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特力A(000025)公告正文

特 力B:2015年半年度报告(英文版)

公告日期:2015-08-26

                     深圳市特力(集团)股份有限公司 2015 年半年度报告全文




SHENZHEN TELLUS HOLDING CO., LTD

       SEMI-ANNUAL REPORT 2015




            August 2015




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                                             深圳市特力(集团)股份有限公司 2015 年半年度报告全文




         Section I. Important Notice, Contents and Paraphrase

Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of Shenzhen Tellus Holding Co., Ltd. (hereinafter referred to as the
Company) hereby confirm that there are no any fictitious statements, misleading
statements, or important omissions carried in this report, and shall take all
responsibilities, individual and/or joint, for the reality, accuracy and completion
of the whole contents.
All directors are attended the Board Meeting for report deliberation.
The Company has no plans of cash dividend distributed, no bonus shares and
has no share converted from capital reserve either.
Lv Hang, principal of the Company, Yang Jianping, person in charger of
accounting works and Ke Wensheng, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of Semi-Annual
Report 2015 is authentic, accurate and complete.
China Securities Journal, Hong Kong Commercial Daily and Juchao Website
(www.cninfo.com.cn) are the media for information disclosure appointed by the
Company, all information under the name of the Company disclosed on the
above said media shall prevail. Concerning the forward-looking statements with
future planning involved in the Report, they do not constitute a substantial
commitment for investors, and investors are advised to exercise caution of
investment risks.




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                                                                          深圳市特力(集团)股份有限公司 2015 年半年度报告全文




                                                          Content
Semi-Annual Report 2015 ............................................................................................................. 1

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

Section II Company Profile .......................................................................................................... 5

Section III Accounting data and summary of finnaical indexes .................................................. 7

Section IV Report of the Board of Directors ................................................................................ 9

Section V Important Events ........................................................................................................ 23

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

Section VII Preferred Stock……………………………………………………………………….41

Section VIII Directors, Supervisors and Senior Executives ..................................................... 42

Section IX Financial Report ....................................................................................................... 44

Section X Documents Available for Reference ........................................................................ 159




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                                                                    深圳市特力(集团)股份有限公司 2015 年半年度报告全文



                                                  Paraphrase
                     Items                   Refers to                               Definition

CSRC                                         Refers to China Securities Regulatory Commission

SZ Exchange                                  Refers to Shenzhen Stock Exchange

                                                         Shenzhen Branch of China Securities Depository & Clearing
Shenzhen Branch of SD&C                      Refers to
                                                         Corporation Limited

Company, the Company, our Company, Tellus
                                             Refers to Shenzhen Tellus Holding Co., Ltd.
Group

Reporting period, Current Period, the Year   Refers to 1 January 2015 to 30 June 2015

SDG                                          Refers to Shenzhen SDG Co., Ltd.

Auto Industrial and Trading Company          Refers to Shenzhen Auto Industry and Trade Corporation




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                                                                        深圳市特力(集团)股份有限公司 2015 年半年度报告全文




                                         Section II Company profile

I. Company Profile
Short form for share           Tellus-A, Tellus-B                       Code for share                 000025, 200025

Listing stock exchange         Shenzhen Stock Exchange

Chinese name of the Company 深圳市特力(集团)股份有限公司

Abbr. of Chinese name of the
                               深特力
Company(if applicable)

English name of the
                               ShenZhen Tellus Holding Co.,Ltd
Company(if applicable)

Legal Representative           Lv Hang


II. Contact person and ways

                                                      Secretary of the Board                       Rep. of securities affairs

                                            Lv Hang (function in an acting capacity of
Name                                                                                      Sun Bolun
                                            Secretary of the Board)

                                            15/F, Zhonghe Building, Shennan Middle        15/F, Zhonghe Building, Shennan Middle
Contact adds.
                                            Road, Futian District, Shenzhen               Road, Futian District, Shenzhen

Tel.                                        (0755)83989335                                (0755)83989339

Fax.                                        (0755)83989386                                (0755)83989386

E-mail                                      ir@tellus.cn                                  sunbl@tellus.cn


III. Others

1. Way of contact

Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or
not
□ Applicable   √ Not applicable

Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period,
found more details in Annual Report 2014.


2. Information disclosure and preparation place

Whether information disclosure and preparation place changed in reporting period or not
□ Applicable   √ Not applicable


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                                                                          深圳市特力(集团)股份有限公司 2015 年半年度报告全文


The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation
place for semi-annual report have no change in reporting period, found more details in Annual Report 2014.


3. Registration changes of the Company

Whether registration has changed in reporting period or not
□ Applicable   √ Not applicable
Date/place for registration of the Company, registration number for enterprise legal license, number of taxation registration and
organization code have no change in reporting period, found more details in Annual Report 2014.




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                                                                        深圳市特力(集团)股份有限公司 2015 年半年度报告全文




       Section III. Accounting data and summary of financial indexes

I. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting
error correction or not
□Yes √ No

                                                                                                         Increase/decrease in this
                                                  Current period            Same period of last year
                                                                                                             report y-o-y (%)

Operating revenue (RMB)                                 158,491,781.84                228,692,541.86                        -30.70%

Net profit attributable to shareholders of
                                                           7,650,356.02                  5,521,161.43                       38.56%
the listed company(RMB)

Net profit attributable to shareholders of
the listed company after deducting                         7,516,539.71                  5,355,980.64                       40.34%
non-recurring gains and losses(RMB)

Net cash flow arising from operating
                                                         33,862,882.70                  -4,185,311.96
activities(RMB)

Basic earnings per share (RMB/Share)                               0.0296                      0.0251                       17.93%

Diluted earnings per share (RMB/Share)                             0.0296                      0.0251                       17.93%

Weighted average ROE                                               1.49%                        2.98%                        -1.49%

                                                                                                         Increase/decrease in this
                                               End of current period           End of last period       report-end over that of last
                                                                                                              period-end (%)

Total assets (RMB)                                    1,143,974,813.03                806,324,777.80                        41.88%

Net assets attributable to shareholder of
                                                        833,050,618.82                191,880,262.80                       334.15%
listed company(RMB)


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

1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable     √ Not applicable




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                                                                           深圳市特力(集团)股份有限公司 2015 年半年度报告全文


The Company has no difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) in reporting period


2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable    √ Not applicable


The Company has no difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and
Chinese GAAP (Generally Accepted Accounting Principles) in reporting period


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

√Applicable     □Not applicable
                                                                                                                                   In RMB

                                  Item                                          Amount                             Note

Gains/losses from the disposal of non-current asset (including the
                                                                                         -20,206.16
write-off that accrued for impairment of assets)

Gains/losses from entrusted investment or asset management                              154,657.53

Other non-operating income and expenditure except for the
                                                                                         31,650.33
aforementioned items

Less: Impact on income tax                                                               41,525.43

     Impact on minority shareholders’ equity (post-tax)                                  -9,240.04

Total                                                                                   133,816.31                   --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss




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                     Section IV. Report of the Board of Directors

I. Introduction

(I)Overview of the overall operation
The first half year of 2015, the international environment has been very complicated, the global economic
recovery has been slow, and the domestic economy has entered a sustainable growth track after a slowdown, but
the consumer demand failed to show a growing trend and the substantial economy was still low. As for the
industry environment of our company’s business development, the auto sales business has been influenced by the
slowdown of economic growth and decrease of consumer demands, especially the car purchase policy issued by
Shenzhen government in December 2014 has brought great impact on the company’s auto sales business, and the
auto sales revenue has significantly decreased. On the business transformation, the company has established the
―Business Transformation and Development Program of Test Rite Group‖ in 2014, which clarified the group’s
strategic development direction of transforming to the integrated service operator in jewelry industry. Since 2015,
the jewelry industry has kept the status at the end of the second half year of 2014, influenced by the changes in
economic environment, the low-price running of gold, and the excess capacity, the jewelry consumption has been
tending to decline, the prosperity has been descending, and the industry development has a slowdown, as a results,
the rental prices at distributing centers of jewelry enterprises in Shenzhen, such as Shuibei and Buxin, have been
showing a decreasing trend. At the same time, compared with the sluggish growth of traditional jewelry sales
model, the jewelry network retail business has a rapid growth with the help of E-commerce platform, so the whole
jewelry industry is facing the transformation and reformation. In the face of so severe external environment, under
the leadership of the board of directors, the company has been adhering to take the transformation and upgrading as
guiding principle and take the market-oriented reform as power, actively responding to the market changes,
intensifying the promotion of the company’s business transformation, focusing on the planning to develop the
e-commerce and financial service business of jewelry while gradually sorting out and adjusting the company’s
existing automotive aftermarket and leasing management and property service management of resources assets,
which has found a accurate entry point for the company to transform to the jewelry industry and laid a solid
foundation for the company to arrange the operations, e-commerce and financial services of jewelry market.
During the reporting period, the company has achieved the operating income of 158,490,000 yuan, a decrease of
70.2 million yuan and down 30.70% on a year-on-year basis, which was mainly because that the subsidiary Huari
Toyota Company’s automobile sales revenue has decreased by 81.6 million yuan and down 51.14% on a
year-on-year basis under the influence of the car purchase policy in Shenzhen. The renter income has increased by
8.55 million yuan, up 30.38% on a year-on-year basis by re-adjusting the rental price system and raising the unit
rental price reasonably.The company’s operating costs were 116,940,000 yuan, down 40.12% on a year-on-year
basis. The costs were 30,830,000 yuan, a decrease of 2.6 million yuan and down 7.78% on a year-on-year basis.
The company has achieved total profits of 8.51 million yuan, an increase of 2.98 million yuan and up 53.89% on a
year-on-year basis. The company has gained the net profits vesting in the parent company of 7.65 million yuan, an
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                                                                深圳市特力(集团)股份有限公司 2015 年半年度报告全文


increase of 2.13 million yuan and up 38.59% on a year-on-year basis. The net profits assigned to the shareholders
of listed company after deducting the non-recurring profits and losses were 7.51 million yuan, an increase of 2.16
million yuan on a year-on-year basis. Under the influence of the unfavorable factor ,such as the car purchase
policy in Shenzhen, the significant decrease in automobile sales revenue, the declining investment revenue in
holding subsidiary companies,The company makes the operating costs depressed more than that in the operating
income and the profits sharply increased on a year-on-year basis by enhancing the management of leasing
resource assets, improving control efforts of auto operating costs, innovating management, optimizing workforce
structure,reducing costs in business, boosting revenue of the raising capital and so on.


(II) The implementation of main work
1.On the major project construction
The main construction of Tellus Shuibei Jewelry Building project which is built by the Company’s subsidiary
Zhongtian Company has been completed and capped in May, 2015, the project is under construction as planned
now, and it is expected to be completed by the end of 2015 and put into use in June, 2016. The main construction
of Shuibei Gold Plaza project which is built by the joint venture Shenzhen Tellus Gimeng Investment Co., Ltd.
has been completed and capped in November, 2014, the project is expected to be completed before the end of
2015 and put into use in the first quarter of 2016.The main construction of Xinglong Gold Jewelry Building
project (the original name is Shenzhen Shuibei Xinglong R&D Center Building) which is built by the joint stock
company Shenzhen Xinglong Machinery Co., Ltd. has been completed and capped in November, 2014, the project
is expected to be completed before the end of 2015 and put into use in the first quarter of 2016.
2. On the business transformation
(1) The jewelry market operation: during the reporting period, the company has launched a market investigation
and pre-work for attracting investments, and formed the investment attraction plan on the basis of registration data
of investment intention.
(2)The e-commerce business: Via the market research and analysis, the company has preliminarily positioned the
e-commerce business by cooperating with the e-commerce enterprises or merging and absorbing the excellent and
mature e-commerce enterprises, made use of the advantages of the e-commerce enterprises in e-commerce field
and big data analysis, replied on the company’s properties at Shuibei jewelry accumulation area and scale
advantages of jewelry professional wholesale market that shall be brought by the transformation and operation of
properties, and made the virtual platform side and physical platform side to complement each other's advantages
so as to create a Test Rite jewelry e-commerce platform mainly in the form of B2B e-commerce and complete the
company’s preliminary layout at e-commerce platform.
(3)The financial service business: Via the market research and analysis, the company has preliminarily positioned
the financial service business as the core based on the owned and joint venture property operations management
of Tellus Jimeng Gold Jewelry Industrial Park, made use of the advantageous conditions of being the biggest
owner of the industrial park, the state-owned enterprise identity and the third party service provider, established an
intelligent internet new model of property management based on the management services of the whole industrial

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park, carried out the strategic cooperation with the large jewelry enterprises, gradually established a big data
service system for the supply chain of large jewelry enterprises, progressively developed the financial service
business such as the commercial factoring, financial leasing, petty loans, mortgage, and third party payment by
adopting the self-building or cooperation, created the internet financial services platform company, and built a
comprehensive jewelry financial service platform for the jewelry industry chain.




II. Main business analysis

Y-o-y changes of main financial data
                                                                                                                               In RMB

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

                                                                                                           Impact by the car
                                                                                                           restrictions, revenue from
Operation revenue                      158,491,781.84           228,692,541.86                  -30.70% car sales by subsidiary
                                                                                                           Huari Toyota decreased
                                                                                                           y-o-y

                                                                                                           Operating costs
Operation cost                         116,939,503.91           195,298,141.59                  -40.12% decreased along the
                                                                                                           declined of car sales

Sales expenses                           9,520,419.70              9,182,022.30                   3.69%

Administrative expenses                 16,780,916.30             15,727,273.24                   6.70%

                                                                                                           Bank loans are paid in
                                                                                                           the Period, than the
Financial cost                           4,529,677.17              8,521,242.69                 -46.84%
                                                                                                           interest expenses
                                                                                                           declined

                                                                                                           Enterprise income tax
                                                                                                           payable increased in the
Income tax expense                       1,200,717.31                717,262.39                  67.40%
                                                                                                           Period with the increased
                                                                                                           profits

                                                                                                           the stock vehicles in the
Net cash flow arising
                                        33,862,882.70             -4,185,311.96                            previous year selling by
from operation activities
                                                                                                           subsidiary Huari Toyota

Net cash flow arising                                                                                      More expenses on the
from investment                    -332,753,974.96               -70,203,958.22                 373.98% bank capital preservation
activities                                                                                                 products in the Period

                                                                                                           More fund-raised in the
Net cash flow arising                                                                                      Period due to the target
                                       350,100,271.84             67,083,699.08                 421.89%
from financing activities                                                                                  private placement, and
                                                                                                           net expenses from the

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                                                                                                        bank fund-raise increased
                                                                                                        y-o-y

Net increase of cash and
                                      51,209,174.82              -7,304,868.03
cash equivalent

                                                                                                        Profit from associated
                                                                                                        enterprise Shenzhen
                                                                                                        Zung Fu Tellus Auto
Investment earnings                      624,390.10              7,841,475.98                  -92.04% Service Co., Ltd. and
                                                                                                        Shenzhen Dongfeng
                                                                                                        Automobile Co., Ltd.
                                                                                                        decreased

Major changes on profit composition or profit resources in reporting period
□ Applicable √ Not applicable
No major changes on profit composition or profit resources occurred in reporting period
The future development and planning extended to reporting period that published in disclosure documents as prospectus, private
placing memorandum and recapitalize statement
□ Applicable √ Not applicable
No future development and planning extended to reporting period that published in disclosure documents as prospectus, private
placing memorandum and recapitalize statement
Review on the previous business plan and its progress during reporting period
In the first half year of 2015, while gradually sorting out and adjusting the company’s existing automotive
aftermarket and leasing management and property service management of resources assets according to the
business plan, the company has put forth efforts to boost the key projects, and actively promoted the transformation
and upgrading of the company. On the existing business, the company has further enhanced the marketization of
property rental price and improved the property management business benefits by firmly grasping the management,
reducing the cost of automobile sales business, and effecting decrease the losses. On the major project
construction, the project of Tellus Shuibei Jewelry Building has been going well and should be completed as
planned. On the enterprise strategy transformation, the company has strictly followed ―The Business
Transformation Development Program of Test Rite Group‖, kept to the established strategic direction, actively
explored the group’s business model and operation path of three business sections which are operations,
e-commerce and financial services. All tasks have been carried forward steadily as planned.


III. Constitution of main business

                                                                                                                           In RMB
                                                                               Increase or      Increase or      Increase or
                                                                               decrease of      decrease of   decrease of gross
                        Operating
                                       Operating cost    Gross profit ratio operating revenue operating cost   profit ratio over
                         revenue
                                                                            over same period over same period same period of
                                                                               of last year     of last year       last year
According to industries



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                                                                          深圳市特力(集团)股份有限公司 2015 年半年度报告全文


Auto sales              77,974,081.36    76,616,616.19                 1.74%        -51.14%         -50.66%         -0.97%

Auto      inspection
and maintenance
                        25,971,734.61    19,091,451.78            26.49%             13.52%          4.43%           6.40%
and      accessories
sales

Rental          and
                        50,824,379.95    19,838,423.28            60.97%             17.77%          -1.05%          7.43%
service

According to products

Auto sales              77,974,081.36    76,616,616.19                 1.74%        -51.14%         -50.66%         -0.97%

Auto      inspection
and maintenance
                        25,971,734.61    19,091,451.78            26.49%             13.52%          4.43%           6.40%
and      accessories
sales

Rental and
                        50,824,379.95    19,838,423.28            60.97%             17.77%          -1.05%          7.43%
service

According to region

Shenzhen               154,770,195.92   115,546,491.25            25.34%            -31.40%         -40.32%         11.15%


IV. Core competitive-ness analysis

During the period, core competitive-ness of the Company remain stable without important changes. Found more
in ―Section IV. Reprot of the Board of Directors‖ in the annual reprot of 2014

V. Investment analysis

1. Equity investment outside

(1) Investment outside

□ Applicable √ Not applicable
The Company has no investment outside in the Period


(2) Holding equity of financial enterprise

□ Applicable √ Not applicable
The Company has no equity of financial enterprise held in the Period


(3) Securities investment

□ Applicable √ Not applicable
The Company has no securities investment in the Period

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                                                                              深圳市特力(集团)股份有限公司 2015 年半年度报告全文


(4)Explanation on equity of other listed company held

□ Applicable      √ Not applicable

The Company had no equity of other listed company held in Period.


2. Trust financing, investment of derivatives and entrustment loan

(1) Trust financing

√ Applicable □ Not applicable
                                                                                                                         In ten thousand Yuan

                                                                                                             Amount
                                                                                                            of reserve
                                                                                                Principal      for
                          Whether                                                                                                    Actual
              Related                                Trust                          Criterial   actually devaluati Anticipat
                           related                                                                                                  gains/loss
  Name       relationsh                  Type       financing Start date End date for fixing collected        on of        ed
                          trade or                                                                                                    es in
                ip                                  amount                          reward       in the     withdrawi income
                               not                                                                                                   period
                                                                                                 Period      ng (if
                                                                                                            applicable
                                                                                                                )

Shenzhen
Tianan
                                                                                   Agreeme
Branch of                              Floating                2015-04- 2015-10-
             N/A          No                           6,000                       nt      to                             151.89
Industrial                              proceeds               30       15
                                                                                   determine
Bank Co.,
Ltd.

Shenzhen
Branch of
China
                                                                                   Agreeme
CITIC                                  Floating                2015-04- 2015-07-
             N/A          No                           3,000                       nt      to                               32.91
Bank                                    proceeds               30       30
                                                                                   determine
Corporati
on
Limited

Shenzhen
Branch of
                                                                                   Agreeme
China                                  Structured              2015-04- 2015-07-
             N/A          No                           4,000                       nt      to                                40.5
Everbrigh                              deposit                 30       30
                                                                                   determine
t Bank
Co., LTd.

Shenzhen                               Floating                2015-05- 2015-08- Agreeme
             N/A          No                           4,000                                                                43.88
Branch of                               proceeds               07       06         nt      to

                                                                       14
                                                         深圳市特力(集团)股份有限公司 2015 年半年度报告全文


China                                                          determine
CITIC
Bank
Corporati
on
Limited

Shenzhen
Tianan
                                                               Agreeme
Branch of               Floating           2015-05- 2015-05-
             N/A   No              5,000                       nt     to   5,000                       2.4
Industrial              proceeds           07       12
                                                               determine
Bank Co.,
Ltd.

Shenzhen
Tianan
                                                               Agreeme
Branch of               Floating           2015-05- 2015-05-
             N/A   No              4,000                       nt     to   3,000                       5.3
Industrial              proceeds           08       12
                                                               determine
Bank Co.,
Ltd.

Shuibei
Jewellery
Branch of                                                      Agreeme
                        Deposit            2015-05- 2015-07-
China        N/A   No              3,000                       nt     to   2,000             2.29     3.92
                        products           08       29
Construct                                                      determine
ion Bank
Co., Ltd.

Shenzhen
Tianan
                                                               Agreeme
Branch of               Floating           2015-05- 2015-10-
             N/A   No              5,000                       nt     to                   126.58
Industrial              proceeds           14       29
                                                               determine
Bank Co.,
Ltd.

Shenzhen
Tianan
                                                               Agreeme
Branch of               Floating           2015-05- 2015-10-
             N/A   No              3,000                       nt     to                    75.95
Industrial              proceeds           14       29
                                                               determine
Bank Co.,
Ltd.

Shenzhen
Gold                                                           Agreeme
                        Floating           2015-05- 2015-06-
Jewelry      N/A   No              5,000                       nt     to   5,000                     21.95
                        proceeds           20       23
Branch of                                                      determine
China


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                                                                             深圳市特力(集团)股份有限公司 2015 年半年度报告全文


Minsheng
Bank Co.,
Ltd.

Total                                               42,000   --         --          --        15,000             474      33.57

Capital resource                              Idle fund-rasing

Principal uncollected for overdue and
                                                                                                                              0
accumulated earninsg

Lawsuit involved (if applicable)              N/A

Disclosure date for approval from the
                                              2015-04-29
Board for trust financing (if applicable)

Disclosure date for approval from board of
shareholders for trust financing (if
applicable)

(2) Investment of derivatives
□ Applicable √ Not applicable
The Company has no derivatives investment in the Period


(3) Entrustment loan
□ Applicable √ Not applicable
The Company has no entrustment loan in the Period


3. Application of raised proceeds

√ Applicable □ Not applicable


(1)Overall application of raised proceeds

√ Applicable □ Not applicable
                                                                                                             In ten thousand Yuan
Total raised capitals                                                                                                    64,680

Total raised capital invested in reporting period                                                                      31,145.54

Total accumulative raised capital invested                                                                             31,145.54
Total raised fund for changes its usage area in report
                                                                                                                              0
period
Total accumulative raised fund for changes its usage
                                                                                                                              0
area
Proportion of total accumulative raised fund for
                                                                                                                          0.00%
changes its usage area
                                             Explanation on general usage of raised capital

The company has completed the non-public offering of shares in March, 2015. This non-public offering has totally raised funds of

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                                                                           深圳市特力(集团)股份有限公司 2015 年半年度报告全文


RMB 646.8 million Yuan, and the net amount of raised funds was RMB 633,520,000 Yuan after deducting the issue expenses
including the sponsorship fee, underwriting fee, legal fee, capital verification, information disclosure, and registration fee of initial
public offering, etc. In accordance with the issuance program, the net amount of raised funds after deducting the issue expenses
should be used for the Tellus Shuibei Jewelry Building project and supplementing the company’s circulating funds. After the
non-public offering of shares was fully funded, it should be saved to the placement’s special account at China Construction Bank,
Shenzhen Shuibei Jewelry Branch. On April 10, 2015, the company has remitted the raised funds of 260 million Yuan from the
company’s special account of placement to the placement’s special account of its subsidiary Shenzhen Zhongtian Industrial Co.,
Ltd. (hereinafter referred to as "Zhongtian Company") at China Construction Bank, Shenzhen Shuibei Jewelry Branch which was
used for capital increase in Zhongtian Company, and the follow-up special project was used for Tellus Shuibei Jewelry Building
project; the surplus raised funds were saved in the company’s special account of placement for supplementing the circulating funds.
On April 27, 2015, the company held the thirtieth interim meeting of the seventh board of directors which deliberated and approved
the motion about replacing the self-raised funds beforehand invested in fundraising project with the raise funds, and agreed the
company to replace the self-raised funds of 114,162,000 Yuan invested in fundraising project with the raise funds, of which 15.6
million Yuan was used to replace and supplement the beforehand invested self-raised funds of the company’s circulating funds and
98,562,000 Yuan was used to replace and supplement the beforehand invested self-raised funds of Tellus Shuibei Jewelry Building
project. The company’s independent director and sponsor institution have expresses their agreement on this matter. On April 28,
2015, the company held the twelfth meeting of the seventh board of directors which deliberated and approved the motion of how to
use some idle raised funds to purchase the principal-protected bank financial products, and authorized the company and the
subsidiary Zhongtian Company to use the idle raised funds to purchase the principal-protected bank financial products, the total
amount was less than 0.35 billion Yuan. Up to June 30, 2015, the company has used the raise funds of 311,455,400 Yuan, and used
the temporarily idle raised funds to purchase the financial products of 270 million Yuan, and the balance of placement account was
55,359,000 Yuan(including the issue expenses 1.98 million Yuan, interest 982,000 Yuan and financing income 335,700 Yuan).



(2) Situation of committed project of raised proceeds

√ Applicable □ Not applicable
                                                                                                                         In ten thousand Yuan
                                                  Total
                                                 investme               Amount Investme
                          Projects     Total
                                                               of         nt                 Predicted                              Project
                     changed committe nt after
Committed investment or not        d     adjustme Amount accumula program                    serviceab    Profit        Reach the feasibility
                                                  invested    ted      till the                  le      realized predicted            was
projects &investment (includin investme nt (1)
                                                   in this investme period-en                condition    in this       interest or changed
    of raised fund       g       nt of
                                                   period nt till the      d                  date of      year            not     hugely or
                     changed raised
                                                           period-en (3)=(2)/(1               project                                  not
                     partially) capitals
                                                             d (2)         )


Investment project commitment

Tellus Shuibei Jewelry
                         No             26,000     26,000 11,995.54 11,995.54       46.14%                          0             No
Building

Liquid assets
supplementation of the No               38,680     38,680     19,150     19,150     49.51%                          0             No
Company


                                                                   17
                                                                           深圳市特力(集团)股份有限公司 2015 年半年度报告全文


Subtotal of
                              --        64,680     64,680 31,145.54 31,145.54         --         --             0      --         --
commitment projects

Investment orientation for fund arising out of plan

Total                         --        64,680     64,680 31,145.54 31,145.54         --         --             0      --         --

                          1. Tellus Shuibei Jewelry Building project has been constructing as planned.
                          2. About the placement investment project supplementing the company’s circulating funds:
                          (1)The repayment of bank loan has been completed;
                          (2)The newly increased decoration project of Tellus Shuibei project has been proceeding as planned;
                          (3)Jewelry e-commerce business has been carrying forward as planned;
                          (4)Jewelry retail market business has been carrying forward as planned;
                          (5)Jewelry training business: This project has not yet been started. The company has started to investigate
Situation about not
                          some schools in early 2015 and found there are already many jewelry training schools in Shuibei and the
coming up to schemed
                          market competition is rather intense; moreover, the prosperity degree of jewelry industry has been declining
progress or expected
                          so the training business requirements have sharply reduced. The return on investment shall be relatively
revenue and the
                          low and the payback period shall be rather long if investing to establish the jewelry training school now,
reason(In specific
                          therefore, the company has decided to cancel the investment plan to this project for the time being, and wait
project)
                          until the company’s business in jewelry service industry has developed smoothly and accumulated the
                          certain resources.
                          (6)Automobile leasing business in the jewelry market: This project has not yet been started. The first main
                          reason was that Shenzhen Municipal Government announced the implementation of car purchase policy on
                          December 29, 2014 which shall adopt two methods, license-plate lottery and bidding, this policy caused the
                          company could not develop this business as planned, the second main reason was that the demands for
                          automobile leasing business in jewelry industry at Shuibei has sharply reduced so that the business
                          prospects have been affected, therefore, the company has decided to cancel the investment to this project.

Explanation on great
changes of feasibility    Not applicable
of project

Amount, usage and         Not applicable
progress of using for
fund raising out of the
plan

Change of                 Not applicable
implementation place
of investment project
of raised capitals

Adjustment of             Not applicable
implementation way
for investment project
of raised capitals

Regulation of             Applicable
implementation ways       On April 27, 2015, the company held the thirtieth interim meeting of the seventh board of directors which

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                                                                              深圳市特力(集团)股份有限公司 2015 年半年度报告全文


of investment project       deliberated and approved the motion about replacing the self-raised funds beforehand invested in
of raised capitals          fundraising project with the raise funds, and agreed the company to replace the self-raised funds of
                            114,162,000 Yuan invested in fundraising project with the raise funds, of which 15.6 million Yuan was used
                            to replace and supplement the beforehand invested self-raised funds of the company’s circulating funds and
                            98,562,000 Yuan was used to replace and supplement the beforehand invested self-raised funds of Tellus
                            Shuibei Jewelry Building project. The company’s independent director and sponsor institution have
                            expresses their agreement on this matter.

Temporarily                 Not applicable
supplement for the
current capitals with
idle raised capitals

Temporarily                 Not applicable
supplement for the
current capitals with
idle raised capitals



(3)The changed project of raised proceeds

□ Applicable √ Not applicable
The Company has no project of raised proceeds changed in the Period


(4) Project of raised proceeds


  Project of raised proceeds and summary                       Disclosure date                            Disclosure index

The Company completed the private
                                                                                              Found more in the ―Specific Reprot of the
placement in March 2015, and net amount
                                                                                              Fund-raised Saving for semi-annual of
of RMB 633.52 million are raised during
                                                                                              2015 and utilization conditions‖ released
the placement, which will contribute to the 2015-08-26
                                                                                              on Securities Times, Hong Kong
Tellus Shuibei Jewerlly Building and
                                                                                              Commercial Daily and Juchao Website
supplement the current capital of the
                                                                                              dated 26 August 2015
Company


4. Main subsidiaries and joint-stock companies analysis

√ Applicable □ Not applicable
Main subsidiaries and joint-stock companies
                                                                                                                                  In RMB

                                                Main
                                  Industry                 Registered                              Operation Operation
   Name              Type                    products or                 Total assets Net assets                             Net profit
                                  involved                   capital                                revenue       profit
                                               service

Shenzhen                                     Self-owned RMB 58.96 279,934,72 234,296,06 9,224,944.7 1,897,379
              Subsidiary        Commerce                                                                                     1,409,847.73
Auto                                         property      million               0.91       8.50              4        .96

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                                                                               深圳市特力(集团)股份有限公司 2015 年半年度报告全文


Industry                                  leasing,
and Trade                                 automobile
Corporation                               and
                                          accessories
                                          selling

                                          Automobile
Shenzhen
                                          maintenanc
SD Huari
                               Service    e&             US$ 5             70,923,149. 32,736,570. 16,856,842. -686,656.
Automobile Subsidiary                                                                                                       -563,970.91
                                          production million                       97          85          48         66
Enterprise                     industry
                                          and sales of
Co.
                                          accessory

Shenzhen
                                                         RMB
Zhongtian                  Service        Property                         382,129,96 281,937,10 2,438,145.0 1,469,812
              Subsidiary                                 267.25                                                             1,102,359.28
Industrial                 industry       leasing                                0.69        7.75           3         .35
                                                         million
Co., Ltd.

Shenzhen
Huari
Toyota                                    Automobile RMB 2                 26,557,682. -9,430,200. 103,112,24 -930,793.
              Subsidiary   Commerce                                                                                         -961,593.44
Automobile                                selling        million                   64          50        8.20         26
Sales Co.
Ltd

Shenzhen
                                          Production
New
                                          of
Yongtong
                           Service        inspection     RMB 19.           14,455,103. 2,140,999.1 1,863,208.6 732,320.3
Automobile Subsidiary                                                                                                        548,320.38
                           industry       equipment      61 million                14           6           0          8
Inspection
                                          for auto
Equipment
                                          vehicles
Co. Ltd

Shenzhen
                                          Inspection
Tellus New
                                          and
Yongtong                   Service                       RMB 32.90 83,952,797. 45,082,227. 6,823,866.5 1,701,794
              Subsidiary                  maintenanc                                                                        1,471,803.46
Automobile                 industry                      million                   76          99           8         .63
                                          e of auto
Developme
                                          vehicle
nt Co. Ltd

Shenzhen                                  Developmet
SD Tellus                  Manufactur n and              RMB 31.15 28,766,512. 11,723,046.                      -147,748.
              Subsidiary                                                                                 0.00               -147,748.98
Real Estate                e              operation of million                     20          86                     98
Co. Ltd                                   real estate

Shenzhen
                                          Property
SD Tellus                  Service                       RMB 7.05          29,233,464. 9,709,381.5 17,536,463. -378,742.
              Subsidiary                  managemen                                                                         -371,454.04
Property                   industry                      million                   14           4          54         90
                                          t
Managemen

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                                                                           深圳市特力(集团)股份有限公司 2015 年半年度报告全文


t Co. Ltd

Shenzhen
Tellus Real                               Agency of
                             Service                    RMB 2          2,673,778.5 2,447,277.5               -34,949.3
Estate         Subsidiary                 real estate                                            52,700.00               -34,949.38
                             industry                   million                 8           9                       8
Exchange                                  exchange
Co. Ltd

Shenzhen
                                          Sales of
Zung Fu
               Joint-stock   Service      auto and      RMB 30         331,855,66 223,133,73 334,504,85 -161,361.
Tellus Auto                                                                                                              300,028.70
               company       industry     maintenanc million                 7.06        0.49         9.40         28
Service Co.,
                                          e
Ltd.

                                          Auto
Shenzhen
                                          manufacturi
Dongfeng       Joint-stock   Manufactur                 RMB 100        542,036,07 155,698,67 158,949,38 -2,195,90
                                          ng and                                                                         330,374.34
Auto Co.,      company       e                          million              9.57        3.33         3.31       6.52
                                          maintenanc
Ltd.
                                          e

Shenzhen
                                          Mould
Xinglong                                                RMB
               Joint-stock   Manufactur processing                     278,326,46 64,979,136.
Machinery                                               60.6333
               company       e            and                                5.96          82
Mould Co.,                                              million
                                          exportation
Ltd.


5. Major project invested by non-raised funds

□ Applicable √ Not applicable


No major project invested by non-raised funds in Period


VI. Prediction of business performance from January – September 2015

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable

VII. Explanation from the Board and Supervisory Committee for “Qualified Opinion” from
the CPA of this year’s
□ Applicable √ Not applicable


VIII. Explanation on “Qualified Opinion” of previous year from the Board

□ Applicable √ Not applicable




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                                                                           深圳市特力(集团)股份有限公司 2015 年半年度报告全文


IX. Implementation of profit distribution in reporting period

Implementation or adjustment of profit distribution plan in reporting period, cash dividend plan and shares converted from capital
reserve in particular
□ Applicable √ Not applicable
Previous year’s profit distribution plan was no profit distribution and shares converted from capital reserve either


X. Profit distribution and capitalization of capital reserves in the Period

□ Applicable √ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the semi-annual year


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

□ Applicable √ Not applicable
The Company has no reception of research, communication and interview occurred in the Period




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                                                                       深圳市特力(集团)股份有限公司 2015 年半年度报告全文



                                        Section V. Important Events

I. Corporate governance

During the reporting period, the Company has been observing the Company Law, Securities Law and relevant
rules issued by the CSRC, for the purpose of improving its legal person governance structure and standardizing its
operation level. According to the Articles of Association, Procedure Rules of General Meeting, Procedure Rules of
Board of Directors, Procedure Rules of Supervisory Committee, Working Rules of Independent Directors,
Working Rules of General Manager and a series of rules and regulations, the Company maintained normal
performance of the duties and obligations of its general meeting, board of directors and supervisory committee.
Each of its directors and supervisors can perform their duties earnestly. The corporate governance of the Company
is satisy the requirement of regulation documents with corporate governance for listed companies issued by
CSRC.
During the reporting period, in order to improve the company's internal control system, the company has followed
the requirements of internal control, and revised the "Articles of Association" according to the changes of the
company’s share capital and registered capital which has been deliberated and approved by the general meeting of
stockholders. The company has established ―the provisional management procedures of the purchase of financial
products‖ which has been deliberated and approved by the board of directors.
The actual situations of corporate governance have no difference with the ―Corporation Law‖ and the related
provisions of China Securities Regulatory Commission.


II. Lawsuits

Significant lawsuits and arbitrations
□Applicable √Not applicable
The Company has no significant lawsuits and arbitrations in Period.
Other lawsuits
□Applicable √Not applicable


III. Question from media

□ Applicable √ Not applicable
No universal questioned by media in reporting period


IV. Bankruptcy reorganization

□ Applicable √ Not applicable
In reporting period, the Company has no bankruptcy reorganization occurred.




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                                                                              深圳市特力(集团)股份有限公司 2015 年半年度报告全文


V. Transaction in assets

1. Assets acquisition

□ Applicable √ Not applicable
The Company did not purchased assets in the Period


2. Sales of assets

□ Applicable √ Not applicable
The Company did not sell assets in the Period


3. Business combination

□ Applicable √ Not applicable
The Company has no business combined in the Period

VI. Implementation of the company’s equity incentive and the effects
□ Applicable √ Not applicable
No equity incentive in reporting period


VII. Significant related transaction

1. Related transaction routine operations concerned

□ Applicable √ Not applicable
The Company has no related transaction with routine operations concerned occurred in the Period
2. Related transaction incurred by purchase or sales of assets
□ Applicable √ Not applicable
No related transaction incurred by purchase or sales of assets in Period
3. Related transaction from jointly investment outside
□ Applicable √ Not applicable
No related transaction from jointly investment outside occurred in Period
4. Credits and liability of related party
√ Applicable □ Not applicable
Whether have non-operation related liabilities and credits relations or not
√ Yes □ No
Claim receivable from related party:
                                          Whether has Balance at        Current       Current                   Current    Balance at
                                          non-busines period-begin newly added       recovery                   interest   period-end
   Related
               Relationship   Causes       s capital       (10             (10         (10      Interest rate     (10         (10
    party
                                          occupying     thousand        thousand     thousand                   thousand   thousand
                                            or not        Yuan)          Yuan)        Yuan)                      Yuan)       Yuan)

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                                                                                 深圳市特力(集团)股份有限公司 2015 年半年度报告全文


Debts payable to related party:
                                                    Balance at    Current          Current                          Current     Balance at
                                                   period-begin newly added        recovery                         interest    period-end
Related party Relationship           Causes                                                       Interest rate
                                                   (10 thousand (10 thousand (10 thousand                         (10 thousand (10 thousand
                                                      Yuan)        Yuan)            Yuan)                           Yuan)         Yuan)
                                  Long-term
                                  loans
Shenzhen
               Parent             ( Non-curre
SDG Co.,                                                  7,300             0                                                         7,300
               company            nt liabilities
Ltd.
                                  due within 1
                                  year)

Shenzhen
               Parent             Accounts
SDG Co.,                                                  5,978            270                                                        6,248
               company            current
Ltd.

Shenzhen
               Parent             Short-term
SDG Co.,                                                  1,892                               2                                       1,890
               company            loans
Ltd.


5. Other related transactions

□ Applicable √ Not applicable
The Company had no other related transactions in the reporting period


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

□ Applicable √ Not applicable
No non-business capital occupied by controlling shareholders and its related parties in Period


IX. Major contract and implantation

1. Trusteeship, contract and leasing

(1) Trusteeship

□ Applicable √ Not applicable
The Company had no trusteeship in the reporting period.


 (2) Contract

□ Applicable √ Not applicable
The Company had no contract in the reporting period.




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                                                                              深圳市特力(集团)股份有限公司 2015 年半年度报告全文


(3) Leasing

□ Applicable √ Not applicable
The Company had no leasing in the reporting period.


2. Guarantee

  √ Applicable □ Not applicable
                                                                                                                       In ten thousand Yuan

                    Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)
                        Related
                                               Actual date of                                                         Complete Guarante
    Name of the        Announce
                                    Guarantee happening (Date     Actual                  Guarantee     Guarantee     implemen e for
     Company              ment
                                      limit      of signing   guarantee limit               type          term         tation or related
    guaranteed         disclosure
                                                agreement)                                                                not     party
                          date
                                                                    Total actual occurred external
    Total approving external
                                                                0     guarantee in report period                                        0
 guarantee in report period (A1)
                                                                                   (A2)

    Total approved external                                               Total actual balance of
 guarantee at the end of report                                 0 external guarantee at the end                                         0
           period ( A3)                                                   of report period (A4)

                                         Guarantee between the Company and the subsidiaries
                        Related
                                               Actual date of                                                         Complete Guarante
    Name of the        Announce
                                    Guarantee happening (Date     Actual                  Guarantee     Guarantee     implemen e for
     Company              ment
                                      limit      of signing   guarantee limit               type          term         tation or related
    guaranteed         disclosure
                                                agreement)                                                                not     party
                          date
                                                                                                      To the expire
Shenzhen Zung Fu
                                                                                                      date of joint
Tellus Auto            2014-09-30        3,500 2007-04-17                       3,500 Pledged                         No        Yes
                                                                                                      venture
Service Co., Ltd.
                                                                                                      contract

Shenzhen
                                                                                        Joint liability 2014.6.24-
Zhongtian              2014-05-07       30,000 2014-06-24                      30,000                                 No        No
                                                                                        guaranty      2024.6.23
Industrial Co., Ltd.

Shenzhen
                                                                                        General       To 25 June
Zhongtian              2014-03-17        4,140                                  4,140                                 No        No
                                                                                        guarantee     2016
Industrial Co., Ltd.

Shenzhen Auto
                                                                                        General
Industry and Trade 2014-08-20            1,000 2014-09-16                       1,000                 2015-9-16       No        No
                                                                                        guarantee
Corporation

                                                                    Total amount of actual
Total amount of approving
                                                                    occurred guarantee for
guarantee for subsidiaries in                                   0                                                                       0
                                                                    subsidiaries in report period
report period (B1)
                                                                    (B2)


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                                                                               深圳市特力(集团)股份有限公司 2015 年半年度报告全文


                                                                      Total balance of actual
Total amount of approved
                                                                      guarantee for subsidiaries at
guarantee for subsidiaries at the                        38,640                                                                     38,640
                                                                      the end of reporting period
end of reporting period (B3)
                                                                      (B4)

                                           Guarantee of the Company for the subsidiaries
                       Related
                                               Actual date of                                                           Complete Guarante
   Name of the        Announce
                                    Guarantee happening (Date     Actual                 Guarantee        Guarantee     implemen e for
    Company              ment
                                      limit      of signing   guarantee limit              type             term         tation or related
   guaranteed         disclosure
                                                agreement)                                                                  not     party
                         date
                                                                                                         Two years
                                                                                                         since the
                                                                                                         expired date
Shenzhen Huari                                                                                           when debtor
Toyota Auto-Sales 2014-03-17             4,900 2014-06-26                        4,900 Pledged           of the main    No       Yes
Service Co., Ltd.                                                                                        contract
                                                                                                         completed
                                                                                                         debt
                                                                                                         maturities

Shenzhen Huari
Toyota Auto-Sales 2014-03-17             1,800 2014-10-13                        1,800 Pledged           2015-10-13     No       Yes
Service Co., Ltd.

                                                                      Total amount of actual
Total amount of approving
                                                                      occurred guarantee for
guarantee for subsidiaries in                                    0                                                                        0
                                                                      subsidiaries in report period
report period (C1)
                                                                      (C2)

                                                                      Total balance of actual
Total amount of approved
                                                                      guarantee for subsidiaries at
guarantee for subsidiaries at the                             6,700                                                                    6,700
                                                                      the end of reporting period
end of reporting period (C3)
                                                                      (C4)

Total amount of guarantee of the Company( total three abovementioned guarantee)
Total amount of approving                                       Total amount of                 actual
guarantee in report period                                    0 occurred guarantee in           report                                    0
(A1+B1+C1)                                                      period (A2+B2+C2)
Total amount of approved                                        Total balance of                actual
guarantee at the end of report                           45,340 guarantee at the end of         report                              45,340
period (A3+B3+C3)                                               period (A4+B4+C4)
The proportion of the total amount of actually guarantee in the
                                                                                                                                   54.43%
net assets of the Company(A4+ B4+C4)

Including:

Amount of guarantee for shareholders, actual controller and its
                                                                                                                                          0
related parties(D)

The debts guarantee amount provided for the guaranteed
                                                                                                                                       6,700
parties whose assets-liability ratio exceed 70% directly or


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                                                                                     深圳市特力(集团)股份有限公司 2015 年半年度报告全文


indirectly(E)
Proportion of total amount of guarantee in net assets of the
                                                                                                                                3687.47
Company exceed 50%(F)
Total amount of the aforesaid three guarantees(D+E+F)                                                                          10387.47

Explanations on possibly bearing joint and several liquidating
                                                                        N/A
responsibilities for undue guarantees (if applicable)

Explanations on external guarantee against regulated
                                                                        N/A
procedures (if applicable)

Explanation on guarantee with composite way


(1) Guarantee outside against the regulation

□ Applicable √ Not applicable
No guarantee outside against the regulation in Period


3. Other material contracts
□ Applicable √ Not applicable
The Company had no other material contracts in the reporting period.


4. Other material transactions

□ Applicable √ Not applicable
The Company had no other material transactions in the reporting period.
X. Commitments made by the Company or shareholders holding above 5% shares of the
Company in reporting period or occurred in the previous reporting period but continued to
reporting period
√ Applicable □ Not applicable
                                                                                     Commitment Commitment
Commitments             Accepter                        Contents                                                    Implementation
                                                                                        time       period
                                         Commitments during the work
                                         of Share Merger Reform of the
                                         Company: (1) In accordance
                                         with the Measures for the
                                         Administration of the Share
Commitments                              Merger    Reform          of     Listed
for                                      Companies, SDG would abide
                 SDG                                                                 2005-12-29 Long-term    Implementing
Share Merger                             by the various laws, regulations
Reform                                   and rules, and perform its
                                         statutory commitment duty.
                                         (2)      Apart       from             the
                                         above-mentioned                statutory
                                         commitment, SDG also made
                                         the      following              special

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                                                  深圳市特力(集团)股份有限公司 2015 年半年度报告全文


      commitment: with 36 months
      since the day the reform plan
      starts to take effect, SDG
      would not list at Shenzhen
      Stock Exchange and sell the
      shares of Tellus it held (except
      for the shares used to promote
      the administration level of
      Tellus).
      (3) The administration level
      would abide by the laws,
      regulations      and    rules,        and
      perform          its           statutory
      commitment duty.
      (4)        SDG         made           the
      commitment: ―The Promiser
      hereby promises that, if the
      Promiser failed to fulfill its
      commitment or not fully fulfill
      its   commitment,         it     would
      compensate other shareholders
      for    their     losses        suffered
      thereafter‖.
      (5)    SDG       declared:        ―The
      Promiser would dutifully fulfill
      its commitments and shoulder
      corresponding                      legal
      responsibilities. The Promiser
      would transfer the shares held
      by it only if the assignee agree
      and have the ability to shoulder
      the                    commitment
      responsibility.‖

      Commitments are as follows:                                        SASAC and the Ministry of
      (1) In order to effectively boost                                  Finance have jointly issued the
      the core management level and                                      "trial implementation methods
      business backbones for long,                                       of how state-controlled listed
      SDG would take out its shares,                                     companies       carry   out   stock
SDG   not exceeding 10% in total 2005-12-29 Long-term                    ownership incentive", CSRC
      number after the Share Merger                                      has issued the ―stock ownership
      Reform, and apply them to the                                      incentive management methods
      boost of the administration                                        of     listed   companies     (trial
      level. The shares would be sold                                    implementation)‖, it has found
      to         the            Company’s                               that     the     above-mentioned

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                 administrative level over 3                                           promises made by SDG Group
                 years, with the selling price                                         didn’t   conform        to   the
                 being the net asset value per                                         above-mentioned           relevant
                 share audited during the period                                       provisions,   so    no    relevant
                 nearest to the implementation.                                        commitment has been executed
                 Before the implementation of                                          yet.
                 the promoting plan by share
                 selling      each         year,          the
                 administration          level          must
                 prepay the Company a risk
                 responsibility fund, i.e. 20% of
                 the   planned          selling        price;
                 Should      the        work      of      the
                 performance examination set
                 by the Board failed to be
                 finished,     the         paid          risk
                 responsibility fund would not
                 be refunded and shall be owned
                 by the Company. Detailed rules
                 concerning the limitations on
                 the administration level, such
                 as the subscription conditions
                 and risk responsibility fund,
                 and boost plans would be set
                 by the Board and submitted to
                 relevant      departments                for
                 approval. The implementation
                 of the shares for promoting
                 would be conducted strictly
                 according to relevant laws and
                 regulations, and the circulation
                 conditions        of    these         shares
                 would be in conformity with
                 relevant regulations set by the
                 Shenzhen Stock Exchange. (2)
                 Relevant     expenses            of     this
                 Share Merger Reform of Tellus
                 would be paid by SDG.

Commitments
in report of
acquisition or
equity change

Commitments
in assets

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replacement

Commitments
make in Initial
public offering
or re-financing

                                     In order to avoid the horizontal
                                     competition,       the      company’s
                                     controlling                shareholder,
                                     Shenzhen SDG Co., Ltd., has
                                     issued the ―commitment letter
                                     about      the     avoidance                of
                                     horizontal       competition‖              on
                                     May     26,      2014.          The        full
                                     commitment             letter     is        as
                  SDG                follows: 1. The Company and 2014-05-26 Long-term                         Implementing
                                     other enterprises controlled by
                                     the Company except Test Rite
                                     Group haven’t occupied in any
                                     business           that               could
                                     substantially compete with the
                                     main businesses of Test Rite
                                     Group, and have no horizontal
Other                                competition relationship with
commitments                          Test Rite Group.
for medium
                                     The     commitments              to        the
and small
                                     fulfillment       of       information
shareholders
                                     disclosure about the company
                                     business development are as
                                     follows:      except            for        the
                                     information has been disclosed
                                     publicly, the Company has not
                                     had the disclosed information
                  ShenZhen Tellus    about asset acquisition and
                                                                                       2014-10-17 Long-term   Implementing
                  Holding Co.,Ltd    business development that has
                                     not been disclosed within one
                                     year.   In       the      future,          the
                                     company           shall           timely,
                                     accurately       and        adequately
                                     disclose          the            relevant
                                     information according to the
                                     progress of new business and
                                     the related requirements.

                  Shenzhen Capital   1. The commitments of the 2014-08-22 2015-3-27                           Completed

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Fortune Investment      relevant bodies on the timely
Manaegment Co.,         arrival     of        funds     of     share
Ltd.; Shenzhen Jiahe    subscription: On August 22,
Investment              2014, about the subscription to
Managemetn              Test      Rite        Group’s       private
Enterprise; Shenzhen    placement of shares, Jewelry
Wanban Investment       Industry Funds, SZ Capital,
Management Co.,         Capital           Fortune,             Jiahe
Ltd.; Shenzhen Capital Investment,                         Wanbang
Investment Co., Ltd.;   Investment,           and      Test     Rite
Shenzhen Zhiyuan        Group have respectively issued
Fuhai Jewlry Industry the ―commitment letter‖, and
Investment Enterprise; made        commitments               to the
ShenZhen Tellus         timely arrival of funds of share
Holding Co.,Ltd         subscription.           The          specific
                        contents of Jewelry Industry
                        Funds’ commitment letter are
                        that      after       this     non-public
                        offering         of     shares         being
                        approved          by         the      China
                        Securities                     Regulatory
                        Commission, the subscription
                        funds of Test Rite Group’s
                        non-public offering of shares
                        have all been in place when
                        reporting the issuing scheme,
                        and have been transferred to
                        the special account which was
                        opened        by         the         sponsor
                        institution                      (principal
                        underwriter) for this non-public
                        offering of shares at one time
                        in     accordance              with        the
                        requirements of the payment
                        notice issued by Test Rite
                        Group        and         the         sponsor
                        institution                      (principal
                        underwriter).           The          specific
                        contents of Test Rite Group’s
                        commitment letter are that after
                        this non-public offering of
                        shares being approved by the
                        China Securities Regulatory
                        Commission,             the      Company


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      should supervise              and urge
      Capital         Fortune         (limited
      partnership)          to      put        all
      subscription funds in place
      when reporting the issuing
      scheme,         and     transfer         the
      subscription          funds     to       the
      special account which was
      opened        by       the      sponsor
      institution                   (principal
      underwriter) for this non-public
      offering of shares at one time
      in     accordance            with        the
      requirements of the payment
      notice issued by the Company
      and the sponsor institution
      (principal underwriter).
      2. The commitments to no
      undisclosed related protocols
      of related bodies: On August
      22, 2014, Jewelry Industry
      Funds, Jiahe Investment, and
      Wanbang             Investment           has
      respectively                         made
      commitments that no other
      undisclosed protocols exist in
      Test     Rite       Group      and       its
      controlling shareholder SDG,
      the actual controller Shenzhen
      SASAC and the related parties
      except        for      the     publicly
      disclosed protocols.

      SDG promised to continue to
      support the company to bring
      out    a    long-term          incentive
      program to replace the stock
      ownership incentives during
      the stock reform and complete
SDG                                                  2014-06-26 2016-6-30   Implementing
      the construction of long-term
      incentive        system        on        the
      premise of conforming to the
      relevant laws and regulations
      and supervision requirements.
      At the appointed time, the

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                                         long-term incentive program
                                         shall be implemented after
                                         being    submitted     to        the
                                         company’s general meeting of
                                         stockholders for consideration.

Completed on
                 Y
time(Y/N)



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

Whether the semi-annual financial report had been audited

□Yes √ No

The semi-annual report was not audited


XII. Penalty and rectification

□ Applicable √ Not applicable
The Company had no penalty or rectification in the reporting period.




XIII. Risk disclosure of delisting with laws and rules violated

□ Applicable √ Not applicable
The Company has no delisting risks with laws and rules violated in Period


XIV. Explanation on other significant events

□ Applicable √ Not applicable
The Company had no explanation on other significant events in the reporting period.




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    Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in shares

                                                                                                                               In share

                                     Before change             Increase/decrease in this time (+ , - )               After change

                                                                              Capitalizat
                                                                      Bonus     ion of
                                  Amount       Ratio     New issue                          Other    Subtotal     Amount       Ratio
                                                                      share     public
                                                                               reserve

I. Restricted shares              14,587,056     6.62% 77,000,000                                   77,000,000    91,587,056   30.81%

2. State-owned corporation
                                  14,587,056     6.62% 6,000,000                                     6,000,000    20,587,056    6.93%
shares

3. Other domestic shares                                 71,000,000                                 71,000,000    71,000,000   23.88%

Including: domestic legal
                                                         71,000,000                                 71,000,000    71,000,000   23.88%
person’s shares

II. Un-restricted shares      205,694,544       93.38%                                                           205,694,544   69.19%

1. RMB ordinary shares        179,294,544       81.39%                                                           179,294,544   60.31%

2. Domestically listed
                                  26,400,000    11.98%                                                            26,400,000    8.88%
foreign shares

III. Total shares             220,281,600      100.00% 77,000,000                                   77,000,000 297,281,600 100.00%
Reasons for share changed
√ Applicable □ Not applicable

During the reporting period, the restricted shares has increased by 77 million Shares because the company issued
the non-public offering of shares to two specified objectives to raise funds, respectively issued RMB ordinary
shares of 6 million shares to Shenzhen Special Development Group Co., Ltd., and issued RMB ordinary shares of
71 million shares to Shenzhen Capital Fortune Jewelry Industry Investment Enterprise (limited partnership).


Approval of share changed
√ Applicable □ Not applicable

On April 21, 2014, the company held the nineteenth interim meeting of the seventh board of directors which
deliberated and passed the motions relevant to this offering, such as ―Motion about the program of the company’s
non-public offering of shares‖; on June 3, 2014, the company held the fourth extraordinary general meeting in
2014 which deliberated and passed the motions relevant to this offering, such as ―Motion about the program of the
company’s non-public offering of shares‖. On November 21, 2014, the company’s non-public offering of shares
has been checked and passed by the Issuance Examination Commission of China Securities Regulatory
Commission; on January 29, 2015, the company’s non-public offering of shares has been approved and obtained

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―Reply about the approval of non-public offering of shares of Shenzhen Test Rite (Group) Co. Ltd.‖ (SFC license
[2015] No. 173).
Ownership transfer of share changes
√ Applicable □ Not applicable

On March 18, 2015, the Company has submitted the relevant registration materials of the newly increased 77
million shares of share to China Securities Depository and Clearing Co., Ltd. Shenzhen Branch, the newly
increased share this time has been registered to the account on the trading day (March 26, 2015) just one day
before its offering day (March 27, 2015), and has been officially included in stock transfer books of listed
companies.

Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
√ Applicable □ Not applicable
The new issuing shares have registered to the account dated 26 March 2015, total share captial of the Company up
to 297,281,600 shares from 220,281,600 shares. The EPS of the Period and same period of last year are calculated
based on the weighted average of the total share capital, the basic EPS for first half of the Year of 2015 was RMB
0.0296, diluted EPS was RMB 0.0296, while the above mentioned are counted as RMB 0.0251 and RMB 0.0251
respectively for the same period of last year. Net assets attributable to common shareholders of the Company was
RMB 2.80 while counted as RMB 0.85 for same period of last year.
Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□ Applicable     √ Not applicable
Explanation on changes in aspect of total shares, shareholders structures as well as structure of assets and liability of the Company
√ Applicable □ Not applicable

The changes in the share capital structure of the issue are as follows:

                Type                          Before the issue                            After the issue

                                      Amount (share)           Ratio           Amount (share)             Ratio

I.Restricted            circulation        14,587,056                  6.62%         91,587,056               30.81%
shares

RMB ordinary shares                        14,587,056                  6.62%         91,587,056                30.81%

II.Un-restricted circulation             205,694,544                93.38%          205,694,544               69.19%
          shares

1. RMB ordinary shares                   179,294,544                81.40%          179,294,544                60.31%

2. Domestically listed                     26,400,000               11.98%           26,400,000                 8.88%
foreign shares

                Total                    220,281,600              100.00%           297,281,600              100.00%
During the reporting period, the company’s total raise funds amount of non-public offering of shares has reached
646,800,000 Yuan, and the net amount of raise funds was 633,520,000.00 Yuan after deducting the issuance costs
of 13,280,000.00 Yuan, the company’s share has increased from 220,281,600 shares to 297,281,600 shares, an

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increase of 77,000,000 shares and increased the company’s share by 77,000,000.00 Yuan, and increased the
capital of the company - capital premium of 556,520,000.00 Yuan. On June 30, 2015, the company’s asset-liability
ratio was 26.30%, down 48.61% compared with the asset-liability ratio at the end of 2014 which was 74.91%.
After the non-public offering of shares, the company’s asset size has increased, financial risk has reduced, and
debt paying ability has greatly improved.



II. Number of shares and shares held

                                                                                                                                      In Share

                                                                      Total preference shareholders
Total common shareholders at                                          with voting rights recovered at
                                                             13,306                                                                        0
period-end                                                            end of reporting period (if
                                                                      applicable) (see Note 8)

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

                                                    Total                                                           Number of shares
                                                   common                Amount of Amount of                         pledged/frozen
                                                              Changes in
                                      Proportion shareholders             restricted unrestricted
 Full name of        Nature of
                                       of shares                report
 Shareholders       shareholder                   at the end              common      common
                                         held                                                                   State of
                                                                period                                                       Amount
                                                   of report             shares held shares held                 share
                                                    period

SHENZHEN          State-owned
                                         51.09% 151,870,560                     20,587,056 131,283,504
SDG CO., LTD. corporation

Shenzhen
Capital Fortune
Jewelry
                  Domestic      non
Industry
                  state-owned            23.88%   71,000,000                    71,000,000
Investment
                  corporate
Enterprise
(limited
partnership)

FISRT
SHANGHAI          Foreign
                                          0.56%     1,661,672                                       1,661,672
SECURITIES        corporation
LTD.

China Southern
Fund – ICBC-
Target clinets    Other                   0.48%     1,438,642                                       1,438,642
assets
management

ICBC Pension      Other                   0.47%     1,406,830                                       1,406,830

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plans –ABC

Guoyuan
Securities        Foreign
                                              0.47%      1,399,432                               1,399,432
Brokerage (HK) corporation
Co., Ltd.

GUOTAI
JUNAN
                  Foreign
SECURITIES(                                   0.45%      1,324,709                               1,324,709
                  corporation
HONGKONG)
LIMITED

National
Council for
                  Other                       0.41%      1,233,496                               1,233,496
Social Security
Fund-411

Bank of China
Limited –South
                  Other                       0.34%        999,961                                999,961
Industry Active
Stock Fund

Bank of China
Limited-
Xincheng Cycle Other                          0.34%        997,866                                997,866
Lundong Stock
Fund (LOF)

Strategy investors or        general
                                         Shenzhen Capital Fortune Jewelry Industry Investment Enterprise (limited partnership)holds
corporate      becomes      top     10
                                         71,000,000 RMB ordinary shares of the Company through private placement, the shares
common shareholders due to
                                         subscrib can not be trade or transfer within 36 months since the placement ended (27th March
rights issued (if applicable)(see
                                         2015)
Note 3)

                                         Among the top ten shareholders, there exists no associated relationship between the state-owned
Explanation       on      associated legal person’s shareholders Shenzhen SDG Co., Ltd and other shareholders, and they do not
relationship among the aforesaid belong to the consistent actionist regulated by the Management Measure of Information
shareholders                             Disclosure on Change of Shareholding for Listed Companies. For the other shareholders of
                                         circulation share, the Company is unknown whether they belong to the consistent actionist.

                                  Particular about top ten common shareholders with un-restrict shares held

                                                 Amount of unrestricted common shares held at                    Type of shares
          Shareholders’ name
                                                                 period-end                                   Type           Amount

                                                                                                     RMB ordinary
SHENZHEN SDG CO., LTD.                                                                131,283,504                             131,283,504
                                                                                                     shares

FISRT SHANGHAI SECURITIES                                                                            Domestically
                                                                                         1,661,672                                1,661,672
LTD.                                                                                                 listed foreign


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                                                                                                  shares

China Southern Fund – ICBC-                                                                      RMB ordinary
                                                                                      1,438,642                        1,438,642
Target clinets assets management                                                                  shares

                                                                                                  RMB ordinary
ICBC Pension plans –ABC                                                              1,406,830                        1,406,830
                                                                                                  shares

                                                                                                  Domestically
Guoyuan Securities Brokerage (HK)
                                                                                      1,399,432 listed foreign         1,399,432
Co., Ltd.
                                                                                                  shares

GUOTAI JUNAN                                                                                      Domestically
SECURITIES(HONGKONG)                                                                  1,324,709 listed foreign         1,324,709
LIMITED                                                                                           shares

National Council for Social Security                                                              RMB ordinary
                                                                                      1,233,496                        1,233,496
Fund-411                                                                                          shares

Bank of China Limited –South                                                                     RMB ordinary
                                                                                       999,961                           999,961
Industry Active Stock Fund                                                                        shares

Bank of China Limited- Xincheng                                                                   RMB ordinary
                                                                                       997,866                           997,866
Cycle Lundong Stock Fund (LOF)                                                                    shares

Bank of China Limited- Jinying                                                                    RMB ordinary
                                                                                       971,760                           971,760
Technology Innovation Stock Fund                                                                  shares

Expiation on associated relationship Among the top ten shareholders, there exists no associated relationship between the
or consistent actors within the top    state-owned legal person’s shareholders Shenzhen SDG Co., Ltd and other shareholders, and
10 un-restrict common shareholders they do not belong to the consistent actionist regulated by the Management Measure of
and between top 10 un-restrict         Information Disclosure on Change of Shareholding for Listed Companies. For the other
common shareholders and top 10         shareholders of circulation share, the Company is unknown whether they belong to the
common shareholders                    consistent actionist.

Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement
dealing in reporting period
□ Yes √ No
The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy-back
agreement dealing in reporting period.


III. Changes of controlling shareholders or actual controller

Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
Changes of controlling shareholders had no change in reporting period.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
Changes of actual controller in reporting period had no change in reporting period.

IV. Share holding increasing plan proposed or implemented in reporting period from
                                                                  39
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shareholder of the Company and its concerted action person

□ Applicable   √Not applicable
As far as the Company know, there are no share holding increasing plan proposed or implemented in Period from shareholder of the
Company and its concerted action person




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                                      Section VII. Preferred Stock

□ Applicable   √ Not applicable
The Company had no preferred stock in the reporting.




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                 Section VIII. Directors, Supervisors and Senior Executives

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

□ Applicable    √ Not applicable
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report
2014.


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

√ Applicable □ Not applicable

        Name              Title            Type                 Date                                 Reason

Lv Hang            Chairman          Be elected        2015-05-20              General election of the Board

Ding Hui           Director, GM      Be elected        2015-05-20              General election of the Board

Yang Jianping      Director, CFO     Be elected        2015-05-20              General election of the Board

Yu Lei             Director          Be elected        2015-05-20              General election of the Board

Zhang Quanxun Director               Be elected        2015-05-20              General election of the Board

Chen Gengsen       Director          Be elected        2015-05-20              General election of the Board

                   Independent
Ji Huibin                            Be elected        2015-05-20              General election of the Board
                   Director

                   Independent
Wei Shaohui                          Be elected        2015-05-20              General election of the Board
                   Director

                   Independent
Li Xiangjun                          Be elected        2015-05-20              General election of the Board
                   Director

                   Chairman of
Chen Hua           Supervisory       Be elected        2015-05-20              General election of the Supervisory
                   Committee

Li Miao            Supervisor        Be elected        2015-05-20              General election of the Supervisory

Fu Chunlong        Supervisor        Be elected        2015-05-20              General election of the Supervisory

Ke Wensheng        Supervisor        Be elected        2015-05-20              General election of the Supervisory

Li Xiaohong        Supervisor        Be elected        2015-05-20              General election of the Supervisory

Ren Yongjian       Deputy GM         Engagement        2015-05-20              General election of the Board

Feng Yu            Deputy GM         Engagement        2015-05-20              General election of the Board

Yao Xiongbin       Deputy GM         Engagement        2015-05-20              General election of the Board

Li Ming            Deputy GM         Engagement        2015-05-20              General election of the Board

                   Chairman of       Leave the post
Guan Zhicai                                            2015-05-20              General election of the Board
                   Supervisory       while office


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                Committee       terms expired

                                Leave the post
Wang Guangye    Supervisor      while office     2015-05-20        General election of the Board
                                terms expired

                                Leave the post
Li Miao         Director        while office     2015-05-20        General election of the Board
                                terms expired

                                Leave the post
Jiang Hongjun   Director        while office     2015-05-20        General election of the Board
                                terms expired

                                Leave the post
                Independent
Liu Hongling                    while office     2015-05-20        General election of the Board
                Director
                                terms expired

Luo Bojun       Director, GM    Office leaving   2015-04-01        Due to the work change

Fu Bin          Director, CFO   Office leaving   2015-04-01        Due to the work change




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                                         Section IX. Financial Report

   I. Audit reports

   Whether the semi-annual report was audited or not
   □ Yes √ No
   The financial report of this semi-annual report was unaudited


   II. Financial statements

   Units in Notes of Financial Statements is RMB


   1. Consolidated Balance Sheet

   Prepared by ShenZhen Tellus Holding Co.,Ltd
                                                                                                                  In RMB

                    Item                               Closing balance                         Opening balance

Current assets:

     Monetary funds                                                   131,254,844.47                         80,045,669.65

     Settlement provisions

     Capital lent

     Financial liability measured by fair
value and with variation reckoned into
current gains/losses

     Derivative financial liability

     Notes receivable

     Accounts receivable                                                  4,102,502.80                           1,373,257.89

     Accounts paid in advance                                            10,169,681.79                           6,981,402.87

     Insurance receivable

     Reinsurance receivables
     Contract reserve of reinsurance
receivable
     Interest receivable

     Dividend receivable

     Other receivables                                                    8,202,352.43                           7,904,999.44

     Purchase restituted finance asset

     Inventories                                                          8,390,167.15                       48,209,026.18

     Divided into assets held for sale

     Non-current asset due within one


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year
       Other current assets                            275,145,955.22                          8,968,278.77

Total current assets                                   437,265,503.86                        153,482,634.80

Non-current assets:

       Loans and payments on behalf

       Finance asset available for sales                10,478,985.77                         10,478,985.77

       Held-to-maturity investment                        100,000.00                            100,000.00

       Long-term account receivable

       Long-term equity investment                     211,739,998.37                        211,270,265.80

       Investment property                              84,449,111.32                         85,083,745.72

       Fixed assets                                    139,731,088.46                        142,849,121.72

       Construction in progress                        180,350,822.65                        122,551,469.97

       Engineering material

       Disposal of fixed asset

       Productive biological asset

       Oil and gas asset

       Intangible assets                                53,320,753.67                         53,924,233.96
    Expense           on   Research       and
Development
       Goodwill
    Long-term          expenses      to    be
                                                          892,758.22                            905,871.01
apportioned
       Deferred income tax asset                        25,645,790.71                         25,678,449.05

       Other non-current asset

Total non-current asset                                706,709,309.17                        652,842,143.00

Total assets                                         1,143,974,813.03                        806,324,777.80

Current liabilities:

       Short-term loans                                 20,702,909.00                         74,719,672.00

       Loan from central bank
    Absorbing deposit and interbank
deposit
       Capital borrowed

       Financial liability measured by fair
value and with variation reckoned into
current gains/losses

       Derivative financial liability

       Notes payable

       Accounts payable                                 21,606,693.00                         22,340,922.90

       Accounts received in advance                      4,742,719.34                          9,979,166.89



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     Selling         financial    asset    of
repurchase
   Commission                charge       and
commission payable
       Wage payable                                     14,811,315.29                         17,164,185.03

       Taxes payable                                     9,330,311.03                          9,055,093.27

       Interest payable

       Dividend payable

       Other accounts payable                          119,927,946.68                        114,533,081.65

       Reinsurance payables

       Insurance contract reserve

       Security trading of agency

       Security sales of agency

       Divided into liability held for sale
       Non-current liabilities due within 1
                                                        73,000,000.00                        120,700,000.00
year
Other current liabilities

Total current liabilities                              264,121,894.34                        368,492,121.74

Non-current liabilities:

       Long-term loans                                                                       178,597,550.55

       Bonds payable

         Including: preferred stock

                    Perpetual capital
securities

       Long-term account payable                        13,657,490.94                         13,657,490.94

       Long-term wages payable                           9,783,743.11                          9,953,557.75

       Special accounts payable

       Projected liabilities

       Deferred income

       Deferred income tax liabilities                    600,773.43                            723,459.18

       Other non-current liabilities                    12,651,834.58                         32,570,237.55

Total non-current liabilities                           36,693,842.06                        235,502,295.97

Total liabilities                                      300,815,736.40                        603,994,417.71

Owner’s equity:

       Share capital                                   297,281,600.00                        220,281,600.00

       Other equity instrument

         Including: preferred stock

                    Perpetual capital
securities


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     Capital public reserve                                         564,192,605.51                          7,672,605.51

     Less: Inventory shares

     Other comprehensive income

     Reasonable reserve

     Surplus public reserve                                           2,952,586.32                          2,952,586.32

     Provision of general risk

     Retained profit                                                -31,376,173.01                        -39,026,529.03
Total owner’s equity attributable to
                                                                    833,050,618.82                        191,880,262.80
parent company
Minority interests                                                   10,108,457.81                         10,450,097.29

Total owner’s equity                                               843,159,076.63                        202,330,360.09

Total liabilities and owner’s equity                             1,143,974,813.03                        806,324,777.80


   Legal Representative: Lv Hang                                  Person in charge of Accounting Works:Yang Jianping
   Person in charge of Accounting Institution: Ke Wensheng


   2. Balance Sheet of Parent Company

                                                                                                             In RMB

                        Item                            Closing balance                         Opening balance

    Current assets:

         Monetary funds                                                   33,500,490.83                       26,441,746.73

         Financial liability measured by fair
    value and with variation reckoned into
    current gains/losses

         Derivative financial liability

         Notes receivable
         Accounts receivable

         Account paid in advance                                            266,250.00                             106,810.00

         Interest receivable

         Dividends receivable

         Other receivables                                                95,972,167.53                      110,350,188.00

         Inventories

         Divided into assets held for sale
         Non-current assets maturing within
    one year

         Other current assets                                          195,000,000.00                             1,350,000.00

    Total current assets                                               324,738,908.36                        138,248,744.73

    Non-current assets:


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       Available-for-sale financial assets               10,176,617.20                         10,176,617.20

       Held-to-maturity investments

       Long-term receivables

       Long-term equity investments                     686,592,480.67                        425,961,150.29

       Investment property                               54,354,654.23                         54,186,250.01

       Fixed assets                                      17,531,238.88                         17,961,888.31

       Construction in progress                            251,308.70                            251,308.70

       Project materials

       Disposal of fixed assets

       Productive biological assets

       Oil and natural gas assets

       Intangible assets                                   242,680.79                            274,939.25

       Research and development costs

       Goodwill

       Long-term deferred expenses                         271,845.09                            346,559.91

       Deferred income tax assets                        13,966,667.34                         13,986,138.44

       Other non-current assets

Total non-current assets                                783,387,492.90                        523,144,852.11

Total assets                                          1,108,126,401.26                        661,393,596.84

Current liabilities:

       Short-term borrowings                              9,544,160.00                         19,544,160.00

       Financial liability measured by fair
value and with variation reckoned into
current gains/losses

       Derivative financial liability

       Notes payable

       Accounts payable

       Accounts received in advance

       Wage payable                                       6,280,000.00                          6,918,478.90

       Taxes payable                                       604,470.42                            430,065.27

       Interest payable

       Dividend payable
       Other accounts payable                           259,016,171.79                        260,117,846.49

       Divided into liability held for sale

       Non-current liabilities due within 1
                                                         73,000,000.00                        120,700,000.00
year



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     Other current liabilities

Total current liabilities                            348,444,802.21                           407,710,550.66

Non-current liabilities:

     Long-term loans                                                                          132,300,000.00

     Bonds payable

        Including: preferred stock

                    Perpetual capital
securities

     Long-term account payable

     Long-term wages payable                             3,265,868.41                            3,343,417.98

     Special accounts payable

     Projected liabilities

     Deferred income

     Deferred income tax liabilities

     Other non-current liabilities

Total non-current liabilities                            3,265,868.41                         135,643,417.98

Total liabilities                                    351,710,670.62                           543,353,968.64

Owners’ equity:

     Share capita                                    297,281,600.00                           220,281,600.00

     Other equity instrument

        Including: preferred stock

                    Perpetual capital
securities

     Capital public reserve                          560,999,182.23                              4,479,182.23

     Less: Inventory shares
     Other comprehensive income

     Reasonable reserve

     Surplus reserve                                     2,952,586.32                            2,952,586.32

     Retained profit                                -104,817,637.91                           -109,673,740.35

Total owner’s equity                                756,415,730.64                           118,039,628.20

Total liabilities and owner’s equity              1,108,126,401.26                           661,393,596.84


3. Consolidated Profit Statement

                                                                                              In RMB

                       Item             Current Period                          Last Period

I. Total operating income                            158,491,781.84                           228,692,541.86

Including: Operating income                          158,491,781.84                           228,692,541.86


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         Interest income

         Insurance gained

         Commission charge and commission
income

II. Total operating cost                                 150,618,182.26                        231,228,127.35

Including: Operating cost                                116,939,503.91                        195,298,141.59

         Interest expense

         Commission charge and commission
expense

         Cash surrender value

         Net amount of expense of
compensation

         Net amount of withdrawal of
insurance contract reserve

         Bonus expense of guarantee slip

         Reinsurance expense

         Operating tax and extras                          2,847,665.18                          2,463,848.35

         Sales expenses                                    9,520,419.70                          9,182,022.30

         Administration expenses                          16,780,916.30                         15,727,273.24

         Financial expenses                                4,529,677.17                          8,521,242.69

         Losses of devaluation of asset                                                             35,599.18

         Add: Changing income of fair
value(Loss is listed with ―-‖)

         Investment income (Loss is listed
                                                             624,390.10                          7,841,475.98
with ―-‖)

         Including: Investment income on
                                                             469,732.57                          7,841,475.98
affiliated company and joint venture

         Exchange income (Loss is listed
with ―-‖)

III. Operating profit (Loss is listed with
                                                           8,497,989.68                          5,305,890.49
―-‖)

         Add: Non-operating income                            48,762.10                           225,251.91

              Including: Disposal gains of
                                                              17,094.02                           172,812.80
non-current asset

         Less: Non-operating expense                          37,317.93                              2,633.01

              Including: Disposal loss of
                                                              37,300.18                                  0.00
non-current asset

IV. Total Profit (Loss is listed with ―-‖)               8,509,433.85                          5,528,509.39

         Less: Income tax expense                          1,200,717.31                           717,262.39


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V. Net profit (Net loss is listed with ―-‖)               7,308,716.54                          4,811,247.00

    Net profit attributable to owner’s of
                                                            7,650,356.02                          5,521,161.43
parent company

  Minority shareholders’ gains and
                                                             -341,639.48                           -709,914.43
losses

VI. Net after-tax of other comprehensive
                                                                                                    -66,261.00
income

  Net after-tax of other comprehensive
income attributable to owners of parent                                                             -66,261.00
company

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

              1. Changes as a result of
re-measurement of net defined benefit
plan liability or asset

              2. Share of the other
comprehensive income of the investee
accounted for using equity method which
will not be reclassified subsequently to
profit and loss
     (II) Other comprehensive income
items which will be reclassified                                                                    -66,261.00
subsequently to profit or loss

              1. Share of the other
comprehensive income of the investee
accounted for using equity method which
will be reclassified subsequently to profit
or loss

              2. Gains or losses arising
from changes in fair value of                                                                       -66,261.00
available-for-sale financial assets

              3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale financial
assets

              4. The effect hedging portion
of gains or losses arising from cash flow
hedging instruments

              5. Translation differences
arising on translation of foreign currency
financial statements



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                                                                 深圳市特力(集团)股份有限公司 2015 年半年度报告全文


                6. Other

   Net after-tax of other comprehensive
income attributable to minority
shareholders

VII. Total comprehensive income                                           7,308,716.54                                4,744,986.00

      Total comprehensive income
                                                                          7,650,356.02                                5,454,900.43
attributable to owners of parent Company

      Total comprehensive income
                                                                           -341,639.48                                 -709,914.43
attributable to minority shareholders

VIII. Earnings per share:

       (i) Basic earnings per share                                             0.0296                                        0.0251

       (ii) Diluted earnings per share                                          0.0296                                        0.0251

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


Legal Representative: Lv Hang                                    Person in charge of Accounting Works:Yang Jianping
Person in charge of Accounting Institution: Ke Wensheng


4. Profit Statement of Parent Company

                                                                                                                     In RMB

                     Item                               Current Period                                 Last Period

I. Operating income                                                      17,058,260.06                                9,684,900.12

      Less: Operating cost                                                1,860,594.49                                1,820,193.72

              Operating tax and extras                                     955,262.54                                   542,354.41

              Sales expenses

              Administration expenses                                     6,617,979.97                                6,215,317.95

              Financial expenses                                          3,534,837.43                                4,923,931.67

              Losses of devaluation of asset

      Add: Changing income of fair
value(Loss is listed with ―-‖)

          Investment income (Loss is
                                                                           785,987.91                                 6,741,386.38
listed with ―-‖)

          Including: Investment income
                                                                           631,330.38                                 6,741,386.38
on affiliated company and joint venture

II. Operating profit (Loss is listed
                                                                          4,875,573.54                                2,924,488.75
with ―-‖)

   Add: Non-operating income                                                                                             28,512.68

              Including: Disposal gains of
non-current asset


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                                                 深圳市特力(集团)股份有限公司 2015 年半年度报告全文


         Less: Non-operating expense

             Including: Disposal loss of
non-current asset

III. Total Profit (Loss is listed with
                                                        4,875,573.54                          2,953,001.43
―-‖)

         Less: Income tax expense                          19,471.10                            19,471.10

IV. Net profit (Net loss is listed with
                                                        4,856,102.44                          2,933,530.33
―-‖)

V. Net after-tax of other comprehensive
                                                                                                -66,261.00
income

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

               1. Changes as a result of
re-measurement of net defined benefit
plan liability or asset

               2. Share of the other
comprehensive income of the investee
accounted for using equity method
which will not be reclassified
subsequently to profit and loss

          (II) Other comprehensive income
items which will be reclassified                                                                -66,261.00
subsequently to profit or loss

               1. Share of the other
comprehensive income of the investee
accounted for using equity method
which will be reclassified subsequently
to profit or loss

               2. Gains or losses arising
from changes in fair value of                                                                   -66,261.00
available-for-sale financial assets

               3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale
financial assets

               4. The effect hedging
portion of gains or losses arising from
cash flow hedging instruments

               5. Translation differences
arising on translation of foreign
currency financial statements


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              6. Other
VI. Total comprehensive income                               4,856,102.44                           2,867,269.33

VII. Earnings per share:

        (i) Basic earnings per share                              0.0188                                   0.0133

        (ii) Diluted earnings per share                           0.0188                                   0.0133


5. Consolidated Cash Flow Statement

                                                                                                  In RMB

                   Item                    Current Period                           Last Period

I. Cash flows arising from operating
activities:

       Cash received from selling
commodities and providing labor                          166,412,700.80                           253,756,652.24
services

       Net increase of customer deposit
and interbank deposit

       Net increase of loan from central
bank

       Net increase of capital borrowed
from other financial institution

       Cash received from original
insurance contract fee

  Net cash received from reinsurance
business

    Net increase of insured savings and
investment

       Net increase of amount from
disposal financial assets that measured
by fair value and with variation
reckoned into current gains/losses

       Cash received from interest,
commission charge and commission
       Net increase of capital borrowed

       Net increase of returned business
capital

       Write-back of tax received

       Other cash received concerning
                                                            21,091,520.19                          25,759,770.67
operating activities

Subtotal of cash inflow arising from
                                                         187,504,220.99                           279,516,422.91
operating activities


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                                                    深圳市特力(集团)股份有限公司 2015 年半年度报告全文


       Cash     paid      for    purchasing
commodities         and    receiving   labor              70,874,644.66                        211,397,194.39
service

       Net increase of customer loans and
advances

       Net increase of deposits in central
bank and interbank

       Cash paid for original insurance
contract compensation

       Cash paid for interest, commission
charge and commission

       Cash paid for bonus of guarantee
slip

       Cash paid to/for staff and workers                 25,426,536.32                         25,369,986.36

       Taxes paid                                          9,842,550.96                         16,810,604.28

       Other    cash      paid   concerning
                                                          47,497,606.35                         30,123,949.84
operating activities

Subtotal of cash outflow arising from
                                                         153,641,338.29                        283,701,734.87
operating activities

Net cash flows arising from operating
                                                          33,862,882.70                         -4,185,311.96
activities

II. Cash flows arising from investing
activities:

       Cash received from recovering
                                                          80,000,000.00
investment

       Cash received from investment
                                                            154,657.53
income

       Net cash received from disposal of
fixed, intangible and other long-term                       191,300.00                              40,740.00
assets

       Net cash received from disposal of
subsidiaries and other units

       Other cash received concerning
investing activities

Subtotal of cash inflow from investing
                                                          80,345,957.53                             40,740.00
activities

       Cash paid for purchasing fixed,
                                                          58,099,932.49                         70,244,698.22
intangible and other long-term assets

       Cash paid for investment                          355,000,000.00

       Net increase of mortgaged loans

       Net cash received from


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                                                    深圳市特力(集团)股份有限公司 2015 年半年度报告全文


subsidiaries and other units obtained

     Other      cash   paid     concerning
investing activities

Subtotal of cash outflow from investing
                                                         413,099,932.49                         70,244,698.22
activities

Net cash flows arising from investing
                                                        -332,753,974.96                        -70,203,958.22
activities

III. Cash flows arising from financing
activities

     Cash received from absorbing
                                                         635,500,000.00
investment

     Including: Cash received from
absorbing       minority      shareholders’
investment by subsidiaries

     Cash received from loans                             24,698,215.03                        226,000,000.00

     Cash received from issuing bonds

     Other cash received concerning
financing activities

Subtotal of cash inflow from financing
                                                         660,198,215.03                        226,000,000.00
activities

     Cash paid for settling debts                        304,995,765.58                        154,000,000.00

     Cash paid for dividend and profit
                                                           4,665,177.61                          4,916,300.92
distributing or interest paying

     Including: Dividend and profit of
minority shareholder paid by
subsidiaries

     Other      cash   paid     concerning
                                                            437,000.00
financing activities

Subtotal of cash outflow from financing
                                                         310,097,943.19                        158,916,300.92
activities

Net cash flows arising from financing
                                                         350,100,271.84                         67,083,699.08
activities

IV. Influence on cash and cash
equivalents due to fluctuation in                                 -4.76                                  703.07
exchange rate

V. Net increase of cash and cash
                                                          51,209,174.82                         -7,304,868.03
equivalents

     Add: Balance of cash and cash
                                                          80,045,669.65                         63,166,448.10
equivalents at the period -begin

VI. Balance of cash and cash
                                                         131,254,844.47                         55,861,580.07
equivalents at the period -end



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6. Cash Flow Statement of Parent Company

                                                                                                   In RMB

                  Item                      Current Period                           Last Period

I. Cash flows arising from operating
activities:

     Cash received from selling
commodities and providing labor                              18,015,142.44                          10,855,355.64
services

     Write-back of tax received

     Other cash received concerning
                                                             50,522,932.88                         137,551,446.17
operating activities

Subtotal of cash inflow arising from
                                                             68,538,075.32                         148,406,801.81
operating activities

     Cash paid for purchasing
commodities and receiving labor
service

     Cash paid to/for staff and workers                       7,125,889.43                           5,844,213.54

     Taxes paid                                               1,871,082.86                           1,314,378.34

     Other    cash     paid    concerning
                                                             38,586,106.40                         210,948,195.60
operating activities

Subtotal of cash outflow arising from
                                                             47,583,078.69                         218,106,787.48
operating activities

Net cash flows arising from operating
                                                             20,954,996.63                         -69,699,985.67
activities

II. Cash flows arising from investing
activities:

     Cash received from recovering
                                                             80,000,000.00
investment

     Cash received from investment
                                                               154,657.53
income

     Net cash received from disposal of
fixed, intangible and other long-term                                                                   39,890.00
assets

     Net cash received from disposal of
subsidiaries and other units

     Other cash received concerning
investing activities

Subtotal of cash inflow from investing
                                                             80,154,657.53                              39,890.00
activities

     Cash paid for purchasing fixed,                           483,189.15                             539,007.00



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                                                 深圳市特力(集团)股份有限公司 2015 年半年度报告全文


intangible and other long-term assets

     Cash paid for investment                         535,000,000.00

     Net      cash     received     from
subsidiaries and other units

     Other      cash   paid    concerning
investing activities

Subtotal of cash outflow from investing
                                                      535,483,189.15                           539,007.00
activities

Net cash flows arising from investing
                                                     -455,328,531.62                           -499,117.00
activities

III. Cash flows arising from financing
activities

     Cash received from absorbing
                                                      635,500,000.00
investment

     Cash received from loans                                                               175,000,000.00

     Cash received from issuing bonds

     Other cash received concerning
financing activities

Subtotal of cash inflow from financing
                                                      635,500,000.00                        175,000,000.00
activities

     Cash paid for settling debts                     190,000,000.00                        118,000,000.00

     Cash paid for dividend and profit
                                                        3,630,720.91                          4,439,406.07
distributing or interest paying

     Other      cash   paid    concerning
                                                         437,000.00
financing activities

Subtotal of cash outflow from financing
                                                      194,067,720.91                        122,439,406.07
activities

Net cash flows arising from financing
                                                      441,432,279.09                         52,560,593.93
activities

IV. Influence on cash and cash
equivalents due to fluctuation in
exchange rate

V. Net increase of cash and cash
                                                        7,058,744.10                        -17,638,508.74
equivalents

     Add: Balance of cash and cash
                                                       26,441,746.73                         30,209,143.04
equivalents at the period -begin

VI. Balance of cash and cash
                                                       33,500,490.83                         12,570,634.30
equivalents at the period -end




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

This Period
                                                                                                                  In RMB

                                                                        This Period

                                             Owners’ equity attributable to parent company
                                     Other
                                equity instrument
       Item                                                Less:      Other                   Provisio         Minorit Total
                                      Perpet                                  Reason
                       Share                       Capital Invento    compre          Surplus n     of Retaine y         owners’
                                      ual                                     able
                       capital Prefer capita       reserve ry         hensive         reserve general d profit interests equity
                               red           Other                            reserve
                                      l                    shares     income                  risk
                               stock
                                      securi
                                      ties
                       220,28
I. Balance at the                                   7,672,6                             2,952,5         -39,026, 10,450, 202,330
                       1,600.
end of the last year                                  05.51                               86.32          529.03 097.29 ,360.09
                           00
             Add:
Changes         of
accounting policy
             Error
correction of the
last period

 Enterprise
 combine under
 the same control
              Other

II. Balance at the 220,28
                                                    7,672,6                             2,952,5         -39,026, 10,450, 202,330
beginning of this 1,600.
                                                      05.51                               86.32          529.03 097.29 ,360.09
year                   00
III.       Increase/ 77,000
Decrease in this                                    556,520                                              7,650,3 -341,63 640,828
                       ,000.0
year (Decrease is                                   ,000.00                                               56.02     9.48 ,716.54
                            0
listed with ―-‖)
  (i)            Total
                                                                                                         7,650,3 -341,63 7,308,7
comprehensive
                                                                                                          56.02     9.48     16.54
income
 (ii)     Owners’ 77,000
                                                    556,520                                                                633,520
devoted        and ,000.0
                                                    ,000.00                                                                ,000.00
decreased capital       0

1.Common shares 77,000
                                                    556,520                                                                633,520
invested     by ,000.0
                                                    ,000.00                                                                ,000.00
shareholders         0
2. Capital invested
by holders of other
equity instruments



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3.        Amount
reckoned      into
owners equity with
share-based
payment
4. Other
(III)         Profit
distribution
1. Withdrawal of
surplus reserves
2. Withdrawal of
general         risk
provisions
3. Distribution for
owners           (or
shareholders)
4. Other
(IV)       Carrying
forward internal
owners’ equity
1. Capital reserves
conversed        to
capital      (share
capital)
2. Surplus reserves
conversed        to
capital      (share
capital)
3. Remedying loss
with        surplus
reserve
4. Other
(V)     Reasonable
reserve
1. Withdrawal in
the report period

2. Usage in the
report period

(VI)Others

IV. Balance at the 297,28
                            564,192                           2,952,5        -31,376, 10,108, 843,159
end of the report 1,600.
                            ,605.51                             86.32         173.01 457.81 ,076.63
period                 00




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Last Period
                                                                                                                      In RMB

                                                                            Last Period

                                               Owners’ equity attributable to the parent Company
                                       Other
                                 equity instrument                                                                 Minorit
        Item                                                 Less:        Other                   Provisio                  Total
                                        Perpet                                    Reason                           y
                         Share
                                        ual          Capital Invento      compre          Surplus n     of Retaine interest owners’
                                                                                  able
                         capital Prefer capita       reserve ry           hensive         reserve general d profit s        equity
                                 red           Other                              reserve
                                        l                    shares       income                  risk
                                 stock
                                        securi
                                        ties
                     220,28
I. Balance at the                                       8,508,5                             2,952,5         -49,371, 12,229, 194,600
                     1,600.
end of the last year                                      31.18                               86.32          746.70 106.80 ,077.60
                         00
             Add:
Changes         of
accounting policy
             Error
correction of the
last period

Enterprise
combine under the
same control
           Other

II. Balance at the 220,28
                                                        8,508,5                             2,952,5         -49,371, 12,229, 194,600
beginning of this 1,600.
                                                          31.18                               86.32          746.70 106.80 ,077.60
year                   00
III.       Increase/
Decrease in this                                       -66,261.                                             5,521,1 -709,91 4,744,9
year (Decrease is                                            00                                               61.43    4.43    86.00
listed with ―-‖)
  (i)            Total
                                                       -66,261.                                             5,521,1 -709,91 4,744,9
comprehensive
                                                             00                                               61.43    4.43    86.00
income
  (ii)      Owners’
devoted            and
decreased capital
1.Common shares
invested            by
shareholders
2. Capital invested
by holders of other
equity instruments
3.        Amount
reckoned      into
owners equity with
share-based


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payment
4 Other
(III)         Profit
distribution
1. Withdrawal of
surplus reserves
2. Withdrawal of
general         risk
provisions
3. Distribution for
owners           (or
shareholders)
4. Other
(IV)      Carrying
forward internal
owners’ equity
1. Capital reserves
conversed        to
capital      (share
capital)
2. Surplus reserves
conversed        to
capital      (share
capital)
3. Remedying loss
with        surplus
reserve
4. Other

(V) Reasonable
reserve

1. Withdrawal in
the report period

2. Usage in the
report period

(VI)Others

IV. Balance at the 220,28
                                      8,442,2                           2,952,5        -43,850, 11,519, 199,345
end of the report 1,600.
                                        70.18                             86.32         585.27 192.37 ,063.60
period                 00




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

This Period
                                                                                                In RMB


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                                                                       This Period
                                        Other
                                   equity instrument
                                                                                Other                                        Total
       Item                             Perpetu                       Less:
                       Share                            Capital                 comprehe Reasonab Surplus       Retaine
                                                                      Inventory                                            owners’
                       capital Preferre al              reserve                 nsive    le reserve reserve     d profit
                                        capital Other                 shares                                                equity
                               d stock                                          income
                                        securiti
                                        es
                                                                                                                -109,67
I. Balance at the 220,281,                              4,479,182                                   2,952,586              118,039,6
                                                                                                                3,740.3
end of the last year 600.00                                     .23                                       .32                 28.20
                                                                                                                       5
     Add: Changes
of     accounting
policy
       Error
correction of the
last period

           Other

II. Balance at the                                                                                              -109,67
                   220,281,                             4,479,182                                   2,952,586              118,039,6
beginning of this                                                                                               3,740.3
                    600.00                                      .23                                       .32                 28.20
year                                                                                                                   5
III.       Increase/
Decrease in this 77,000,0                               556,520,0                                               4,856,1 638,376,1
year (Decrease is      00.00                                00.00                                                 02.44       02.44
listed with ―-‖)
  (i)            Total
                                                                                                                4,856,1 4,856,102
comprehensive
                                                                                                                  02.44          .44
income
 (ii)      Owners’
                    77,000,0                            556,520,0                                                          633,520,0
devoted         and
                       00.00                                00.00                                                             00.00
decreased capital
1.Common shares
                    77,000,0                            556,520,0                                                          633,520,0
invested         by
                       00.00                                00.00                                                             00.00
shareholders
2. Capital invested
by holders of other
equity instruments
3.          Amount
reckoned       into
owners equity with
share-based
payment
4. Other
(III)         Profit
distribution
1. Withdrawal of
surplus reserves
2. Distribution for



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owners (or
shareholders)

3. Other
(IV)       Carrying
forward internal
owners’ equity
1. Capital reserves
conversed        to
capital      (share
capital)
2. Surplus reserves
conversed        to
capital      (share
capital)
3. Remedying loss
with        surplus
reserve
4. Other
(V)     Reasonable
reserve
1. Withdrawal in
the report period

2. Usage in the
report period

(VI)Others

IV. Balance at the                                                                                             -104,81
                   297,281,                            560,999,1                                   2,952,586              756,415,7
end of the report                                                                                              7,637.9
                    600.00                                 82.23                                         .32                 30.64
period                                                                                                                1

Last period
                                                                                                                  In RMB

                                                                      Last period
                                       Other
                                  equity instrument
                                                                               Other                                        Total
       Item                            Perpetu                       Less:
                      Share                            Capital                 comprehe Reasonab Surplus       Retaine
                                                                     Inventory                                            owners’
                      capital Preferre al              reserve                 nsive    le reserve reserve     d profit
                                       capital Other                 shares                                                equity
                              d stock                                          income
                                       securiti
                                       es
                                                                                                               -109,76
I. Balance at the 220,281,                             5,315,107                                   2,952,586              118,784,7
                                                                                                               4,586.3
end of the last year 600.00                                    .90                                       .32                 07.92
                                                                                                                      0
     Add: Changes
of     accounting
policy
       Error
correction of the



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last period

           Other

II. Balance at the                                                              -109,76
                   220,281,   5,315,107                             2,952,586             118,784,7
beginning of this                                                               4,586.3
                    600.00           .90                                  .32                07.92
year                                                                                 0
III.       Increase/
Decrease in this              -66,261.0                                         2,933,5 2,867,269
year (Decrease is                     0                                          30.33          .33
listed with ―-‖)
  (i)            Total
                              -66,261.0                                         2,933,5 2,867,269
comprehensive
                                      0                                          30.33          .33
income
  (ii)      Owners’
devoted            and
decreased capital
1.Common shares
invested             by
shareholders
2. Capital invested
by holders of other
equity instruments
3.          Amount
reckoned           into
owners equity with
share-based
payment
4. Other
(III)         Profit
distribution
1. Withdrawal of
surplus reserves
2. Distribution for
owners (or
shareholders)

3. Other
(IV)       Carrying
forward internal
owners’ equity
1. Capital reserves
conversed        to
capital      (share
capital)
2. Surplus reserves
conversed        to
capital      (share
capital)
3. Remedying loss
with        surplus
reserve



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4. Other
(V)     Reasonable
reserve
1. Withdrawal in
the report period

2. Usage in the
report period

(VI)Others

IV. Balance at the                                                              -106,83
                   220,281,   5,248,846                             2,952,586             121,651,9
end of the report                                                               1,055.9
                    600.00           .90                                  .32                77.25
period                                                                               7




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                                  Shenzhen Tellus Holding Co., Ltd.

                     Notes to Financial Statements in semi-annual 2015
                                (The unit is RMB except special explanation)
I. Company profiles

1. Company profile
Chinese name of the Company: 深圳市特力(集团)股份有限公司

Foreign name of the Company: ShenZhen Tellus Holding Co.,Ltd
Registered address of the Company: 3/F, Tellus Building, Shuibei 2nd Road, Luohu District, Shenzhen, Guangdong Province.
Office address of the Company: 15/F, Zhonghe Building, Shennan Middle Road, Futian District, Shenzhen
Stock exchange for listing: Shenzhen Stock Exchange
Short form of the stock and Stock code: Tellus-A(000025),Tellus-B(200025)
Registered capital: RMB 297,281,600
Legal representative: Lv Hang
Registration number of legal person business license: 440301103017750
2. Business nature, operating scope and major products and services of the Company
Business nature: wholesale industry of energy, materials and machinery electronic equipments.
Operating scope: mainly engaged in provision of auto related comprehensive services, including sales and maintenance of
autos, production of detection equipments, and property leasing and management.
Major products and services: sales, detection and maintenance of autos and components, property leasing and service.
3. The history of the Company
Shenzhen Testrite Group Co., Ltd. (hereinafter referred to as the Company), previously known as Shenzhen Machinery
Industry Company, was incorporated on 10 November 1986. In 1992, as authorized by the reply relating to Shenzhen
Machinery Industry Company transforming to Shenzhen Testrite Machinery Co., Ltd.(SFBF[1991]1012) issued by the
Office of Shenzhen People Government, Shenzhen Machinery Industry Company was transformed to Shenzhen Testrite
Machinery Co., Ltd. in 1993, as authorized by the reply relating to Shenzhen Testrite Machinery Co., Ltd. transforming to a
public company (SFBF[1992]1850) issued by the Office of Shenzhen People Government and the reply relating to issuance
of stocks by Shenzhen Testrite Machinery and Electric Co., Ltd. (SRYFZ[1993]092) issued by Shenzhen branch of People’s
Bank of China, Shenzhen Testrite Machinery Co., Ltd. changed to be a public company and made the initial public offering.
The name of the Company changed to Shenzhen Testrite Machinery and Electric Co., Ltd., with a total share capital of
166,880,000 shares, among which, 120,900,000 shares were converted from the original assets and 45,980,000 shares were
newly issued. The newly issued shares comprises of 25,980,000 RMB ordinary shares (A shares) and 20,000,000 RMB
special shares (B shares). In June 1993, as approved by the reply relating to listing of Shenzhen Testrite Machinery and
Electric Co., Ltd. (SZBF[1993]34) issued by Shenzhen Securities Management Office and the Listing Grant issued by
Shenzhen Stock Exchange(SZSZ[1993]22), Shenzhen Testrite Machinery and Electric Co., Ltd. was listed on Shenzhen
Stock Exchange. And the Company renamed as Shenzhen Tellus Holding Co., Ltd. dated 30 June 1994 after approval from
the Shenzhen Administration for Industry and commerce. On 15 March 1993, being approved by branch of Shenzhen
Special Economic Zone of People’s Bank of China ―Shen Ren Yin Fu Zi (1993) No.: 092‖, the Company released 25.98
million registered common A shares with RMB 1.00 par value as well as 20 million B shares. And the Company renamed as
Shenzhen Tellus Holding Co., Ltd. dated 30 June 1994 after approval from the Shenzhen Administration for Industry and
commerce.


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Capital structure of the Company while initial public offering:


                                   Type                                    Amount (Share)                   Ratio (%)

     I. Non-tradable share

     Including: State shares                                                        120,900,000                         72.45

     Total non-tradable shares                                                      120,900,000                         72.45

     II. Outstanding shares

     1. Tradable A-Share                                                             25,980,000                         15.57

     2. Tradable B-Share                                                             20,000,000                         11.98

     Total tradable shares                                                           45,980,000                         27.55

                                 Total                                              166,880,000                      100.00
All previous changes in the share capital after the public issue of the Company:
(1) Bonus shares in 1993
The Company held the resolution of annual shareholders' general meeting of 1993, distribute dividend of 0.5 Yuan in cash
for every 10 shares and 2 more bonus shares to all shareholders based on the Company’s total share capital of 166,880,000
shares on 31st, Dec., 1993, and the Company’s total share capital changed to 200,256,000 shares.
On 22nd April 1994, Shenzhen Securities Regulatory Office approved the stock dividend scheme of the Company. After the
implementation of the stock dividend program, the ownership structure of the Company became as follows:


                                   Type                                    Amount (Share)                   Ratio (%)

     State-owned corporate shares                                                  145,080,000                          72.45

     Domestic public shares                                                         31,176,000                          15.57

     RMB special stock (B-Share)                                                    24,000,000                          11.98

                                 Total                                             200,256,000                      100.00
(2) Bonus shares and capitalization in 1994
On 28th May 1995, the shareholders' general meeting of the Group approved the bonus share and capitalization program
proposed by the board of directors. The Company distributes 0.5 bonus shares to every 10 shares with 0.5 more shares
increased for 0.5 Yuan dividend in cash to all shareholders based on the Company’s total share capital of 200,256,000 shares
on 31st, Dec., 1994, and the Company’s total share capital changed to 220,281,600 shares.
Equity structure of the Company after bonus scheme implemented:


                                   Type                                    Amount (Share)                   Ratio (%)

     State-owned corporate shares                                                   159,588,000                          72.45

     Domestic public shares                                                          34,293,600                          15.57

     RMB special stock (B-Share)                                                     26,400,000                          11.98



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                                   Type                                      Amount (Share)                 Ratio (%)

                                 Total                                                 220,281,600                      100.00
(3) The changes of controlling shareholders in 1997
On 31st March 1997, in accordance with the approval of ―Shenfuhan [1997] No.19‖ and ―Zhengjianhan [1997] No.5‖, the
People's Government of SZ Municipality and China Securities Regulatory Commission agreed Shenzhen Investment and
Management Company to transfer its 159,588,000 shares of State shares to ―Shenzhen Special Development Group Co.,
Ltd‖ (hereinafter referred to as ―SDG‖), which took proportion of 72.45% in the total share capital.
(4) Reform of non-tradable shares in 2006
In December 2005, Shenzhen State-owned Assets Supervision and Administration Commission approved the non-tradable
shares reform program of Shenzhen Tellus (Group) Ltd. which reported by the Company’s non-tradable shareholders -
Shenzhen Special Development Group Co., Ltd.
On 4th January 2006, SDG paid 13,717,440 shares of stock to the shareholders of A shares in circulation as the consideration
of the non-tradable shares reform, and SDG held 66.22% of the Company’s total share capital after the non-tradable shares
reform. After the implementation of the non-tradable shares reform program, the ownership structure of the company
became as follows:


                                   Type                                      Amount (Share)                 Ratio (%)

     State-owned corporate shares                                                      145,870,560                       66.22

     Domestic public shares                                                             48,011,040                       21.80

     RMB special stock (B-Share)                                                        26,400,000                       11.98

                                 Total                                                 220,281,600                      100.00

(5) Non-public stock offer in 2015

In March 2015, the total proceeds from non-public stock offer was RMB646.8 million, and the net proceeds was

RMB633.52 million after deduction of issuance expense of RMB13.28 million. 77,000,000 shares were issued through the

non-public offering, the listing date of which was 27 March 2015. They were circulating shares with lock-up conditions.

These shares were respectively subscribed by Tefa Group and Shenzhen Yuanzhi Fuhai Jewelry Industry Investment

Company (limited partnership, hereinafter referred to as Jewelry Industry Fund) in cash, among which, Tefa Group was

allocated with 6,000,000 shares with subscription amount of RMB50.4 million and Jewelry Industry Fund was allocated

with 71,000,000 shares with subscription amount of RMB596.4 million.

This non-public offering has been verified by Ruihua CPA which issued the assets verification report

(RFYZ[2015]48330003) on 12 March 2015.
As at 30 June 2015, the Company has in aggregate issued total share capital of 297,281,600 shares. Details are set out in
note VII(29).
4. Consolidation scope of the Company in the year
Totally 14 companies included in the consolidation scope for the Year of 2015, found more in ―Equity in other entity‖ in the
Note VIII. The consolidation range has no changes over that of last year.
5. Relevant party offering approval reporting of financial statements and date thereof


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This financial statement is approved for disclosure by resolution from the Board dated 25 August 2015.



II. Basis Preparation of the Financial Statements
The financial statements of the Group is prepared based on the going-concern assumption in accordance with the actually
occurred transactions and events, the ―Accounting standards for Businees Enteprise-Basic rules‖ (ministry of finance order
No. 33 issued, ministry of finance No.76 revised), the ―Accounting Standards for Business Enterprises – Basic Standards‖
and 41 specific accounting standards promulgated by the ministry of finance on 15th, Feb., 2006, the subsequently
promulgated application guide and interpretation of the accounting standards for business enterprises and other relevant
provisions (hereinafter collectively referred to as ―ASBE‖), and China Securities Regulatory Commission ―information
disclosure regulations No.15 for the companies publicly issuing securities - general provisions of financial reports‖ (2014
Revision).
According to the relevant requirements under the Accounting Standards for Business Enterprises, the Company has adopted
the accrual basis as its basis of accounting. Except for certain financial instruments, historical costs have been adopted as the
basis of measurement in these Financial Statements. Non-current assets held for sale are recorded at the lower of fair value
less predicted expenses and the original carrying value when the assets satisfy such conditions for sale. Provisions of
corresponding impairment losses are recognised in respect of any impairment of assets.



III. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Groups meet the requirements of the Accounting Standards for Business
Enterprises, truthfully and completely reflect the financial situation of the Company on 30th, June, 2015, and the business
performance and cash flow in January to June of 2014. In addition, the financial statements of the Company and the Group
meet the disclosure requirements of ―Preparation Regulation of Information Disclosure for Enterprise with Security Issued
Publicly No.15—General Rules of Financial Report‖ revised by China Securities Regulatory Commission in all significant
aspects in 2014.



IV. Main accounting policy and estimate
The Company and its subsidiaries determine specific accounting policies and accounting estimation based on their actual
production characteristics according to the relevant requirements under the Accounting Standards for Business Enterprises.
Details relating to significant accounting judgment and estimation made by the management, please refer to note IV(29)
―Significant accounting judgment and estimation‖.
1. Fiscal period
The accounting period of the Group includes annual and interim, accounting interim refers to the reporting period shorter
than a complete fiscal year. The fiscal year of the Group adopts the Gregorian calendar, i.e. from 1 January to 31 December
for each year.
2. Business cycle
Normal business cycle is the period from purchasing assets used for process by the Company to the cash and cash equivalent
achieved.
The Company’s normal business cycle was one-year (12 months), and as the determining criterion of the liquidity for astes
and liabilities.
3. Book-keeping currency
RMB is the currency in the major economic environment of the Company and its sub-company which take RMB as the


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book-keeping currency. The Group adopts RMB as the currency when preparing this financial statement.
4. The accounting treatment of business merger under the common control and the different control.
Business merger refers to the transactions or matters that two or more than two individual enterprises form a reporting entit.
Business combination is at least subject to the following conditions: to acquire controlling right upon another or multiple
enterprises (or business); enterprises to be combined must constitute business. In case that an acquirer obtains controlling
right upon another or multiple enterprises which do not constitute business, the transaction shall not constitute business
combination.
When acquirer acquires a group of assets or net assets which don’t constitute business, the acquisition costs shall be
allocated into various identifiable assets or liabilities based on their fair value as of the acquisition date. Where there a re
specific identifiable assets which cannot be substituted taking substantial proportion in a group of assets or net assets and the
future cash flow of the acquiree also highly depends on such specific identifiable assets, the remaining amount between
acquisition costs less fair value of other identifiable assets shall be entirely recorded in such specific identifiable assets.
Business merger includes the business merger under the common control and the different control.
(1) Business merger under the common control
Business merger under the common control means the enterprises participated in the merger are subject to the ultimate
control of the same party or the same multi-party before and after the merger, and the control is not temporary. For the
business merger under the same control, the party obtains the control rights of other enterprises participated in the merger on
the merger date is the merging party, and other enterprises participated in the merger are the merged party. The merger date
refers to the date that the merging party obtains the control rights of the merged party.
The assets and liabilities of the merging party should be measured in accordance with the book value of the combined party
on the combining date. The balance between the book value of the net asset obtained by the merging party and the book
value of the merger consideration (or the total face value of the issued shares) paid by the merging party, and adjust the
capital reserve (share premium); for the capital reserve (share premium) insufficient to reduce, adjust the retained earnings.
All direct expenses the merging party spent for the business merger are included in the current profit and loss when the
business merger occurred.
(2) Business merger under the different control
Business merger under the different control means the enterprises participated in the merger are not subject to the ultimate
control of the same party or the same multi-party before and after the merger. For the business merger under the different
control, the party obtains the control rights of other enterprises participated in the merger on the acquisition date is the
acquirer, and other enterprises participated in the merger are the acquiree. The acquisition date refers to the date that the
acquirer obtains the control rights of the acquiree.
As for the business merger under the different control, the merger costs contain the assets paid by the acquirer for obtaining
the control rights of the acquiree on the acquisition date, the liabilities incurred or assumed, and the fair value of the issued
equity securities. The intermediary fees such as auditing, legal services and consulting services costs and other
administrative costs incurred by the business merger are charged to the current profit and loss. The transaction costs of the
equity securities or debt securities issued as the combination consideration by the acquirer are reckoned in the initially
recognized amount of the equity securities or debt securities. As for the involved or existing consideration reckoned in the
merger costs in accordance with the fair value on the acquisition date, correspondingly adjust the consolidated goodwill for
these needs to be adjusted or possess consideration because new or further evidence appears for the situations existing on the
acquisition date within 12 months after the acquisition date The merger costs of the acquirer and the net identifiable assets
obtained in the merger are reckoned in accordance with the fair value on the acquisition date. The balance of which the
merger costs are more than the net identifiable assets’ fair value share of the acquiree obtained in the merger on the
acquisition date is recognized as goodwill. For those whose merger costs are less than the net identifiable assets’ fair value



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share of the acquiree obtained in the merger, recheck the obtained identifiable assets, liabilities, and the fair value with
contingent liability of the acquiree, and the measurement of the merger costs at first, while for those whose merger costs are
still less than the net identifiable assets’ fair value share of the acquiree obtained in the merge after rechecking, reckon its the
balance in the current profit and loss.
For the deductable temporary difference obtained by the acquirer from the acquiree that is not confirmed because of not
meeting the assets confirmation requirements of the deferred income taxes on the acquisition date, if there is new or further
information states that the relevant conditions on the acquisition date has already existed and the economic interests on the
acquisition date brought by the deductable temporary difference can be realized by the acquiree within 12 months after the
acquisition date, then confirm the relevant deferred income tax assets, and decrease the goodwill, as for the goodwill
insufficient for reducing, confirm the difference to be the current profit and loss; except for the above-mentioned cases,
reckon those deferred income tax assets related to the business merger in the current profit and loss.
For a business combination not involving enterprises under common control and achieved in stages, the company shall
determine whether the business combination shall be regarded as ―a bundle of transactions‖ in accordance with
―Interpretation 5 on Accounting Standards for Business Enterprises‖ (Cai Kuai 2012 No. 19) and clause 51 of ASBE 33-
Consolidated Financial Statements relating to judgment standard for ―a bundle of transactions‖(please refer to this Note IV
5(2)). When the business combination is regarded as ―a bundle of transactions‖, the accounting treatment for the business
combination shall be in accordance with the previous paragraphs and Note IV 13 ―long term equity investment‖; when the
business combination is not regarded as ―a bundle of transactions‖, the accounting treatment should be different when comes
to individual financial report and consolidated financial report.
In the individual financial statements, the initial cost of the investment shall be the sum of the carrying amount of its
previously-held equity interest in the acquiree prior to the acquisition date and the amount of additional investment made to
the acquiree at the acquisition date. Other comprehensive income involved in the previously-held equity interest of the
acquiree prior to the acquisition date shall be subject to accounting treatment on the same basis adopted by the acquiree in
its direct disposal of related assets or liabilities (which are reclassified as investment income during the period , net of the
audited changing corresponding shares resulted from the net liability and net assets remeasured and set by acquiree
according to equity method ).
In the consolidate financial statements, the previously-held equity interest of the acquire is re-measured according to the fair
value at the acquisition date; the difference between the fair value and the carrying amount is recognized as investment
income for the current period; the amount recognized in other comprehensive income relating to the previously-held equity
interest in the acquire shall be subject to accounting treatment on the same basis adopted by the acquire in its direct disposal
of related assets or liabilities (which are reclassified as investment income during the period, net of the audited changing
corresponding shares resulted from the net liability and net assets re-measured and set by acquire according to equity
method).
5. Preparing method of consolidated financial statements
(1) Determinate principles of range for consolidation financial statement
The scope of consolidated financial statements is determined based on control. Control is the power to govern the investees
so as to obtain benefits from their operating activities by the involvement in the relevant activities of the investee. The s cope
of consolidation comprises the Company and all of its subsidiaries. Subsidiaries are the entities controlled by the Company.
Once relevant elements involved in the above definition of control change due to alteration of relevant facts or situations, the
Company will make evaluation again.
(2) Preparing method of consolidated financial statements
Since the date of gaining the net assets and the actual control rights of the production and operation decision-making of the
subsidiaries, the Group has started to bring it into the consolidation scope; stop to bring into the consolidation scope since
the date of losing the actual control rights. As for the disposed subsidiaries, the business performance and cash flow before

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the disposal have been suitably included in the consolidated income statement and the consolidated cash flow statement; as
for the subsidiaries currently disposed; don’t adjust the opening balance of the consolidated balance sheet. For the
subsidiaries increased by the business merger under the different control, the business performance and cash flow after its
acquisition date have been suitably included in the consolidated income statement and the consolidated cash flow statement,
and don’t adjust the opening balance and correlation date of the combined financial statement. For the subsidiaries increased
by the business merger under the common control, the business performance and cash flow from the beginning period of the
merger to its merger date have been suitably included in the consolidated income statement and the consolidated cash flow
statement, and adjust the correlation date of the combined financial statement at the same time.
When preparing the consolidated financial statements, for the accounting policies adopted by the subsidiaries and the
Company being inconsistent during the accounting time period, adjust in accordance with the accounting policies of the
Company and the financial statements of the subsidiaries during the accounting time period. As for the subsidiaries obtained
by the business merger under the different control, adjust the financial statements based on the fair value of the net
identifiable assets on the acquisition date.
All significant intra-group current account balances, transactions and unrealized profits are offset in the preparation of
consolidated financial statements.
The stockholders' equity of the subsidiaries and the shares not belong to the Company in the current net profit or loss are
respectively served as the separate presentation in the stockholders' equity and net profits of the minority interest and
minority interest income in the consolidated financial statements. The shares of the current net profit or loss of the
subsidiaries that belong to the minority interest are listed under net profit item in the consolidated profit statement as
―minority interest income‖ item. Reduce the minority interest for those that the subsidiaries’ losses shared by the minority
shareholders exceed the shares that the minority shareholders gained from the owner's equity at the beginning period of this
subsidiary.
When losing the control rights of the original sub companies because of disposing some equity investment or other reasons,
re-measure the residual equity in accordance with its fair value on the date of losing the control rights. Use the sum of the
consideration obtained by disposing the stock rights and the fair value of the residual equity to minus the balance among the
net assets’ shares of the original sub companies continuously calculated since the acquisition date in accordance with the
original shareholding ratio, and then reckon in the current investment income when losing the control rights. The other
consolidated incomes related to the equity investment of the original sub companies, It shall be subject to accounting
treatment on the same basis adopted by the acquiree in its direct disposal of related assets or liabilities during the period
when the control ceases (which are reclassified as investment income for the current period, other than changes resulting
from re-measuring net liability or net assets under defined benefit plan of the original subsidiary). Thereafter, do the
follow-up measurement for this part’s residual equity in accordance with the relevant provisions of ―Accounting Standards
for Business Enterprises No.2 - long-term equity investment‖ or ―Accounting Standards for Business Enterprises No.22 -
financial instruments recognition and measure’, refer to the Note IV 13 ―long-term equity investment‖ or the Note IV 9
―financial instruments‖ for details.
The company shall determine whether loss of control arising from disposal in a series of transactions should be regarded as
a bundle of transactions. When the economic effects and terms and conditions of the disposal transactions met one or more
of the following situations, the transactions shall normally be accounted for as a bundle of transactions: (i) The transactions
are entered into after considering the mutual consequences of each individual transaction; (ii) The transactions need to be
considered as a whole in order to achieve a deal in commercial sense; (iii) The occurrence of an individual transaction
depends on the occurrence of one or more individual transactions in the series; (iv) The result of an individual transaction is
not economical, but it would be economical after taking into account of other transactions in the series. When the
transactions are not regarded as a bundle of transactions, the individual transactions shall be accounted as ―disposal of a
portion of an interest in a subsidiary which does not lead to loss of control‖) (for details, please refer to Note IV 13(2)④)


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and ―disposal of a portion of an interest in a subsidiary which lead to loss of control‖ (details are set out in previous
paragraph). When the transactions are regarded as a bundle of transactions, the transactions shall be accounted as a single
disposal transaction; however, the difference between the consideration received from disposal and the share of net assets
disposed in each individual transactions before loss of control shall be recognized as other comprehensive income, and
reclassified as profit or loss arising from the loss of control when control is lost.
6. Classification of joint arrangement and accounting for joint operations
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In accordance with the Company’s
rights and obligations under a joint arrangement, the Company classifies joint arrangements into: joint ventures and joint
operations. Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets and
obligations of this arrangement. Joint ventures refer to a joint arrangement during which the Company only is entitled to net
assets of this arrangement.
Investment in joint venture is accounted for using the equity method accounting to the accounting policies referred to Note
IV 13(2)②―Long-term equity investment accounted for using the equity method‖.

The Company shall, as a joint venture, recognise the assets held and obligations assumed solely by the Company, and
recognise assets held and obligations assumed jointly by the Company in appropriation to the share of the Company;
recognise revenue from disposal of the share of joint operations of the Company; recognise fees solely occurred by
Company and recognise fees from joint operations in appropriation to the share of the Company.
When the Company, as a joint venture, invests or sells assets to or purchase assets (the assets dose not constitute a busines s,
the same below) from joint operations, the Company shall only recognise the part of profit or lost from this transaction
attributable to other parties of joint operations before these assets are sold to a third party. In case of an impairment loss
incurred on these assets which meets the requirements as set out in ―Accounting Standards for Business Enterprises No. 8 –
Asset Impairment‖, the Company shall recognise the full amount of this loss in relation to its investment in or sale of asset s
to joint operations, or recognise the loss according to the Company’s share of commitment in relation to the its purchase of
assets from joint operations.
7. Determination criteria of cash and cash equivalent
Cash and cash equivalent of the Company including stock cash, deposits available for payment at any time and the
investment held by the Company with the follow characters obtained at the same time: short term (expire within 3 months
commencing from purchase day), active liquidity, easy to convert to already-known cash, and small value change risks.
8. Foreign Currency Operations and translation of foreign currency statements
(1) Basis for translation of foreign currency transactions
The foreign currency transactions of the Company, when initially recognized, are translated into functional currency at the
prevailing spot exchange rate on the date of exchange (usually refers to the middle rate of the exchange rate for the day as
quoted by the People’s Bank of China, the same below) while the Company’s foreign currency exchange operations and
transactions in connection with foreign currency exchange shall be translated into functional currency at the exchange rate
actually adopted.
(2) Basis for translation of foreign currency monetary items and foreign currency non-monetary items
On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet
date. All differences are included in the consolidated income statement, except for: ① the differences arising from foreign
currency borrowings related to the acquisition or construction of fixed assets which are qualified for capitalization; and ②
except for other carrying amounts of the amortization costs, the differences arising from changes of the foreign currency
items available for sale.
When preparing consolidated financial statement involving overseas operation, in case there is foreign currency monetary
items which substantially constitute net investment in overseas operation, the exchange difference arising from exchange


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rate fluctuation shall be included in other comprehensive income; and shall transfer to gains and losses from disposal for the
current period when the overseas operation is disposed of.
The foreign currency non-monetary items measured at historical cost shall still be measured by the functional currency
translated at the spot exchange rate on the date of the transaction. Foreign currency non-monetary items measured at fair
value are translated at the spot exchange rate on the date of determination of the fair value. The difference between the
amounts of reporting currency before and after the translation will be treated as changes in fair value (including changes in
foreign exchange rates) and recognized in profit or loss for the period or recognized as other consolidated income.
(3)Translation of foreign currency financial statement
When preparing consolidated financial statement involving overseas operation, in case there is foreign currency monetary
items which substantially constitute net investment in overseas operation, the exchange difference arising from exchange
rate fluctuation shall be included in other comprehensive income as ―translation difference of foreign currency statement‖;
and shall transfer to gains and losses from disposal for the current period when the overseas operation is disposed of.
Foreign currency financial statement for overseas operation is translated into RMB statement by the following means: assets
and liabilities in balance sheet are translated at the spot rate as of balance sheet date; owner’s equity items (other than
undistributed profit) are translated at the spot rate prevailing on the date of occurrence. Income and expense items in profit
statement are translated at the spot rate prevailing on the date of transactions. Beginning undistributed profit represents the
translated ending undistributed profit of previous year; ending undistributed profit is allocated and stated as several items
upon translation. Upon translation, difference between assets, liabilities and shareholders’ equity items shall be recorded as
foreign currency financial statement translation difference and recognized as other comprehensive income.             In case of
disposal of overseas operation where control is lost, foreign currency financial statement translation difference relating to
the overseas operation as stated under shareholders’ equity in balance sheet shall be transferred to current gains and losses of
disposal in full or under the proportion it disposes.
Foreign currency cash flow and cash flow of overseas subsidiary are translated at the spot rate prevailing on the date of
occurrence of cash flow. Influence over cash from exchange rate fluctuation is taken as adjustment items to separately stated
in cash flow statement.
The beginning figure and previous year actual figures are stated at the translated figures in previous year financial statement.
If the Company loses control over overseas operation due to disposal of all the owners’ equity or part equity investment in
the overseas operation or other reasons, foreign currency financial statement translation difference relating to the overseas
operation attributable to owners’ equity of parent company as stated under shareholders’ equity in balance sheet shal l be
transferred to current gains and losses of disposal in full.
If the Company reduces equity proportion while not loses control over overseas operation due to disposal of part equity
investment in the overseas operation or other reasons, foreign currency financial statement translation difference relating to
the disposed part will be vested to minority interests and will not transfer to current gains and losses. When disposing part
equity interests of overseas operation which is associate or joint venture, foreign currency financial statement translation
difference relating to the overseas operation shall transfer to current disposal gains and losses according to the disposed
proportion.
9. Financial instruments
(1) Method of determination of the fair value for financial assets and financial liabilities
Fair value represents the price that market participator can receive for disposal of an asset or he should pay for transfer of a
liability in an orderly transaction happened on the measurement date. Financial instruments exist in an active market. Fair
value is determined based on the quoted price in such market. An active market refers to where pricing is easily and
regularly obtained from exchanges, brokers, industrial organizations and price-fixing service organizations, representing the
actual price of a market transaction that takes place in a fair deal. While financial instruments do not exist in an active



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market, the fair value is determined using valuation techniques. Valuation technologies include reference to be familiar with
situation and prices reached in recent market transactions entered into by both willing parties, reference to present fair
values of similar other financial instruments, cash flow discounting method and option pricing models.
(2) Classification, recognition and measurement of the financial assets
Financial asset or financial liability is recognized when the Company becomes a party to financial instrument contract.
Financial assets and liabilities are initially measured at fair value. For financial assets and financial liabilities classified as
fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For
financial assets and financial liabilities classified as other categories, relevant transaction costs are included in the amount
initially recognized.
①Financial assets carried at fair value through profit or loss for the current period
They include financial assets held for trading and financial assets designated as at fair value through profit or loss for the
current period.
Financial assets may be classified as financial assets held for trading if one of the following conditions is met: A. the
financial assets is acquired or incurred principally for the purpose of selling it in the near term; B. the financial assets is part
of a portfolio of identified financial instruments that are managed together and for which there is objective evidence of a
recent pattern of short-term profit taking; or C. the financial assets is a derivative, excluding the derivatives designated as
effective hedging instruments, the derivatives classified as financial guarantee contract, and the derivatives linked to an
equity instrument investment which has no quoted price in an active market nor a reliably measured fair value and are
required to be settled through that equity instrument.
A financial asset may be designated as at FVTPL upon initial recognition only when one of the following conditions is
satisfied: A. Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise result from measuring assets or recognizing the gains or losses on them on different bases; or B. The financial
asset forms part of a group of financial assets or a group of financial assets and financial liabilities, which is managed and its
performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment
strategy, and information about the grouping is reported to key management personnel on that basis.
Financial assets carried at fair value through profit or loss for the current period is subsequently measured at fair value. The
gain or loss arising from changes in fair value and dividends and interest income related to such financial assets are charged
to profit or loss for the current period.
②Held-to-maturity investments

They are non-derivative financial assets with fixed maturity dates and fixed or determinable payments that the Group has
positive intent and ability to hold to maturity.
Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. Gain or loss
on derecognition, impairment or amortization is recognized through profit or loss for the current period.
The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest
income or expense over each period based on the effective interest of a financial asset or a financial liability (including a
group of financial assets or financial liabilities). The effective interest is the rate that discounts future cash flows from the
financial asset or financial liability over its expected life or (where appropriate) a shorter period to the carrying amount of
the financial asset or financial liability.
In calculating the effective interest rate, the Group will estimate the future cash flows (excluding future credit losses) by
taking into account all contract terms relating to the financial assets or financial liabilities whilst considering various fees,
transaction costs and discounts or premiums which are part of the effective interest rate paid or received between the parties
to the financial assets or financial liabilities contracts.
③ Loans and receivable


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They are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Financial assets, including bills receivable, accounts receivable, interest receivable, dividends receivable and other
receivables, are classified as loans and receivables by the Group.
Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising
from derecognition, impairment or amortization is recognized in current profit or loss.
④Available-for-sale financial assets
They include non-derivative financial assets that are designated in this category on initial recognition, and the financial
assets other than the financial assets at fair value through profit and loss, loans and receivables and held-to-maturity
investments.
The closing cost of available-for-sale debt instruments are determined based on amortised cost method, which means the
amount of initial recognition less the amount of principle already repaid, add or less the accumulated amortised amount
arising from the difference between the amount due on maturity and the amount initially recognised using effective interest
rate method, and less the amount of impairment losses recognised. The closing cost of available-for-sale equity instruments
is equal to its initial acquisition cost.
Available-for-sale financial assets are subsequently measured at fair value. The gain or loss on change in fair value are
recognized as other comprehensive income, except for impairment loss and exchange differences arising from foreign
monetary financial assets and amortized cost which are accounted for through profit or loss for the current period. The
financial assets will be transferred out of the financial assets on derecognition and accounted for through profit or loss for
the current period.
However, equity instrument investment which is not quoted in active market and whose fair value cannot be measured
reliably, and derivative financial asset which is linked to the equity instrument and whose settlement is conditional upon
delivery of the equity instrument, shall be subsequently measured at cost.
Interests received from available-for-sale financial assets held and the cash dividends declared by the investee are
recognized as investment income.
(3) Impairment of financial assets
In addition to financial assets at fair value through profit or loss for the current period, the Group reviews the book value of
other financial assets at each balance sheet date and provide for impairment where there is objective evidence that financial
assets are impaired.
For a financial asset that is individually significant, the Group assesses the asset individually for impairment. For a financial
asset that is not individually significant, the Group assess the asset individually for impairment or include the asset in a
group of financial assets with similar credit risk characteristics and collectively assess them for impairment. If it is
determined that no objective evidence of impairment exists for an individually assessed financial asset, whether the financial
asset is individually significant or not, the financial asset is included in a group of financial assets with similar credit risk
characteristics and collectively assessed for impairment. Financial assets for which an impairment loss is individually
recognized are not included in the collective assessment for impairment.

①Impairment of held-to-maturity investments, loans and receivables
The carrying amount of financial assets measured at costs or amortized costs are subsequently reduced to the present value
discounted from its projected future cash flow. The reduced amount is recognized as impairment loss and recorded as profit
or loss for the period. After recognition of the impairment loss from financial assets, if there is objective evidence showing
recovery in value of such financial assets impaired and which is related to any event occurring after such recognition, the
impairment loss originally recognized shall be reversed to the extent that the carrying value of the financial assets upon
reversal will not exceed the amortized cost as at the reversal date assuming there is no provision for impairment.
②Impairment of available-for-sale financial assets


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In the event that decline in fair value of the available-for-sale equity instrument investment is regarded as ―severe decline‖
or ―non-temporary decline‖ on the basis of comprehensive related factors, it indicates that there is impairment loss of the
available-for-sale equity instrument investment.
When the available-for-sale financial assets impair, the accumulated loss originally included in the capital reserve arising
from the decrease in fair value was transferred out from the capital reserve and included in the profit or loss for the period.
The accumulated loss that transferred out from the capital reserve is the balance of the acquired initial cost of asset, after
deduction of the principal recovered, amortized amounts, current fair value and the impairment loss originally included in
the profit or loss.
After recognition of the impairment loss, if there is objective evidence showing recovery in value of such financial assets
impaired and which is related to any event occurring after such recognition in subsequent periods, the impairment loss
originally recognized shall be reversed. The impairment loss reversal of the available-for-sale equity instrument will be
recognized as other consolidated income, and the impairment loss reversal of the available-for-sale debt instrument will be
included in the profit or loss for the period.
When an equity investment that is not quoted in an active market and the fair value of which cannot be measured reliably, or
the impairment loss of a derivative financial asset linked to the equity instrument that shall be settled by delivery of that
equity instrument, then it will not be reversed.
(4) Recognition and measurement of transfers of financial asset
Financial asset that satisfied any of the following criteria shall be derecognized: the contract right to recover the cash flows
of the financial asset has terminated;  the financial asset, along with substantially all the risk and return arising from the
ownership of the financial asset, has been transferred to the transferee; and  the financial asset has been transferred to the
transferee, and the transferor has given up the control on such financial asset, though it does not assign maintain
substantially all the risk and return arising from the ownership of the financial asset.
When the entity does not either assign or maintain substantially all the risk and return arising from the ownership of the
financial asset and does not give up the control on such financial asset, to the extent of its continuous involvement in the
financial asset, the entity recognizes it as a related financial asset and recognizes the relevant liability accordingly. The
extent of the continuous involvement is the extent to which the entity exposes to changes in the value of such financial
assets.
On derecognition of a financial asset, the difference between the following amounts is recognized in profit or loss for the
current period: the carrying amount and the sum of the consideration received and any accumulated gain or loss that had
been recognized directly in equity.
If a part of the financial assets qualifies for derecognition, the carrying amount of the financial asset is allocated between the
part that continues to be recognized and the part that qualifies for derecognition, based on the fair values of the respective
parts. The difference between the following amounts is recognized in profit or loss for the period: the sum of the
consideration received and the carrying amount of the part that qualifies for derecognition and the aforementioned carrying
amount.
For financial assets that are transferred with recourse or endorsement, the Company needs to determine whether the risk and
rewards of ownership of the financial asset have been substantially transferred. If the risk and rewards of ownership of the
financial asset have been substantially transferred, the financial assets shall be derecognised. If the risk and rewards of
ownership of the financial assets have been retained, the financial assets shall not be derecognised. If the Company neither
transfers nor retains substantially all the risks and rewards of ownership of the financial assets, the Company shall assess
whether the control over the financial assets is retained, and the financial assets shall be accounted for according to the
above paragraphs.
(5) Classification and measurement of financial liabilities



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At initial recognition, financial liabilities are classified either as ―financial liabilities at fair value through profit or loss‖ or
―other financial liabilities‖. Financial liabilities are initially recognized at fair value. For financial liabilities classi fied as fair
value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For financial
liabilities classified as other categories, relevant transaction costs are included in the amount initially recognized.
① Financial liabilities at fair value through profit or loss for the period
The criteria for a financial liability to be classified as held for trading and designated as at financial liabilities at fair value
through profit or loss are the same as those for a financial asset to be classified as held for trading and designated as at
financial assets at fair value through profit or loss.
Financial liabilities at fair value through profit or loss for the period are subsequently measured at fair value. The gain or
loss arising from changes in fair value and dividends and interest income related to such financial liabilities are included into
the current profit or loss.
 Other financial liabilities
Derivative financial liabilities which are linked to equity instruments that are not quoted in an active market and the fair
value of which cannot be measured reliably measured, and which shall be settled by delivery of equity instruments are
subsequently measured at cost. Other financial liabilities are subsequently measured at amortized cost using the effective
interest method. Gains or losses arising from derecognition or amortization is recognized in profit or loss for the current
period.
③Financial guarantee contract
Financial guarantee contract in respect of financial liabilities not designed at fair value through profit or loss shall be
initially measured at fair value, and subsequently measured at the lower between the amount determined under Accounting
Standards for Enterprises No.13-Contingent issues and its initial measurement amount less accumulative amortization
determined under Accounting Standards for Enterprises No.14-Revenue.
(6) Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full or in part. An
agreement is entered between the Group (debtor) and a creditor to replace the original financial liabilities with new financi al
liabilities with substantially different terms, derecognize the original financial liabilities as well as recognize the new
financial liabilities.
When financial liabilities is derecognized in full or in part, the difference between the carrying amount of the financial
liabilities derecognized and the consideration paid (including transferred non-cash assets or new financial liability) is
recognized in profit or loss for the current period.
(7) Derivatives and embedded derivatives
Derivatives are initially measured at fair value as of the execution date of relevant contract, and subsequently measured at
fair value. Change of fair value of derivatives is recorded in profit or loss for the period.
In respect of mixed instruments containing embedded derivatives, if they are financial assets or financial liabilities not
designated at fair value through profit or loss, and there is no close relation between embedded derivatives and such main
contract in terms of economic characteristics and risk, separate instrument shares the same conditions with embedded
derivatives and meets definition of derivatives, the embedded derivatives are split off from the mixed instruments and
accounted for as separate derivative financial instrument. If an embedded derivative instrument cannot be measured
separately upon acquisition or at subsequent balance sheet date, the mixed instruments shall be taken in its entirety as
financial assets or financial liabilities designated at fair value through profit or loss.
(8) Offset of Financial Assets and Financial Liabilities
If the Group owns the legitimate rights of offsetting the recognized financial assets and financial liabilities, which are
enforceable currently, and the Group plans to realize the financial assets or to clear off the financial liabilities by net amount


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method, the amount of the offsetting financial assets and financial liabilities shall be reported in the balance sheep.
Otherwise, financial assets and financial liabilities are presented separately in the balance sheet without offsetting.
(9) Equity instruments
Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. The Company issues (including refinancing), repurchases, sells or cancels equity instruments as movement of
equity. No fair value change of equity instrument would be recognized by the Company. Transaction fees relating to equity
transactions are deducted from equity.
The distribution (excluding the dividends) to the equity instrument holders by the Group shall reduce the shareholder’s
equity. The Group shall not recognize the changes of the equity instruments’ fair value.
10. Account receivable
Account receivable including receivables and other account receivables etc.
(1) Recognition standards for bad debt provision
On balance sheet date, the Company examined book value of the account receivable, if the followed objective evidence has
been show for impairment occurred, impairment provision shall withdrawal: ①the debtor has serious financial difficulties;
②debtor violated the terms of the contract (such as interest or principal payment default or overdue etc.); ③debtor probably
close down or exercise other financial restructuring; and ④other objective evidence showing impairment occurred on
receivables.
(2) Withdrawal method for bad debt provision

①Recognition criteria and depreciation method for account receivable with large single amount and accrued for provision of
bad debt on a single basis
Account receivable with over RMB one million and other account receivable with over RMB 500,000 are recognized as
account receivable with large single amount.
The Company exercise impairment test separately on account receivable with large single amount, if no impairment been
found in financial assets after separate testing, they shall be included in portfolios of accounts receivable with similar credit
risk features for impairment tests.
For accounts receivable with confirmed impairment losses after separate tests, they shall not be included in portfolios of
accounts receivable with similar credit risk features for impairment tests.

②Recognition criteria and depreciation method for account receivable with accrued for provision of bad debt on credit risk
portfolio basis
A.Recognition basis for credit risk characteristics portfolio
As for the account receivable with minor single amount and those with major amount without impairment had been found
after testing on a single basis, the Company grouping the financial assets according to similarity and relativity of the credit
risk characteristics. The credit risk characteristics usually reflect the repaying capability for all due amount from debtors, in
line with the terms of the contract, and related with the measurement of future cash flow on assets which has been examined.
Recognition basis for different portfolio:


                  Item                                                               Basis

Age portfolio                                Divide the portfolio on the age of account receivable as a credit risk characteristics
B. Depreciation method for bad debt provision recognized by credit risk characteristics portfolio
At the time of impairment testing, the bad debt amount will recognized by the estimated losses, according to historical losses
experience, which has been occurred in account receivable portfolio, and current economic status as well as portfolio
structure and similar credit risk characteristics (debt paying capability for debtor based on terms of the contract).

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Depreciation method of bad debt provision in different portfolio:


                  Item                                                     Depreciation method

Age portfolio                                                Accrual bad debt provision by aging of accounts

a. Depreciation method of bad debt provision by aging of accounts in portfolio

                                                                    Accrual ratio of account        Accrual ratio of other
                            Age
                                                                        receivable (%)                 receivables (%)

Within 1 year (including one year, the same below)                                    No accrual                    No accrual

1-2 years                                                                         5                            5

2-3 years                                                                     20                               20

Over 3 years                                                                  50                               50

③Accounts receivable that are individually insignificant but with bad debt provision provided on an individual basis:

Account receivable with RMB one million at most and other account receivable with RMB 500,000 at most are recognized
as account receivable with insignificant single amount.
As for the account receivable with insignificant single amount but with followed features, exercise impairment separately, if
there has evidence of impairment, provision for bad debts shall be made at the difference of present value of estimated
future cash flows in short of their book values, and shall be recognized as impairment losses: account receivable with
dispute and arbitration involved or exist with the counter party; receivables which has obvious evidence that the debtor
probably unable to performed payment obligations etc.
(3) Reversal of bad debt provisions
If there is evidence showing that the value of the account receivable has been recovered, and that the recovery is objectively
related to events after recognition of the loss, the originally recognized impairment loss should be reversed and included in
current profit and loss. However, the book values after such reversal shall not exceed the amortized costs of the account
receivable on the reversal date, assuming there is no provision for impairment.
11. Inventories
(1)Classification of inventories
Inventory including raw materials, stock commodity and low value consumables etc.
(2) Pricing for inventories delivered and obtained
Inventories are priced at actual costs when acquired. Inventory cost includes procurement cost, processing cost and other
costs. Raw materials and inventory commodities are measured under weighted average method when applied for use and
delivered.
(3)Recognition for net realizable value of inventories and withdrawal method for inventory impairment provision
Net realizable value refers to the amount resulted by inventory’s estimated sale price minor the cost, which is going to
occurred till end of the completion, estimated sales expenses and relevant taxes, in daily activities. At the time of
recognizing the net realizable value for inventory, on basis of unambiguous evidence, take the purpose of inventory held and
influence of events after the balance sheet date into account at the same time.
On balance sheet date, measure of the inventory is made as the lower of their cost and or net realizable values. Provision for
inventory depreciation reserve are made while the net realizable values below the cost. Inventory falling price reserves
withdrawal usually base on the difference of the cost of single inventory which over the net realizable value. As for

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inventories with numerous quantity and low unit price, inventory depreciation provision is made based on categories of
inventories.
After inventory impairment provision, if any factor rendering write-downs of the inventories has been eliminated as net
realizable value higher than its book value resulted, the amounts written down are recovered and reversed from the
inventory depreciation reserve, which has been provided for. The reversed amounts are included into the current profit and
loss.
(4) Inventory system was the perpetual inventory system.
(5) Low value consumptions and packing materials are amortized under amortization method when applied for use.
12. Classified as assets held for sale
If a non-current asset can be promptly sold at its existing status only according to the practice terms in connection with
disposal of this kind of assets, and the Company has already made resolution on disposal of the non-current asset and
entered into irrevocable transfer agreement with the transferee, and this transfer will be completed within one year, then the
non-current asset would be calculated as non-current asset held for sale which would be not applicable to depreciation or
amortisation since the date of classification as asset held for sale, and would be measured at the lower of its carrying value
less disposal cost and fair value less disposal cost. Non-current asset held for sale consists of single item asset and disposal
group. If a disposal group is a group of assets as defined by No.8 of Business Accounting Standards-Assets Impairment, and
goodwill arising from business combination shall be allocated to the group of assets under this accounting principle, or the
disposal group constitutes one operation of the group of assets, then the disposal group includes the goodwill arising from
business combination.
For single non-current asset and asset in disposal group classified as assets held for sale, they shall be presented in balance
sheet separately as current assets. For liabilities in disposal group relating to the transferred assets classified as assets held
for sale, they shall be presented in balance sheet separately as current liabilities.
If an asset or disposal group classified as held for sale no longer meets the recognition condition as non-current asset held
for sale, the Company will cease such recognition and measure the asset at the lower of (1)the carrying value of the asset or
disposal group prior to being classified as held for sale, based on the amount adjusted with the depreciation, amortisation or
impairment which should have been recognised assuming it had not been classified as held for sale; (2)the recoverable
amount on the date when the Company decides to cease disposal.
13. Long-term equity investments
Long-term equity investments under this section refer to long-term equity investments in which the Company has control,
joint control or significant influence over the investee. Long-term equity investment without control or joint control or
significant influence of the Group is accounted for as available-for-sale financial assets or financial assets measured at fair
value with any change in fair value charged to profit or loss. Details on its accounting policy please refer to Note 9.
―Financial instruments‖ under section IV.
Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevant activities of such
arrangement must be decided by unanimously agreement from parties who share control. Significant influence is the power
of the Company to participate in the financial and operating policy decisions of an investee, but to fail to control or joint
control the formulation of such policies together with other parties.
(1) Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises under common control,
the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of
the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination.
The difference between the initial cost of the long-term equity investment and the cash paid, non-cash assets transferred as
well as the book value of the debts borne by the absorbing party shall offset against the capital reserve. If the capital reserve


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is insufficient to offset, the retained earnings shall be adjusted. If the consideration of the merger is satisfied by issue of
equity securities, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the
carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the
date of combination. With the total face value of the shares issued as share capital, the difference between the initial cost of
the long-term equity investment and total face value of the shares issued shall be used to offset against the capital reserve. If
the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For business combination resulted in an
enterprise under common control by acquiring equity of the absorbing party under common control through a stage-up
approach with several transactions, these transactions will be judged whether they shall be treat as ―transactions in a basket‖.
If they belong to ―transactions in a basket‖, these transactions will be accounted for a transaction in obtaining control. If
they are not belong to ―transactions in a basket‖, the initial investment cost of the long-term equity investment shall be the
absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the
ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity
investment and the aggregate of the carrying amount of the long-term equity investment before merging and the carrying
amount the additional consideration paid for further share acquisition on the date of combination shall offset against the
capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive
income recognised as a result of the previously held equity investment accounted for using equity method on the date of
combination or recognised for available-for-sale financial assets will not be accounted for.
For a long-term equity investment acquired through a business combination involving enterprises not under common control,
the initial investment cost of the long-term equity investment shall be the cost of combination on the date of acquisition.
Cost of combination includes the aggregate fair value of assets paid by the acquirer, liabilities incurred or borne and equity
securities issued. For business combination resulted in an enterprise not under common control by acquiring equity of the
acquiree under common control through a stage-up approach with several transactions, these transactions will be judged
whether they shall be treat as ―transactions in a basket‖. If they belong to ―transactions in a basket‖, these transactions will
be accounted for a transaction in obtaining control. If they are not belong to ―transactions in a basket‖, the initial invest ment
cost of the long-term equity investment accounted for using cost method shall be the aggregate of the carrying amount of
equity investment previously held by the acquiree and the additional investment cost. For previously held equity accounted
for using equity method, relevant other comprehensive income will not be accounted for. For previously held equity
investment classified as available-for-sale financial asset, the difference between its fair value and carrying amount, as well
as the accumulated movement in fair value previously included in the other comprehensive income shall be transferred to
profit or loss for the current period.
Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service, and valuation and
consultation fees, and other related administration expenses are charged to profit or loss in the current period at the time
such expenses incurred.
The long-term equity investment acquired through means other than a business combination shall be initially measured at its
cost. Such cost is depended upon the acquired means of long-term equity investments, which is recognised based on the
purchase cost actually paid by the Company in cash, the fair value of equity securities issued by the Group, the agreed value
of investment contract or agreement, the fair value or original carrying amounts of the non-monetary asset exchange
transaction which the asset will be transferred out of the Company, and the fair value of long-term equity investment itself.
The costs, taxes and other necessary expenses that are directly attributable to the acquisition of the long-term equity
investments are also included in the investment cost. For additional equity investment made in order to obtain significant
influence or common control over investee without resulted in control, the relevant cost for long-term equity investment
shall be the aggregate of fair value of previously held equity investment and additional investment cost determined
according to ―Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of Financial
Instruments‖.



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(2)Subsequent measurement and income recognition method
Long term equity investment by which the Company has common control (other than that constituting joint operation) or
significant influence in investee is measured under equity method. In addition, long term equity investment by which the
Company is able to exercise control in investee is measured under cost method in financial statements.

①Long term equity investment measured under cost method

Under cost method, long term equity investment is measured at initial investment cost, and cost of long term equity
investment shall be adjusted in case of adding or recovering investment. Other than the price actually paid when obtaining
investment or cash dividends or distribution declared but not paid in consideration, investment income for the period would
be recognised based on the cash dividend or distribution declared by the investee.
② Long-term equity investments accounted for using the equity method

Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investor’s interest
in the fair value of the investee’s identifiable net assets at the acquisition date, no adjustment shall be made to the initial
investment cost. Where the initial investment cost is less than the investor’s interest in the fair value of the investee’s
identifiable net assets at the acquisition date, the difference shall be charged to profit or loss for the current period, and the
cost of the long term equity investment shall be adjusted accordingly.
Under the equity method, investment gain and other comprehensive income shall be recognised based on the Group’s share
of the net profits or losses and other comprehensive income made by the investee, respectively. Meanwhile, the carrying
amount of long-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be
reduced based on the Group’s share of profit or cash dividend distributed by the investee. In respect of the other movement
of net profit or loss, other comprehensive income and profit distribution of investee, the carrying value of long-term equity
investment shall be adjusted and included in the capital reserves. The Group shall recognise its share of the investee’s net
profits or losses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition,
after making appropriate adjustments thereto. In the event of inconformity between the accounting policies and accounting
periods of the investee and the Company, the financial statements of the investee shall be adjusted in conformity with the
accounting policies and accounting periods of the Company. Investment gain and other comprehensive income shall be
recognised accordingly. In respect of the transactions between the Group and its associates and joint ventures in which the
assets disposed of or sold are not classified as operation, the share of unrealised gain or loss arising from inter-group
transactions shall be eliminated by the portion attributable to the Company. Investment gain shall be recognised accordingly.
However, any unrealised loss arising from inter-group transactions between the Group and an investee is not eliminated to
the extent that the loss is impairment loss of the transferred assets. In the event that the Group disposed of an asset class ified
as operation to its joint ventures or associates, which resulted in acquisition of long-term equity investment by the investor
without obtaining control, the initial investment cost of additional long-term equity investment shall be the fair value of
disposed operation. The difference between initial investment cost and the carrying value of disposed operation will be fully
included in profit or loss for the current period. In the event that the Group sold an asset classified as operation to its
associates or joint ventures, the difference between the carrying value of consideration received and operation shall be fully
included in profit or loss for the current period. In the event that the Company acquired an asset which formed an operation
from its associates or joint ventures, relevant transaction shall be accounted for in accordance with ―Accounting Standards
for Business Enterprises No. 20 ―Business combination‖. All profit or loss related to the transaction shall be accounted for.
The Group’s share of net losses of the investee shall be recognized to the extent that the carrying amount of the long-term
equity investment together with any long-term interests that in substance form part of the investor’s net investment in the
investee are reduced to zero. If the Group has to assume additional obligations, the estimated obligation assumed shall be
provided for and charged to the profit or loss as investment loss for the period. Where the investee is making profits in
subsequent periods, the Group shall resume recognizing its share of profits after setting off against the share of unrecognized
losses.

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If there is debit variation in relation to the long-term equity investments in associates and joint venture held prior to first
adoption of the Accounting Standards for Business Enterprises by the Group on 1 January 2007, the amounts amortized over
the original residual term using the straight-line method is included in the profit or loss for the period.
③ Acquisition of minority interests

Upon the preparation of the consolidated financial statements, since acquisition of minority interests increased of long-term
equity investment which was compared to fair value of identifiable net assets recognized which are measured based on the
continuous measurement since the acquisition date (or combination date) of subsidiaries attributable to the Group calculated
according to the proportion of newly acquired shares, the difference of which recognized as adjusted capital surplus, capital
surplus insufficient to set off impairment and adjusted retained earnings.
④ Disposal of long-term equity investments

In these consolidated financial statements, where the parent company disposes of a portion of the long term equity
investments in a subsidiary without a change in control, the difference between disposal cost and disposal of long-term
equity investments relative to the net assets of the subsidiary is charged to the shareholders’ equity. As for the disposal of a
portion of the long term equity investments in a subsidiary by the parent company leading to lose of control over such
subsidiary, it shall be accounted for under the relevant accounting policies described in Note IV.5-(2) Headed ―preparation
methods for consolidated financial statements‖.
On disposal of a long-term equity investment otherwise, the difference between the carrying amount of the investment and
the actual consideration paid is recognized through profit or loss in the current period.
In respect of long-term equity investment at equity with the remaining equity interest after disposal also accounted for using
equity method, other comprehensive income previously under owners’ equity shall be accounted for in accordance with the
same accounting treatment for direct disposal of relevant asset or liability by investee on pro rata basis at the time of
disposal. The owners’ equity recognised for the movement of other owners’ equity (excluding net profit or loss, other
comprehensive income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro
rata basis.
In respect of long-term equity investment at cost with the remaining equity interest after disposal is also accounted for at
cost, other comprehensive income recognised due to measurement at equity or recognition and measurement for financial
instruments prior to obtaining control over investee shall be accounted for in accordance with the same accounting treatment
for direct disposal of relevant asset or liability by investee and carried forward to current gains and losses on pro rata ba sis.
The movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution of
investee) shall be transferred to profit or loss for the current period on pro rata basis.
In the event of loss of control over investee due to partial disposal of equity investment by the Group, in preparing separate
financial statements, the remaining equity interest which can apply common control or impose significant influence over the
investee after disposal shall be accounted for using equity method. Such remaining equity interest shall be treated as
accounting for using equity method since it is obtained and adjustment was made accordingly. For remaining equity interest
which cannot apply common control or impose significant influence over the investee after disposal, it shall be accounted
for using the recognition and measurement standard of financial instruments. The difference between its fair value and
carrying amount as at the date of losing control shall be included in profit or loss for the current period. In respect of other
comprehensive income recognised using equity method or the recognition and measurement standard of financial
instruments before the Group obtained control over the investee, it shall be accounted for in accordance with the same
accounting treatment for direct disposal of relevant asset or liability by investee at the time when the control over investee is
lost. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution
under net asset of investee accounted for and recognised using equity method) shall be transferred to profit or loss for the
current period at the time when the control over investee is lost. Of which, for the remaining equity interest after disposal



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accounted for using equity method, other comprehensive income and other owners’ equity shall be transferred on pro rata
basis. For the remaining equity interest after disposal accounted for using the recognition and measurement standard of
financial instruments, other comprehensive income and other owners’ equity shall be fully transferred.
In the event of loss of common control or significant influence over investee due to partial disposal of equity investment by
the Group, the remaining equity interest after disposal shall be accounted for using the recognition and measurement
standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing common
control or significant influence shall be included in profit or loss for the current period. In respect of other comprehensive
income recognised under previous equity investment using equity method, it shall be accounted for in accordance with the
same accounting treatment for direct disposal of relevant asset or liability by investee at the time when equity method was
ceased to be used. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit
distribution under net asset of investee accounted for and recognised using equity method) shall be transferred to profit or
loss for the current period at the time when equity method was ceased to be used.
The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions until the control
over the subsidiary is lost. If the said transactions belong to ―transactions in a basket‖, each transaction shall be accounted
for as a single transaction of disposing equity investment of subsidiary and loss of control. The difference between the
disposal consideration for each transaction and the carrying amount of the corresponding long-term equity investment of
disposed equity interest before loss of control shall initially recognised as other comprehensive income, and subsequently
transferred to profit or loss arising from loss of control for the current period upon loss of control.
14. Investment real estate
Investment real estate is the real estate that held by the Company for purpose of obtaining rent or capital appreciation or
both purpose received. Investment real estate including rented land use right, land use right held ready for transfer after
appreciation and rented buildings etc.
The investment real estate shall be measured initially at the cost. The subsequent spending related to the investment real
estate, if it is very likely for the related economi interest to flow in and its cost can be reliably measured, shall be incl uded in
the cost for the investment real estate. Other subsequent spending shall be included in the current profit or loss when
occurring.
The Company applies the cost model for subsequent measurement of investment real estate, and depreciates and amortizes it
as per the policy consistent to those for the houses and buildings and land use right.
For details about the methods for impairment testing of the investment real estate and for accrual of impairment provision,
see Notie IV 20 ―Impairment of long term assets‖.
Where property for own use or inventory transfers to investment property, or investment property transfers to property for
own use, carrying value before such transfer shall be taken as book value after such transfer.
In the event that an investment property is converted to an owner-occupied property, such property shall become fixed assets
or intangible assets since the date of its conversion. In the event that an owner-occupied property is converted to real estate
held to earn rentals or for capital appreciation, such fixed assets or intangible assets shall become an investment property
since the date of its conversion. Upon the conversion, investment property which is measured at cost is accounted for with
the carrying value prior to conversion, and investment property which is measured at fair value is accounted for with the fair
value as of the conversion date.
If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will be obtained
from the disposal, the recognition of it as an investment property shall be terminated. When an investment property is sold,
transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carrying amount and related
tax and surcharges is recognised in profit or loss for the current period.
15. Fixed assets



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(1) Recognition criteria of fixed assets
Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services, renting or
business management with useful lives exceeding one fiscal year. Fixed assets are only recognised when the relevant
economic benefits are likely to inflow to the Company and their cost can be measured reliably. Fixed assets are initially
measured at cost taking into account predicted disposal expenses.
(2) Depreciation method of fixed assets
The initial measurement of a fixed assets shall be made at its cost and consider expected discard expenses factors
alternatives. Accrual depreciation of fixed assets shall be made based on straight-line depreciation within the service life
since the second month, when the fixed assets reached its expected condition for use. Service life, estimated net residual
value and annual depreciation rate for vary fixed assets are as:


                                                                                                         Annual depreciation
                    Type                         Depreciation term (year)         Residual rate (%)
                                                                                                               rate (%)

House and buildings                                         35                           3                       2.77

Machinery equipment                                         12                           3                       8.08

Transportation equipment                                     7                           3                      13.86

Electronic equipment                                         7                           3                      13.86

Office and other equipment                                   7                           3                      13.86

Decoration charge for self-owned houses                     10                           0                      10.00
Estimated net residual value is the amount obtained from disposal of such fixed assets after estimated disposal expense
deducted, on assumption basis of the fixed assets has full estimated service life and in an anticipating condition of service
life terminated.
(3) Impairment test method and accrual of depreciation reserves for fixed asset
Impairment test method and accrual of depreciation reserves for fixed asset please found in ―20. Impairment of non-current
and non-financial assets‖ in Note IV
(4)Others
As for the subsequent expenditure related to fixed assets, if the economic benefits related to the fixed assets is probable to
flow into the Company and its cost could be measured reliably, then the expenditure shall be included in costs of the fixed
assets, and the carrying value of the replaced portion shall be derecognized. Other subsequent expenditures other than this
shall be included in profits or losses of the period when occurred.
The disposal income from disposal, transfer, dumping or damage of fixed assets less its carrying value and related tax
expenses shall be recorded in profits or losses of the period.
The Company, at least, re-reviews the use of life, projected net residual value and depreciation method of fixed assets at the
end of year. For any change of the above factor, it shall be dealt as change of accounting estimation.
16. Construction-in-progress
Cost of construction-in-progress should recognized by the actual construction costs, including vary construction costs during
the period of construction, the capitalized borrowing costs prior to the expected conditions for use and other relevant
expenses etc. The construction-in-progress should carry forward as fixed assets after reached the expected conditions for
use.



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Impairment test method and impairment provision method for the construction-in-progress found in ―20.impairment of
non-current/non-financial assets‖ in Note IV.
17. Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in
connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. For
borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, when
expenditures for the asset and borrowing costs are being incurred, activities relating to the acquisition, construction or
production of the asset that are necessary to prepare the asset for its intended use or sale have commenced, such borrowing
costs shall be capitalized as part of the cost of that asset; and capitalization shall discontinue when the qualifying asset is
ready for its intended use or sale. Other borrowing costs shall be recognized as expense in the period in which they are
incurred.
Where funds are borrowed for a specific purpose, the amount of interest to be capitalized shall be the actual interest expense
incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being
used into banks or any investment income on the temporary investment of those funds. Where funds are borrowed for
general purpose, the Group shall determine the amount of interest to be capitalized on such borrowings by applying a
capitalization rate to the weighted average of the excess amounts of cumulative expenditures on the asset over and above the
amounts of specific-purpose borrowings. The capitalization rate shall be the weighted average of the interest rates applicable
to the general-purpose borrowings.
During the capitalization period, exchange differences related to the principal and interest on a specific purpose borrowing
denominated in foreign currency shall be capitalized as part of the cost of the qualifying asset. Exchange differences related
to general-purpose borrowings denominated in foreign currency shall be included in profit or loss for the current period.
Qualifying assets are assets (fixed assets, investment property, inventories, etc) that necessarily take a substantial period of
time for acquisition, construction or production to get ready for their intended use or sale.
Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a
qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months, until the
acquisition, construction or production of the qualifying asset is resumed.
18. Intangible assets
(1) Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Group.
An intangible asset shall be initially measured at cost. The expenditures incurred on an intangible asset shall be recognized
as cost of the intangible asset only if it is probable that economic benefits associated with the asset will flow to the Group
and the cost of the asset can be measured reliably. Other expenditures on an item asset shall be charged to profit or loss
when incurred.
Land use right acquired shall normally be recognized as an intangible asset. Self-constructed buildings (e.g. plants), related
land use right and the buildings shall be separately accounted for as an intangible asset and fixed asset. For buildings and
structures purchased, the purchase consideration shall be allocated among the land use right and the buildings on a
reasonable basis. In case there is difficulty in making a reasonable allocation, the consideration shall be recognized in full as
fixed assets.
An intangible asset with a finite useful life shall be stated at cost less estimated net residual value and any accumulated
impairment loss provision and amortised using the straight-line method over its useful life when the asset is available for use.
Intangible assets with indefinite life are not amortised.
The Group shall review the useful life of intangible asset with an infinite useful life and the amortization method applied at
period-end. A change in the useful life or amortization method used shall be accounted for as a change in accounting


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estimate. For an intangible asset with an indefinite useful life, the Group shall review the useful life of the asset. If there is
evidence indicating that the period during which the intangible assets brings in economic benefits to the Group can be
predicted, the Group shall estimate the useful life of that asset and make amortization under the amortization policies
applicable to intangible assets with finite useful life.
(2) Research and development expenditures
Research and development expenditure of the Group was divided into expenses incurred during the research phase and
expenses incurred during the development phase.
Expenses incurred during the research phase are recognised as profit or loss in the current period.
Expenses incurred during the development phase that satisfy the following conditions are recognised as intangible assets,
while those that do not satisfy the following conditions are accounted for in the profit or loss for the current period:
①it is technically feasible that the intangible asset can be used or sold upon completion;

②there is intention to complete the intangible asset for use or sale;

③the intangible asset can produce economic benefits, including there is evidence that the products produced using the
intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is
evidence that there exists usage for the intangible asset;
④there is sufficient support in terms of technology, financial resources and other resources in order to complete the
development of the intangible asset, and there is capability to use or sell the intangible asset;
⑤the expenses attributable to the development phase of the intangible asset can be measured reliably.

If the expenses incurred during the research phase and the development phase cannot be distinguished separately, all
development expenses incurred are accounted for in the profit or loss for the current period.
(3) Intangible assets impairment test method and their impairment provision
The method for impairment test and impairment provision of intangible assets is detailed in Note IV. 20 ―Impairment of
non-current non-monetary financial asset‖.
19. Long-term prepaid expenses
Long-term prepaid expenses refer to the general expenses that occurred but shall be amortized over one year in reporting
period and later period. Long-term prepaid expenses shall amortized by straight-line method in expected benefit period.
20. Long-term impairment
The Group will judge if there is any indication of impairment as at the balance sheet date in respect of non-current
non-financial assets such as fixed assets, construction in progress, intangible assets with a finite useful life, investment
properties measured at cost, and long-term equity investments in subsidiaries, joint controlled entities and associates. If there
is any evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test.
Goodwill, intangible assets with an indefinite useful life and intangible assets beyond working conditions will be tested for
impairment annually, regardless of whether there is any indication of impairment.
If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, the impairment
provision will be made according to the difference and recognized as an impairment loss. The recoverable amount of an
asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived
from the asset. An asset’s fair value is the price in a sale agreement in an arm’s length transaction. If there is no sale
agreement but the asset is traded in an active market, fair value shall be determined based on the bid price. If there is neither
sale agreement nor active market for an asset, fair value shall be based on the best available information. Costs of disposal
are expenses attributable to disposal of the asset, including legal fee, relevant tax and surcharges, transportation fee and
direct expenses incurred to prepare the asset for its intended sale. The present value of the future cash flows expected to be
derived from the asset over the course of continued use and final disposal is determined as the amount discounted using an


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appropriately selected discount rate. Provisions for assets impairment shall be made and recognized for the individual asset.
If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine the recoverable
amount of the asset group to which the asset belongs. The asset group is the smallest group of assets capable of generating
cash flows independently.
For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statements shall
be allocated to the asset groups or group of assets benefiting from synergy of business combination. If the recoverable
amount is less than the carrying amount, the Group shall recognise an impairment loss. The amount of impairment loss shall
first reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then reduce the
carrying amount of other assets (other than goodwill) within the asset group or set of asset groups, pro rata on the basis of
the carrying amount of each asset.
An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in respect of the
restorable value.
21. Staff remuneration
Staff remuneration includes short term staff remuneration, post office benefit, dismissal benefit, among which:
Short term staff remuneration mainly consists of salary, bonus, allowance and subsidy, staff benefits, medical insurance,
maternity insurance, work related injury insurance, housing funds, labor unit fee and education fee, non-monetary benefits,
etc. short term staff remuneration actually happened during the accounting period in which staff provides services to the
Company is recognised as liability, and shall be included in current gains and losses or relevant asset cost. Non-monetary
benefits are measured at fair value.
Post office benefits mainly consist of defined withdraw plan and defined benefit plan. Defined withdraw plan mainly
includes basic pension insurance, unemployment insurance and annuity, and the contribution payable is included in relevant
asset cost or current gains and losses when occurs. Our defined benefit plan mainly relates to retirement benefits. The
Company engaged independent actuary to make estimation on demographic variables and financial variables under
predicted accumulative benefits unit method with unbiased and consistent actuary assumption, measure liabilities arising
from defined benefit plan and determine vesting periods of various liabilities. On balance sheet date, the Company presented
liabilities arising from defined benefit plan at present value, and recorded service costs as profit or loss for the period.
When the Company terminates the employment relationship with employees before the end of the employment contracts or
provides compensation as an offer to encourage employees to accept voluntary redundancy, the Company shall recognise
employee compensation liabilities arising from compensation for staff dismissal and included in profit or loss for the current
period, when the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labour
relationship plans and employee redundant proposals; and the Company recognise cost and expenses related to payment of
compensation for dismissal and restructuring, whichever is earlier. However, if the compensation for termination of
employment is not expected to be fully paid within 12 months from the reporting period, it shall be accounted for other
long-term staff remuneration.
Employee internal retirement plans is to use the same principle to deal with termination benefits. The group will pay staff
salary, social insurance and others from the date they stop providing service to their retire-day. This amount shall be
included in the current profits and losses (termination benefits), only when it meets the projected liabilities confirmation
conditions.
For other long-term employee benefits provided by the Company to its employees, if satisfy with the established withdraw
plan, then the benefits are accounted for under the established withdraw plan, otherwise accounted for under defined benefit
scheme.
22. Accrual liability
The obligation pertinent to contingencies shall be recognized as accrual liability when the following conditions are satisfied
simultaneously: (1) That obligation is a current obligation of the Group; (2) It is likely to cause any economic benefit to flow

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out of the enterprise as a result of performance of the obligation; and (3) The amount of the obligation can be measured in a
reliable way.
At the balance sheet date, considering matters related to risks, uncertainties and time value of money and other factors, the
expected liabilities are measured in accordance with the best estimate of the necessary expenses for the performance of the
current obligation.
If the expenditure required paying all or part of the expected liabilities was compensated by the third party, and the amount
of compensation basically can be sure when received, it could be recognized as a separate asset. But the amount of
compensation confirmed couldn’t be more than the book value of the estimated debts.
23. Income
(1) Income of commodities sales
When the transfer of significant risks and rewards of ownership of the goods to the buyer is done, when the right of
management usually associated with ownership is not reserved, when we didn’t effectively control the goods sold, the
amount of revenue can be measured reliably. The associated economic benefits are likely to flow into the enterprise. And the
related costs incurred or to be incurred can be measured in a reliable way. Thus we realize sales income.
The company engages in sales of cars, confirming income after the vehicle delivery to customers according to agreement,
payment received or the rights to receive payment.
(2) Income from providing labor
On condition that provision of services trade results can be reliably estimated, we confirm income from providing labor on
the balance sheet date according to the percentage of completion. The Company calculates the completion schedule through
the ratio of the costs incurred taking up of the estimated total cost.

The results of labor transaction provided can be estimated reliably only when simultaneously: ①the amount of revenue can
be measured reliably; ②the economic interests are likely to flow into the enterprise; ③the degree of completion can be
reliably determined; ④cost occurred and to be occurred can be reliably measured.

If the service transaction results couldn’t be able to reliably estimated, labor income will be calculated according to
according to amount of labor costs which has occurred and is expected to be t compensated, and labor costs occurred would
be included as expenses of the current period. Labor cost occurred which cannot be compensated will not be included as
revenue.
The Company engages in car repair services, confirming income after the car repair service is delivered to customers
according to agreement, payment received or the rights to receive payment.
(3) Use fee income
According to the relevant contract or agreement, revenue is recognized in accordance with the accrual basis.
(4) Interest income
Interest income is confirmed in accordance with time and actual interest others make use of the monetary capital of the
group
24. Government subsidy
A government subsidy means the monetary or non-monetary assets obtained free by the Group from the government, but
excluding the capital invested by the government as the owner of the enterprise. Government subsidies consist of the
government subsidies pertinent to assets and government subsidies pertinent to income. Government grant obtained by the
Company for the purpose of constructing or otherwise forming long term assets is recognised as government grant related to
assets, and other government grants are recognised as those related to income. If government document fails to identify
specific grantee, government grants will be categorized into government grants related to income or assets respectively
under the below method: (1) in case government document indicates the specific project applicable to the grant, such
categorization shall be made based on the respective proportion of expenditures to form assets or be recorded as expenses in


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budget for the specific project. The allocation proportion will be reviewed on each balance sheet date, and is subject to
necessary alteration; (2) in case government document only indicate general purpose of such grant instead of specific project,
the grant shall be viewed as government grant related to income.
The government subsidy with monetary assets concerned should be measured by the actual received or receivable amount
while non-monetary assets government subsidy measured by fair value; if without realizable fair value obtained, measured
by nominal amount instead. The government subsidy with nominal amount measured should reckon into current gains and
losses.
Government grants are generally recognised when received and measured at the amount actually received, but are measured
at the amount likely to be received when there is conclusive evidence at the end of the accounting period that the Group will
meet related requirements of such grants and will be able to receive the grants. The government grants so measured should
also satisfy the following conditions: (1) the amount of the grants be confirmed with competent authorities in written form
or reasonably deduced from related requirements under financial fund management measures officially released without
material
uncertainties; (2) the grants be given based on financial support projects and fund management policies officially published
and voluntarily disclosed by local financial authorities in accordance with the requirements under disclosure of government
information, where such policies should be open to any company satisfying conditions required and not specifically for
certain companies; (3) the date of payment be specified in related documents and the payment thereof be covered by
corresponding budget to ensure such grants will be paid on time as specified; and (4)other relevant conditions which shall be
met based on the specific situations of the Company and the subject matter.
Asset-related government subsidies are recognized as deferred income and accounted into the current gains/losses equally
within service life for the relevant assets. The government subsidies pertinent to incomes, which are used for compensating
the related future expenses or losses of the enterprise shall be recognized as deferred income and should reckoned into
current gains/losses in period of when relevant expenses are recognized; if used for compensating the occurred relevant
expenses and losses, reckoned into current gains/losses directly.
As for the recognized government subsidy needs to return, if there has relevant balance of deferred incomes, relevant book
balance of the deferred income should be written down, and the exceeded part should included in the current gains/losses; if
there has no relevant balance of deferred incomes, reckoned into current gains/losses directly.
25. Deferred income tax assets and deferred income tax liabilities
(1) The current income tax
At the balance sheet date, for the current income tax liabilities (or assets) arising during the current and previous periods,
current income tax should be calculated in line with expected payable (or return) income tax amount in accordance with the
provisions of the tax law. Calculation of the current income tax expenses on the basis of the computation of taxable income
is adjusted to the pre-tax accounting profit according to the relevant provisions of the tax law.
(2) The deferred income tax assets and deferred income tax liabilities
As for the balance between the book value of some assets and liabilities and the tax base, and those temporary difference
arisen from balance which is not recognized as an asset or liability but whose difference between the book value and tax
base could be calculable in accordance with the provisions of the tax law, we adopt debt method of balance sheet to
recognize deferred income tax assets and deferred income tax liabilities.
As for taxable temporary differences which is arisen from initial recognition of goodwill, and those related to initial
recognition of assets or liabilities arisen during trade with neither merging nor those which won’t affect the accounting profit
and taxable income (or deductible loss), related deferred tax liabilities will not be confirmed. In addition, as for temporary
differences taxable related to subsidiary companies, associated enterprises and joint venture investment, if the group is able
to control the reversal time of the temporary difference, and the temporary differences in the foreseeable future probably will
not be reversed, we also could not confirm the deferred income tax liabilities. In addition to the above condition, the group

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could confirm all the other deferred income tax liabilities arising from taxable temporary differences.
As for deductible temporary differences related to initial reorganization of asset or liability arising from trades with neither
merge nor those which won’t affect the accounting profit and taxable income (or deductible loss), we’ll not recognize
relevant deferred income tax assets. In addition, as for deductible temporary differences related to subsidiary companies,
associated enterprises and joint venture investment, if the temporary differences in the foreseeable future probably will not
be reversed, we also could not confirm the deferred income tax assets. In addition to the above condition, the group could
confirm all the other deferred income tax assets arising from deductible temporary differences within benchmark of income
of taxable deductible temporary differences.
As for deductible loss or tax deduction which to be reversed in the following years, we confirm the corresponding deferred
income tax assets within benchmark of future taxable income to be likely deducted for deductible loss and tax deduction.
On the balance sheet date, the deferred income tax assets and liabilities are measured according to the provisions of the tax
law, in accordance with the applicable tax rate during related assets to be expected recovery or related liabilities to be paid
off.
At the balance sheet date, we recheck the book value of deferred income tax assets. If in future it is unlikely to obtain
adequate taxable income to offset the benefit of the deferred income tax asset, then we write down the book value of
deferred income tax assets. When it is probable to obtain adequate taxable income, amount written down shall be reversed.
(3) The income tax expenses
The income tax expense included the current income tax and deferred income tax.
In addition to trades and current income tax and deferred income tax related to projects which are included in other
comprehensive income or directly included in owners’ interest, as well as the book value whose goodwill arranged in line
with deferred income tax arising from enterprises combination, all the other current income tax and deferred income tax
expenses or income will be included in current profit and loss.
(4) Offset of income tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realise the assets and
settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and deferred
tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realise the assets and
liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected
to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
26. Leasing
Finance lease transfers substantially all the risks and rewards related to the ownership of an asset. Its ownership may
eventually transfer, also may not. While all the other leases are classified as operating leases.
(1) The Company keeps record of lease business as lessee
Rental expense of operating lease is included in the relevant asset costs or current profits and losses through the straight-line
method during every period. Initial direct costs shall be included in profit or loss for the current period. Or rent to the actual
shall be included in the current profits and losses.
(2) The Company keeps record of lease business as lessor
Rental income of operating lease is included in the relevant asset costs or current profits and losses through the straight-line
method during every period. The larger amount of initial direct costs shall be capitalized when it is created, and shall be
included in the current profits and losses during the lease period in accordance with same basic as the confirmed amount by
stages. The other small amount of initial direct costs shall be included in the current profits and losses when it’s created. Or
rent to the actual shall be included in the current profits and losses.


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(3) Financing lease business with the Group recorded as lessee
On the beginning date of the lease, the entry value of leased asset shall be at the lower of the fair value of the leased asset
and the present value of minimum lease payment at the beginning date of the lease. Minimum lease payment shall be the
entry value of long-term accounts payable, with difference recognised as unrecognised financing expenses. In addition,
initial direct costs attributable to leased items incurred during the process of lease negotiation and signing of lease
agreement shall be included in the value of leased assets. The balance of minimum lease payment after deducting
unrecognised financing expenses shall be accounted for long-term liability and long-term liability due within one year.
Unrecognised financing expenses shall be recognised as financing expenses for the current period using effective interest
method during the leasing period. Contingent rent shall be included in profit or loss for the current period at the time it
incurred.
(4) Financing lease business with the Group recorded as lessor
On the beginning date of the lease, the entry value of lease receivable shall be the aggregate of minimum lease receivable
and initial direct costs at the beginning date of the lease. The unsecured balance shall be recorded. The aggregate of
minimum lease receivable, initial direct costs and unsecured balance and the different between their present value shall be
recognised as unrealised financing income. The balance of lease receivable after deducting unrecognised financing income
shall be accounted for long-term debt and long-term debt due within one year.
Unrecognised financing income shall be recognised as financing income for the current period using effective interest
method during the leasing period. Contingent rent shall be included in profit or loss for the current period at the time it
incurred.
27. Other significant accounting policies and accounting estimation
(1) Discontinued operation
Discontinued operation refers to the operation disposed or classified as held-for-sale by the Company and presented
separately under operation segments and financial statements, which has fulfilled one of the following criteria: ① it
represents an independent key operation or key operating region; ② it is part of the proposed disposal plan on an
independent key operation or proposed disposal in key operating region; or ③ it only establishes for acquisition of
subsidiary through disposal.
Accounting for discontinued operation is set out in note IV 12 ―classified as assets held for sale‖.
(2)Repurchase of shares
Share repurchase consideration paid and transaction costs to reduce the owner’s equity, repurchase, transfer or cancellation
of Chenming Paper’s shares, the gains or losses are not recognised.
In respect of transfer of treasury shares, the difference between the actual amount received and the carrying amount of
treasury shares shall be included in capital reserve. When insufficient to dilute, capital reserve will be offset against the
surplus reserve and retained profits. Treasury shares are cancelled at par value and by the number of shares cancelled to
reduce the share capital. The difference between the book balance and the nominal value of the treasury shares shall be
offset against the capital reserve. When insufficient to dilute, capital reserve will be offset against the surplus reserve a nd
retained profits.
(3)Assets securitization
Partial assets (―trust properties‖) of the Company are securitized. Relevant assets are operated by special purpose vehicles
on trust. The special purpose vehicles issue superior assets supporting securities to investors and the Company holds
subordinated assets supporting securities. The subordinated ones are not allowed to transfer prior to completion of
repayment of principal and interest of superior ones. As assets service provider, the Company provides assets maintenance
and normal management, determination of annual assets disposal plan, preparation and implementation of assets disposal
plan, execution of relevant assets disposal agreement and regular preparation of assets service report. In addition, as

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liquidity supporting institution, the Company shall provide liquidity support where principal of superior assets supporting
securities aren’t paid in full, to make up shortage of interest or principal. Trust properties, after being applied to pay trust
taxes and associate expenses, are preferentially used to repay the principal and interests of superior assets supporting
securities, and the remaining trust properties after full settlement of such principal and interests are recorded as income of
subordinated assets supporting securities and vested by the Company. The Company actually keeps nearly all the risks and
rewards of trust properties, thus it doesn’t derecognize trust properties. Besides, the Company owns effective control over
special purpose vehicle which is included in consolidated financial statements.
When applying accounting policies in relation to securitization of financial assets, the Company has considered the risks and
rewards of assets transferred to other entity as well as the level of control that the Company can exercise in respect of such
entity:
- In case that the Company has transferred nearly all the risks and rewards of ownership of financial assets, the Company
 derecognizes such financial assets;
- In case that the Company keeps nearly all the risks and rewards of ownership of financial assets, the Company continues to
 recognize such financial assets;
- In case that the Company doesn’t transfer or keep nearly all the risks and rewards of ownership of financial assets, the
 Company considers whether it owns control over such financial assets. If the Company maintains no control, it will
 derecognize such assets, and recognize the rights and liabilities occurred or kept during transfer as assets or liabilities
 respectively. If the Company maintains control, it will recognize such financial assets based on the continuous involvement
 level in respect of such assets.
28. Changes of major accounting policies and accounting estimation
 (1) Changes of accounting policy
Accounting policies changed due to the implementation of the new accounting standards.
In early 2014, the Ministry of Finance issued ―Accounting Standard for Business Enterprises No. 39 – Fair Value
Measurement‖, ―Accounting Standard for Business Enterprises No. 30 – Presentation of Financial Statements‖, ―Accounting
Standard for Business Enterprises No. 9 – Employee Benefits‖, ―Accounting Standard for Business Enterprises No. 33 –
Consolidated Financial Statements‖, ―Accounting Standard for Business Enterprises No. 40 – Joint Arrangements‖,
―Accounting Standard for Business Enterprises No. 2 – Long-term Equity Investments (as amended in 2014)‖ and
―Accounting Standard for Business Enterprises No. 41 – Disclosure of Interest in Other Entities‖ in Cai Kuai [2014] No. 6,
No. 7, No. 8, No. 10, No. 11, No. 14 and No. 16, requiring the above to be adopted among companies applying the
Standards from 1 July 2014, and encouraging entities listed overseas to early adopt the above. Furthermore, the Ministry
issued ―Accounting Standard for Business Enterprises No. 37 – Presentation of Financial Instruments (as amended in 2014)‖
(the ―Financial Instrument Presentation Standard‖) in Cai Kuai [2014] No. 23, requiring the adoption of the above standard
for accounting periods starting in or after 2014.
As resolved at the fourth meeting of the Board of the tenth session held on 24 October 2014, the Company has adopted since
the accounting period starting from 1 July 2014 the above seven new or revised standards save for Financial Instrument
Presentation Standard. Adjustments made to the items and amounts in financial statements for the half year of 2014 when
preparing the financial statement for the half year of 2015 according to transitional arrangements were set out as follows:

                                                                                      Amount impact on relevant financial
                           Changes of accounting policy and impacts on the
      Standards                                                                     statement dated 30 June 2014/ January to
                                               Company
                                                                                                   June in 2014




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                                                                                                                  Amount impact
                                                                                              Items                  Increase
                                                                                                                   +/decrease -

Accounting               Prior to implementation of Accounting Standard for         Financial            assets
                                                                                                                   +10,478,985.77
Standards          for   Business Enterprises No. 2 – Long-term Equity             available for sale
Business Enterprises     Investments (as amended in 2014), the Company
No. 2 - Long-term        recognized such equity investment where it owned
Equity                   no control or significant influence over the acquire
Investments(2014         and which was not quoted in active market and
Revised)                 whose fair value cannot be measured reliably as
                         long-term equity investment, and measured it at cost
                         method.     After    implementation of      Accounting     Long-term           equity
                                                                                                                   -10,478,985.77
                         Standard for        Business Enterprises No.      2   –   investment
                         Long-term Equity Investments (as amended in
                         2014), the aforesaid kind of equity investment shall
                         be accounted for as financial assets available for
                         sale. The Company has made corresponding
                         accounting treatment in respect of the above
                         accounting policy change retrospectively.

Accounting                                                                          Deferred income tax
                         Prior to implementation of Accounting Standard for                                        + 1,165,792.85
Standards          for                                                              assets
                         Business Enterprises No. 9 – Employee Benefits(as
Business Enterprises
                         amended in 2014), the retirement benefits were             Long-term
No. 9 - Employee                                                                                                  + 10,124,533.65
                         recorded in current profit or loss when occurred           remuneration payables
Remuneration
                         actually.   After implementation of Accounting             Minority interest                 -118,494.94
                         Standard for Business Enterprises No. 9 – Employee
                                                                                    Retained profit                 -8,840,245.86
                         Benefits(as amended in 2014), retirement benefits
                         will be accounted for by reference to the accounting       Administration
                                                                                                                      -464,746.03
                         policies as detailed in Note IV 21. The Company has        expenses

                         made corresponding accounting treatment in respect         Financial expenses               + 292,079.35
                         of    the    above      accounting    policy    change
                                                                                    Opening           retained
                         retrospectively.                                                                           -8,980,986.48
                                                                                    profit

(2) Changes of accounting estimate
No accounting estimate changed in reporting period
29. Major accounting judgment and estimate
The Company need make judgment, estimation and hypothesis to book value of those unaccountable items in sheet due to
inner uncertainties of operating activities in the process of using accounting policies. These judgments, estimates and
assumptions are made in line with the Company's past management experience, and in consideration of other relevant
factors. These judgments, estimates and assumptions will affect disclosure of amount of income, expenses, assets and
liabilities as well as contingent liability on the balance sheet day. However, the uncertainties in these estimates may cause
significant adjustments to book value of those asset or liability affected in the future.
The Company rechecks regularly the judgment, estimation and hypothesis based on sustainable management. As for a
change affecting only the current period, the amount shall be confirmed only in the current period; for those not only


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affecting the current but the future, the amount shall be confirmed in the current and future period.
At the balance sheet date, the Company needs to determine amount of items of the financial statements, estimation and
hypothesis shown as the following important areas:
(1) Provision for bad debts
The Company accounts for the allowance for bad debt losses according to the receivable accounting policies. Accounts
receivable is the valuation of accounts receivable can be recovered based on. Identification of devaluation of accounts
receivable needs judgments and estimates of management level. Difference between actual results and the original estimates
impact reversal of the book value accounts receivable and accounts receivable for provision for bad debts during the
estimation was changing.
(2) Provision of inventory devaluation
According to the inventory accounting policies, the Company shall accrue inventory devaluation provision as for inventory
whose cost is higher than net realizable and those obsolete or unmarketable in accordance with the lower one in cost and net
realizable value. Write-down of inventories to net realizable value is to assess the salability and net amount of prospect
realization. Identification of inventory impairment requires management’s judgment and estimation after their obtaining
conclusive evidence and consideration of the purpose for holding inventories, events effects occurring after balance sheet
date. The difference between actual results and original estimates will affect the reversal of book value and devaluation
provision of inventories during the estimation was changing.
(3) Financial assets available for sale
In respect of impairment of available-for-sale financial assets, whether impairment loss shall be recognised in income
statement significantly depends on the judgments and assumptions of the management. While making judgments and
assumptions, the Company shall assess the excess of cost of the investee’s identifiable net assets attributable to the
investment over fair value and the duration, and financial condition and short term business outlook of the investee,
including industry situation, technical reform, credit rating, default rate and risks from counterparties.
(4) Impairment provision of non-financial non-current assets
The Company takes judge on non-current assets excluding financial assets to see whether there is any sign of possible
impairment at the balance sheet date. For those intangible assets not sure on the service life, when there is any indication of
impairment, are to be tested for impairment, too, except for impairment testing performed each year. Other financial assets
outside the non-current assets, when there are signs that its carrying amount is not recoverable, tested for impairment is
needed.
The book value of the asset or asset group is higher than that of the recoverable amount, namely fair value minus the higher
net amount between the disposal expenses and the future cash flows, which show that impairment happened.
The net amount of fair value minus the disposal expenses is confirmed by referring to sales agreement price of assets of
similar bargain or observable market price, then minus the incremental costs directly attributable to the disposal of assets.
When prospecting current value of future cash flows, we need make critical judgments for the asset (or asset group) yield,
price, related operating costs and discount rate when calculating the present value. The group shall make use of relevant
materials to estimate recoverable amount, including the predictions about the production, price and related operating costs
based on reasonable and supportable assumptions.
(5) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Company takes a straight-line depreciation and
amortization within service life in consideration of its residual value. The Company regularly review service life, thus
determine the depreciation and amortization amount in each reporting period. Life is determined based on past experience of
similar assets and technology update is expected. If the previous estimate changes, we will adjust depreciation and
amortization expense in future periods.


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(6) The deferred income tax assets
Within the limits that it is very likely to have sufficient taxable profits to offset losses, the Company confirms deferred
income tax assets using all unused tax losses. This requires the management to use a lot of judgment to estimate the time and
amount of future taxable profits, combined with the tax planning strategy, thus confirm the amount of deferred income tax
assets.
(7) The income tax
During ordinary course of business, uncertainty exists in final tax treatment and calculation of a part of trading. Whether
part of the project is in pre tax expenses requires approval of tax authorities. If the final confirmation of these tax matters
differs from an initial estimate, the difference will affect current income tax and deferred income tax during the final period.
(8)Retirement benefits
Expenses and expenditures regarding to retirement benefits are determined based on various assumptions including discount
rate, average medical care expense growth rate, growth rate of retirement subsidy and other factors. Difference between
actual results and assumption will be recognised immediately upon occurrence and recorded in expense for the year.
Although management believes that reasonable assumption has been adopted, actual results and change of assumption
conditions would affect balance of expenses and liabilities regarding to retirement benefits.
(9) Accrual liabilities
The Company estimates and accrues corresponding provision for product quality guarantee, expected contract loss, penalty
for late delivery and others in accordance with terms of the contract, existing knowledge and experience. When such
contingencies has formed a present obligation, and the performance of the current obligation is likely to lead to the outflow
of economic benefits of the Company, the Company recognizes the best estimate of required expense when performing
current obligation as accrual liability. The recognition and measurement of debt is largely dependent on the judgment of
management. In the process of judgment the Company needs to assess the contingent risks, uncertainties and money and the
time value and other factors.




V. Taxation
Main tax and tax rate

                  Type                                                            Tax rate

                                            Output tax calculated based on 17% of the taxable income, calculated and paid
VAT
                                            the VAT on the difference after deducted deductible current input tax

Operation tax                               Calculated and paid on 5% of the taxable operation amount

City maintaining & construction tax         Calculated and paid on 7% of the turnover tax actually paid

Education surcharge                         Calculated and paid on 3% of the turnover tax actually paid

Local education surcharge                   Calculated and paid on 2% of the turnover tax actually paid

                                            Calculated and paid on 25% of the taxable income amount and tax by the levy
Corporation income tax *
                                            rate

* Note: The Company and subsidiaries exercise rate of 25% in 2015, except Shenzhen New Yongtong Dongxiao Vehicle
Inspection Co., Ltd., which has taxed on levy rate.




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VI. Enterprise consolidation and consolidated financial statements

Unless otherwise stated, the follow notes (including the items of financial statement of the Company), year-begin refers to
31st December 2014 while period-end refers to 30th June 2015.
1. Monetary fund

                    Item                                 Closing balance                           Balance at year-begin

Stock cash                                                                   131,222.54                               84,813.57

Bank deposits:                                                          131,123,621.93                             79,960,856.08

Other monetary capital                                                                --                                      --

                   Total                                                131,254,844.47                             80,045,669.65

2. Accounts receivable
 (1) Accounts receivable by category


                                                                             Closing balance

                   Types                            Book balance                     Bad debt reserve
                                                                                                                    Book value
                                                Amount         Ratio (%)       Amount          Accrual ratio (%)

Account        receivable     with    single

significant amount and withdrawal bad          22,512,414.52         43.25    22,512,414.52               100.00             -- -

debt provision separately

Receivables with bad debt provision
                                                4,866,303.50          9.35       763,800.70                15.70 4,102,502.80
accrual by credit portfolio

Accounts with single significant amount

and   bad      debts   provision     accrued   24,674,068.64         47.40    24,674,068.64               100.00              --

individually

                    Total                      52,052,786.66        100.00    47,950,283.86                92.12 4,102,502.80
(Cont.)


                                                                           Balance at year-begin

                   Types
                                                    Book balance                     Bad debt reserve
                                                                                                                    Book value
                                                Amount         Ratio (%)       Amount          Accrual ratio (%)

Account        receivable     with    single

significant amount and withdrawal bad          22,512,414.52         45.65    22,512,414.52               100.00             -- -

debt provision separately

Receivables with bad debt provision
                                                2,137,058.59          4.33       763,800.70                35.74 1,373,257.89
accrual by credit portfolio


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                                                                             Balance at year-begin

                    Types
                                                  Book balance                         Bad debt reserve
                                                                                                                        Book value
                                              Amount         Ratio (%)           Amount          Accrual ratio (%)

Accounts with single significant amount

and    bad     debts   provision   accrued   24,674,068.64           50.02      24,674,068.64                 100.00             --

individually

                    Total                    49,323,541.75          100.00      47,950,283.86                  97.22 1,373,257.89
①Account receivable with single significant amount and withdrawal bad debt provision separately at period end

                                                                               Closing balance

       Account receivable(units)              Account                              Accrual
                                                                  Bad debt
                                                                                                              Reasons
                                             receivable                              ratio
                                                                   reserve

Shenzhen Jinlu Industry and Trade Co.,        9,846,607.00        9,846,607.00        100.00 Has        greater    uncertainty   in
Ltd.                                                                                            collection

Guangdong Zhanjiang Sanxing Auto                                                                Not expected to collected due to
                                              4,060,329.44        4,060,329.44        100.00
Service Co., Ltd.                                                                               long account age

Wang Changlong                                                                                  Not expected to collected due to
                                              2,380,760.40        2,380,760.40        100.00
                                                                                                long account age

Huizhou         Jiandacheng        Daoqiao
                                              2,021,657.70        2,021,657.70        100.00 Unlikely to collected
Engineering Company

Jiangling Automobile Factory                                                                    Not expected to collected due to
                                              1,191,059.98        1,191,059.98        100.00
                                                                                                long account age

Yangjiang Auto Trade Co., Ltd.                                                                  Not expected to collected due to
                                              1,150,000.00        1,150,000.00        100.00
                                                                                                long account age

Guangdong Materials Group Corp.               1,862,000.00        1,862,000.00        100.00 Not expected to collected due to

                                                                                                long account age

                    Total                    22,512,414.52    22,512,414.52           100.00                                     —

②Account receivable provided for bad debt reserve under aging analysis method in the groups

                                                                             Closing balance
                 Age
                                        Account receivable               Bad debt reserve                    Accrual ratio (%)

Within 1 year                                    3,258,301.50                                      --                            --

1-2 years                                                    --                                    --                            --

2-3 years                                          134,001.00                            26,800.20                            20.00


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                                                                            Closing balance
               Age
                                        Account receivable                 Bad debt reserve                  Accrual ratio (%)

Over 3 years                                         1,474,001.00                      737,000.50                              50.00

               Total                                 4,866,303.50                      763,800.70                              15.70
 (2) Bad debt provision accrual collected or switch back
Bad debt provision accrual was 0 Yuan; the amount collected or switches back amounting to 0 Yuan.
 (3) Top 5 receivables at ending balance by arrears party


                                                                                                                        Proportion

                                                                                                                          in total
                                                              Relationship with
                  Name of the company                                                 Amount             Terms            account
                                                                the Company
                                                                                                                        receivables

                                                                                                                            (%)

Shenzhen Jinlu Industry and Trade Co., Ltd.                   Non-related party      9,846,607.00     Over 3 years             18.92

Guangdong Zhanjiang Sanxing Auto Service Co., Ltd.            Non-related party      4,060,329.44     Over 3 years               7.80

Wang Changlong                                                Non-related party      2,380,760.40     Over 3 years               4.57

Huizhou Jiandacheng Daoqiao Engineering Company               Non-related party      2,021,657.70     Over 3 years               3.88

Guangdong Materials Group Corp.                               Non-related party      1,862,000.00     Over 3 years               3.58

                         Total                                                     20,171,354.54                               38.75
(4) Account receivable derecognition due to financial assets transfer
The Company has no account receivable derecognition due to financial assets transfer in the Period
(5) Assets and liabilities resulted by account receivable transfer and continues involvement
The Company has no assets and liabilities resulted by account receivable transfer and continues involvement in the Period

3. Advance payment
 (1) advance payment by age

                                       Closing balance                                        Balance at year-begin
      Age
                              Amount                        Ratio (%)                  Amount                      Ratio (%)

within one year                     9,398,652.43                         92.42                6,384,573.51                     91.45

1-2 years                             761,065.42                          7.48                 586,865.42                        8.41

2-3 years                                       --                          --                          --                           --

Over 3 years                             9,963.94                         0.10                   9,963.94                        0.14

      Total                        10,169,681.79                        100.00                6,981,402.87                  100.00

(2) Top 5 advance payment at ending balance by prepayment object


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Total year-end balance of top five advance payment by prepayment object amounting to 9,852,428.22 Yuan, takes 96.88
percent of the total advance payment at year-end.
4. Other accounts receivable
(1) Other accounts receivable by category

                                                                              Closing balance

                  Category                          Book balance                     Bad debt reserve
                                                                                                                    Book value
                                                Amount         Ratio (%)        Amount          Accrual ratio (%)

Other account receivable with single

significant amount and withdrawal bad          39,166,619.18          63.69   39,166,619.18                100.00            --

debt provision separately

Other      receivables   with   bad     debt
                                               11,651,823.44          18.95    3,449,471.01                 29.60 8,202,352.43
provision accrual by credit portfolio

Other accounts with single significant

amount and bad debts provision accrued         10,675,308.95          17.36   10,675,308.95                100.00            --

individually

                    Total                      61,493,751.57         100.00   53,291,399.14                 86.66 8,202,352.43

(Cont.)

                                                                           Balance at year-begin

                  Category                          Book balance                     Bad debt reserve
                                                                                                                    Book value
                                                Amount         Ratio (%)        Amount          Accrual ratio (%)

Other account receivable with single

significant amount and withdrawal bad          39,166,619.18          64.00   39,166,619.18                100.00            --

debt provision separately

Other      receivables   with   bad     debt
                                               11,354,470.45          18.55    3,449,471.01                 30.38 7,904,999.44
provision accrual by credit portfolio

Other accounts with single significant

amount and bad debts provision accrued         10,675,308.95          17.45   10,675,308.95                100.00            --

individually

                    Total                      61,196,398.58         100.00   53,291,399.14                 87.08 7,904,999.44

①Other receivable with single significant amount and withdrawal bad debt provision separately at end of period

          Account receivable(units)                                           Closing balance




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                                                Account          Bad debt      Accrua
                                                                                                           Reasons
                                                                                l ratio
                                               receivable        reserve

Zhongqi     South    China     Auto    Sales                                              The company has revoked, and
                                                9,832,956.37    9,832,956.37 100.00
Company                                                                                   estimated of uncollectible amount

South Industry & TRADE Shenzhen                                                           The company has revoked, and
                                                7,359,060.75    7,359,060.75 100.00
Industrial Company                                                                        estimated of uncollectible amount

                                                                                          Win a lawsuit, no executable assets
                                                5,000,000.00    5,000,000.00 100.00
Shenzhen Zhonghao (Group) Co., Ltd.                                                       from adversary

Gold      Beili   Electrical      Appliances                                              Not expected to collected due to long
                                                2,706,983.51    2,706,983.51 100.00
Company                                                                                   account age

                                                                                          The company has revoked, and
                                                2,418,512.90    2,418,512.90 100.00
Shenzhen Xingtai Trade Co., Ltd.                                                          estimated of uncollectible amount

Shenzhen Petrochemical Group                    1,889,129.04    1,889,129.04 100.00 Unlikely to collected

Shenzhen Tefa Huatong Package Co.,                                                        The   company      has     revoked,   and
                                                1,212,373.79    1,212,373.79 100.00
Ltd.                                                                                      estimated of uncollectible amount

Shenzhen Jinhe Standard Mould Co.,                                                        The company has revoked, and
                                                1,023,560.00    1,023,560.00 100.00
ltd.                                                                                      estimated of uncollectible amount

Heyuan Dongfeng Technology Service                                                        The enterprise has revoked, and
                                                 930,000.00          930,000.00 100.00
station                                                                                   estimated of uncollectible amount

Shenzhen Nuoer Electrical Co., Ltd.                                                       Not expected to collected due to long
                                                 906,024.60          906,024.60 100.00
                                                                                          account age

Shenzhen South Great Wall Investment                                                      Has greater uncertainty in collection
                                                 819,460.91          819,460.91 100.00
Holding Co., Ltd.

Shenzhen      Xiandao       New    Materials                                              The company has revoked, and
                                                 660,790.09          660,790.09 100.00
Company                                                                                   estimated of uncollectible amount

Shenzhen          Baodong           Property                                              Not expected to collected due to long
                                                 609,773.00          609,773.00 100.00
Development Company                                                                       account age

                                                                                          Not expected to collected due to long
Others                                          3,797,994.22    3,797,994.22 100.00
                                                                                          account age

                    Total                      39,166,619.18   39,166,619.18 100.00

②In combination, other accounts receivable whose bad debts provision was accrued by age analysis

                    Age                                                      Closing balance


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                                                 Other accounts receivable          Bad debt reserve            Accrual ratio (%)

Within 1 year                                                  3,777,028.86                              --                           --

1-2 years                                                          724,510.45                  36,225.52                            5.00

2-3 years                                                          539,654.51                 107,930.69                          20.00

Over 3 years                                                   6,610,629.62                 3,305,314.80                          50.00

                      Total                                   11,651,823.44                 3,449,471.01                          29.60

 (2) Bad debt provision accrual collected or switch back

Bad debt provision accrual was 0 Yuan; the amount collected or switches back amounting to 0 Yuan.

 (3) Top 5 other receivables at ending balance by arrears party

                                                         Ending                     Ratio in total ending balance Ending balance of
              Company                      Nature                         Age
                                                         balance                      of other receivables (%)        bad bet provision

Zhongqi      South      China     Auto Intercourse      9,832,956.37 Over 3
                                       funds                                                                  15.99       9,832,956.37
Sales Company                                                          years

South      Industry     &     TRADE Intercourse         7,359,060.75 Over       3
                                       funds                                                                  11.97       7,359,060.75
Shenzhen Industrial Company                                            years

Shenzhen Zhonghao (Group) Intercourse                                  Over     3
                                       funds            5,000,000.00                                           8.13       5,000,000.00
Co., Ltd.                                                              years

Shenzhen       Kaifeng          Special Intercourse                    Over     3
                                       funds            4,413,728.50                                           7.18       2,206,864.25
Vehicles Industry Co., Ltd.                                            years

Jinbeili      Home          Appliance Intercourse                      Over     3
                                       funds            2,706,983.51                                           4.40       2,706,983.51
Company                                                                years

                Total                                  29,312,729.13                                          47.67      27,105,864.88

(4) Classification of other receivables by nature

                        Nature                                         Closing balance                        Balance at year-begin

Intercourse     accounts        of   related   units
                                                                                          4,851,396.97                    4,803,420.77
receivable

Other intercourse                                                                         56,642,354.6                   56,392,977.81

                        Total                                                            61,493,751.57                   61,196,398.58

5. Inventory
(1) Inventory classification




                                                            &n