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特力A(000025)公告正文

特 力B:2017年半年度报告(英文版)

公告日期:2017-08-31

                      深圳市特力(集团)股份有限公司 2017 年半年度报告全文




    深圳市特力(集团)股份有限公司
SHENZHEN TELLUS HOLDING CO., LTD

       Semi-Annual Report 2017




             August 2017




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                                              深圳市特力(集团)股份有限公司 2017 年半年度报告全文




         Section I. Important Notice, Contents and Paraphrase

Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of 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.
Lv Hang, Principal of the Company, Yang Jianping, person in charge of
accounting works and Liu Yuhong, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of
Semi-Annual Report 2017 is authentic, accurate and complete.
All directors are attended the Board Meeting for report deliberation.
Securities Times, 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.
The Company has no plan of cash dividends carried out, bonus issued and
capitalizing of common reserves either.




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                                                                                          深圳市特力(集团)股份有限公司 2017 年半年度报告全文




                                                                      Contents




Section I Important Notice, Contents and Paraphrase ............................................................................................... 2
Section II Company Profile and Main Finnaical Indexes .......................................................................................... 5
Section III Summary of Company Business .............................................................................................................. 8
Section IV Discussion and Analysis of the Operation ............................................................................................. 10
Section V Important Events ..................................................................................................................................... 20
Section VI Changes in shares and particular about shareholders ............................................................................ 32
Section VII Preferred Stock ..................................................................................................................................... 36
Section VIII Particulars about Directors, Supervisors and Senior Executives ........................................................ 37
Section IX Corporate Bonds .................................................................................................................................... 38
Section X Financial Report ...................................................................................................................................... 39
Section XI Notes to financial statement .................................................................................................................. 61
Section XII Documents available for reference…………………………………………………………………..157




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                                                                    深圳市特力(集团)股份有限公司 2017 年半年度报告全文




                                                 Paraphrase


                     Items                  Refers to                                Contents

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, this reporting period     Refers to January to June of 2017

Auto Industry and Trade Co.,                Refers to Shenzhen Auto Industry and Trade Corporation

Zhongtian Company                           Refers to Shenzhen Zhongtian Industrial Co,. Ltd.

SDG Property                                Refers to Shenzhen SDG Property Management Co., Ltd.

Tellus Property                             Refers to Shenzhen SDG Tellus Property Management Co., Ltd.

Tellus Starlight Jinzun                     Refers to Anhui Tellus Starlight Jinzun Jewelry Co., Ltd.

Tellus Starlight                            Refers to Anhui Tellus Starlight Jewelry Investment Co., Ltd.

SDG                                         Refers to Shenzhen Special Development Group Co., Ltd.




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                                                                        深圳市特力(集团)股份有限公司 2017 年半年度报告全文




                Section II Company Profile and Main Finnaical Indexes

I. Company information

Short form of the stock          Tellus-A, Tellus-B                     Stock code                     000025, 200025

Stock exchange for listing       Shenzhen Stock Exchange

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

Short form of the Company
                                 特力 A
(in Chinese)

Foreign name of the Company
                                 Shenzhen Tellus Holding Co., Ltd
(if applicable)

Legal representative             Lv Hang


II. Person/Way to contact

                                                       Secretary of the Board                       Rep. of security affairs

Name                                         Qi Peng                                      Sun Bolun

                                             15/F, CNNC Building, Shennan Middle          15/F, CNNC Building, Shennan Middle
Contact add.
                                             Road, Futian District, Shenzhen              Road, Futian District, Shenzhen

Tel.                                         (0755) 83989378                              (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 2016.


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 2017 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 2016


IV. Main accounting data and financial indexes

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


□ Yes √ No


                                                   Current period            Same period of last year        Changes over last year

Operating income (RMB)                                   160,984,104.56                157,147,166.48                            2.44%

Net profit attributable to shareholders of
                                                          24,596,905.09                    17,747,952.63                        38.59%
the listed Company(RMB)

Net profit attributable to shareholders of
the   listed   Company     after   deducting              17,705,046.11                    15,449,772.01                        14.60%
non-recurring gains and losses(RMB)

Net cash flow arising from operating
                                                            7,380,561.40                   23,971,506.36                        -69.21%
activities(RMB)

Basic earnings per share (RMB/Share)                                0.0827                       0.0597                         38.53%

Diluted earnings per share (RMB/Share)                              0.0827                       0.0597                         38.53%

Weighted average ROE                                                2.71%                         2.02%                          0.69%

                                                                                                           Changes over period-end of
                                                     Period-end              Period-end of last year
                                                                                                                    last year

Total assets (RMB)                                     1,217,998,855.68              1,189,001,074.98                            2.44%

Net assets attributable to shareholder of
                                                         920,993,189.04                895,362,614.95                            2.86%
listed Company (RMB)


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

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

□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International
Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.


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

□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or


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                                                                           深圳市特力(集团)股份有限公司 2017 年半年度报告全文


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


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

√Applicable □ Not applicable
                                                                                                                                   In RMB

                                 Item                                           Amount                              Note

Gains/losses from the disposal of non-current asset (including the                                    Including: income from equity
                                                                                      4,967,267.25
write-off that accrued for impairment of assets)                                                      transfer 4.92 million Yuan

Gains/losses from entrust investment or assets management                             1,790,968.34 Income from financing products

Restoring of receivable impairment provision that tested
                                                                                           5,884.91
individually

Other non-operating income and expenditure except for the
                                                                                        261,331.17
aforementioned items

Less: Impact on income tax                                                               30,378.16

     Impact on minority shareholders’ equity (post-tax)                                103,214.53

Total                                                                                 6,891,858.98                    --

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 III Summary of Company Business

I. Main businesses of the Company in the reporting period
Does the Company need to comply with the disclosure requirements of the special industry
No

The main business of the company during the reporting period was auto sales; auto testing, maintenance and
accessories sales; property leasing and service business. During the reporting period, under the leadership of the
Board of Directors, the company took innovation-driven development as the guiding principle, actively promoted
the company's strategic transformation in accordance with the company's strategic planning, ensured the sound
development of existing main business, accelerated to implement the new business model and ensured the smooth
implementation of strategic transformation through the overall allocation of resources.

II. Major changes in main assets

1. Major changes in main assets


                Major assets                                              Note of major changes


Equity assets                            No major change

Fixed assets                             No major change

Intangible assets                        No major change

                                         Book value of the construction in progress till end of 30 June 2017 amounting to
Construction in progress                 354,723,200 Yuan, an increase of 11,357,900 Yuan from a year earlier with 3.31% up.
                                         Mainly due to the continuous input on Shuibei Jewelry Building

                                         Book value of other current assets till end of 30 June 2017 amounting to 185,824,000
Other current assets                     Yuan, an increase of 95,700,100 Yuan from a year earlier with 106.19% up, mainly
                                         because financing products purchased in the period increased.


2. Main overseas assets

□ Applicable √ Not applicable



III. Core Competitiveness Analysis
Does the Company need to comply with the disclosure requirements of the special industry
No
1. Rich resources accumulation: Shenzhen jewelry market shares account for over 70% of the national jewelry
industry, Shuibei area is the core gathering area of Shenzhen jewelry industry and forms a huge domestic gold
jewelry enterprises cluster which covers the entire industry chain, including raw materials purchase, production
and processing, and wholesale sales, and has established good cooperation relationships with many jewelry

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                                                               深圳市特力(集团)股份有限公司 2017 年半年度报告全文


enterprises by providing various stable services for many leading enterprises in jewelry industry in Shenzhen over
the years. Therefore, with the help of resources at the leading jewelry enterprises with whom the company has
established strategic partnership, the company can gather jewelry enterprises and attract talents to enter Shuibei
industry park project.
2. Low-cost funds access: in recent years, the macro economy has continued the downturn, the macroeconomic
downturn has caused a certain impact on the jewelry wholesale and retail industry, and the bank credit tightening
has caused continuous tension to the capital chain of jewelry wholesaler and retailer. As a listed company, the
company has diversified and low-cost financing channels; as a state-owned listed company with lower
asset-liability ratio, the company has low bank loan costs. Smooth financing channels and lower capital costs
provide strong financial supports for the company's transformation development and platform layout.
3. Clear strategic blueprint for third-party service providers: stay out of the competition among jewelers, drop out
of the third-party service positioning of specific management jewelry products, avoid the conflicts of interest
between the company and jewelry enterprises, which is helpful for the company to give full play to its own
advantages, establish in-depth relations with numerous jewelry brands and operators, integrate the entire industry
chain resources, and provide full services.




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                                                                             深圳市特力(集团)股份有限公司 2017 年半年度报告全文



                  Section IV Discussion and Analysis of the Operation
1. Introduction
During the reporting period, under the general background of continued downturn in the marketing environment,
the Company achieved good operating results by innovating ideas, integrating business, exploring the greatest
potential of stock business, and giving play to the basic support role of the original business, and the total profit
and the net profit attributable to the parent company raised substantially over the same period last year. From
January to June 2017, the company achieved operating income of RMB 160,984,100, an increase of RMB
3,836,900 or 2.44% compared with RMB 157,147,200 in the same period of last year; the total profit was RMB
24,025,100, an increase of RMB 5,457,700 or 29.39% compared with RMB 18,567,400 in the same period of last
year; net profit attributable to the parent company was RMB 24,596,900, an increase of RMB 6,849,000 or
38.59% compared with RMB 17,748,000 in the same period of last year. The main reason for the increase of the
total profit and the net profit attributable to the parent company over the same period last year was because of the
increase in the property leasing income and the investment income from equity transfer.
On the basis of the steady and healthy development of the current main business, the transformation of Tellus
Group has also entered the implementation stage. During the reporting period, Anhui Tellus Starlight Jinzun
Jewelry Co., Ltd. which was established for entering the retail market of jewelry market has been opened for
business; Sichuan Tellus Jewelry Technology Co., Ltd., the regional channel platform project of jewelry market
channel, has completed the industrial and commercial registration, and shall carry out business soon; Tellus
Shuibei Jewelry Building phase I project which aimed at the jewelry physical platform has entered the investment
attraction stage and is predicted to put into use before the end of 2017. In the second half of 2017, Tellus Group
will continue to explore new ideas, develop steadily, and strive to complete the annual economic indicators.


II. Main business analysis
See the ―I-Introduction‖ in ―Discussion and Analysis of the Operation‖


Change of main financial data on a y-o-y basis
                                                                                                                                In RMB

                                  Current period         Same period of last year    y-o-y changes (+,-)             Reasons

                                                                                                            Revenue from vehicle
                                                                                                            sales increased from a
                                                                                                            year earlier, particularly
Operation revenue                      160,984,104.56             157,147,166.48                    2.44%
                                                                                                            the high and mid grade
                                                                                                            vehicles; and rental
                                                                                                            revenue increased

                                                                                                            Operating costs increased
                                                                                                            for the vehicle sales
Operation costs                        118,024,813.96              112,822,380.88                   4.61%
                                                                                                            increased, and
                                                                                                            furthermore, leasing


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                                                                                                            costs from the new Tellus
                                                                                                            Starlight Company
                                                                                                            increased from a year
                                                                                                            earlier

Sales expense                          6,883,605.25               7,399,760.23                     -6.98%

Management expense                    19,352,021.76              20,805,027.12                     -6.98%

                                                                                                            Interest expenditure
Financial expense                          26,460.54                  289,000.78                  -90.84% declined after SDG loans
                                                                                                            are paid

Income tax expense                       623,687.09                   597,869.12                    4.32%

                                                                                                            The new Tellus Starlight
                                                                                                            paid margins of the
                                                                                                            goods to Chow Tai Fook
Net cash flow arising                                                                                       and at end of May in the
                                       7,380,561.40              23,971,506.36                    -69.21%
from operation activities                                                                                   period, the net cash flow
                                                                                                            from operation declined
                                                                                                            for the property company
                                                                                                            transferred

Net cash flow arising                                                                                       Financing products
from investment                      -84,354,916.88              24,320,840.63                              investment increased
activities                                                                                                  from a year earlier

                                                                                                            Loans of engineering
                                                                                                            increased and minority
                                                                                                            investment for Tellus
Net cash flow arising                                                                                       Starlight Company
                                      21,709,660.64             -16,495,591.67
from financing activities                                                                                   increased in the period;
                                                                                                            while loans interest paid
                                                                                                            to SDG at same period of
                                                                                                            last year

Net increase of cash and
                                     -55,264,848.22              31,796,882.13
cash equivalent

                                                                                                            Earnings from
Investment earnings                    9,636,578.24               5,100,570.96                    88.93% subsidiary’s equity
                                                                                                            transfer increased

Major changes on profit composition or profit resources in reporting period
□ Applicable √ Not applicable
No major changes on profit composition or profit resources occurred in reporting period
Constitution of main business
                                                                                                                                 In RMB
                                                                                 Increase or       Increase or            Increase or
                        Operating
                                        Operating cost   Gross profit ratio      decrease of       decrease of         decrease of gross
                         revenue
                                                                              operating revenue   operating cost        profit ratio over

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                                                                                深圳市特力(集团)股份有限公司 2017 年半年度报告全文


                                                                                      over same period over same period    same period of
                                                                                         of last year     of last year        last year
According to industries

Auto sales              74,929,639.26        73,852,237.08                   1.44%             10.96%            11.28%             -0.28%

Auto inspection
and maintenance
                        24,232,935.05        18,604,006.02                 23.23%              -8.99%            -10.55%            1.35%
and accessories
sales

Rental and
                        58,726,081.12        22,176,416.41                 62.24%              -1.75%            -10.25%            3.58%
service

Jewelry business          432,616.24          2,538,282.27            -486.73%                                                   -486.73%

According to products

Auto sales              74,929,639.26        73,852,237.08                   1.44%             10.96%            11.28%             -0.28%

Auto inspection
and maintenance
                        24,232,935.05        18,604,006.02                 23.23%              -8.99%            -10.55%            1.35%
and accessories
sales

Rental and
                        58,726,081.12        22,176,416.41                 62.24%              -1.75%            -10.25%            3.58%
service

Jewelry business          432,616.24          2,538,282.27            -486.73%                                                   -486.73%

According to region

Shenzhen              157,888,655.43        114,632,659.51                 27.40%                 2.58%           2.47%             0.08%

Anhui                     432,616.24          2,538,282.27            -486.73%


III. Analysis of non-main business

√Applicable □ Not applicable
                                                                                                                                   In RMB

                                 Amount              Ratio in total profit                 Note                  Whether be sustainable

                                                                              The investment income from
                                                                              disposal equity of Property
                                                                              Company in the year and
Investment earnings                4,916,001.05                   20.46%                                     N
                                                                              loss from equity transfer of
                                                                              share holding corporation
                                                                              Biske

Assets impairment                   -189,620.97                    -0.79%

Non-operation
                                     319,517.17                     1.33%
revenue

Non-operation                             6,919.80                  0.03%



                                                                      12
                                                                             深圳市特力(集团)股份有限公司 2017 年半年度报告全文


expenditure


IV. Assets and liability

1. Major changes of assets composition

                                                                                                                                    In RMB

                                Period-end                Period-end of last year
                                                                                          Ratio
                                        Ratio in total                  Ratio in total                     Notes of major changes
                         Amount                           Amount                         changes
                                           assets                          assets

                       153,232,791.8                                                               More financing products and
Monetary fund                                 12.58% 190,981,593.06           16.36%      -3.78%
                                    8                                                              engineering input increased

Account
                        2,221,154.93           0.18%     1,664,778.74          0.14%       0.04%
receivable

Inventory               7,989,799.13           0.66%     9,179,418.55          0.79%      -0.13%

Investment      real
                       75,475,007.05           6.20% 79,847,555.27             6.84%      -0.64%
estate

                                                                                                   Change of the investment earnings that
Long-term equity 198,496,585.9
                                              16.30% 216,689,503.20           18.56%      -2.26% accrual by equity method from shares
investment                          1
                                                                                                   holding corporation

                       124,060,216.9
Fix assets                                    10.19% 132,707,486.29           11.37%      -1.18%
                                    4

Construction in        354,723,231.1                                                               Investment for 1st phase of Shuibei
                                              29.12% 314,412,966.77           26.93%       2.19%
process                             6                                                              Jewelry Building increased

Short-term loans       50,000,000.00           4.11%                                       4.11% Bank credit increased

Long-term loans        27,600,000.00           2.27%                                       2.27% Loans for engineering increased

Other current          185,823,991.9
                                              15.26% 110,319,674.72            9.45%       5.81% Financing products increased
assets                              3

Intangible assets      53,042,802.82           4.35% 54,296,001.28             4.65%      -0.30%

Other account          114,778,401.1
                                               9.42% 179,682,571.96           15.39%      -5.97% Loans from SDG decreased
payables                            9


2. Assets and liability measured by fair value

□Applicable √ Not applicable


3. Right of the assets restrained till end of the Period

                         Item                            Book value at period-end                       Restriction reasons

    Monetary fund                                                          30,000,000.00 structured financing products over

                                                                     13
                                                                深圳市特力(集团)股份有限公司 2017 年半年度报告全文


                                                                                         3 months
    Investment real estate                                    45,656,477.74 (1)
    Fixed assets                                               1,580,835.53 (1)
    Intangible assets                                         50,752,685.52 (2)
    Long-term equity investment                               75,219,913.29 (3)
                   Total                                   203,209,912.08
(1)In order to meet the needs of operation and construction, the Company signed a comprehensive credit contract
(No. 2014SYJTZZ007) with China Citic Bank Jingtian Sub-branch on August 28, 2014, the credit amount was
RMB 211,000,000.00, and at the same time signed a highest mortgage contract (No. 2014SYJTZDZ008) by
taking the book assets of Shenzhen SDG Tellus Real Estate Co., Ltd. as the mortgage with amount of RMB
50,293,453.68, and signed a highest mortgage contract (No. 2014SYJTZDZ007) by taking the book assets of the
Company as the mortgage with amount of RMB 117,706,546.32, and accordingly signed a loan contract (No.
2014SYJTDZ0012) on August 28, 2014 with loan amount of RMB 157,500,000.00 and loan period from August
28, 2014 to on August 28, 2017, the repayment method was paying interest monthly and returning 8% of principal
for every half year after offering loans, and the balance should be paid off at a time once due, up to June 30, 2017,
the loans were returned, but the assets were still in mortgage because the loan commitment was still valid.
(2) In order to meet the project construction needs of Tellus Shuibei Jewelry Building, Shenzhen Zhongtian
Industrial Co., Ltd., a subsidiary of the Company, took the land (No. SFDZ2000609764) of this project as the
mortgage and signed a loan contract (DJ2014G250TB) with China Construction Bank Shuibei Jewelry
Sub-branch on June 24, 2014 with loan amount of RMB 300 million and loan term from June 24, 2014 to June 23,
2024, and the Company provided the joint liability guaranty (BJ2014G250TB), up to June 30, 2017, Shenzhen
Zhongtian Industrial Co., Ltd. borrowed RMB 27,600,000.00 from the bank.
(3)The Company signed a Pledge Contract with Zung Fu Automobile Management (Shenzhen) Co., Ltd.
(hereinafter referred to as ―Zung Fu Shenzhen‖) which agreed that from the establishment of the Company’s joint
venture Shenzhen Zung Fu Tellus Automobile Service Co., Ltd. (hereinafter referred to as ―Zung Fu Tellus‖) to
the expiration date of the joint venture contract between the Company and Zung Fu Shenzhen, Zung Fu Shenzhen
provided loans to Zung Fu Tellus by entrusted loan, and Zung Fu Tellus asked for loans to banks or other
financial enterprises and Zung Fu Shenzhen provided guarantee for it, if the total amount of above loans was no
more than RMB 100 million, Zung Fu Shenzhen would undertake 35% of the liabilities caused by above loans
according to the equity ratio, and agree the Company to pledge its 35% equity stake of Zung Fu Tellus to Zung Fu
Shenzhen as the corresponding counter guarantee of above loans.


V. Investment

1. Overall situation

□Applicable √ Not applicable




                                                         14
                                                                                深圳市特力(集团)股份有限公司 2017 年半年度报告全文


2. The major equity investment obtained in the reporting period

□Applicable √ Not applicable


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

□Applicable √ Not applicable


4. Financial assets investment

(1) Securities investment
□ Applicable √ Not applicable
The Company had no securities investment in the reporting period.


(2) Derivative investment

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


VI. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicable
The Company had no sales of major assets in the reporting period.


2. Sales of major equity

√Applicable □ Not applicable
                                             Net
                                            profit
                                          contribu
                                                                                                                   Whether
                                           ted by
                                                                  Ratio of                                         implem
                                             the         The                                             Equity
                                                                   the net                                         ented as
                                           equity     influenc                     Whether                have
                        Trading                                     profit                   Relation              schedul
                                          to listed      e of                       to be a             ownersh
                        price (in                                 contribu Pricing            ship                    ed,            Disclos
 Counter Equity Date on                   compan        equity                      related                ip               Disclos
                           10                                      ted by principl           with the              explain             ure
  party on sale  sale                     y (from      sales to                    transacti            transfer            ure date
                        thousan                                    equity     e              counter               reasons            index
                                          period-b       the                          on                complet
                        d Yuan)                                   sales in                    party                  and
                                           egin to    compan                         (Y/N)                 ed
                                                                  total net                                        counter
                                          date on         y                                              (Y/N)
                                                                    profit                                         measure
                                          sale) (in
                                                                                                                    if not
                                             10
                                          thousan
                                          d Yuan)
Shenzhe    100%                                    The            Accordi                   SDG                                    Notice
n SDG      equity                                  transacti      ng to                     Property                               No:
                                                                                                                   Complet
Property   of                                      on’s          the                       has the                                2017-0
                    2017-05                                                                                        ed as   2017-05
Manage     Shenzhe                1,415         25 pricing 21.58% Assets Y                  same      Y                            39 on
                    -25                                                                                            schedul -26
ment       n SDG                                   basis          Apprais                   controlli                              Securit
                                                                                                                   e
Co.,       Tellus                                  based          al                        ng                                     ies
Ltd.       Property                                on the         Report                    sharehol                               Times,

                                                                         15
                                                                                  深圳市特力(集团)股份有限公司 2017 年半年度报告全文


           Manage                                 appraisa                [Guo                der as                                   Hong
           ment                                   l                       Zhong               the                                      Kong
           Co.,                                   conclusi                Lian                Compan                                   Comm
           Ltd.                                   on, after               Apprais             y, it has                                ercial
                                                  equity                  al Zi               a related                                Daily
                                                  transferr               (2017)              relations                                and
                                                  ed,                     No.                 hip with                                 Juchao
                                                  Tellus                  3-0058              the                                      Websit
                                                  Property                issued              Compan                                   e
                                                  will not                by Guo              y                                        (www.
                                                  included                ZHong                                                        cninfo.
                                                  in the                  Lian                                                         com.cn
                                                  consolid                Assets                                                       )
                                                  ation                   Apprais
                                                  stateme                 al Land
                                                  nt any                  and
                                                  more.                   Real
                                                  The                     Estate
                                                  Compan                  Apprais
                                                  y, by                   al Co.,
                                                  initial                 Ltd.,
                                                  calculati               who has
                                                  on,                     the
                                                  earns                   qualific
                                                  approxi                 ation for
                                                  mately                  perform
                                                  5.05                    ing
                                                  million                 related
                                                  Yuan                    business
                                                  from                    of
                                                  this                    securitie
                                                  transacti               s and
                                                  on,                     futures,
                                                  which                   the
                                                  shows a                 assessm
                                                  positive                ent
                                                  impact                  based
                                                  on                      on
                                                  operatio                asset-ba
                                                  n                       sed
                                                  perform                 approac
                                                  ance for                h and
                                                  year of                 income
                                                  2017.                   approac
                                                                          h.


VII. Analysis of main Holding Company and stock-jointly companies

√Applicable □ Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over 10%
                                                                                                                                       In RMB

  Company                         Main                        Register                                    Operating Operating
                    Type                      Industry                        Total assets Net Assets                              Net profit
    name                         business                     capital                                     revenue       profit

Shenzhen                                    Own
Auto                                        property
                                                         RMB 58.96 286,537,25 248,268,63 9,741,743.0 1,251,680
Industry      Subsidiary     Commerce leasing and                                                                                  865,680.72
                                                         million                      1.74       3.32               7        .23
and Trade                                   sales of
Corporation                                 auto and



                                                                         16
                                                                             深圳市特力(集团)股份有限公司 2017 年半年度报告全文


                                        accessories

                                        Auto
Shenzhen
                                        maintenanc
SD Huari
                             Service    e and             US$ 5          75,743,190. 28,892,660. 17,870,512.
Automobile Subsidiary                                                                                           -5,163.39     146,386.14
                             industry   production million                       68          36           30
Enterprise
                                        and sales of
Co.Limited
                                        accessories

Shenzhen
                                                          RMB
Zhongtian                    Service    Property                         425,673,91 282,517,63 1,589,953.3 -881,245.
               Subsidiary                                 267.25                                                             -882,202.36
Industrial                   industry   rental                                 3.34        2.25            2          76
                                                          million
Co,. Ltd.

Shenzhen
Huari
Toyota                                  Sales of          RMB 2          45,085,172. -4,130,784. 97,707,246. 171,752.3
               Subsidiary    Commerce                                                                                         204,462.59
Automobile                              automobile million                       36          29           23           0
Sales Co.
Ltd

Shenzhen
                                        Manufactur
Xinyongton
                                        e of
g Auto
                             Service    inspection        RMB 19.61 10,578,172. 3,598,514.9 2,301,999.0 578,273.2
Vehicle        Subsidiary                                                                                                     452,026.51
                             industry   equipment         million                81           1            5           9
Inspection
                                        for motor
Equipment
                                        vehicle
Co., Ltd.

Shenzhen
Tellus
                                        Inspection
Xinyongton
                             Service    and repair        RMB 32.90 85,455,484. 49,541,290. 6,148,572.3 2,017,047
g              Subsidiary                                                                                                   1,909,938.96
                             industry   of motor          million                28          74            9          .00
Automobile
                                        vehicle
Developme
nt Co. Ltd

Anhui
Tellus
Starlight                    Sales      Retail of         RMB 9.8        14,455,973. 12,477,568.                -2,243,90
               Subsidiary                                                                          432,616.24               -2,243,908.10
Jewelry                      industry   jewelry           million                67          14                     8.10
Investment
Co., Ltd.

Shenzhen
                                        Car       sales
Zung Fu
               Joint stock   Service    and               RMB 30         372,867,46 216,285,30 602,080,90 31,936,10 24,584,092.9
Tellus
               Company       industry   maintenanc million                     3.47        3.21          7.00       5.58               6
Automobile
                                        e
Service Co.,


                                                                    17
                                                                           深圳市特力(集团)股份有限公司 2017 年半年度报告全文


Ltd.

                                            Manufactur
Shenzhen
                                            e and
Dongfeng      Joint stock    Manufactur                  RMB 100        537,123,54 132,294,33 249,209,51 -12,315,0
                                            maintenanc                                                                     -9,138,940.53
Automobile Company           ing industry                million              4.17         7.69         5.73      05.42
                                            e of
Co., Ltd.
                                            automobile

Shenzhen                                    Property
Tellus                                      managemen RMB
              Joint stock    Service                                    446,185,83 107,752,43 19,777,905. -6,609,39
Gman                                        t; own       123,704,96                                                        -6,609,390.37
              Company        industry                                         2.21         6.26           85        0.37
Investment                                  property     0
Co., Ltd.                                   leasing

Particular about subsidiaries obtained or disposed in report period
√Applicable □ Not applicable

                                                                                                  Impact on overall operation and
                   Name                        Way to obtained and dispose in the Period
                                                                                                           performance

                                                                                           The transaction’s pricing basis based on
                                                                                           the appraisal conclusion, after equity
                                                                                           transferred, Tellus Property will not
                                                                                           included in the consolidation statement any
                                                                                           more. The Company, by initial calculation,
                                                                                           will earns approximately 5.05 million Yuan
Shenzhen SDG Tellus Property                   Subsidy disposal by equity transfer
                                                                                           from this transaction, which shows a
Management Co., Ltd.                           agreement
                                                                                           positive impact on operation performance
                                                                                           for year of 2017. Found more in relevant
                                                                                           notice (Notice No.: 2017-039) released on
                                                                                           Securities Times, Hong Kong Commercial
                                                                                           Daily and Juchao Website
                                                                                           (www.cninfo.com.cn)


VIII. Structured vehicle controlled by the Company

□Applicable √ Not applicable


IX. Prediction of business performance from January – September 2017

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


X. Risks and countermeasures

1. Construction in progress: the project construction and development plans and completion plans may be affected
by the following force majeure factors:

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                                                                  深圳市特力(集团)股份有限公司 2017 年半年度报告全文


(1) Changes in laws and regulations may have an impact on the project development;
(2) The license procedures processing of the audit institutions to the development project may have an impact on
the development progress of the project;
(3) The demolition progress of the project involving demolition may have an impact on the project progress;
(4) Significant weather changes may have an impact on the project progress;
(5) Other unpredictable major events may have impacts on the project progress.
2. Existing business: the current situation of jewelry industry is grim, although the company’s operating
performance is in an opposite trend and has turned losses into gains, the relevant industry has not yet formed core
competitiveness, before the jewelry project producing benefits, the company still needs to rely on the existing
business to maintain profitability, and faces greater operating pressure. The company will be market-oriented,
optimize and adjust the main business structure, fully revitalize its own resources, improve business management
and cost control level, and enhance the profitability of existing main businesses.
3. Transformational business: through the repeated market researches in the past two years, the company has a
more clear understanding about the characteristics of jewelry industry, the core links of industrial chain and the
corporate pain point, and begins to try to implement the transformational business. But the market research still
has some limitations, and there are large uncertainties whether the platform can graft the jewelry financial services
to leverage the entire supply chain. From the external environment, it is still a serious year for the shuffling of
jewelry industry, and there are still uncertainties whether the industry can bottom out. In this regard, the company
will strengthen the transformation faith, carefully lay out, seek the industry value depression at the low-tide period,
strengthen the risk control, build operation teams and regulatory agencies based on the company's own staff, and
ensure that the landed projects are efficient and controllable.




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                                                                            深圳市特力(集团)股份有限公司 2017 年半年度报告全文



                                         Section V. Important Events
      I. AGM and extraordinary general meeting

      1. AGM held in the period

                                                Participation ratio
       Meeting                    Type                                     Holding date        Disclosure date          Index
                                                   for investors

                                                                                                                 Notice No.:
                                                                                                                 2017-029 on
                                                                                                                 Securities Times,
Annual General                                                                                                   Hong Kong
                       AGM                                  73.01% 2017-05-04               2017-05-05
Meeting of 2016                                                                                                  Commercial Daily
                                                                                                                 and Juchao Website
                                                                                                                 (www.cninfo.com.cn
                                                                                                                 )

                                                                                                                 Notice No.:
                                                                                                                 2017-036 on
                                                                                                                 Securities Times,
First Extraordinary    Extraordinary
                                                                                                                 Hong Kong
Shareholders           Shareholders                         73.01% 2017-05-25               2017-05-26
                                                                                                                 Commercial Daily
Meeting of 2017        Meeting
                                                                                                                 and Juchao Website
                                                                                                                 (www.cninfo.com.cn
                                                                                                                 )


2. Request for extraordinary general meeting by preferred stockholders with rights to vote
□Applicable √ Not applicable

II. Profit distribution plan and capitalizing of common reserves in the period

□ Applicable √ Not applicable

There are no cash dividend, bonus and capitalizing of common reserves carried out in the semi-annual

III. Commitments that actual controller, shareholder, related parties, buyer and committed
party as the Company etc. have fulfilled during the reporting period and have not yet fulfilled
by the end of reporting period

□ Applicable √ Not applicable

There are no commitments that the actual controller, shareholder, related parties, buyer and committed party as the Company etc.

have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period




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                                                                         深圳市特力(集团)股份有限公司 2017 年半年度报告全文


IV. 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

V. Explanation on “Qualified Opinion” from CPA by the Board and Supervisory Committee

□ Applicable √ Not applicable


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

□ Applicable √ Not applicable

VII. Bankruptcy reorganization

□ Applicable √ Not applicable

No bankruptcy reorganization in Period.

VIII. Lawsuits

Material lawsuits and arbitration

□ Applicable √ Not applicable

No material lawsuits and arbitration in the reporting

Other lawsuits
□Applicable √ Not applicable

Found more in Note X. Commitment and contingency in the Section XI ―Notes to Financial Statement‖ .


IX. Penalty and rectification

□ Applicable √ Not applicable
No penalty and rectification for the Company in reporting period.


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

□Applicable √ Not applicable


XI. Implementation of the company’s stock incentive plan, employee stock ownership plan or
other employee incentives

□Applicable √ Not applicable


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                                                                            深圳市特力(集团)股份有限公司 2017 年半年度报告全文


Nil

XII. Major related transaction

1. Related transaction with routine operation concerned
√Applicable □ Not applicable

                                                                                         Whether
                                                                               Trading
                                                       Related                         over the
                          Content                     transacti     Proporti limit                 Clearing Availabl            Index
                  Type of                                                              approve                        Date of
                              of    Pricing Related       on          on in approve                form for e similar             of
 Related Relation related
                           related principl transacti amount         similar              d         related           disclosu
  party   ship transacti
                          transacti    e    on price (in 10         transacti d (in 10             transacti market            disclos
                    on                                                                 limited                           re
                             on                        thousan      ons (%) thousan                   on      price              ure
                                                       d Yuan)                          or not
                                                                              d Yuan)
                                                                                        (Y/N)

                                                                                                                                Notice
                                                                                                                                No.:
                                                                                                                                2017-0
                                                                                                                                17 on
                                                                                                                                Securit
                                                                                                                                ies
Shenzhe
          Director                                                                                                              Times,
n Zung
          /Supervi                                                                                                              Hong
Fu                                                                                                 By
          sor/ SE Routine               Referen                                                                                 Kong
Tellus                                                                                             contract
          serves     related   Housing ce to                                                                         2017-04 Comm
Automo                                            265         265     5.90%        265 N           or         265
          director transacti lease      market                                                                       -08        ercial
bile                                                                                               agreeme
          of the     ons                price                                                                                   Daily
Service                                                                                            nt
          compan                                                                                                                and
Co.,
          y                                                                                                                     Juchao
Ltd.
                                                                                                                                Websit
                                                                                                                                e
                                                                                                                                (www.
                                                                                                                                cninfo.
                                                                                                                                com.c
                                                                                                                                n)

Total                                      --       --        265      --          265     --           --      --         --        --

Detail of sales return with major
                                        N/A
amount involved

Report the actual implementation of
the normal related transactions which
were projected about their total        Performing normally
amount by types during the reporting
period(if applicable)

Reasons for major differences
                                        Not applicable
between trading price and market


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                                                                                深圳市特力(集团)股份有限公司 2017 年半年度报告全文


reference price (if applicable)

2. Related transactions by assets acquisition and sold
□ Applicable   √ Not applicable
No related transactions by assets acquisition and sold for the Company in reporting period


3. Main related transactions of mutual investment outside
□ Applicable   √ Not applicable
No main related transactions of mutual investment outside for the Company in reporting period


4. Contact of related credit and debt
√Applicable □ Not applicable
Whether has non-operational contact of credit and debts or not
√Yes □No
C
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)

Shenzhen
                                  Intercourse
Special
                Majority          funds and
Development                                            3,186               32                                                            3,218
                shareholder       loans
Group Co.,
                                  interests
Ltd.

Shenzhen
Special
                Majority
Development                       Loans                1,879                                 4                                26         1,874
                shareholder
Group Co.,
Ltd.

Impact on operation results
                                  Total profit decreased 260,000 Yuan due to the interest expenses increased in the Year
and financial status


5. Other related transactions

√Applicable □ Not applicable
In order to centralize the resources and promote the strategy transformation of the company, the company signed a
Property Rights Transfer Contract with Shenzhen SDG Property Management Co., Ltd., and transferred 100%
equity stake of Shenzhen SDG Tellus Property Management Co., Ltd. held by the Company to SDG Property
Company by agreement transfer, and the transfer price was RMB 14.15 million. SDG Property Management and
the Company were controlled by the same controlling shareholder and had a related relation. See details on the
relevant announcement the company published on Securities Times, Hong Kong Commercial Daily and

                                                                    23
                                                                            深圳市特力(集团)股份有限公司 2017 年半年度报告全文


www.cninfo.com.cn., the announcement No. is 2017-039.

Relevant inquiry for the major related transactions

                   Notice name                              Date for disclosure                      Website disclosed

Equity Transfer of Shenzhen SDG Tellus                                                 Securities Times, Hong Kong Commercial
Property Management Co., Ltd. and Related         2017-05-26                           Daily and Juchao Website
Transactions                                                                           (www.cninfo.com.cn)


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

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


XIV. Significant contract and implementations

1. Trusteeship, contract and leasing

(1) Trusteeship

□ Applicable     √ Not applicable
No trusteeship for the Company in reporting period


(2) Contract
□ Applicable     √ Not applicable
No contract for the Company in reporting period


(3) Leasing
□ Applicable     √ Not applicable
No leasing for the Company in reporting period


2. Major guarantees
√Applicable □ Not applicable


(1) Guarantees
                                                                                                                   In 10 thousand Yuan

                    Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)
                        Related                                                                                               Guarante
                                                 Actual date of
    Name of the        Announce                                                                                                   e for
                                      Guarantee happening (Date          Actual       Guarantee     Guarantee     Implemen
     Company              ment                                                                                                 related
                                        limit         of signing    guarantee limit     type           term       ted (Y/N)
     guaranteed        disclosure                                                                                                 party
                                                   agreement)
                          date                                                                                                    (Y/N)

Shenzhen Zung Fu                                                                                  To the expire
                      2014-09-30          3,500 2007-04-17                    3,500 Pledge                        N           Y
Tellus Automobile                                                                                 date of joint


                                                                    24
                                                                         深圳市特力(集团)股份有限公司 2017 年半年度报告全文


Service Co., Ltd.                                                                                    venture
                                                                                                     contract
                                                                 Total actual occurred external
Total    approving       external
                                                               0 guarantee in report period                                           3,500
guarantee in report period (A1)
                                                                 (A2)
Total     approved    external                                  Total actual balance of
guarantee at the end of report                            3,500 external guarantee at the end                                         3,500
period ( A3)                                                    of report period (A4)
                                           Guarantee of the Company and the subsidiaries

                                                                                                                                Guarante
                        Related
                                               Actual date of                                                                       e for
   Name of the         Announce                                                                                     Implemen
                                    Guarantee happening (Date     Actual             Guarantee        Guarantee
    Company               ment                                                                                                   related
                                      limit      of signing   guarantee limit          type             term        ted (Y/N)
   guaranteed          disclosure
                                                agreement)                                                                          party
                          date
                                                                                                                                    (Y/N)

Shenzhen                                                                                             24 June 2014
                                                                                   Joint liability
Zhongtian              2014-05-07      30,000 2014-06-24                  30,000                     to 23 June     N           Y
                                                                                   guaranty
Industrial Co,. Ltd.                                                                                 2024
                                                                 Total amount of actual
Total amount of approving
                                                                 occurred     guarantee    for
guarantee for subsidiaries in                                  0                                                                     30,000
                                                                 subsidiaries in report period
report period (B1)
                                                                 (B2)
                                                                Total balance of actual
Total amount of approved
                                                                guarantee for subsidiaries at
guarantee for subsidiaries at the                        30,000                                                                      30,000
                                                                the end of reporting period
end of reporting period (B3)
                                                                (B4)
                                          Guarantee of the subsidiaries and the subsidiaries

                                                                                                                                Guarante
                        Related
                                               Actual date of                                                                       e for
   Name of the         Announce                                                                                     Implemen
                                    Guarantee happening (Date     Actual             Guarantee        Guarantee
    Company               ment                                                                                                   related
                                      limit      of signing   guarantee limit          type             term        ted (Y/N)
   guaranteed          disclosure
                                                agreement)                                                                          party
                          date
                                                                                                                                    (Y/N)
                                                                 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                              0                                                                            0
                                                                 the end of reporting period
end of reporting period (C3)
                                                                 (C4)
Total amount of guarantee of the Company( total of three abovementioned guarantee)
Total amount of approving                                        Total amount of actual
guarantee in report period                                     0 occurred guarantee in report                                        33,500
(A1+B1+C1)                                                       period (A2+B2+C2)
Total amount of approved                                        Total balance of actual
guarantee at the end of report                           33,500 guarantee at the end of report                                       33,500
period (A3+B3+C3)                                               period (A4+B4+C4)
The proportion of the total amount of actually guarantee in the
                                                                                                                                    36.37%
net assets of the Company (that is A4+ B4+C4)

Including:


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                                                                                   深圳市特力(集团)股份有限公司 2017 年半年度报告全文


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

The debts guarantee amount provided for the guaranteed
parties whose assets-liability ratio exceed 70% directly or                                                                                              0
indirectly(E)

Proportion of total amount of guarantee in net assets of the
                                                                                                                                                         0
Company exceed 50%(F)

Total amount of the aforesaid three guarantees(D+E+F)                                                                                                    0

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


(2)Guarantee outside against the regulation

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


(3) Entrust others to cash asset management

                                                                                             The
                                                                                                          Amount                   Actual     Actual
                                      Amount                                                 actual
                                                                                                          of                       amount     reporting of
                  connec              of                                                     amount
                                                                             Payment                      impairm Projecte of profit profits and
                  ted      product entruste                     Expiration                   of
Trustee                                            Start date                determinatio                 ent          d           and loss losses
                  transac type        d                         date                         principal
                                                                             n method                     provisio earnings during            during the
                  tion                financin                                               recovere
                                                                                                          n      (if               reporting reporting
                                      g                                                      d in this
                                                                                                          any)                     period     period
                                                                                             period

Everbright
Bank,                      Guarant                                            Repayment
Limited      by            eed                     2016.10.1                  of principal
                  no                       2,000                2017.1.14                         2,000                    14.03      14.03          14.03
Share      Ltd,            floating                     4                     and interest
Shenzhen                   income                                             at maturity
branch

Societe
Generale
                           Guarant                                            Repayment
Bank,
                           eed                     2016.11.2                  of principal
Limited      by no                         4,000                2017.2.22                         4,000                    33.04      33.04          33.04
                           floating                     4                     and interest
Share      Ltd,
                           income                                             at maturity
Shenzhen
branch



                                                                             26
                                                                      深圳市特力(集团)股份有限公司 2017 年半年度报告全文


Everbright
Bank,                                                            Repayment
                         Guarant
Limited       by                                                 of principal
                    no   eed        2,000 2016.12.2 2017.3.2                    2,000          14.75    14.75     14.75
Share        Ltd,                                                and interest
                         income
Shenzhen                                                         at maturity
branch

CITIC Bank
Shenzhen                 Guarant                                 Repayment
branch        of         eed                                     of principal
                    no              1,000 2016 .12.7 2017.3.8                   1,000           7.48     7.48      7.48
Limited       by         floating                                and interest
Share        Ltd         income                                  at maturity
King

CITIC Bank,              Guarant
                                                                 Repayment
Limited       by         eed
                                                                 of principal
Share        Ltd, no                3,000 2017.1.6                              3,000           27.3     27.3      27.3
                                                     2017.4.7
                                                                 and interest
Shenzhen
                                                                 at maturity
branch

CITIC Bank,              Guarant
                                                                 Repayment
Limited       by         eed
                                                                 of principal
Share        Ltd, no                2,000 2017.1.6                              2,000           18.2     18.2      18.2
                                                     2017.4.7
                                                                 and interest
Shenzhen
                                                                 at maturity
branch

CITIC Bank,              Guarant
                                                                 Repayment
Limited       by         eed
                                                                 of principal
Share        Ltd, no                3,000 2017.1.18 2017.4.19                   3,000           27.3     27.3      27.3
                                                                 and interest
Shenzhen
                                                                 at maturity
branch

Everbright
Bank,                                                            Repayment
                         Guarant
Limited       by                                                 of principal
                    no   eed        2,000 2017.1.18 2017.4.18                   2,000           17.5     17.5      17.5
Share        Ltd,                                                and interest
                         income
Shenzhen                                                         at maturity
branch

China                    Guarant
Merchants                eed
                                                                 Repayment
Bank,
                                                                 of principal
Limited       by no                 1,000 2017.2.14 2017.5.19                   1,000           7.72     7.72      7.72
                                                                 and interest
Share        Ltd,
                                                                 at maturity
Shenzhen,
Luohu branch

Industrial               Guarant                                 Repayment
                    no              3,000 2017.2.23 2017.5.24                   3,000          30.33    30.33     30.33
Bank,                    eed                                     of principal


                                                                27
                                                                     深圳市特力(集团)股份有限公司 2017 年半年度报告全文


Limited       by                                                and interest
Share        Ltd,                                               at maturity
Shenzhen
Cheonan
subbranch

Everbright
Bank,                                                           Repayment
                         Guarant
Limited       by                                                of principal
                    no   eed       1,000 2017.2.24 2017.5.24                   1,000           9.38     9.38      9.38
Share        Ltd,                                               and interest
                         income
Shenzhen                                                        at maturity
branch

Everbright
Bank,                                                           Repayment
                         Guarant
Limited       by                                                of principal
                    no   eed       2,000 2017.3.3                              2,000          18.78    18.78     18.78
Share        Ltd,                                   2017.6.3
                                                                and interest
                         income
Shenzhen                                                        at maturity
branch

CITIC Bank,              Guarant
                                                                Repayment
Limited       by         eed
                                                                of principal
Share        Ltd, no               1,000 2017.3.17 2017.6.28                   1,000          10.44    10.44     10.44
                                                                and interest
Shenzhen
                                                                at maturity
branch

Industrial               Guarant
Bank,                    eed
                                                                Repayment
Limited       by
                                                                of principal
Share        Ltd, no               3,000 2017.4.13 2017.7.12                      0           31.41       0          0
                                                                and interest
Shenzhen
                                                                at maturity
Cheonan
subbranch

CITIC Bank,              Guarant
                                                                Repayment
Limited       by         eed
                                                                of principal
Share        Ltd, no               2,000 2017.4.14 2017.7.26                      0           20.94       0          0
                                                                and interest
Shenzhen
                                                                at maturity
branch

Industrial               Guarant
Bank,                    eed
                                                                Repayment
Limited       by
                                                                of principal
Share        Ltd, no               2,000 2017.4.21 2017.7.20                      0           20.94       0          0
                                                                and interest
Shenzhen
                                                                at maturity
Cheonan
subbranch

CITIC Bank no            Guarant   2,000 2017.4.21 2017.8.2     Repayment         0           22.01       0          0



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                                                                                   深圳市特力(集团)股份有限公司 2017 年半年度报告全文


Shenzhen                     eed                                              of principal
branch          of           floating                                         and interest
Limited        by            income                                           at maturity
Share          Ltd
King

Everbright
Bank,                                                                         Repayment
                             Guarant
Limited        by                                                             of principal
                     no      eed              1,000 20174.21 2017.7.21                           0           9.63       0          0
Share        Ltd,                                                             and interest
                             income
Shenzhen                                                                      at maturity
branch

Bank            of           Guarant
                                                                              Repayment
Shenzhen                     eed
                                                                              of principal
Jiangsu              no                       1,000 20175.25        T+0                          0                      0          0
                                                                              and interest
Branch Sales
                                                                              at maturity
Department

Industrial                   Guarant
Bank,                        eed
                                                                              Repayment
Limited        by
                                                                              of principal
Share        Ltd, no                          3,000 2017.6.5      2017.9.4                       0          33.75       0          0
                                                                              and interest
Shenzhen
                                                                              at maturity
Cheonan
subbranch

Everbright
Bank,                                                                         Repayment
                             Guarant
Limited        by                                                             of principal
                     no      eed              2,000 2017.6 .14 2017.9.14                         0          22.25       0          0
Share        Ltd,                                                             and interest
                             income
Shenzhen                                                                      at maturity
branch

Total                                        43,000      --          --            --        27,000        397.18   236.25    --
Capital resource
                                           Idle raised funds and Part of its own funds

Principal        uncollected        for
overdue         and       accumulated
earnings                                                                                                                           0

s

Lawsuit              involved        (if
applicable)                                Not applicable


Disclosure date for approval
                                           2016.4.29、2017.4.8
from     the     Board      for    trust



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                                                                         深圳市特力(集团)股份有限公司 2017 年半年度报告全文


financing (if applicable)



Disclosure date for approval
from board of shareholders for
trust financing (if applicable)   2016.5.21、2017.5.5



                                  Yes, the decision-making process that the Company uses idle raised funds and part of the
                            self-owned fund to purchase financial products meets the "Articles of Association", "Raised Funds
Trust financing plan in the Management System" and other relevant provisions. Using idle raised funds to purchase financial
future                      products is implemented in the premise of not affecting the main business. A certain amount of
                                  investment income can be obtained by properly investing in the low-risk financial products so as to
                                  improve the Company's capital usage efficiency.



(4)Other material contracts
□ Applicable   √ Not applicable
No other material contracts for the Company in reporting period


XV. Social responsibility

1. Targeted poverty alleviation social responsibility

(1) Summary of the targeted poverty alleviation for the half year

During the reporting period, the company participated in the targeted poverty alleviation at Libai Village,
Shangguan Town, Dongyuan County, Heyuan City, Guangdong Province. The Company sent representatives to
stay at the village to complete the identification, approval, archiving work by visiting the poor households, went to
the surrounding villages and towns for investigation and study, and made preparation for establishing help
programs and developing the various industries for the village to be helped.


 (2)Targeted poverty alleviation for the first half of 2017

The second half of 2017, the company plans to develop accurate poverty alleviation plan, to participate in the
improvement of infrastructure construction to help the village, to improve the village appearance and other initiatives and
helping promote the economic development of the region.


2. Material environmental protection

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

No




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                                                    深圳市特力(集团)股份有限公司 2017 年半年度报告全文


XVI. Explanation on other significant events

□Applicable √ Not applicable
Nil


XVII. Significant event of subsidiary of the Company

□Applicable √ Not applicable




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    Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital
1. Changes in Share Capital
                                                                                                                                 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

                             77,000,00                                                                               77,000,00
I. Restricted shares                          25.90%                                                                              25.90%
                                          0                                                                                 0

2. State-owned corporation
                             6,000,000         2.02%                                                                 6,000,000     2.02%
shares

                             71,000,00                                                                               71,000,00
3. Other domestic shares                      23.88%                                                                              23.88%
                                          0                                                                                 0

Including: domestic legal    71,000,00                                                                               71,000,00
                                              23.88%                                                                              23.88%
person’s shares                          0                                                                                 0

                             220,281,6                                                                               220,281,6
II. Un-restricted shares                      74.10%                                                                              74.10%
                                      00                                                                                   00

                             193,881,6                                                                               193,881,6
1. RMB ordinary shares                        65.22%                                                                              65.22%
                                      00                                                                                   00

2. Domestically listed       26,400,00                                                                               26,400,00
                                               8.88%                                                                               8.88%
foreign shares                            0                                                                                 0

                             297,281,6                                                                               297,281,6
III. Total shares                             100.00%                                                                            100.00%
                                      00                                                                                   00

Reasons for share changed
□Applicable √ Not applicable


Approval of share changed
□Applicable √ Not applicable


Ownership transfer of share changes
□Applicable √ Not applicable


Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□Applicable √ Not applicable




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                                                                         深圳市特力(集团)股份有限公司 2017 年半年度报告全文


Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□Applicable √ Not applicable


2. Changes of restricted shares

□Applicable √ Not applicable


II. Securities issuance and listing

□Applicable √ Not applicable


III. Amount of shareholders of the Company and particulars about shares holding

                                                                                                                              In Share

                                                                  Total preference shareholders
Total common stock
                                                                  with voting rights recovered at
shareholders in reporting                                65,094                                                                      0
                                                                  end of reporting period (if
period-end
                                                                  applicable) (found in note8)

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

                                                    Total                                               Number of share pledged/frozen
                                                                            Amount
                                                sharehold                        Amount of
                                                           Changes in     of
                                     Proportion   ers at                         un-restricte
  Full name of        Nature of
                                      of shares              report   restricted
  Shareholders       shareholder                the end of                        d shares State of share
                                        held                                                                              Amount
                                                             period     shares
                                                  report                            held
                                                                         held
                                                  period

Shenzhen
Special           State-owned                     145,925,2                              139,925,25
                                         49.09%                             6,000,000
Development       corporation                               56                                      6
Group Co., Ltd.

Shenzhen
Capital Fortune
Jewelry
                  Domestic non
Industry                                          71,000,00                 71,000,00
                  state-owned            23.88%
Investment                                                  0                        0
                  corporate
Enterprise
(limited
partnership)

GUOTAI
JUNAN
                  Foreign
SECURITIES(                               0.88% 1,241,440                                 1,241,440
                  corporation
HONGKONG)
LIMITED



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                                                                            深圳市特力(集团)股份有限公司 2017 年半年度报告全文


                  Domestic nature
Li Guangxin                                  0.26%     761,161                                761,161
                  person

Weng              Foreign nature
                                             0.19%     579,528                                579,528
Zhengwen          person

                  Domestic nature
He Xing                                      0.10%     300,100                                300,100
                  person

                  Foreign nature
Zeng Huiming                                 0.09%     270,000                                270,000
                  person

                  Domestic nature
Huang Chuyun                                 0.09%     266,500                                266,500
                  person

Agricultural
Bank of China
                  Other                      0.08%     242,400                                242,400
Ltd. – CSI 500
ETF

                  Domestic nature
Lin Fengfang                                 0.07%     216,933                                216,933
                  person

Strategy investors or general
corporation comes top 10
                                       N/A
shareholders due to rights issue (if
applicable) (see note3)

                                       Among the top ten shareholders, there exists no associated relationship between the
Explanation       on       associated state-owned legal person’s shareholders SDG, Ltd and other shareholders, and they do not
relationship among the top ten belong to the consistent actionist regulated by the Management Measure of Information
shareholders or consistent action      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 shareholders with un-restrict shares held

                                                                                                              Type of shares
        Shareholders’ name                 Amount of un-restrict shares held at Period-end
                                                                                                           Type           Amount

Shenzhen Special Development                                                                      RMB ordinary
                                                                                    139,925,256
Group Co., Ltd.                                                                                   shares

GUOTAI JUNAN                                                                                      Domestically
SECURITIES(HONGKONG)                                                                  1,241,440 listed foreign
LIMITED                                                                                           shares

                                                                                                  Domestically
Li Guangxin                                                                             761,161 listed foreign
                                                                                                  shares

                                                                                                  Domestically
Weng Zhengwen                                                                           579,528 listed foreign
                                                                                                  shares



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                                                                             深圳市特力(集团)股份有限公司 2017 年半年度报告全文


                                                                                                    Domestically
He Xing                                                                                   300,100 listed foreign
                                                                                                    shares

                                                                                                    Domestically
Zeng Huiming                                                                              270,000 listed foreign
                                                                                                    shares

                                                                                                    Domestically
Huang Chuyun                                                                              266,500 listed foreign
                                                                                                    shares

Agricultural Bank of China Ltd. –                                                                  RMB ordinary
                                                                                          242,400
CSI 500 ETF                                                                                         shares

                                                                                                    Domestically
Lin Fengfang                                                                              216,933 listed foreign
                                                                                                    shares

                                                                                                    Domestically
Liu Jun                                                                                   195,100 listed foreign
                                                                                                    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 SDG and other shareholders, and they do not belong
10   un-restrict     shareholders   and
                                           to the consistent actionist regulated by the Management Measure of Information Disclosure on
between        top    10     un-restrict
                                           Change of Shareholding for Listed Companies. For the other shareholders of circulation share,
shareholders         and    top      10
                                           the Company is unknown whether they belong to the consistent actionist.
shareholders

Explanation on shareholders
involving margin business about top
ten common shareholders with               N/A
un-restrict shares held(if applicable)
(see note 4)

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

IV. Changes of controlling shareholders or actual controller
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
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.




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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

Found more in annual report 2016 for the changes of shares held by directors, supervisors and senior executives


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

√Applicable □ Not applicable

                         Title              Type              Date                                 Reasons
      Name
Li Miao            Supervisor         Leave office     2017-05-04          Resigned supervisor for career move

Chen Yangsheng Supervisor             Election         2017-05-04          Elected as supervisor in shareholders meeting

Ke Wensheng        Staff supervisor   Leave office     2017-04-06          Resigned supervisor for career move

Liu Yuhong         Staff supervisor   Election         2017-04-06          Elected as staff supervisor




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                                         Section IX Corporate Bond

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when
semi-annual report approved for released or fail to cash in full on due
No




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                                           Section X Financial Report
       I. Audit reports

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


       II. Financial statements

       Units in Notes of Financial Statements is RMB


       1. Consolidated Balance Sheet

       Prepared by Shen Zhen Tellus Holding Co., Ltd
                                                               2017-06-30
                                                                                                                    In RMB

                      Item                                 Closing balance                        Opening balance

Current assets:

       Monetary funds                                                    153,232,791.88                        218,497,640.10

       Settlement provisions

       Capital lent

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

       Derivative financial liability

       Notes receivable

       Accounts receivable                                                    2,221,154.93                           113,736.64

       Accounts paid in advance                                               8,771,027.57                          8,436,668.35

       Insurance receivable

       Reinsurance receivables
     Contract reserve of reinsurance
receivable
       Interest receivable                                                     118,000.00                            172,055.56

       Dividend receivable

       Other receivables                                                     17,508,786.88                      16,586,387.45

       Purchase restituted finance asset

       Inventories                                                            7,989,799.13                      11,038,915.69

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



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                                                 深圳市特力(集团)股份有限公司 2017 年半年度报告全文


     Other current assets                             185,823,991.93                      90,123,901.32

Total current assets                                  375,665,552.32                     344,969,305.11

Non-current assets:

     Loans and payments on behalf

     Finance asset available for sales                 10,176,617.20                      10,478,985.77

     Held-to-maturity investment

     Long-term account receivable

     Long-term equity investment                      198,496,585.91                     203,633,308.06

     Investment property                               75,475,007.05                      77,602,248.53

     Fixed assets                                     124,060,216.94                     129,226,236.16

     Construction in progress                         354,723,231.16                     343,365,313.46

     Engineering material

     Disposal of fixed asset

     Productive biological asset

     Oil and gas asset

     Intangible assets                                 53,042,802.82                      53,739,118.72
    Expense         on    Research        and
Development
     Goodwill
    Long-term          expenses      to    be
                                                        1,845,342.27                       1,437,761.31
apportioned
     Deferred income tax asset                         24,413,500.01                      24,448,797.86

     Other non-current asset                              100,000.00                         100,000.00

Total non-current asset                               842,333,303.36                     844,031,769.87

Total assets                                         1,217,998,855.68                   1,189,001,074.98

Current liabilities:

     Short-term loans                                  50,000,000.00                      50,000,000.00

     Loan from central bank
    Absorbing deposit and interbank
deposit
     Capital borrowed

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

     Derivative financial liability

     Notes payable

     Accounts payable                                  22,195,793.29                      23,599,227.33

     Accounts received in advance                       11,203,114.07                     11,930,493.02

     Selling     financial        asset    of


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                                                深圳市特力(集团)股份有限公司 2017 年半年度报告全文


repurchase
   Commission                charge      and
commission payable
       Wage payable                                  23,210,374.12                       27,144,631.18

       Taxes payable                                  9,340,563.46                       10,081,678.60

       Interest payable                                  94,347.00                           77,826.33

       Dividend payable

       Other accounts payable                       114,778,401.19                      126,045,854.54

       Reinsurance payables

       Insurance contract reserve

       Security trading of agency

       Security sales of agency

       Divided into liability held for sale
       Non-current liabilities due within 1
year
Other current liabilities

Total current liabilities                           230,822,593.13                      248,879,711.00

Non-current liabilities:

       Long-term loans                               27,600,000.00                       12,000,000.00

       Bonds payable

         Including: preferred stock

                 Perpetual capital
securities

       Long-term account payable                      3,920,160.36                        3,920,160.36

       Long-term wages payable

       Special accounts payable

       Accrual liabilities                             434,487.74                         1,192,618.90

       Deferred income

       Deferred income tax liabilities                  110,024.04                          232,711.06

       Other non-current liabilities                 14,468,198.45                       14,239,537.48

Total non-current liabilities                        46,532,870.59                       31,585,027.80

Total liabilities                                   277,355,463.72                      280,464,738.80

Owner’s equity:

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

       Other equity instrument

         Including: preferred stock

                 Perpetual capital
securities
       Capital public reserve                       565,226,274.51                      564,192,605.51


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     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                                                    55,532,728.21                       30,935,823.12
Total owner’s equity attributable to
                                                                    920,993,189.04                         895,362,614.95
parent company
Minority interests                                                      19,650,202.92                       13,173,721.23

Total owner’s equity                                               940,643,391.96                         908,536,336.18

Total liabilities and owner’s equity                              1,217,998,855.68                      1,189,001,074.98


    Legal Representative: Lv Hang                                  Person in charge of Accounting Works:Yang Jianping
    Person in charge of Accounting Institution: Liu Yuhong


    2. Balance Sheet of Parent Company

                                                                                                                In RMB

                     Item                             Closing balance                         Opening balance

Current assets:

     Monetary funds                                                 105,697,579.64                         150,800,890.39

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

     Derivative financial liability

     Notes receivable
     Accounts receivable

     Account paid in advance                                               21,000.00                              32,280.00

     Interest receivable                                                  118,000.00                             172,055.56

     Dividends receivable

     Other receivables                                                  98,341,250.33                       98,999,650.03

     Inventories

     Divided into assets held for sale

     Non-current assets maturing within
one year

     Other current assets                                           170,000,000.00                          90,000,000.00

Total current assets                                                374,177,829.97                         340,004,875.98

Non-current assets:

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



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       Held-to-maturity investments

       Long-term receivables

       Long-term equity investments                 680,829,138.92                     686,225,666.43

       Investment real estate                        48,298,436.85                      49,847,406.09

       Fixed assets                                  16,063,024.44                      16,497,899.89

       Construction in progress                         911,072.59                         373,191.69

       Project materials

       Disposal of fixed assets

       Productive biological assets

       Oil and natural gas assets

       Intangible assets                                411,230.25                         484,538.73

       Research and development costs

       Goodwill

       Long-term deferred expenses                      256,747.22                         239,924.49

       Deferred income tax assets                    13,888,782.94                      13,908,254.04

       Other non-current assets

Total non-current assets                            770,835,050.41                     777,753,498.56

Total assets                                       1,145,012,880.38                   1,117,758,374.54

Current liabilities:

       Short-term borrowings                         50,000,000.00                      50,000,000.00

       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                   2,523,809.60

       Wage payable                                   6,578,609.50                       7,713,651.26

       Taxes payable                                  1,623,330.66                         524,089.23

       Interest payable                                  54,375.00                          66,458.33

       Dividend payable
       Other accounts payable                       252,122,572.01                     253,475,259.99

       Divided into liability held for sale

       Non-current liabilities due within 1
year
       Other current liabilities



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Total current liabilities                           312,902,696.77                           311,779,458.81

Non-current liabilities:

     Long-term loans

     Bonds payable

        Including: preferred stock

                Perpetual capital
securities

     Long-term account payable

     Long-term wages payable

     Special accounts payable

     Accrual liabilities

     Deferred income

     Deferred income tax liabilities
     Other non-current liabilities

Total non-current liabilities

Total liabilities                                   312,902,696.77                           311,779,458.81

Owners’ equity:

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

     Other equity instrument

        Including: preferred stock

                Perpetual capital
securities

     Capital public reserve                         562,032,851.23                           560,999,182.23

     Less: Inventory shares
     Other comprehensive income

     Reasonable reserve

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

     Retained profit                                 -30,156,853.94                          -55,254,452.82

Total owner’s equity                               832,110,183.61                           805,978,915.73

Total liabilities and owner’s equity              1,145,012,880.38                      1,117,758,374.54


    3. Consolidated Profit Statement

                                                                                               In RMB

                    Item                Current Period                         Last Period

I. Total operating income                           160,984,104.56                           157,147,166.48

Including: Operating income                         160,984,104.56                           157,147,166.48

     Interest income


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         Insurance gained

         Commission charge and commission
income

II. Total operating cost                                146,908,206.30                      143,719,895.22

Including: Operating cost                               118,024,813.96                      112,822,380.88

         Interest expense

         Commission charge and commission
expense

         Cash surrender value

         Net amount of expense of
compensation

         Net amount of withdrawal of
insurance contract reserve

         Bonus expense of guarantee slip

         Reinsurance expense

         Tax and extras                                   2,810,925.76                        2,403,726.21

         Sales expenses                                   6,883,605.25                        7,399,760.23

         Administration expenses                         19,352,021.76                       20,805,027.12

         Financial expenses                                  26,460.54                          289,000.78

         Losses of devaluation of asset                    -189,620.97

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

         Investment income (Loss is listed
                                                          9,636,578.24                        5,100,570.96
with ―-‖)

              Including: Investment income
                                                          2,929,608.85                        2,808,781.91
on affiliated company and joint venture

              Exchange income (Loss is
listed with ―-‖)

              Other income

III. Operating profit       (Loss is listed with
                                                         23,712,476.50                       18,527,842.22
―-‖)

         Add: Non-operating income                         319,517.17                            45,280.90

              Including: Disposal gains of
                                                             58,186.00                           28,104.37
non-current asset

         Less: Non-operating expense                          6,919.80                            5,764.84

              Including: Disposal loss of
                                                              6,919.80                            1,237.84
non-current asset

IV. Total Profit     (Loss is listed with ―-‖)         24,025,073.87                       18,567,358.28

         Less: Income tax expense                          623,687.09                           597,869.12


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V. Net profit (Net loss is listed with ―-‖)        23,401,386.78                        17,969,489.16

    Net profit attributable to owner’s of
                                                     24,596,905.09                        17,747,952.63
parent company

  Minority shareholders’ gains and
                                                     -1,195,518.31                           221,536.53
losses

VI. Net after-tax of other comprehensive
income

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

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

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

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

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

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

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

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

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

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



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                6. Other

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

VII. Total comprehensive income                                           23,401,386.78                                 17,969,489.16

      Total comprehensive income
                                                                          24,596,905.09                                 17,747,952.63
attributable to owners of parent Company

      Total comprehensive income
                                                                          -1,195,518.31                                   221,536.53
attributable to minority shareholders

VIII. Earnings per share:

       (i) Basic earnings per share                                              0.0827                                       0.0597

       (ii) Diluted earnings per share                                           0.0827                                       0.0597

     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: Liu Yuhong


     4. Profit Statement of Parent Company

                                                                                                                         In RMB

                     Item                               Current Period                                  Last Period

I. Operating income                                                       21,455,828.43                                 21,654,258.03

      Less: Operating cost                                                 1,800,520.02                                  1,787,004.39

              Tax and extras                                                852,504.05                                    794,738.55

              Sales expenses

              Administration expenses                                      8,630,924.30                                  9,195,278.67

              Financial expenses                                            -315,599.87                                    53,700.38

              Losses of devaluation of asset                                -189,620.97

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

          Investment income (Loss is
                                                                          14,439,969.08                                  4,753,088.69
listed with ―-‖)

          Including: Investment income
                                                                           5,721,803.49                                  2,579,910.59
on affiliated company and joint venture

              Other income

II. Operating profit       (Loss is listed
                                                                          25,117,069.98                                 14,576,624.73
with ―-‖)

   Add: Non-operating income                                                                                                     0.01

              Including: Disposal gains of


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non-current asset

         Less: Non-operating expense

             Including: Disposal loss of
non-current asset

III. Total Profit   (Loss is listed with
                                                 25,117,069.98                        14,576,624.74
―-‖)

         Less: Income tax expense                   19,471.10                             19,471.10

IV. Net profit (Net loss is listed with
                                                 25,097,598.88                        14,557,153.64
―-‖)

V. Net after-tax of other comprehensive
income

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

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

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

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

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

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

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

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

               5. Translation differences
arising on translation of foreign


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currency financial statements

              6. Other
VI. Total comprehensive income                              25,097,598.88                         14,557,153.64

VII. Earnings per share:

        (i) Basic earnings per share                              0.0844                                0.0490

        (ii) Diluted earnings per share                           0.0844                                0.0490


    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                         172,205,464.81                           158,112,964.06
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
                                                            17,681,721.14                         22,370,091.90
operating activities

Subtotal of cash inflow arising from                    189,887,185.95                           180,483,055.96


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operating activities

       Cash     paid      for    purchasing
commodities         and    receiving   labor        100,485,791.06                       88,512,297.28
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            30,466,874.43                       29,272,522.61

       Taxes paid                                    12,522,480.67                       13,224,238.25

       Other    cash      paid   concerning
                                                     39,031,478.39                       25,502,491.46
operating activities

Subtotal of cash outflow arising from
                                                    182,506,624.55                      156,511,549.60
operating activities

Net cash flows arising from operating
                                                      7,380,561.40                       23,971,506.36
activities

II. Cash flows arising from investing
activities:

       Cash received from recovering
                                                    237,000,000.00                      165,500,000.00
investment

       Cash received from investment
                                                     10,890,968.34                        8,591,789.05
income

       Net cash received from disposal of
fixed, intangible and other long-term                  272,340.00
assets

       Net cash received from disposal of
                                                      2,343,240.90
subsidiaries and other units

       Other cash received concerning
investing activities

Subtotal of cash inflow from investing
                                                    250,506,549.24                      174,091,789.05
activities

       Cash paid for purchasing fixed,
                                                     12,861,466.12                       38,970,948.42
intangible and other long-term assets

       Cash paid for investment                     322,000,000.00                      110,800,000.00

       Net increase of mortgaged loans


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     Net cash received from
subsidiaries and other units obtained

     Other      cash   paid     concerning
investing activities

Subtotal of cash outflow from investing
                                                    334,861,466.12                      149,770,948.42
activities

Net cash flows arising from investing
                                                    -84,354,916.88                       24,320,840.63
activities

III. Cash flows arising from financing
activities

     Cash received from absorbing
                                                      7,672,000.00
investment

     Including: Cash received from
absorbing       minority      shareholders’          7,672,000.00
investment by subsidiaries

     Cash received from loans                        15,600,000.00

     Cash received from issuing bonds

     Other cash received concerning
financing activities

Subtotal of cash inflow from financing
                                                     23,272,000.00
activities

     Cash paid for settling debts

     Cash paid for dividend and profit
                                                      1,562,339.36                       16,495,591.67
distributing or interest paying

     Including: Dividend and profit of
minority shareholder paid by
subsidiaries

     Other      cash   paid     concerning
financing activities

Subtotal of cash outflow from financing
                                                      1,562,339.36                       16,495,591.67
activities

Net cash flows arising from financing
                                                     21,709,660.64                      -16,495,591.67
activities

IV. Influence on cash and cash
equivalents due to fluctuation in                          -153.38                             126.81
exchange rate

V. Net increase of cash and cash
                                                    -55,264,848.22                       31,796,882.13
equivalents

     Add: Balance of cash and cash
                                                    178,497,640.10                      159,184,710.93
equivalents at the period -begin

VI. Balance of cash and cash                        123,232,791.88                      190,981,593.06



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equivalents at the period -end


    6. Cash Flow Statement of Parent Company

                                                                                                    In RMB

                   Item                     Current Period                          Last Period

I. Cash flows arising from operating
activities:

     Cash received from selling
commodities and providing labor                              32,112,173.50                         30,405,761.68
services

     Write-back of tax received

     Other cash received concerning
                                                              4,567,298.11                         24,198,098.94
operating activities

Subtotal of cash inflow arising from
                                                             36,679,471.61                         54,603,860.62
operating activities

     Cash paid for purchasing
commodities and receiving labor
service

     Cash paid to/for staff and workers                       8,371,531.53                          7,686,514.98

     Taxes paid                                               1,808,421.17                          1,923,502.73

     Other    cash     paid    concerning
                                                             11,123,303.80                         23,114,646.01
operating activities

Subtotal of cash outflow arising from
                                                             21,303,256.50                         32,724,663.72
operating activities

Net cash flows arising from operating
                                                             15,376,215.11                         21,879,196.90
activities

II. Cash flows arising from investing
activities:

     Cash received from recovering
                                                         220,000,000.00                           135,000,000.00
investment

     Cash received from investment
                                                             10,718,165.59                          8,473,178.10
income

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

     Net cash received from disposal of
                                                             14,150,000.00
subsidiaries and other units

     Other cash received concerning
investing activities

Subtotal of cash inflow from investing                   244,868,165.59                           143,473,178.10



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                                             深圳市特力(集团)股份有限公司 2017 年半年度报告全文


activities

     Cash paid for purchasing fixed,
                                                    250,108.10                           205,838.02
intangible and other long-term assets

     Cash paid for investment                    293,998,000.00                      100,000,000.00

     Net      cash     received     from
subsidiaries and other units

     Other      cash   paid    concerning
investing activities

Subtotal of cash outflow from investing
                                                 294,248,108.10                      100,205,838.02
activities

Net cash flows arising from investing
                                                 -49,379,942.51                       43,267,340.08
activities

III. Cash flows arising from financing
activities

     Cash received from absorbing
investment

     Cash received from loans

     Cash received from issuing bonds

     Other cash received concerning
financing activities

Subtotal of cash inflow from financing
activities

     Cash paid for settling debts

     Cash paid for dividend and profit
                                                   1,099,583.35                       16,495,591.67
distributing or interest paying

     Other      cash   paid    concerning
financing activities

Subtotal of cash outflow from financing
                                                   1,099,583.35                       16,495,591.67
activities

Net cash flows arising from financing
                                                  -1,099,583.35                      -16,495,591.67
activities

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

V. Net increase of cash and cash
                                                 -35,103,310.75                       48,650,945.31
equivalents

     Add: Balance of cash and cash
                                                 110,800,890.39                       80,301,551.68
equivalents at the period -begin

VI. Balance of cash and cash
                                                  75,697,579.64                      128,952,496.99
equivalents at the period -end




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

    Current Period
                                                                                                                                       In RMB

                                                                                  Current period

                                                     Owners’ equity attributable to parent company

                                       Other equity
                                          instrument

        Item                                Perpet                     Less:      Other                         Provisio       Minorit Total
                                                                                            Reason
                         Share               ual             Capital Invento compre                   Surplus n of Retaine y             owners’
                                   Prefer                                                    able                              interests equity
                         capital            capita           reserve    ry        hensive             reserve general d profit
                                    red              Other                                  reserve
                                              l                        shares income                              risk
                                   stock
                                            securi
                                             ties

                         297,28
I. Balance at the                                            564,192                                  2,952,5              30,935, 13,173, 908,536
                         1,600.
end of the last year                                         ,605.51                                    86.32              823.12 721.23 ,336.18
                             00
             Add:
Changes         of
accounting policy
             Error
correction of the
last period

 Enterprise
 combine under
 the same control
           Other

II. Balance at the 297,28
                                                             564,192                                  2,952,5              30,935, 13,173, 908,536
beginning of this 1,600.
                                                             ,605.51                                    86.32              823.12 721.23 ,336.18
year                   00
III.       Increase/
Decrease in this                                             1,033,6                                                       24,596, 6,476,4 32,107,
year (Decrease is                                              69.00                                                       905.09    81.69 055.78
listed with ―-‖)
  (i)            Total
                                                                                                                           24,596, -1,195,5 23,401,
comprehensive
                                                                                                                           905.09    18.31 386.78
income
 (ii)     Owners’
                                                                                                                                    7,672,0 7,672,0
devoted        and
                                                                                                                                     00.00   00.00
decreased capital
1.Common shares
                                                                                                                                    7,672,0 7,672,0
invested     by
                                                                                                                                     00.00   00.00
shareholders
2. Capital invested
by holders of other
equity instruments



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                                       深圳市特力(集团)股份有限公司 2017 年半年度报告全文


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

                            1,033,6                                                    1,033,6
(VI)Others
                              69.00                                                     69.00

IV. Balance at the 297,28
                            565,226                      2,952,5       55,532, 19,650, 940,643
end of the report 1,600.
                            ,274.51                       86.32        728.21 202.92 ,391.96
period                 00

    Last Period
                                                                                  In RMB

       Item                                Last Period



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                                                                      深圳市特力(集团)股份有限公司 2017 年半年度报告全文


                                             Owners’ equity attributable to parent company

                                 Other equity
                                  instrument
                                                                                                            Minorit
                                    Perpet                    Less:    Other                      Provisio           Total
                                                                           Reason                           y
                       Share           ual         Capital Invento compre          Surplus n of Retaine              owners’
                               Prefer                                        able                           interest
                       capital                     reserve    ry   hensive         reserve general d profit s        equity
                                      capita
                                red          Other                         reserve
                                         l                  shares income                   risk
                               stock
                                      securi
                                      ties

                       297,28
I. Balance at the                                  564,192                              2,952,5              3,742,2 10,419, 878,588
                       1,600.
end of the last year                                ,605.51                               86.32               60.49 351.32 ,403.64
                          00
             Add:
Changes         of
accounting policy
             Error
correction of the
last period

Enterprise
combine under the
same control
          Other

II. Balance at the 297,28
                                                   564,192                              2,952,5              3,742,2 10,419, 878,588
beginning of this 1,600.
                                                    ,605.51                               86.32               60.49 351.32 ,403.64
year                   00
III.       Increase/
Decrease in this                                                                                             17,747, 221,536 17,969,
year (Decrease is                                                                                            952.63      .53 489.16
listed with ―-‖)
 (i)        Total
                                                                                                             17,747, 221,536 17,969,
comprehensive
                                                                                                             952.63      .53 489.16
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



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                                                                           深圳市特力(集团)股份有限公司 2017 年半年度报告全文


(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            21,490, 10,640, 896,557
end of the report 1,600.
                                                       ,605.51                                    86.32             213.12 887.85 ,892.80
period                 00
    8. Statement of Changes in Owners’ Equity (Parent Company)
    Current Period
                                                                                                                                 In RMB
                                                                            Current period

                                 Other equity instrument

                                           Perpetu                                       Other
                                                                              Less:                                                    Total
          Item        Share                   al                 Capital                comprehe Reasonab Surplus          Retaine
                                Preferre                                    Inventory                                                 owners’
                      capital              capital    Other      reserve                 nsive     le reserve    reserve   d profit
                                d stock                                      shares                                                   equity
                                           securiti                                      income
                                             es

I. Balance at the 297,281,                                    560,999,1                                         2,952,586 -55,254, 805,978,9

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                                        深圳市特力(集团)股份有限公司 2017 年半年度报告全文


end of the last year   600.00      82.23                                  .32 452.82      15.73
     Add: Changes
of     accounting
policy
           Error
correction of the
last period

           Other
II. Balance at the
                     297,281,   560,999,1                           2,952,586 -55,254, 805,978,9
beginning of this
                       600.00      82.23                                  .32 452.82      15.73
year
III.       Increase/
Decrease in this                1,033,669                                     25,097, 26,131,26
year (Decrease is                     .00                                      598.88      7.88
listed with ―-‖)
 (i)        Total
                                                                              25,097, 25,097,59
comprehensive
                                                                               598.88      8.88
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


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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

                                                                    1,033,669                                                             1,033,669
(VI)Others
                                                                          .00                                                                   .00
IV. Balance at the
                   297,281,                                         562,032,8                                       2,952,586 -30,156, 832,110,1
end of the report
                     600.00                                             51.23                                             .32 853.94         83.61
period
    Last period
                                                                                                                                     In RMB

                                                                                 Last period

                                       Other equity instrument

                                                 Perpetu                                       Other
                                                                                  Less:                                                     Total
        Item                Share                   al               Capital                comprehe Reasonab Surplus          Retaine
                                      Preferre                                  Inventory                                                 owners’
                            capital              capital    Other    reserve                   nsive   le reserve    reserve   d profit
                                      d stock                                    shares                                                    equity
                                                 securiti                                    income
                                                   es

I. Balance at the 297,281,                                          560,999,1                                       2,952,586 -91,388, 769,844,4
end of the last year 600.00                                             82.23                                             .32 913.41         55.14
     Add: Changes
of     accounting
policy
           Error
correction of the
last period

             Other
II. Balance at the
                   297,281,                                         560,999,1                                       2,952,586 -91,388, 769,844,4
beginning of this
                     600.00                                             82.23                                             .32 913.41         55.14
year
III.       Increase/
Decrease in this                                                                                                               14,557, 14,557,15
year (Decrease is                                                                                                               153.64         3.64
listed with ―-‖)
  (i)            Total
                                                                                                                               14,557, 14,557,15
comprehensive
                                                                                                                                153.64         3.64
income
 (ii)         Owners’


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

2. Usage in the
report period

(VI)Others
IV. Balance at the
                   297,281,   560,999,1                           2,952,586 -76,831, 784,401,6
end of the report
                     600.00      82.23                                  .32 759.77      08.78
period




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                       Section XI Notes to Financial Statement

                             (The unit is RMB unless otherwise specified)

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 297,280,000.00
Legal representative: Lv Hang
Unified social credit code: 91440300192192210U
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


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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. 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. instead of Shenzhen Testrite Machinery Co., Ltd. dated 30 June 1994 after approval from the Shenzhen

Administration for Industry and commerce.



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


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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

                  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 RMB common stock offer in 2015

In accordance with the provisions of the Company’s 19th extraordinary meeting of the 7th session of board of directors on

April 21, 2014 and the resolutions of the fourth extraordinary general meeting of 2014 on June 3, 2014, the non-public

offering of RMB ordinary shares (A shares) that the Company issues to Shenzhen SDG Co., Ltd. and Shenzhen CMAF

Jewelry Industry Investment Company (limited partnership) should not exceed 77,000,000 shares, of which the par value is

1 Yuan per share, the total raised funds are no more than RMB 646,800,000.00 Yuan, the issuance objects are all subscribed


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by cash.

On May 19, 2014, State-owned Assets Supervision and Administration Commission of the People's Government of

Shenzhen Municipality issued ―Reply to issues related to non-public offering of shares of Shenzhen Test Rite (Group) Co.,

Ltd. from SASAC of Shenzhen Municipality‖ (SGZWH No. [2014]237) which agreed the Company’s plan for non-public

offering of shares. The Company’s non-public offering has obtained the ―Approval for non-public offering of shares of

Shenzhen Test Rite (Group) Co., Ltd.‖ (CSRC License No. [2015]173) approved by China Securities Regulatory

Commission, which agrees the Company to issue the non-public offering of RMB ordinary shares (A shares) not exceeding

77,000,000 new shares. The registered capital is RMB 297,281,600.00 after change, and the company’s ownership

structure is as follows:


                      Type                              Amount (Share)                              Ratio (%)

     State-owned corporate shares                                     151,870,560                                    51.09

     Domestic public shares                                           119,011,040                                    40.03

     RMB special stock (B-Share)                                         26,400,000                                    8.88

                   Total                                              297,281,600                                   100.00

(6) Reducing stock by controlling shareholder in 2016
In accordance with the Announcement on Reducing Share Holding of Controlling Shareholder the company disclosed on
June 1, 2016, from May 4, 2016 to May 31, 2016, Shenzhen SDG Co., Ltd. totally reduced 2,972,537 shares of the
company’s unrestricted outstanding shares by concentrated bidding, accounting for 1% of the company’s total share capital.
On September 30, 2016, the company received a Letter About Reducing Test Rite A Shares and Completing the Share
Holding Reducing Plan from SDG, from September 29, 2016 to September 29, 2016, SDG totally reduced 2,972,767
shares of the company’s unrestricted outstanding shares by concentrated bidding, accounting for 1% of the company’s total
share capital. Up to September 29, 2016, SDG completed the share holding reducing plan. The company's equity structure
was as follows:


                      Type                              Amount (Share)                              Ratio (%)

     State-owned corporate shares                                     145,925,256                                    49.09

     Domestic public shares                                           124,956,344                                    42.03

     RMB special stock (B-Share)                                         26,400,000                                    8.88

                   Total                                              297,281,600                                   100.00

As of 30 June 2017, the Company have 297,281,600 shares offered in total, found more in 31 of Note VI.


4. Consolidation scope of the Company in the year
Totally 15 companies included in the consolidation scope for the first half Year of 2017, found more in ―Equity in other
entity‖ in the Note VIII. One company deducted in consolidation range in the Year.



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5. Relevant party offering approval reporting of financial statements and date thereof
This financial statement is approved for disclosure by resolution from the Board dated 30 August 2017.


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 Business Enterprise-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 15 th, 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 recognized 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 30 th, June 2017 and the business
performance and cash flow in January to June of 2017. 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
assets and liabilities.



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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
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
entity. 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 are
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



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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
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 re-measured 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
scope 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


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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
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


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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)
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, recognize the assets held and obligations assumed solely by the Company, and
recognize assets held and obligations assumed jointly by the Company in appropriation to the share of the Company;
recognize revenue from disposal of the share of joint operations of the Company; recognize fees solely occurred by
Company and recognize 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 business,
the same below) from joint operations, the Company shall only recognize 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 recognize the full amount of this loss in relation to its investment in or sale of assets
to joint operations, or recognize 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:


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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
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 shall 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


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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
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



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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
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 amortized cost method, which means the
amount of initial recognition less the amount of principle already repaid, add or less the accumulated amortized amount
arising from the difference between the amount due on maturity and the amount initially recognized using effective interest
rate method, and less the amount of impairment losses recognized. 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


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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
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.

The company’s standards to judge if the fair value of available for sale equity instruments investment has a ―severe‖

depreciation is that if the fair value of a single available for sale financial asset has a sharp fall which exceeds 50% of its

holding cost, then this available for sale financial asset is affirmed to have a severe decrease in value and should have the

provision for asset impairment to confirm the impairment loss.

The company’s standards to judge if the fair value of available for sale equity instruments investment has a

―non-temporary" depreciation is that if the fair value of a single available for sale financial asset has a sharp fall and this

downtrend is predicted to be non-temporary with the duration over a year that cannot be fundamentally changed in the

whole holding period, then this available for sale financial asset is affirmed to have a non-temporary decrease in value and

should have the provision for asset impairment to confirm the impairment loss.

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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: ①the contract right to
recover the cash flows of the financial asset has terminated; ② 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 ③ 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 derecognized. If the risk and rewards of
ownership of the financial assets have been retained, the financial assets shall not be derecognized. 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


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above paragraphs.

(5) Classification and measurement of financial liabilities
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 classified 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.
② 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

financial 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


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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 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

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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).
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,

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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 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
amortization 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, amortization


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or impairment which should have been recognized 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 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 recognized as a result of the previously held equity investment accounted for using equity method
on the date of combination or recognized 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 investment 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.


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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 recognized 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‖.
(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 recognized 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 recognized 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 recognize 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

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accounting policies and accounting periods of the Company. Investment gain and other comprehensive income shall be
recognized 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 unrealized gain or loss arising from inter-group
transactions shall be eliminated by the portion attributable to the Company. Investment gain shall be recognized
accordingly. However, any unrealized 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 classified 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.
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.
③Acquisition 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.
④Disposal 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

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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 recognized 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 recognized 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 basis. 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 recognized 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 recognized 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 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 recognized 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 recognized 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 recognized as other comprehensive income, and subsequently


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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 economic interest to flow in and its cost can be reliably measured, shall be included
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 Note 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 recognized in profit or loss for the current period.
15. Fixed assets
(1) Recognition criteria of fixed assets

Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services, renting or

business management with useful lives exceeding one fiscal year. Fixed assets are only recognized 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 rate
             Type                  Depreciation term (year)             Residual rate (%)
                                                                                                                (%)




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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                10                              0                             10.00

self-owned houses
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.
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


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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 amortized using the straight-line method over its useful life when the asset is available for
use. Intangible assets with indefinite life are not amortized.



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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 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 recognized as profit or loss in the current period.
Expenses incurred during the development phase that satisfy the following conditions are recognized 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 assets impairment
The Group will judge if there is any indication of impairment as at the balance sheet date in respect of
long-term investments 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.


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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 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 recognize 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 recognized 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 recognize


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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 labor
relationship plans and employee redundant proposals; and the Company recognize 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 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


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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 recognized as government grant related

to assets, and other government grants are recognized 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 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 recognized 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

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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 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.


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(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 realize 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 realize 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.
(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 recognized as unrecognized 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
unrecognized financing expenses shall be accounted for long-term liability and long-term liability due within one year.
Unrecognized financing expenses shall be recognized 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
recognized as unrealized financing income. The balance of lease receivable after deducting unrecognized financing income
shall be accounted for long-term debt and long-term debt due within one year.
Unrecognized financing income shall be recognized 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

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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 recognized.
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 and
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
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


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No accounting policy changed in reporting period.
(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
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 recognized 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) Long-term provision for asset impairment

The Company has checked if there is any sign that the long-term asset except for the financial assets may have the

impairment at the balance sheet date. For the intangible assets with uncertain service life, in addition to the annual

impairment test, make the impairment test when it has signs of impairment. Proceed with the impairment test when there is

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any sign indicates that the book amounts of other long-term assets except for the financial assets are uncollectible

When the book value of the asset or group of assets exceeds its recoverable amount, i.e. the higher one between the net

amount after subtracting the disposal costs from the fair value and the present value of the future cash flow, it indicates

impairment occurs.

The net amount after subtracting the disposal costs from the fair value is determined by subtracting the incremental costs

directly attributable to this disposal of assets from the sales agreement price similar to assets in fair dealing or the

observable market price.

When predicting the present value of future cash flows, it is required to make significant judgments to the output, selling

price and related operating expenses of this asset or group of assets and the discount rate used for calculating the present

value. The Company shall adopt all available related data when predicting the recoverable amounts, including making

predictions about the relevant output, selling price and related operating expenses 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.
(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) 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

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1. Main tax and tax rate

                 Type                                                          Tax rate
                                       Calculate and pay added-value tax for rent and water fee income respectively by 5%
                                       and 3% charge rate; automobile and parts sales, automobile maintenance, jewelry
VAT *1                                 retail, electric charge by 17%, and calculate output tax for property management fee
                                       by 6% tax rate, and calculate and pay added-value tax by the balance after deducting
                                       the input tax allowed to be deducted in the current period.

                                       The property management fee and rental before 1 May 2016 will paying business
Operation tax
                                       tax by 5% of the turnover

Consumption duty                       5% of the sales revenue of jewelry taxable consumer goods

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

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

Corporation income tax *2              Calculated and paid on 25% of the taxable income amount and tax by the levy rate

* 1. The Company's property management fee income and property lease were originally levied the business tax by 5% tax
rate, which was changed to levy the VAT since May 1, 2016 in accordance with the relevant provisions of the Notice on
Comprehensively Piloting the Change of Business Tax to VAT (CS No. [2016] 36), the tax rate of property management
fee was 6%, and the property lease needed to pay VAT by 5% tax rate.
* 2. The Company and its subsidiaries in addition to Shenzhen New Yongtong Dongxiao Vehicle Inspection Co., Ltd.
should be levied the tax by the approved collection rate, i.e. by 25% tax rate in 2017.

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

1st January 2017 while period-end refers to 30th June 2017.


1. Monetary fund

                  Item                               Period-end balance                        Balance at year-begin

Stock cash                                                                67,334.26                               96,167.91

Bank deposits:                                                     153,165,457.62                            218,401,472.19

                  Total                                            153,232,791.88                            218,497,640.10

As of 30 June 2017, the monetary fund with right of use limited amounting to 30,000,000.00 Yuan, refers to the structured

deposit with 3 months. Same deposit at last year has balance of 40,000,000.00 Yuan.
2. Accounts receivable
(1) Accounts receivable by category


                Category                                                  Period-end balance



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                                                       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           44.13      22,512,414.52                  100.00

debt provision separately

Receivables with bad debt provision
                                                   2,221,154.93            4.35                                              2,221,154.93
accrual by credit portfolio

Accounts     with     single        significant

amount and bad debts provision                    26,282,070.64           51.52      26,282,070.64                  100.00

accrued individually

                    Total                         51,015,640.09          100.00      48,794,485.16                   95.65   2,221,154.93

       (Cont.)

                                                                                   Balance at year-begin

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

Account     receivable         with      single

significant amount and withdrawal bad              22,512,414.52           46.03       22,512,414.52              100.00

debt provision separately

Receivables with bad debt provision
                                                      113,736.64            0.23                                               113,736.64
accrual by credit portfolio

Accounts     with      single       significant

amount     and   bad        debts     provision    26,282,070.64           53.74       26,282,070.64              100.00

accrued individually

                    Total                          48,908,221.80          100.00       48,794,485.16                99.77      113,736.64

       ① Account receivable with single significant amount and withdrawal bad debt
provision separately at period end
                                                                                     Period-end balance

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

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



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                                                                              Period-end balance

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

Ltd.                                                                                           collection

Guangdong Zhanjiang Sanxing Auto               4,060,329.44      4,060,329.44         100.00 Not expected to collected due to

Service Co., Ltd.                                                                              long account age

                                               2,380,760.40      2,380,760.40         100.00 Not expected to collected due to

Wang Changlong                                                                                 long account age

Huizhou         Jiandacheng      Daoqiao       2,021,657.70      2,021,657.70         100.00
                                                                                               Less likely to collection
Engineering Company

                                               1,862,000.00      1,862,000.00         100.00 Not expected to collected due to

Guangdong Materials Group Corp                                                                 long account age

                                               1,191,059.98      1,191,059.98         100.00 Not expected to collected due to

Jiangling Automobile Factory                                                                   long account age

                                               1,150,000.00      1,150,000.00         100.00 Not expected to collected due to

Yangjiang Auto Trade Co., Ltd.                                                                 long account age

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

       ② Account receivable provided for bad debt reserve under aging analysis method in
           the groups
                                                                              Period-end balance
                 A/C age
                                                Account receivable               Bad debt reserve             Accrual ratio (%)

Within 1 year                                                 2,221,154.93

                    Total                                     2,221,154.93

(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 account 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             19.30


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Guangdong Zhanjiang Sanxing Auto Service Co., Ltd.            Non-related party      4,060,329.44   Over 3 years           7.96

Wang Changlong                                                Non-related party      2,380,760.40   Over 3 years           4.67

Huizhou Jiandacheng Daoqiao Engineering Company               Non-related party      2,021,657.70   Over 3 years           3.96

Guangdong Materials Group Corp                                Non-related party      1,862,000.00   Over 3 years           3.65

                         Total                                                    20,171,354.54                           39.54

      (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

                                         Period-end balance                                Balance at year-begin
       A/C age
                                 Amount                  Ratio (%)                     Amount                 Ratio (%)

Within 1 year                         8,627,722.80                    98.37                8,259,644.18                   97.90

1-2 years                                                                                     68,400.90                    0.81

2-3 years                               68,400.90                      0.78

Over 3 years                            74,903.87                      0.85                  108,623.27                    1.29

         Total                        8,771,027.57                   100.00                8,436,668.35                 100.00

(2)Top 5 advance payment at ending balance by prepayment object
Total year-end balance of top five advance payment by prepayment object amounting to 8,729,227.63Yuan, takes 99.52
percent of the total advance payment at year-end.

4. Interest receivable

(1) Interest receivable by category

                 Item                                Period-end balance                         Balance at year-begin

Structured deposit                                                      118,000.00                                 172,055.56

                 Total                                                  118,000.00                                 172,055.56
5. Other accounts receivable
(1) Other accounts receivable by category



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                                                                              Period-end balance

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

Other account receivable with single

significant amount and withdrawal bad          39,194,955.77         55.23      39,194,955.77              100.00

debt provision separately

Other   receivables    with      bad    debt
                                               21,162,072.06         29.82       3,653,285.18               17.26   17,508,786.88
provision accrual by credit portfolio

Other accounts with single significant

amount and bad debts provision accrued         10,614,976.75         14.95      10,614,976.75              100.00

individually

                  Total                        70,972,004.58        100.00      53,463,217.70               75.33   17,508,786.88




         (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          39,200,840.68         55.76     39,200,840.68              100.00

debt provision separately

Other    receivables      with   bad    debt
                                               20,423,595.69         29.05      3,837,208.24               18.79    16,586,387.45
provision accrual by credit portfolio

Other accounts with single significant

amount and bad debts provision accrued         10,678,096.75         15.19     10,678,096.75              100.00

individually

                   Total                       70,302,533.12        100.00     53,716,145.67               76.41    16,586,387.45

         ① Other receivable with single significant amount and withdrawal bad debt provision
               separately at end of period
           Account receivable(units)                                            Period-end balance




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                                                  Account                           Accru
                                                                 Bad debt reserve                        Accrual reasons
                                                 receivable                         al ratio

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

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

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

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

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

Shenzhen Petrochemical Group                      1,912,849.63       1,912,849.63 100.00 Less likely to collection

Shenzhen SDG Huatong Industrial Package                              1,212,373.79              The Company has revoked, and
                                                  1,212,373.79                      100.00
Co., Ltd.                                                                                      estimated of uncollectible amount

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

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

                                                                      906,024.60             &