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

Financial Report & Statement

Semi-Annual 2018

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

Financial Report & Financial Statement

(1 January 2018-30 June 2018)

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

Balance Sheet

2018-6-30(Expressed in Renminbi unless otherwise stated)

Item

Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren

The Accounting Firm’s Principal: Fu Zongren

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

Balance Sheet (Cont’)

2018-6-30(Expressed in Renminbi unless otherwise stated)

Current liabilities:

Total liabilities and owners 'equity

Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren

The Accounting Firm’s Principal: Fu Zongren

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

Profit Statement

1 Jan. 2018-30 Jun. 2018(Expressed in Renminbi unless otherwise stated)

VIII. Earnings per share:

Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren

The Accounting Firm’s Principal: Fu Zongren

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

Cash Flow Statement

1 Jan. 2018-30 Jun. 2018(Expressed in Renminbi unless otherwise stated)

Net cash flows from financing activities

Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren

The Accounting Firm’s Principal: Fu Zongren

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

Statement of Changes in Owners’ Equity

1 Jan. 2018-30 Jun. 2018(Expressed in Renminbi unless otherwise stated)

reduced by owners

Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren

The Accounting Firm’s Principal: Fu Zongren

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

Statement of Changes in Owners’ Equity (Cont’)

1 Jan. 2018-30 Jun. 2018(Expressed in Renminbi unless otherwise stated)

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(VI) Others

Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren

The Accounting Firm’s Principal: Fu Zongren

HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD

NOTES TO FINANCIAL STATEMENT

SEMI-ANNUAL 2018

1. Company basic information

Hainan Dadonghai Tourism Center (Holdings) Co., Ltd. (hereinafter referred to as “the Company”),

was founded as a standardized LLC on April 26, 1993, reorganized and incorporated on the basis ofthe former Hainan Sanya Dadonghai Tourism Center Development Ltd. and approved by the HainanProvincial Stock System Experimentation Leading Team Office with a document of Qiong Gu Ban Zi[1993] No. 11. On May 6, 1996, the Company underwent a restructuring and a corresponding divisionunder the approval of the Hainan Provincial Securities Administration Office with a document ofQiong Zheng Ban [1996] No. 58. On October 8, 1996 and January 28, 1997, the Company, with dulyapproval, went public by issuing 80 million shares of B stock and 14 million shares of A stockrespectively on Shenzhen Security Exchange. On June 20, 2007, the Company experienced a reformof non-tradable shares, through which non-tradable share holders of the Company got circulating rightof their shares by paying shares to tradable share holders, and tradable share holders got paid threeshares for every ten of their shares. The Company operates business in the industry of tourism andcatering services.

As at 30 June 2018, the Company's accumulative total issued capital was 364.1 million shares and theCompany's registered capital was RMB 364.1 million. Legal representative: Yuan Xiaoping. Unifiedsocial credit code: 91460000201357188U. Domicile: Dadonghai, Hedong District, Sanya. Businessscope: Accommodation and catering industry (limited to branches); photography; flower bonsai,knitwear, general merchandise, hardware, chemical products (except franchised operations), dailynecessities, industrial means of production (except franchised operations), metal materials, machineryequipment; sales of train, bus, vehicle tickets on an agent basis etc. The Company's largestshareholder is Luoniushan Co., Ltd.

The financial statements were approved by the board of directors of the Company on 9 August 2018

for disclosure.

2. Basis of preparation of the financial statements2.1. Preparation basis

Based on going concern and according to actually occurred transactions and events, the Company prepared

financial statements in accordance with the Accounting Standards for Business Enterprises — Basic

Standards and the specific accounting standards, Application Guidance to the Accounting Standards forBusiness Enterprises, the interpretation of the Accounting Standards for Business Enterprises and otherrelevant provisions (hereinafter referred to collectively as the "Accounting Standards for BusinessEnterprises"), as well as the disclosure provisions of the Rules for the Compilation and Submission ofInformation Disclosure by Companies Offering Securities to the Public No.15 - General Requirements forFinancial Reports (Revised in 2014).

2.2 Going concernThe Company currently has sufficient working capital and normal operating conditions. It is estimated that

the operating activities of the Company will continue in the next 12 months.

3. Significant accounting policies and accounting estimatesMain accounting policies and accounting estimates have no changes in the period

3.1 Statement on compliance with the Accounting Standards for Business EnterprisesThe financial statements prepared by the Company comply with the requirements of the Accounting

Standards for Business Enterprises, and truly and completely present the financial position, operatingresults, cash flows of the Company and other related information.

3.2 Accounting periodThe accounting year is from January 1 to December 31 in calendar year.3.3 Operating cycle

The Company's operating cycle is 12 months.

3.4 Reporting currencyThe Company adopts RMB as its reporting currency.

3.5 Scope of consolidation (aggregation) of financial statementsAs of 30 June 2018, the scope of consolidation (aggregation) of financial statement including theindependent accounting of the non-legal person -South China Grand Hotel of Hainan Dadonghai

Tourism Center (Holdings) Co., Ltd

3.6 Recognition criteria of cash and cash equivalents

For the purpose of preparing the statement of cash flows, the term “cash” refers to the cash onhand and the unrestricted deposit. The term “cash equivalents” refers to short-term (maturing

within three months from acquisition) and highly liquid investments that are readily convertible toknown amounts of cash and which are subject to an insignificant risk of change in value.

3.7 Foreign currency transactions and conversion for statement in foreign languagesForeign currency transactions are converted into RMB for recording purpose at the spot exchange

rate on the date when the transaction occurs.Balances of foreign currency monetary items are measured at the spot exchange rate on the

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

3.8 Financial instruments

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

3.8.1 Classification of financial instruments

Financial assets and liabilities are classified into the following categories according to thepurpose of acquisition: financial assets or financial liabilities measured at fair value andwhose variation is included in the current profit and loss, including financial assets orfinancial liabilities held for trading and financial assets or financial liabilities directlydesignated to be measured at fair value through current profit and loss, held-to-maturityinvestments, accounts receivables, available-for-sale financial assets and other financialliabilities, etc.

3.8.2 Recognition basis and measurement method of financial instruments

(1) Financial assets (financial liabilities) measured at fair value and whose variation is

included in the current profit and lossFinancial assets (financial liabilities) are initially recorded at fair values when acquired(deducting cash dividends that have been declared but not distributed and bondinterests that have matured but not been drawn). Relevant transaction expenses areincluded in the current profit and loss.

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

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

(2) Held-to-maturity investments

Held-to-maturity investments are initially recorded at fair values plus the related tradeexpenses when acquired (deducting bond interests that have matured but not beendrawn).

The interest revenue calculated at amortization cost and effective interest rate (nominalinterest rate is adopted when the difference between the actual interest rate and thenominal interest rate is minor) during the holding period is recognized as investmentincome. Effective interest is recognized when obtained, and remains unchanged in thepredictable holding period or applicable shorter period.

The difference between the amount received and the book value of the investment is

included in the investment profit and loss upon disposal.

(3) Accounts receivable

For creditor’s rights receivable arising from external sales of goods or rendering of

service by the Company and other creditor's rights of other enterprises (excludingliability instruments quoted in an active market) held by the Company, includingaccounts receivable, other receivables, notes receivable and prepayments, etc., theinitial recognition amount shall be the contract price or agreement price receivablefrom purchasing party. Accounts receivable with financing nature are initiallyrecognized at their present values.

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

(4) Available-for-sale financial assets

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

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

The difference between the amount received and the book value of the financial asset isincluded in the investment profit and loss upon disposal. Meanwhile, the correspondingpart of fair value accumulated change accounted as other comprehensive income istransferred into investment profit or loss.

(5) Other financial liabilities

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

3.8.3 Recognition basis and measurement method of transfer of financial assets

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

The principle of substance over form is adopted to determine whether the transfer of afinancial asset satisfies the criteria as described above for derecognition of a financial asset.The Company shall classify the transfer of a financial asset into the entire transfer and thepartial transfer of financial asset. If the entire transfer of financial asset satisfies the criteriafor derecognition, the difference between the amounts of the following two items shall beincluded in the current profit and loss:

(1) The book value of the transferred financial asset;(2) The sum of the consideration received from the transfer and the accumulated amount

of the changes in fair value originally and directly included in owners’ equity (the

situation where the financial asset transferred is an available-for-sale financial asset isinvolved in)

If the partial transfer of financial asset satisfies the criteria for derecognition, the entirebook value of the transferred financial asset shall be split into the derecognized andrecognized part according to their respective fair value and the difference between theamounts of the following two items shall be included in the current profit and loss:

(1) The book value of derecognized part;(2) The sum of the consideration for the derecognized part and the portion of

derecognition corresponding to the accumulated amount of the changes in fair value

originally and directly included in owners’ equity (the situation where the financial

asset transferred is an available-for-sale financial asset is involved in).

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

3.8.4 Derecognition criteria of financial liabilities

A financial liability shall be totally or partly derecognized if its present obligations aretotally or partly dissolved. Where the Company enters into an agreement with a creditor soas to substitute the existing financial liabilities with any new financial liability, and the newfinancial liability is substantially different from the contractual stipulations regarding the

existing financial liability, it shall derecognize the existing financial liability, and shall atthe same time recognize a new financial liability.

Where substantial revisions are made to some or all of the contractual stipulations of theexisting financial liability, the Company shall derecognize the existing financial liabilitytotally or partly, and at the same time recognize the financial liability with revisedcontractual stipulations as a new financial liability.

Upon total or partial derecognition of financial liabilities, the difference between the bookvalue of the financial liabilities derecognized and the consideration paid (includingnon-cash assets surrendered or new financial liabilities assumed) shall be included in thecurrent profit and loss.

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

3.8.5 Method of determining the fair value of financial assets and financial liabilities

For financial instruments with active market, their fair values are determined with quotedmarket price. For financial instruments without active market, their fair values aredetermined by using valuation technique. During the valuation, the Company use valuationtechniques that are appropriate in the circumstances and for which sufficient data and otherinformation are available to measure fair value, select inputs that are consistent with thecharacteristics of the asset or liability that market participants would take into account in atransaction for the asset or liability, and give priority to the use of relevant observableinputs. Unobservable inputs are only adopted when relevant observable inputs cannot beobtained or are impracticable to obtain.

3.8.6 Providing of impairment provision on financial assets (exclude receivableaccounts)

The Company performs inspection on the book value of financial assets apart from thosefinancial assets measured at fair value through current profit and loss on the balance sheet

date. Impairment provision is required if objective evidences of impairment occurs to thefinancial assets.

(1) Impairment provision of available-for-sale financial assets:

If there is a serious decline in fair value of the available-for-sale financial assets at theend of the period, or such decline is not temporary after considering various factors, theimpairment shall be confirmed, the accumulated losses due to decreases in fair value

previously included in owner’s equity shall be reversed, and the impairment loss shall

be recognized.

If, in a subsequent period, the carrying amount of available-for-sale debt instrumentsinvestments increases and the increase can be related objectively to an event occurringafter the impairment was recognized, the previously recognized impairment losses arereversed, included in current profit or loss.

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

(2) Impairment provision of held-to-maturity investment:

Measurement of held-to-maturity investment impairment loss is governed bymeasurement of account receivables impairment loss.3.9 Account receivable3.9.1 Account receivable with individually significant amount and with bad debtprovision accrual independently

Basis and standard for "individuallysignificant"

3.9.2 Receivables with bad debt provision accrual by credit portfolio:

Receivables provided for bad debts on aportfolio basis

3.9.3 Accounts receivable with individually insignificant amounts and individual

allowance for bad debt

3. 10 Inventories

3.10.1 ClassificationInventories are classified into: raw materials, stock commodities, low-cost consumables,

good materials, fuel, etc.

3.10.2 Valuation method of inventories dispatchedStock commodity is accounted for at the selling price and the difference between thepurchase and sale prices are adjusted on a monthly basis by using the integrated pricedifference rate. The purchase and storage of all materials of inventories is measured atactual cost, and by using the first-in first-out method when applied for use. Low-costconsumables are amortized at lump-sum method when applied for use.3.10.3. Determining basis of the net realizable value of inventories and method for inventory

impairment provisionAfter the comprehensive inventory count at the end of the period, provisions for inventory depreciation reserveare made or adjusted at the lower of their costs or net realizable values.For merchandise inventories for direct sale, including stock commodities, goods in progress and materialsfor sale, during normal operations, their net realizable values are recognized at the estimated selling pricesminus the estimated selling expenses and the relevant taxes and surcharges; for material inventories heldfor production, their net realizable values are recognized at the estimated selling prices of finished goodsminus estimated costs until completion, estimated selling expenses and relevant taxes and surcharges.The provisions for inventory depreciation reserve are made on an individual basis at the end of the period;for inventories with large quantities and relatively low unit prices, the provisions for inventorydepreciation reserve are made on a category basis. For inventories related to the product portfoliosmanufactured and sold in the same area, and of which the final usage or purpose is identical or similarthereto, and which is difficult to separate from other items for measurement purposes, the provisions forinventory depreciation reserve are made on a portfolio basis.Where the previous factors affecting the written-down of the value of inventory have disappeared, theamount of write-down shall be resumed and be reversed from the original provision for inventorydevaluation with the reversal being included in current profit and loss.

3.10.4. Inventory systemThe perpetual inventory system is adopted for accounting.

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

3.11.1. Judgment criteria for common control and significant influenceJoint control refers to the control shared over an arrangement in accordance with the relevant stipulations,and the decision-making of related activities of the arrangement should not be made before the partysharing the control right agrees the same. Where the Company exercises joint control over the investeetogether with other parties to the joint venture and enjoys the right on the investee's net assets, the investeeis a joint venture of the Company.

Significant influence refers to the power to participate in making decisions on the financial and operatingpolicies of an enterprise, such as appointing representative to the board of directors or similar organs ofauthority of the investee, but not the power to control the investee, or jointly control, the formulation ofsuch policies with other parties. Where an investor is able to have significant influences on an investee, theinvestee shall be the Company's associate.3.11.2. Determining of initial investment cost(1) Long-term equity investment acquired from business combinationBusiness combination under the common control: if the Company pays a consideration to the combinee incash, by transferring non-cash assets or by assuming debts, the share of book value of its owners' equity inthe combinee in the consolidated financial statements of the ultimate controlling party shall be regarded,on the merger date, as the initial investment cost of the long-term equity investment. If there is a differencebetween the initial investment cost of the long-term equity investment and the total of book values of thepaid cash, transferred non-cash assets and of assumed debts as well as the face value of issued share, thedifference shall be used to adjust the share premium in the capital reserve; and if the share premium in thecapital reserve is insufficient to be offset, retained earnings shall be adjusted.In case the Company can exercise control over the investee under common control for additionalinvestment or other reasons, the initial investment cost of long-term equity investments is recognized atthe share of book value of net asset of the acquiree after the combination in the consolidated financialstatements of the ultimate controller on the combination date. The stock premium should be adjusted at thedifference between the initial investment cost of long-term equity investments on the combination date andthe book value of long-term equity investments before the combination plus the book value ofconsideration paid for additional shares; if there is no sufficient stock premium for write-downs, theretained earnings are adjusted.Business combination not under the common control: the Company recognizes the combination costdetermined on the combination date as the initial cost of long-term equity investments. Where theCompany can control the investee not under common control from additional investments, the initialinvestment cost should be changed to be accounted for under the cost method and recognized at the sum ofthe book value of equity investments originally held and newly increased investment cost. Under businesscombination not under the common control, the auditing, legal services, consulting and other intermediaryfees and other related administrative expenses for business combination will be included into current profitand loss upon occurrence; the transaction costs for the issuance of equity securities or debt securities shallbe included into the initial recognition amount of equity securities or debt securities.(2) Long-term equity investments obtained by other meansFor long-term equity investments acquired from making payments in cash, the initial cost is the actuallypaid purchase cost.For long-term equity investments acquired from issuance of equity securities, the initial investment cost isthe fair value of the issued equity securities.

If the exchange of non-monetary assets has commercial substance and the fair values of assets traded outand traded in can be measured reliably, the initial cost of long-term equity investment traded in withnon-monetary assets are determined based on the fair values of the assets traded out and the relevant taxesand surcharges payable unless there is any conclusive evidence that the fair values of the assets traded inare more reliable; if the exchange of non-monetary assets does not meet the above criteria, the book valueof the assets traded out and the relevant taxes and surcharges payable are recognized as the initial cost oflong-term equity investment traded in.For long-term equity investment acquired from debt restructuring, the initial cost is determined based onthe fair value.3.11.3. Subsequent measurements and recognition of gain or loss(1) Long-term equity investment under cost methodLong-term equity investments in subsidiaries are accounted for under the cost method. Except for theactual price paid for acquisition of investment or the cash dividends or profits contained in theconsideration which have been declared but not yet distributed, the Company recognizes the investmentincome in the current year at the cash dividends or profits declared by the investee.

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

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

When recognizing the share of net profit or loss of the investee that the Company shall enjoy, based on fairvalue of various identifiable assets and others of the investee on acquisition and according to accountingpolicies and accounting periods of the Company, the Company shall recognize such share after makingadjustments to net profit of the investee. When holding the investment, the investee should prepare the

consolidated financial statements, it shall account for the investment income based on the net profit, othercomprehensive income and the changes in other owner's equity attributable to the investee.The Company shall write off the part of incomes from internal unrealized transactions between theCompany and associates and joint ventures which are attributable to the Company according to thecorresponding ratio and recognize the profit and loss on investments on such basis. Where the losses frominternal transactions between the Company and the investee fall into the scope of assets impairment loss,the full amount of such losses should be recognized. For transactions on investments or sales of assetsbetween the Company and associates and joint ventures, where such assets constitute business, they shouldbe accounted for according to the relevant policies.

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

(3) Disposal of long-term equity investmentsFor disposal of long-term equity investments, the difference between the book value and the actual priceshall be included into the current profit or loss.

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

In case the joint control or significant influence over the investee is lost for disposing part of equityinvestments or other reasons, the remaining equity will be changed to be accounted for according to the

recognition and measurement principles of financial instruments. The difference between the fair valueand the book value on the date of the loss of joint control or significant influence should be included in thecurrent profit and loss. As to other comprehensive income recognized based on measurement of theoriginal equity investment under the equity method, accounting treatment shall be made on the same basisas would be required if the investee had directly disposed of the assets or liabilities related thereto whenmeasurement under the equity method is terminated. Owner's equity recognized from the investee'schanges in other owner's equity other than net profit or loss, other comprehensive income and profitdistribution should all transferred to the current profit and loss when the equity method confirmed is nolonger adopted.

Where the Company loses the control over the investee due to disposal of partial equity investments orother reasons, when it prepares separate financial statements, the remaining equity after disposal that canjointly control or have significant influence on the investee will be measured at the equity method, and theremaining equity should be deemed to have been adjusted at equity method on acquisition;If the remaining equity after disposal cannot exercise joint control or significant influence on the investee,such investments should be accounted for according to the provisions on the recognition and measurementof financial instruments and the difference between fair value and book value on the date of loss of thecontrol should be included in the current profit and loss.

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

3.12 Investment property

Measurement modeMeasured by cost methodDepreciation or amortization method

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

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

3.13 Fixed assets3.13.1 Recognition criteria of fixed assets

Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services,renting or business management with useful lives exceeding one year. Fixed assets are recognized whenthey simultaneously meet the following conditions:

(1) It is probable that the economic benefits relating to the fixed assets will flow into the Company;and(2) The costs of the fixed asset can be measured reliably.

3.13.2 Depreciation method of fixed assets

Asset type

3.14 Construction in progressThe book-entry values of the fixed assets are stated at total expenditures incurred before reaching working

condition for their intended use. For construction in progress that has reached working conditions for itsintended use but for which the completion of settlement has not been handled, it shall be transferred intofixed assets at the estimated value according to the project budget, construction price or actual cost, etc.from the date when it reaches the working conditions for its intended use. The fixed assets shall be

depreciated in accordance with the Company’s policy on fixed asset depreciation. Adjustment shall be

made to the originally and provisionally estimated value based on the actual cost after the completion ofsettlement is handled, but depreciation already provided will not be adjusted.

3.15 Borrowing costs3.15.1. Recognition principles of capitalization of borrowing costs

Borrowing costs include the interest of borrowings, the amortization of discount or premium, auxiliaryexpenses, exchange differences incurred by foreign currency borrowings, etc.The borrowing costs incurred to the Company and directly attributable to the acquisition and constructionor production of assets eligible for capitalization should be capitalized and recorded into relevant assetcosts; other borrowing costs should be recognized as costs according to the amount incurred and beincluded into the current profit and loss.Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assetswhich may reach their intended use or sale status only after long-time acquisition and construction orproduction activities.Borrowing costs may be capitalized only when all the following conditions are met at the same time:

(1) Asset disbursements, which include those incurred by cash payment, the transfer of non-cash assetsor the undertaking of interest-bearing debts for acquiring and constructing or producing assets eligible forcapitalization, have already been incurred;(2) Borrowing costs have already been incurred;(3) Purchase, construction or manufacturing activities that are necessary to prepare the assets for theirintended use are in progress.

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

3.15.3. Period of suspension for capitalizationIf the acquisition and construction or production activities of assets eligible for capitalization areabnormally interrupted and such condition lasts for more than three months, the capitalization ofborrowing costs should be suspended; if the interruption is necessary procedures for the acquired,constructed or produced assets eligible for capitalization to reach the working conditions for its intendeduse or sale, the borrowing costs continue to be capitalized. Borrowing costs incurred during theinterruption are recognized as the current profit and loss and continue to be capitalized until the acquisition,construction or production of the asset restarts.

3.15.4. Calculation of capitalization amount of borrowing costsAs for special borrowings borrowed for acquiring and constructing or producing assets eligible forcapitalization, borrowing costs of special borrowing actually incurred in the current period less the interestincome of the borrowings unused and deposited in bank or return on temporary investment should berecognized as the capitalization amount of borrowing costs.As for general borrowings used for acquiring and constructing or producing assets eligible forcapitalization, the interest of general borrowings to be capitalized should be calculated by multiplying theweighted average of asset disbursements of the part of accumulated asset disbursements exceeding specialborrowings at end of each month by the capitalization rate of used general borrowings. The capitalizationrate is calculated by weighted average interest rate of general borrowings.As for borrowings with discount or premium, the to-be-amortized discount or premium in each accountingperiod should be recognized by effective interest rate method, and the interest for each period should beadjusted.3.16 Intangible assets

3.16.1．Valuation method of intangible assets

(1) The Company initially measures intangible assets at cost on acquisition;The costs of externally purchased intangible assets include purchase prices, relevant taxes and surchargesand other directly attributable expenditures incurred to prepare the assets for their intended use. If thepayment for an intangible asset is delayed beyond the normal credit conditions and it is of the financingnature, the cost of the intangible asset shall be determined on the basis of the current value of the purchaseprice.For an intangible asset obtained in debt restructuring by a debtor for the settlement of relevant liability, thebook-entry value shall be initially recognized based on the fair value of the intangible asset. Differencebetween the book value of restructured debts and the fair value of the intangible asset used for debt off-setshall be included in the current profit or loss;On the premise that non-monetary assets trade is of commercial nature and the fair value of the assetstraded in or out can be measured reliably, the intangible assets traded in with non-monetary assets shouldbe recognized at the fair value of the assets traded out, unless any unambiguous evidence indicates that thefair value of the assets traded in is more reliable; as to the non-monetary assets trade not meeting theaforesaid premise, the book value of the assets traded out and related taxes and surcharges payable shouldbe recognized as the cost of the intangible assets, with gains or losses not recognized.For intangible assets acquired from business combination under common control, the initial book value areinitially recognized at the book value of the combinee; for intangible assets acquired from businesscombination not under common control, the initial book value are initially recognized at the fair value.Costs of intangible assets developed internally and independently include: the costs of materials and laborservices used to develop the intangible assets, the registration fee, the amortization of other patents andfranchise used in the process of development, the interest expenses meeting the condition for capitalization,and other direct expenses for preparing the intangible assets for their intended use.

(2) Subsequent measurementThe useful lives of the intangible assets are analyzed and determined on their acquisition.For intangible assets with definite useful lives, the Company shall adopt the straight-line method foramortization within the period during which they can bring economic benefits to the Company; where theperiod during which they can bring economic benefits to the Company cannot be forecast, those intangibleassets shall be deemed as assets with indefinite lives and no amortization will be made.3.16.2. Estimates of useful lives of intangible assets with definite useful lives

Item

3.16.3. Judgment basis for intangible assets with indefinite useful livesAs at the balance sheet date, the Company has no intangible assets with indefinite useful lives.

3.17 Impairment of long-term assetsFor the long-term equity investments, investment properties, fixed assets, construction in progress,

intangible assets, and other long-term assets measured at cost model, if there are signs of impairment, animpairment test will be conducted on the balance sheet date. If impairment test results indicate that therecoverable amounts of the assets are lower than their book value, the provision for impairment is madebased on the differences, which are recognized as impairment losses. The recoverable amounts ofintangible assets are the higher of their fair values less costs to sell and the present values of the futurecash flows expected to be derived from the assets. The assets impairment provision is calculated and madeon an individual basis. If it is difficult for the Company to estimate the recoverable amount of theindividual asset, the recoverable amount of an asset group to which the said asset belongs to will bedetermined. Asset group is the minimum combination of assets that can independently generate cashinflows.After the losses from asset impairment are recognized, they are not reversed in subsequent periods.

3.18 Long-term deferred expensesLong-term deferred expenses refer to various expenses which have been already incurred but will be born

in the reporting period and in the future with an amortization period of over one year.3.18.1. Amortization method

Long-term deferred expenses are evenly amortized over the beneficial period3.18.2. Amortization period

C FLOOR ROOM RENOVATION

3.19 Employee compensation3.19.1 Accounting method for short-term compensation

During the accounting period when employees serve the Company, the actual short-term compensation isrecognized as liabilities and included in current profit and loss or costs associated with assets.The appropriate amount of employee compensation payable will be determined during the accountingperiod when the employees provide services for the Company based on the medical insurance, work injuryinsurance and maternity insurance and other social insurance and housing fund paid by the Company foremployees, as well as trade union funds and employee education funds withdrawn according to provisionsat the accrual basis and accrual ratio.The employee benefits in the non-monetary form shall be measured at fair value.3.19.2 Accounting method for post-employment benefitsThe Company will pay basic old-age insurance and unemployment insurance in accordance with relevantprovisions of the local government for employees. During the accounting period when they provideservices for the Company, the amount payable will be calculated at the basis and proportion specified bylocal authorities, recognized as a liability and charged into current profit and loss or costs associated withassets.3.19.3 Accounting method for dismiss welfareWhere the Company cannot unilaterally withdraw the dismissal welfare offered in view of the cancellationof the labor relation plan or the layoff proposal, or recognizes the cost or expenses as to the restructuringinvolving the payment of dismissal welfare (whichever is earlier), the employee compensation arisingfrom the dismissal welfare should be recognized as the liabilities and charged to the current profit or loss.

3.20 Estimated liabilitiesWhen the Company is involved in litigation, debt guarantees, loss-making contract, reorganization matters,

if such matters are likely to be satisfied by delivery of assets or provision of services in the future and theamount can be measured reliably, they shall be recognized as estimated liabilities.

3.20.1. Recognition criteria for estimated liabilitiesWhen an obligation relating to a contingency meets all the following conditions at the same time, it isrecognized as an estimated liability:

(1) Such obligation is a present obligation of the Company;(2) The performance of such obligation may well cause outflows of economic benefits from theCompany; and(3) The amount of such obligation can be measured reliably.

3.20.2. Measurement method of estimated liabilitiesThe estimated liabilities of the Company are initially measured as the best estimate of expenses requiredfor the performance of relevant present obligations.When the Company determines the best estimate, it should have a comprehensive consideration of riskswith respect to contingencies, uncertainties and the time value of money. If the time value of money issignificant, the best estimates will be determined after discount of relevant future cash outflows.The best estimates shall be treated as follows in different circumstances:

If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of allthe outcomes within this range are equal, the best estimates will be determined at the average amount ofupper and lower limits within the range.If there is no continuous range (or interval) for the necessary expenses, or probabilities of occurrence of allthe outcomes within this range are unequal despite such a range exists, in case that the contingencyinvolves a single item, the best estimate shall be determined at the most likely outcome; if the contingencyinvolves two or more items, the best estimate should be determined according to all the possible outcomeswith their relevant probabilities.When all or part of the expenses necessary for the settlement of estimated liabilities of the Company areexpected to be compensated by a third party, the compensation shall be separately recognized as an assetonly when it is virtually certain to be received. The compensation recognized shall not exceed the bookvalue of the estimated liabilities.

3.21. Revenue

3.20.1. Recognition and measurement principles for revenues from sale of goods(1) General recognition and measurement principles for revenue from sales of goodsIncome from sales of goods is recognized when the Company has transferred to the buyer the significantrisks and rewards of ownership of the goods; the Company retains neither continuous management rightsassociated with ownership of the goods sold nor effective control over the goods sold; the relevant amountof income can be measured reliably; it is highly likely that the economic benefits associated with thetransaction will flow into the Company; and the relevant amount of cost incurred or to be incurred can bemeasured reliably.(2) Recognition criteria and time of revenue from sale of goods of the CompanyIn the provision of hotel housing services at the same time, the Company provides goods to customers andwill prepare daily sales list after confirming with the Rooms Department and the hotel front desk. Basedon the sales list, the finance department confirms that the major risks and rewards of ownership of thegoods have been transferred to the customer and then the sales revenue is recognized.3.20.2. Recognition and measurement principles of revenue from rendering of service(1) For the hotel rooms, catering (breakfast) and other services to be provided by the Company, afterthey are provided, and the Company checks with the sales department and the front check, the Companywill prepare the daily sales reports and accounts receivable list to the finance department, which will

review the same, after which, the revenue will be recognized.(2) For the revenue from restaurants and venues contracted out, they will be recognized in accordancewith the period stipulated in the contract or agreement and the collection timing.

3.20.3. Recognition basis for revenue from transfer of right to use assetsWhen the economic benefit related to the transaction is probably to flow into the Company and therelevant revenue can be reliably measured, the revenue from transfer of the asset use right is determined asfollows: the revenue from transferring use right of assets shall be recognized based on the followingcircumstances:

(1) The amount of interest income is determined based on the time and effective interest rate for othersto use the monetary funds of the Company.(2) The amount of revenue from usage is determined based on the charging time and method as agreedin relevant contract or agreement.

3.22 Government subsidies

3.22.1 Judgment criteria and accounting method for government subsidies related to assetsSet off the book value of related assets or be recognized as deferred income. Government subsidies related

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

3.22.2 Judgment criteria and accounting method for government subsidies related to income1) To be used as compensation for future costs, expenses or losses are recognized as deferred income

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

3.23. Major accounting policies and estimtes changes

The Company’s major accounting policies and estimtes have no changes in the period

4. Taxation

Major tax types and tax rates applicable to the Company

Taxation type

5. Notes to the items of financial statements

(The monetary unit refers to RMB/CNY unless specified)

5.1 Monetary fund

Other notes: The closing balance is unsecured, unfrozen or doesn’t have other restrictions on realization or the

funds deposit in the overseas, or have potential recovery risks.

5.2 Accounts receivable

5.2.1 Accounts receivable by type

Type

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

Accountsreceivable

5.2.2 Top five accounts receivable

5.3 Prepayments5.3.1 Aging analysis of repayment

5.3.2 Top five prepayment collected by objects at ending balance

Unit

5.4 Other receivables

5.4.1 Other receivables by type:

Total

Other receivables with provision for bad debts made by aging analysis method in portfolios:

5.4.2 Classification of other receivables by the nature of payment

5.4.3 Top five other account receivables collected by arrears party at ending balance

payment

5.5 Inventories5.5.1 Classification of inventories

5.5.2 Inventory depreciation reserve

5.6 Non-current assets maturing within one year

5.7 Other current assets

Item

5.7 Long-term equity investments

5.8 Investment real estate

Item

5.9 Fixed assets

Item

Period

5.10 Intangible assets

（1）disposal

5.11 Long-term deferred expenses

5.12 Accounts payable

Item

5.13 Accounts received in advance5.13.1 Accounts received in advance

5.13.2 Accounts received in advance with major amount and aging of over one year

5.14 Employee compensation payable

5.14.1 Classification of employee compensation payable

Item

5.14.2 Short-term employee benefits

5.14.3 Details of defined contribution plans

Total

5.15Tax payable

5.16 Other payables5.16.1 Other payables by fund quality

Other

5.16.2 Other payables with large amount and aging of over one year

5.17 Estimates liabilities

Other note:

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

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

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

Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co., Ltd’s the amount of CT is different with itsmarketing management system record. The inconformity time is July, 2006, and the hotel’s CT is changing on

April, 2016. Therefore, undercounted electricity consumption amount is10,313,373.00 kilowatt-hours, and

estimated cost is7,200,165.75 Yuanas various electricity prices and charges.

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

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

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

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

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

“General Rule of Civil Law”, this item claims that limitation of action is two years if accuser request people'scourt’s protection, except situations provided by law. The Company has withheld theundercounted electricity

consumption cost in 2016 which is about1,489,685.04 Yuan during the period from April, 2014 to April, 2016.

5.18 Share capital

Item

5.19 Capital reserves

5.20 Undistributed profit

Less: appropriation of statutory surplus reserves

5.21 Operating income and operating cost

5.22 Business tax and surcharges

5.23 Selling expenses

Depreciation

5. 24 Administrative expenses

5. 25 Financial expenses

5.26 Non-operating income

5.27. Non-operating expenditure

profits or losses

5.28. Notes to statement of cash flow

5.28.1 Other cash receipts related to operating activities

5.28.2 Cash paid for other operating activities

5.28.3 Cash paid with other investment activities concerned

5.28.4 Cash received with other financing activities concerned

Item

5.28.5 Cash paid with other financing activities concerned

5.29 Supplementary information to statement of cash flows

5.29.1 Supplementary information to statement of cash flows

Decrease in inventories ("-" for increases)

5.29.2 Breakdowns of cash and cash equivalents:

In RMB

3. Ending balance of cash and cash equivalents

6 . Business combination and consolidated financial statements

6.1 Scope of consolidation (aggregation) of financial statements

The scope of consolidation (aggregation) of financial statements covers the headquarter of theCompany and the subsidiary South China Grand Hotel of Hainan Dadonghai Tourism Center(Holdings) Co., Ltd., which is subject to independent accounting.

6.2 Changes in scope of consolidation (aggregation) of financial statements:

There is no change in scope of consolidation (aggregation) of the financial statements of theCompany in the year.

7. Risks relating to financial instruments

The Company faces a variety of financial risks in business process: credit risk, market risk and liquidity

risk. The Company’s Board of Directors is overall responsible for risk management objectives and

determining policies, and bears the ultimate responsibility for risk management objectives and policies, but

the board has authorized the Company’s enterprise management department to design and executive the

procedure which could guarantee the effective implementation of risk management objectives and policies.

The Company’s internal auditors will audit the policies and procedures of risk management as well, and

will report the discovery to Audit Committee.

The overall objective of the Company’s risk management is to set the risk management policies to

reduce risks as possible without giving excessive influence to competitiveness and strain capacity of theCompany.

7.1.Credit risk

Credit risk is the risk of financial loss on one party of a financial instrument due to the failure ofanother party to meet its obligations. The Company mainly faces credit risk generated fromcustomers through credit sales. The Company will understand and assess the credit risk of the newcustomer before signing the new contract. The Company makes credit rating for existing

customers and aging analysis of accounts receivable to ensure the Company’s overall credit risk

falls within a controllable range.

7.2 Market risk

Market risk is the risk of financial instruments’ fair value and future cash flow fluctuating due

to change of market price, including currency risk, interest risk and other pricing risk.

7.3 Liquidity risk

Liquidity risk is the risk that an enterprise may encounter deficiency of funds infulfilling the obligations when paying cash or settle in way of other financial assets. Thepolicy of the Company is to ensure there are enough cash to pay back mature debts. The

liquidity risk is centralized controlled by the Company’s accounting department. The

accounting department ensures the Company to possess enough cash to pay back the debts inall reasonable foreseeable circumstances through monitor the balance of cash, monitor thesecurities that can be converted into cash at any time and rolling forecasts of future cashflows in twelve months.

8. Related parties and related party transactions

8.1. Parent company

Parent company

Note: As of 30 June 2018, Luoniushan Co., Ltd. (hereinafter referred to as Luoniushan) and its wholly-owned

subsidairy Hainan Ya’anju Property Service Co., Ltd. holds 72,091,780 shares of the Company under A-stock,

totally takes 19.80% in total share capital of the Compamy, and it is the first largest shareholder of theCompany.

8.2. Related party transactions8.2.1 Transaction with goods purchasing ,labor service offering/receiving concerned

Total

2）Receivables and payables of related parties

9. Commitment and contingency

9.1 Important commitmentsThe Company has no commitmetns that need to disclosed up to balance sheet date2. ContingenciesMajor contingency on balance sheet date

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

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

Supply Bureau"), the letter claims that Sanya Power Supply Bureau found that the Company’s subsidiarySouth China Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co., Ltd’s the amount of CT is

different with its marketing management system record. The inconformity time is July 2006, and the

hotel’s CT is changing on April 2016. Therefore, undercounted electricity consumption amount is

10,313,373.00 kilowatt-hours, and estimated cost is7,200,165.75 Yuanas various electricity prices and

charges.

According to the file “Law Advisory Opinion about Retroactive Power (Charge) Dispute betweenSouth

China Grand Hotel andSanya Power Supply Bureau”issued by Beijing Junhe (Haikou) Law Firm on

December 20, 2016, which claims that

Sanya Power Supply Bureau has responsibility for CT to purchase,install, enseal, unseal and change, therefore, the responsibility of the guilty party forundercounted

electricity consumption of South China Grand Hotel isSanya Power Supply Bureau. According to the one

hundred and thirty-five item of “General Rule of Civil Law”, this item claims that limitation of action istwo years if accuser request people's court’s protection, except situations provided by law. The Company

has withheld theundercounted electricity consumption cost in 2016 which is about1,489,685.04 Yuan

during the period from April, 2014 to April, 2016. The event has no further progress up to 31 December2017.

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

11. Notes to other significant events

1. Correction of accounting errors in previous period

1）Retrospective restatement method

There is no correction of accounting errors using retrospective restatement method in previousperiod.

2）Prospective application method

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

2. OthersIn accordance with the requirements of the Regulatory Guidelines of Listed Companies No. 4 - Actual

Controller, Shareholders, Related Parties, Purchaser and Commitments and Fulfillment of ListedCompanies (CSRC Announcement No. [2013] 55) of China Securities Regulatory Commission, on June 7,

2014, Luoniushan Co., Ltd. (hereinafter referred to as “Luoniushan”) sent out the Letter about Changing

the Commitments of Luoniushan Co., Ltd. to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. tothe Company, and made commitments that Luoniushan shall actively seek reorganization party to

reorganize the assets of Dadonghai within three years from the date the Company’s general meeting of

shareholders considered and approved this commitment. The above matters have been considered andapproved by the general meeting of shareholders of Dadonghai on June 27, 2014.

On February 22, 2017, the Company received from Luoniushan a Letter on Progress in the Planning ofCommitment Implementation, in which Luoniushan intended to transfer 100% of the equity it held in theIndustrial Company, a wholly-owned subsidiary (specifically, the Industrial Company will first betransferred with part of financial assets equity held by Luniushan and of 6.91% equity of Sanya RuralCommercial Bank Co., Ltd.) to the Company, the transaction was made in cash with transaction amount ofabout RMB300 million. The proposal was not adopted at the 11th extraordinary meeting of the eighth boardof directors of the Company due to the Company's lack of sufficient debt repayment ability.

On June 23, 2017, Luoniushan issued to the Company a Letter on Change in Term of Commitment byLuoyunshan Co., Ltd. to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd., extending Luoniushan'sperformance period of the above restructuring commitment of the Company by 6 months, whichmeans thedeadline for the fulfillment of reorganization commitment was changed to December 27, 2017.As thereorganization would take a certain amount of time, on November29, 2017, Luoniushan again applied toextend the performance period of the reorganization commitment for two years, that is, the performancedeadline of the reorganization commitment was changed from December 27, 2017 to December 26, 2019,which was not approved at the fourth extraordinary general meeting of shareholders of the Company in2017.

12. Supplementary information

1. Details of current non-recurring profits and losses

Item

2. Return on net assets and earnings per share

3. Accounting difference between IFRS and CAS

There are no accounting differences between IFRS and CAS.(No text)

HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD

9 August 2018