Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd
Shenzhen SEG Co., Ltd.
2017 Annual Report
2018-028
April 2018
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 1 Important Notice, Contents, and Definitions
The Board of Directors, the Board of Supervisors, the directors, the supervisors, and the
senior executives guarantee that the annual report is authentic, accurate, and complete, and
that it has no false records misleading statements or major omissions and they commit to the
individual and joint legal liabilities.
Chairman of the Board of Directors Chen Huijie, the Chief Financial Officer Liu Zhijun and
the responsible person of the accounting institution (Accountant in charge) Ying Huadong
hereby declare that the Financial Statements enclosed in this annual report are true,
accurate and complete.
All directors other than the following directors have attended this board meeting and
reviewed the annual report.
Position of director not
Name of director not present Reason for absence Name of proxy
present
Yu Qian Director For work Chen Huijie
Li Luoli Independent director For work Fan Zhiqing
Song Pingping Independent director For work Fan Zhiqing
The future plans, development strategies and other forward-looking statements mentioned in
the annual report do not constitute substantial commitments to investors of the Company.
Investors are advised to pay attention to investment risks.
According to the profit distribution plan deliberated and adopted by the meeting of the
Board of Directors, based on 1,235,656,249 share capital, the Company will distribute cash
dividend of RMB 0.55 (tax included) for every 10 shares and 0 bonus share (tax included) to
all shareholders, and will not transfer reserves into share capital.
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
CONTENTS
Chapter 1 Important Notice, Contents, and Definitions ..........................................2
Chapter 2 Company Profile and Main Financial Indexes ........................................6
Chapter 3 Overview of Business ............................................................................... 11
Chapter 4 Management Discussion and Analysis ................................................... 14
Chapter 5 Important Matters ................................................................................... 46
Chapter 6 Changes in Share Capital and Information on Shareholders ............ 117
Chapter 7 Preferred Shares..................................................................................... 124
Chapter 8 Information on Directors, Supervisors, Senior Executives and Employees 126
Chapter 9 Corporate Governance ..........................................................................138
Chapter 10 Corporate Bonds .................................................................................. 153
Chapter 11 Financial Report ................................................................................... 154
Chapter 12 Documents Available for Reference .................................................... 154
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Definitions
Definition Refers to Description
This Company, the Company, the listed
Refers to Shenzhen SEG Co., Ltd.
company, Shen SEG
Shenzhen SEG Group Co., Ltd. Refers to Shenzhen SEG Group Co., Ltd.
Longgang SEG Refers to Shenzhen SEG Electronics Market Management Co., Ltd.
Suzhou SEG Refers to Suzhou SEG Electronics Market Management Co., Ltd.
Suzhou SEG Digital Refers to Suzhou SEG Digital Plaza Management Co., Ltd.
Shenzhen SEG Nanjing Electronics Market Management Co.,
Nanjing SEG Refers to
Ltd.
Xi'an SEG Refers to Xi'an SEG Electronics Market Co., Ltd.
Xi'an Hairong SEG Refers to Xi'an Hairong SEG Electronics Market Co., Ltd.
Changsha SEG Refers to Changsha SEG Development Co., Ltd.
Wujiang SEG Refers to Wujiang SEG Market Management Co., Ltd.
Wuxi SEG Refers to Wuxi SEG Electronics Market Co., Ltd.
Shunde SEG Refers to Shunde SEG Electronics Market Management Co., Ltd.
Nanning SEG Refers to Nanning SEG Digital Plaza Management Co., Ltd.
Shanghai SEG Refers to Shanghai SEG Electronics Market Co., Ltd.
SEG Baohua Refers to Shenzhen SEG Baohua Enterprise Development Co., Ltd.
SEG Industrial Refers to Shenzhen SEG Industrial Investment Co., Ltd.
SEG Credit Refers to Shenzhen SEG Credit Co., Ltd.
Nantong SEG Refers to Nantong SEG Times Plaza Management Co., Ltd.
Nantong SEG Operation Refers to Nantong SEG Commercial Operation Management Co., Ltd.
SEG Intelligent Refers to Suzhou SEG Intelligent Technology Co., Ltd.
SEG Investment Refers to Shenzhen SEG Investment Management Co., Ltd.
Shenzhen SEG Longyan New Energy Application and
Longyan Application Refers to
Development Co., Ltd.
SEG Longyan Technology Refers to Shenzhen SEG Longyan Energy Technology Co., Ltd.
Hangzhou SEG Longyan Refers to Hangzhou SEG Longyan Energy Technology Co., Ltd.
SEG Lianzhong Refers to Shenzhen SEG Lianzhong Internet Technology Co., Ltd.
SEG Zhongtong Refers to Shenzhen SEG Zhongtong Technology Co., Ltd.
SEG Real Estate Investment Refers to Shenzhen SEG Real Estate Investment Co., Ltd.
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Definition Refers to Description
SEG Property Development Refers to Shenzhen SEG Property Development Co., Ltd.
SEG Recreation Refers to Shenzhen SEG Recreation Enterprise Development Co., Ltd.
SegMaker Refers to Shenzhen SegMaker Co., Ltd.
SEG Property Management Refers to Shenzhen SEG Property Management Co., Ltd.
SEG New Urban Refers to Shenzhen SEG New Urban Construction Development Co., Ltd.
SEG Yicheng Refers to Shenzhen SEG Yicheng Science and Technology Co., Ltd.
SEG Real Estate, SEG Property Development, SEG Recreation
Target companies Refers to
and SegMaker that major assets are injected into
Xi'an SEG Kanghong Refers to Xi'an SEG Kanghong Real Estate Co., Ltd.
Huizhou Stars Refers to Huizhou Stars Real Estate Development Co., Ltd.
Beijing SEG Refers to Beijing SEG Property Development Co., Ltd.
SEG Wisdom Refers to SEG Wisdom Sports and Culture Development Co., Ltd.
Mellow Orange Hotel Refers to Shenzhen Mellow Orange Business Hotel Management Co., Ltd
Maker Hotel Refers to SEG Maker Hotel Management Co., Ltd.
Huakong SEG Refers to Shenzhen Huakong SEG Co., Ltd.
SEG Navigations Refers to Shenzhen SEG GPS Scientific Navigations Co., Ltd.
China International Consumer Electronics Exhibition/Exchange
CEEC Refers to
Center
Longyan Energy Technology Refers to Longyan Energy Technology (Hangzhou) Co., Ltd.
Wangyu Technology Refers to Shanghai Wangyu Information Technology Co., Ltd.
Shenzhen Zhonghai SEG Intelligent Parking Development Co.,
Zhonghai SEG Intelligent Parking Refers to
Ltd.
Tencent Refers to Shenzhen Tencent Computer System Co., Ltd.
Fujian Babycat Refers to Fujian Babycat Animation Technology Co., Ltd.
Zhuhai Zhongtong Refers to Zhuhai Zhongtong Lexing Network Technology Co., Ltd.
Allied eSports Refers to Tianjin Allied eSports Internet Technology Co., Ltd.
State-owned Assets Supervision and Administration Commission
Shenzhen SASAC Refers to
of Shenzhen Municipality
CSRC Refers to China Securities Regulatory Commission
Shenzhen Securities Regulatory Bureau of China Securities
Shenzhen Securities Regulatory Bureau Refers to
Regulatory Commission
Articles of Association Refers to Articles of Association of Shenzhen SEG Co., Ltd.
Unless otherwise specified, the amount referred
Refers to Amount in RMB
to in the report
Reporting period Refers to From January 1, 2017 to December 31, 2017
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Chapter 2 Company Profile and Main Financial Indexes
I. Basic Information
Stock abbreviation SHEN SEG, SHEN SEG B Stock code 000058, 200058
Changed stock abbreviation (if
None
any)
Listed on Shenzhen Stock Exchange
Company name in Chinese Shenzhen SEG Co., Ltd.
Company name in Chinese SHEN SEG
Company name in English (if
SHENZHEN SEG CO., LTD.
any)
Company name abbreviations
None
in English (if any)
Legal representative Chen Huijie
Registered address 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen
Post code 518028
Office address 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen
Post code 518028
Website http://www.segcl.com.cn
E-mail segcl@segcl.com.cn
II. Contact Information
Secretary of the Board of Directors Securities affairs representative
Name Peng Aiyun
31/F, Tower A, Stars Plaza, Huaqiang Road
Contact address
(N), Futian District, Shenzhen
Phone 0755-83747939
Fax 0755-83975237
E-mail segcl@segcl.com.cn
III. Information Disclosure and Filing Site
Media selected by the Company for information China Securities Journal, Securities Times, Securities Daily and Hong Kong
disclosure Commercial Daily
Website selected by CSRC for publishing the annual
http://www.cninfo.com.cn (Cninfo Website)
report
The place where the annual report is prepared and Secretary's Office of Board of Directors, 31/F, Tower A, Stars Plaza,
kept Huaqiang Road (N), Futian District, Shenzhen
IV. Changes in Registration Information
Organization code 91440300279253776E
Changes to business scope on July 6, 2005: Domestic commerce, goods supply and
sale (excluding commodities under special operation, control and sale), industrial
investment (licenses for specific projects shall be subject to application on a
Changes in main business since the
case-by-case basis), economic information consultancy, property lease, real estate
Company's listing (if any)
agency, and operation of SEG electronics markets (the license for the professional
market shall be further applied for).
Alteration of registration information on September 28, 2016: The business scope of
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the Company is changed to investment in industrial projects (specific items to be
declared separately); operation and management of electronics markets; online trade;
Internet technology development; advertising business; housing leasing; sales of
computers, software, auxiliary equipment, and electronic products; cultural and artistic
exchange activity planning (excluding performances); exhibition activities; investment
in and management of children's industrial chain projects; children's playground
equipment leasing (excluding financial leasing activities); playground management and
services (limited to branch management); catering services (limited to branch
management); business management consulting; education consulting; wholesale and
retail of pre-packaged food, unpacked food, and dairy products (including infant
formula milk powder) (limited to branch management); sales of stationery, craft gifts,
toys, children's clothing, electronic products, handicrafts, and daily necessities;
photography services; technical development of new energy; EPC of photovoltaic
power generation and building integrated photovoltaic (BIPV) engineering; technical
development and services of CdTe film solar cell modules; investment in photovoltaic
power plants, contracting of BIPV curtain wall engineering; domestic trade (excluding
franchised goods, proprietary goods, and goods under special control). (Any item
subject to approval pursuant to laws can be operated only after approval.) Information
services (limited to Internet information services); sales of food; manufacturing and
sales of CdTe solar cell modules.
Changes in dominant stockholders (if any) None
V. Other Relevant Information of the Company
The accounting firm employed by the Company:
Name of the accounting firm Da Hua Certified Public Accountants (Special General Partnership)
Address of the accounting firm Room 1101, 11/F, Tower 7, No. 16 Block, Xisihuan Road (M), Haidian District, Beijing
Name of the certified public
Zhang Zhaocheng and Liu Guoping
accountant
The sponsor firm employed by the Company for fulfilling the duties of continuous supervision in the reporting
period:
□ Applicable √ Not applicable
The financial advisor employed by the Company for fulfilling the duties of continuous supervision in the
reporting period:
√ Applicable □ Not applicable
Office address of financial
Name of financial advisor Name of handler Continuous supervision period
advisor
China Merchants Securities Co., 38-45F, Jiangsu Building, Yitian Wang Xinlei, Luo Li (changed From March 2017 to December
Ltd. Road, Futian District, Shenzhen in April 2018) 2018
VI. Main Accounting Data and Financial Indexes
Are retrospective adjustments made to previous financial statements?
√ Yes □ No
Reason for retrospective adjustments or restatement
According to the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to Shenzhen SEG Group Co., Ltd. to
Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) issued by China Securities Regulatory
Commission (CSRC), the Company issued 450,857,239 shares to the controlling shareholder SEG Group to
acquire assets of four target companies. Such share issuance for asset acquisition is business combination under
common control. According to the Accounting Standards for Enterprises No. 20 – Business Combination, the
opening balance in the balance sheet statement and the amount incurred in the same period last year are subject
to retrospective adjustment.
Year-on-year
2017 2016 increase/decr 2015
ease
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Before After After Before After
adjustment adjustment adjustment adjustment adjustment
1,981,307,55 672,384,276. 1,371,044,98 741,533,676.
Operating income (Yuan) 44.51% 1,812,676,97
8.23 47 2.11 93
9.61
Net profit attributable to
219,553,261. 107,560,213. 246,062,783. 74,242,090.4
shareholders of the listed -10.77% 176,302,276.
10 41 31 9
company (Yuan) 77
Net profit attributable to
shareholders of the listed
148,677,556. 29,705,359.6 22,248,698.5 84,931,560.6
company after deduction of 568.25% 67,551,197.9
32 3 9 8
non-recurring profit and loss 2
(Yuan)
Net cash flow arising from 507,386,549. -120,030,057 443,535,540. -12,453,523. -204,641,269
14.40%
operating activities (Yuan) 21 .68 78 82 .58
Basic EPS (Yuan/Share) 0.1777 0.1371 0.1991 -10.76% 0.0946 0.1427
Diluted EPS (Yuan/Share) 0.1777 0.1371 0.1991 -10.76% 0.0946 0.1427
Weighted average ROE 11.96% 7.11% 11.15% 0.81% 5.19% 8.24%
Year-on-year
End of 2016 increase/decr End of 2015
End of 2017 ease
Before After After Before After
adjustment adjustment adjustment adjustment adjustment
6,992,590,42 2,548,276,26 6,923,273,09 2,614,660,52
Total assets (Yuan) 1.00% 5,980,165,40
0.75 5.32 3.64 4.37
1.09
Net assets attributable to
1,917,228,37 1,548,200,64 2,412,301,07 1,475,126,22
shareholders of the listed -20.52% 2,129,168,59
0.15 7.55 0.04 9.16
company (Yuan) 9.26
VII. Differences in Accounting Data under Chinese and Overseas Accounting Standards
1. Differences in net profits and net assets reported in the financial statements disclosed under
international accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
In the reporting period, the company's net profits and net assets have no differences in the financial report
disclosed based on both the international and the Chinese accounting standards.
2. Differences in net profits and net assets reported in the financial statements disclosed under
international accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
In the reporting period, the company's net profits and net assets have no differences in the financial report
disclosed based on both the international and the Chinese accounting standards.
3. Reason for differences in accounting data under international accounting standards and Chinese
accounting standards
□ Applicable √ Not applicable
VIII. Major quarterly financial indexes
Unit: Yuan
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Operating income 264,775,121.17 1,124,185,810.84 264,775,121.17 1,124,185,810.84
Net profit attributable to shareholders of the 31,609,057.25 18,399,728.17 19,184,279.34 150,360,196.34
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listed company
Net profit attributable to shareholders of the
listed company after deduction of 30,418,650.93 360,232.34 19,569,428.60 98,329,244.46
non-recurring profit and loss
Net cash flow from operating activities 44,232,089.23 48,893,189.51 187,037,443.86 227,223,826.61
Are there any significant differences between the financial indexes or their totals in the preceding table and those
described in the disclosed quarterly reports or annual reports?
□ Yes √ No
IX. Items and amount of non-recurring profit and loss:
√ Applicable □ Not applicable
Unit: Yuan
Item Amount of 2017 Amount of 2016 Amount of 2015 Remarks
Gains on reduction of
Profit or loss on disposal of non-current holding-shares of Huakong
assets (including the write-off of assets 54,066,201.12 89,459,793.78 -257,269.63 SEG and sales of the equity
depreciation reserves) of Wuxi SEG during the
reporting period.
Tax return, reduction or exemption with
unauthorized approval or without any
official approval document
Government subsidies recognized in
current profit or loss (except those closely
related to corporate business and enjoyed 6,416,623.72 9,828,264.76 980,956.24
according to national standards or certain
quota)
Fund appropriation charges for
non-financial entities recognized in 2,376,532.33 3,097,500.00 3,414,955.63
current profit or loss
Gains on less acquisition costs of
subsidiaries, associates and joint ventures
than the accrued fair value of the
investee's identifiable net assets
Profit or loss on non-monetary assets
exchange
Profit or loss on investment or asset
15,843,427.61 9,844,238.42 15,188,228.82
management in proxy
Provision for impairment of assets due to
force majeure(such as natural disasters)
Profit or loss on debt restructuring
Corporate restructuring costs, such as
-1,439,958.00 0.00
staffing expenses and integration costs
Profit or loss on the part exceeding the
fair value in unfair transactions
Current net profit or loss of subsidiaries
incurred by business combination under
10,632,970.71 197,406,948.04 127,043,092.65
common control from the beginning of
the reporting period to the date of merger
Profit or loss on contingencies unrelated
to business operation of the Company
Profit or loss on changes in fair value due
to holding of trading financial assets and
trading financial liabilities and investment
income from disposal of trading financial
assets, trading financial liabilities and
available-for-sale financial assets apart
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Item Amount of 2017 Amount of 2016 Amount of 2015 Remarks
from valid hedging operations related to
business operation of the Company
Transferred-back impairment provision
for accounts receivable, for which 0.00 469,871.93
separate impairment tests are carried out
Profit or loss on consignment loan
Profit or loss on changes in fair value of
investment property subsequently
measured by the fair value
Impact of one-time adjustment on the
current profit or loss as required by
taxation or accounting laws and
regulations
Trustee fee from entrusted operation 143,444.42 188,679.24 200,000.00
Losses from litigation
Other non-operating income and expenses compensation of Hainan
8,349,713.60 -3,068,241.76 -13,043,897.59
except the above-mentioned items nanhai mingzhu real estate
and Furao eatate
Other items conforming to the definition
of non-recurring profit and loss
Subtotal 97,828,913.51 305,317,224.48 133,995,938.05
Less: Amount of affected income tax 24,815,042.12 21,534,040.30 5,819,109.22
Amount of influence of minority
2,138,166.61 59,969,099.47 19,425,749.98
shareholders' equity (after tax)
Total 70,875,704.78 223,814,084.72 108,751,078.85 --
An explanation shall be made with regard to the Company's considerations for defining non-recurring profit and
loss according to the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public - Non-recurring Profit and Loss and the reason of classifying the non-recurring profit
and loss listed in this announcement as recurring.
□ Applicable √ Not applicable
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Chapter 3 Overview of Business
I. Main Business in the Reporting Period
Should the Company abide by the disclosure requirements of special industries?
No.
(I) Main business and operation model
In 2017, the Company has completed major assets restructuring, further improved the overall market size, share
and profitability, and promoted the transformation and upgrading of the original traditional business. In the major
assets restructuring, the Company purchased 100% of the equity of SegMaker, 55% of the equity of SEG
Recreation, 100% of the equity of SEG Property Development and 79.02% of the equity of SEG Real Estate held
by SEG Group by issuing shares and paying cashes to acquire assets (see the Report of Share Issuance and Cash
Payment to Acquire Assets and Raise Funds & Connected Transactions for details). On January 17, 2017, the
Company received the approval document on the major assets restructuring issued by the CSRC. In the reporting
period, the Company has completed asset transfer and issued 450,857,239 shares to SEG Group on March 6,
2017.
After restructuring, the main business of the Company has not changed substantially, including the development
and operation of electronics markets and supporting projects, property leasing and management services,
commercial real estate (industrial park) business, microcredit business, budget hotel business, trade and channel
business. Business model: On the basis of the electronics markets, commercial real estate (industrial parks),
marker business, and new energy business, the Company combines multiple business models, develops the
overall resource advantages, expands from operation of a single business platform to the content production and
operation, creates a business model combining multiple business types, including the maker ecosystem, culture
& education, intelligent technology, sports & entertainment, virtual experience, e-sports, financial services, and
construction and operation of industrial parks, and builds a new SEG industrial ecosystem. By innovation in the
business model, investment, M&A, the Company transforms itself into a platform for diversified strategic
emerging industries and becomes a leader in high-end manufacturing and services.
(II) Current situation of industries
1. Electronics market industry
Under the continuous impact of e-commerce, the traditional electronics market industry focuses on innovation in
the original business model: a. transforms from a single electronic trading platform to a complex business type
platform combining culture, science & technology, intelligence, sports, and financial services; b. transforms
enterprises engaged in electronics market operation from a single leasing role to platform operators and service
providers that integrate online and offline resources; c. supports innovative business based on the existing
electronics market business resource platform, and deploys full industry chains.
2. Commercial(industrial park) real estate industry
In recent years, in the context of economic policy stimulus, rapid growth of total retailing of social consuming
goods, and transformation of the traditional department stores, China's commercial real estate witnesses
continuous rapid development. At present, China's real estate market enters new normal. The government
becomes more rational and attaches more importance to market regulation and control. As the market
mechanism and the investor sentiment grow mature, commercial real estate will step into a rational and stable
development stage.
2. Maker industry
Relying on its advantages in the electronic component industry, Shenzhen has initially formed three maker
clusters, namely Qianhai, Citizens Center, and Huaqiangbei, and has full maker industry chains including the
maker space, venture capital, crowd funding platforms, incubators, and electronic supply chains. The
construction of the maker ecosystem is an important trend for economic transformation and upgrading of
Huaqiangbei. At present, the maker industry enters the stage of survival of the fittest, and equity investment
tends to be rational.
(II) Industrial position of the Company
Having been dedicated to the electronics market industry for nearly 30 years, the Company is the founder of the
electronics market operation model in China and a leader in the industry. The Company has established more than
20 electronics markets in China by means of direct operation, joint operation, and entrusted operation, has formed
an electronics market chain system covering Zhujiang River Delta and Yangtze River Delta and radiating the
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whole country, and has gained high brand influence both at home and abroad.
II. Significant Changes in Main Assets
1. Significant Changes in Main Assets
Main assets Description of Significant Changes
In the reporting period, the equity increased by 4.08% year on year, mainly because
(1) In the reporting period, the Company contributed RMB 17,500,000 to Shenzhen
Zhonghai SEG Intelligent Parking Development Co., Ltd., accounting for 29.75% of its
Equity
equity.
(2) In the reporting period, the Company reduced 10,000,000 holding-shares of Huakong
SEG and the long-term equity investment of RMB 9,125,600.
In the reporting period, fixed assets increased by 19.94% year on year, mainly because
Fixed assets SEG Lianzhong purchased computers, broadcasting equipment, stages and LED systems
(RMB 11,914,100).
In the reporting period, intangible assets increased by 1087.08% year on year, mainly
Intangible assets because Shenzhen-Shantou Cooperation Zone SEG Longyan Energy Technology Co.,
Ltd. paid RMB 28,010,000 for the land use right in the reporting period.
In the reporting period, construction in progress increased by 93.42% year on year,
mainly due to (1) expenses incurred by renovation of Economic Building Huaqiang north
Shenzhen, Recreation Building, and SEG Industrial Building (RMB 20,060,000); (2)
Construction in progress expenses incurred by decoration of Skyland Museum of Yicheng Science and Technology
(RMB 4,175,800). (3)mainly because Shenzhen-Shantou Cooperation Zone SEG
Longyan Energy Technology Co., Ltd. Paid RMB 9,918,300 for consturction .
In the reporting period, prepayment decreased by 93.42% year on year, mainly because
Prepayment
SEG Industrial redused the prepayment of RMB 30,359,900.
In the reporting period, other non-current assets increased by 575.77% year on year,
Other non-current assets mainly because Shenzhen-Shantou Cooperation Zone SEG Longyan Energy Technology
Co., Ltd. paid RMB 91,709,300 for some equipment.
2. Main Overseas Assets
□ Applicable √ Not applicable
III. Analysis of the Core Competitiveness
Should the Company abide by the disclosure requirements of special industries?
No.
Shenzhen SEG Electronic Market operated by the Company is the founder of the electronics market operation
model in China, leading in the industry. It has won honorable titles successively including "Five-star Market of
Electronic Products in China", "Most Influential Market in Shenzhen Special Area in 30 Years", Top 10
Shenzhen Branded Markets "Influential in China", "China's Top 10 Electronics Markets in 2016", and "China's
Electronics Market Operation Innovation Prize in 2016". Dedicated to the electronics market for 30 years, the
Company has acquired abundant market merchant resources and mature market operation and management
experience. As of today, the Company has set up more than 20 electronics markets in China by means of direct
operation, joint operation and entrusted operation, has formed an electronics market chain system covering
Zhujiang River Delta and the Yangtze River Delta and radiating the whole country, has become the largest
comprehensive electronics market in China and even in Asia covering electronic components, digital IT and
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communication products, and has gained high brand influence both at home and abroad.
For the past several years, the Company has been exploring, innovating in, and practicing electronics market
business transformation and upgrading based on the traditional main business. Faced with new consumption,
new channels, and new retail, the Company expands from operation of a single business platform to the content
production and operation, creates a business model combining multiple business types, including the maker
ecosystem, culture & education, intelligent technology, sports & entertainment, virtual experience, e-sports, and
financial services, builds a new SEG industrial ecosystem, and provides one-stop and comprehensive
consumption experience to consumers.
In the reporting period, the Company has completed major assets restructuring and is raising funds. After
restructuring, by asset injection into quality electronics markets, property management, and commercial real
estate, the Company has reduced horizontal competition to the maximum extent, enriched the business structure,
enhanced the profitability and core competitiveness of the listed company, and achieved strategic integration,
transformation and upgrading of the existing business.
At present, the Company has cooperated with Longyan Energy Technology, Wangyu Technology, Alibaba,
Fujian Babycat, Tencent, and Zhuhai Zhongtong in such new business fields as new energy, e-sports,
e-commerce, animation, and makers. The Company has promoted the transformation and upgrading of the
original business, developed new business, and achieved coordinated development of multiple business types.
The Company will develop diversified strategic emerging industries, high-end manufacturing, and services.
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Chapter 4 Operation Discussion and Analysis
I. Overview
In 2017, the Company has completed major assets restructuring. Benefiting from injection of core property and
other business assets into the electronics market in Huaqiangbei area, the electronics market business size of the
Company has expanded, laying a solid foundation for further development. Benefiting from injection of
commercial real estate and property assets, the existing business of the Company will interwork. In this way, the
Company has further enhanced its core competitiveness and going-concern ability.
Facing fierce market competition and the continuous impact of e-commerce, the Company is dedicated to user
value, integrates resources, further expands the industrial chain, improves the service quality of electronics
markets, creates a complex business model, vigorously promotes transformation and upgrading of the electronics
market business, and continuously improves its operating capacity. At the same time, the Company actively
explores innovation programs involving new energy, e-sports, and makers, and transforms itself into a platform
for diversified strategic emerging industries. The Company develops the commercial real estate business
according to the diversified development strategy featuring "real estate + culture + sports + finance +
technology", integrates cultural real estate and sports real estate, enriches the content experience business types,
expands its development scale, and promotes its market position.
In the reporting period, the total revenue of the Company amounted to RMB 2,030,440,000 and increased by
39.11% year on year. The total profit amounted to RMB 1,428,260,000 and increased by 2.72% year on year.
The revenue and profit increased mainly because: (1) the income from property sales of SEG Real Estate
increased; (2) after centralizing core property resources of Huaqiangbei, the property lease and management
business made steady progress and the revenue and profit increased year on year.
II. Analysis of Main Business
1. Overview
Is it the same as the overview disclosed in operation discussion and analysis?
□ Yes √ No
After restructuring, the main business of the Company includes the development and operation of electronics
markets and supporting projects, property leasing services, commercial real estate (industrial park) business,
microcredit business, budget hotel business, and trade and channel business.
(I) Electronics market business and property leasing & management business
With the rapid development of multiple shopping channels and changes in consumer behaviors, the electronics
markets have been continuously impacted. In face of the difficulties, the Company actively transforms and
upgrades its existing electronics market business, and adopts a complex business model to create a
comprehensive electronics market where multiple business types co-exist. The Company also constantly
improves services, enhances communication with the government, and perfects the original business types so as
to ensure the Company's stable operating capacity and create new profit opportunities.
The Company has developed strategic cooperation with Allied eSports, Wangyu Technology and Fujian Babycat,
and has gradually expanded from operation of a single business platform to the content production and operation.
As of December 2017, the Company's e-sports and children’s amusement park projects have been running
steadily, and the transformation and development strategy have delivered results.
Operation of new projects in the reporting period:
Children's amusement park project: The park in Nantong branch store has been running steadily. The project
team has developed a new park in Longgang branch store which is to finish decoration, prepare devices and
apply for certificates.
Internet café and e-sports project: The "Nantong Area Finals of the 2nd SEG E-Sports Suzhou-Nantong
Competition" and "Nantong Area Finals of the 3rd SEG E-Sports Suzhou-Nantong Competition" have been
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successfully held in the Nantong branch store. The Nantong branch store has also cooperated with Nantong TV
Station and local colleges to jointly host multiple e-sports events, including Nantong Tencent Hundreds of City
Tournament and Daluandou. The Suzhou branch store and Soochow University jointly held the first e-sports
competition of Soochow University.
SEG-OURGAME e-sports stadium: The e-sports stadium in Shenzhen branch store has completed construction
and fire inspection and is put into for trial operation. In September 2017, the stadium successfully held the
"Overwatch Masters Cup" China Finals which attracted thousands of scene audience and more than 1 million
online audience in two days. In October, the stadium successfully held "CS:GO Urban Elite Competition" as
authorized by Perfect World. In December, the stadium held "QQ Space Arena of Valor Star Tournament" jointly
with Tencent.
The property leasing services of the Company cover the property leasing business of its headquarters and
holding subsidiaries, including SEG Baohua, SEG Real Estate, SegMaker, SEG Recreation, and Nantong SEG
Business Operation Company. In the reporting period, the Company has improved its property management
capabilities and service quality, cut down costs and expenses, and attracted more investments. Thanks to these
effective operation measures, the occupancy rates of SEG Baohua and SEG Recreation properties maintain at
99%, and the overall performance of the property leasing services is stable.
SEG Business Apartment of SegMaker was transformed from Building 6 of SEG Court located in the metro
business district in Huaqiangbei and Huaqiangnan. Based on characteristics of the customer housing demands in
Huaqiangbei, SegMaker carried out the customer-based diversified operation strategy, renovated and improved
the hardware environment, introduced third-party service provider resources, and offered both short-term lease
and long-term lease. In this way, the customer loyalty is built, and the occupancy rate maintains at a high level.
Beijing SEG, a holding subsidiary of SEG Real Estate, rented the offices of Beijing Air China Property Hotel
Management Co., Ltd. Air China Plaza Branch located at Air China Plaza, No. 36, Xiaoyun Road, Chaoyang
District, Beijing. Beijing SEG intends to develop it into an operational service business center. It is the first
project that SEG Real Estate launched in North China and also an important step for business deployment across
the country. This will enhance the brand influence of SEG Real Estate.
In the reporting period, the operating income of electronics markets and property leasing and management
business amounted to RMB905,290,000, increasing by 9.23% year on year. The total profit amounted to RMB
195,590,100, slightly decreasing year on year, mainly because the Company has continuously promoted the
diversification, transformation and upgrading of electronics markets, brought in different industries in line with
the transformation goal with preferential policies while keeping the original business types, and increase
investment in new project development. As a result, the profit of the Company has decreased.
(II) Commercial real estate (industrial park) business
After restructuring, the real estate business of the Company is about the development, construction and operation
of urban complexes (industrial parks).
Development of the real estate business in the reporting period:
1. Nantong SEG Times Plaza project
Since its opening, Nantong SEG Times Plaza has improved the internal management quality and coordinated
resources for targeted investment attraction to continuously increase the customer flow and enhance the regional
influence and market value of SEG brand. In 2017, the Animation Industrial Park of Nantong SEG Times Plaza
received the special fund from Nantong municipal government. At the same time, as the original animation
products of the industrial park won the Best Works Award of Jiangsu, the influence of the animation industrial
park is enhanced. Engineering settlement audit: In the reporting period, the completion rate of the second audit
of Nantong SEG Times Plaza is 74% (based on the project cost ratio).
2. SEG New Urban Plaza (Phase II) project (SEG ECO Center)
SEG New Urban Plaza (Phase II) project is invested and developed by SEG New Urban, a holding subsidiary of
SEG Real Estate. This project is located at the intersection of Bulong Road and Lianzhong Road, Buji
Sub-district, Longgang District, Shenzhen. With a total development area of 108,000 m2, SEG New Urban Plaza
(Phase II) is an iconic complex project integrating 5A offices, regional flagship stores, entry lux business
apartments and business headquarters bases. The project won the title of "Shenzhen Major Project" and listed as
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a key project in Guangdong as recommended by Development and Reform Commission of Shenzhen. As of
December 2017, the inspection and acceptance of the project has been completed.
3. Huizhou Stars SEG Holiday Plaza project
Huizhou Stars SEG Holiday Plaza is developed in three phases. As a commercial complex covering shopping,
leisure, catering, culture and entertainment, it is designed to be a life and fashion culture center. Currently, the
project is in development and construction of Phase I. The project covers 100,000 m2, comprising 5A offices and
experience-oriented commercial shopping center. 5A offices of SEG Holiday Plaza Phase I – SEG Building was
the best-selling offices in Huicheng District in 2015 and 2016. The commercial shopping center of SEG Holiday
Plaza was officially open on April 14, 2016.
By the end of December 2017, offices of SEG Holiday Plaza have almost been sold. Since opening, by
continuous marketing and promotions, optimization of the merchant structure, and improvement of the shopping
experience, SEG Holiday Plaza has become a community-based shopping center with the most distinctive
culture, leisure and entertainment features. In the reporting period, SEG Holiday Plaza Phase II is in progress.
4. Xi'an SEG Plaza project
This project is located on Gaoxin 6th Road, Hi-tech Zone, Xi'an. The project will bring in such business types as
electronic markets, leisure and entertainment, catering, finance, high-end offices and apartments, create a
professional office cluster with regional spin-off effect and a experience-oriented urban complex centering on
electronics markets, cinemas and leisure restaurants. In the reporting period, the Land Use Certificate, Land
Planning Permit and Construction Planning Permit have been obtained for the project.
In the reporting period, the operating income of the commercial real estate (industrial park) business amounted to
RMB 883,600,000, increasing by 256.24% year on year, mainly because SEG Real Estate' income from real
estate sales increased.
(III) Microcredit business
As China tightened financial risk control and financial regulation became strict in 2017, the loan interest rate in
the microcredit industry declined. To reduce operating risks, SEG Credit reduced its business size, standardized
its business process, and strengthening interest collection. These measures ensure normal operation of SEG
Credit. However, the economic indicators obviously go down. In the reporting period, the operating income of
the microcredit business amounted to RMB 49,130,000, decreasing by 44.50% year on year. To avoid potential
financial risks, in March 2018, the Company decided to transfer 62% of the equity of SEG Credit held by the
Company and its holding subsidiaries (see the Announcement on the Connected Transaction of Transfer of 62%
of the Equity of SEG Credit Held by the Company and its Holding Subsidiaries released by the Company in
designated information disclosure media. The transaction was deliberated and adopted at the 30th interim
meeting of the 7th Board of Directors and the first extraordinary general meeting of 2018. After transfer, the
Company will discontinue the microcredit business.
(IV) Budget hotel business
The Company has opened five budget hotels: four Mellow Orange Hotel branches (separately located on
Changsha Wuyi Road, Changsha Xingsha, Shenzhen Bao'an, and Dongmen, and one SEG Maker Hotel in
Huaqiangbei. In the reporting period, the operating income of the budget hotel business amounted to RMB
42,050,000, increasing by 68.80% year on year, mainly because the Mellow Orange Hotel in Dongmen and SEG
Maker Hotel were open.
(V) Trade and channel business
In the reporting period, the operating income of the trade and channel business amounted to RMB 150,360,000,
decreasing by 47.12% year on year, mainly because: SEG Industrial has discontinued the trade business other
than the government procurement platform business; SEG Intelligent Technology adjusted the smart home
business and no longer underwrite large projects.
2. Income and Cost
(1) Formation of operating income
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Unit: Yuan
2017 2016 Year-on-year
Percentage of Percentage of increase/decrease
Amount Amount
operating income operating income (%)
Total operating
2,030,445,390.62 100% 1,459,575,791.50 100% 39.11%
income
By sector
Electronics market
and property leasing 905,285,927.82 44.59% 793,204,704.80 54.34% 14.13%
and management
Real estate
883,601,001.00 43.52% 248,736,375.89 17.04% 255.24%
development
Trade 150,361,821.40 7.41% 284,331,867.85 19.48% -47.12%
Finance 49,137,832.39 2.42% 88,530,809.39 6.07% -44.50%
Hotel 42,058,808.01 2.07% 24,915,964.23 1.71% 68.80%
E-commerce 19,856,069.34 1.36%
By region
Shenzhen 1,692,018,637.57 83.33% 908,164,964.11 62.22% 86.31%
Xi'an 57,222,951.89 2.82% 61,087,396.36 4.19% -6.33%
Suzhou 138,598,817.14 6.83% 177,711,494.88 12.18% -22.01%
Changsha 23,401,682.40 1.15% 24,597,175.67 1.69% -4.86%
Nanjing 23,846,790.75 1.17% 24,795,038.43 1.70% -3.82%
Shunde 3,132,622.73 0.15% 3,020,405.16 0.21% 3.72%
Beijing 134,077.67 0.01%
Huizhou 87,472,427.54 4.31% 254,378,434.59 17.43% -65.61%
Wuxi 4,617,382.93 0.23% 5,820,882.30 0.40% -20.68%
(2) Information on industries, products or regions accounting for over 10% of operating income or
operating profit
√ Applicable □ Not applicable
Should the Company abide by the disclosure requirements of special industries?
No.
Unit: Yuan
Year-on-year Year-on-year
Year-on-year
increase/decrease increase/decrease
Operating income Operating cost Gross profit rate increase/decrease
of operating of gross profit
of operating cost
income rate
By sector
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Electronics
market and
905,285,927.82 615,786,444.11 31.98% 14.13% 12.89% 2.39%
property leasing
and management
Real estate
883,601,001.00 594,819,985.74 32.68% 255.24% 354.32% -31.00%
development
Trade 150,361,821.40 146,430,367.50 2.61% -47.12% -48.57% -1919.71%
Finance 49,137,832.39 5,219,910.64 89.38% -44.50% -58.01% 3.98%
Hotel 42,058,808.01 36,837,858.28 12.41% 68.80% 69.72% -3.67%
By region
Shenzhen 1,692,018,637.57 1,112,543,601.01 34.25% 86.31% 79.58% 7.75%
Xi'an 57,222,951.89 45,835,666.33 19.90% -6.33% 3.01% -26.74%
Suzhou 138,598,817.14 135,546,900.46 2.20% -22.01% -17.01% -72.78%
Changsha 23,401,682.40 15,723,374.20 32.81% -4.86% 2.39% -12.67%
Nanjing 23,846,790.75 26,326,585.42 -10.40% -3.82% -9.47% -39.85%
Shunde 3,132,622.73 2,939,384.53 6.17% 3.72% 2.31% 26.48%
Beijing 134,077.67 6,204,734.56 -4527.72%
Huizhou 87,472,427.54 50,124,623.44 42.70% -65.61% -63.00% -8.65%
Wuxi 4,617,382.93 3,849,696.32 16.63% -20.68% -22.56% 13.91%
If the statistical caliber of main business data is adjusted in the reporting period, the Company shall use the main
business data of the previous year collected at the end of the reporting period after adjustment of statistical
caliber.
□ Applicable √ Not applicable
(3) Is the Company's material sales revenue more than its service revenue?
□ Yes √ No
(4) Performance of executed major sales contracts as of the reporting period
□ Applicable √ Not applicable
(5) Formation of operating cost
Industry classification
Unit: Yuan
2017 2016 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Electronics Electronics
market and market and
615,786,444.11 44.01% 545,456,587.10 53.73% 12.89%
property leasing property leasing
and management and management
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2017 2016 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Real estate Real estate
594,819,985.74 42.51% 130,925,844.41 12.90% 354.32%
development development
Trade Trade 146,430,367.50 10.47% 284,740,411.64 28.05% -48.57%
Finance Finance 5,219,910.64 0.37% 12,430,171.06 1.22% -58.01%
Hotel Hotel 36,837,858.28 2.63% 21,705,084.88 2.14% 69.72%
2017 2016 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Electronics
market and Lease and
398,239,211.88 64.67% 366,902,709.81 67.27% 8.54%
property leasing property costs
and management
Electronics
Total
market and
remuneration for 93,931,218.48 15.25% 79,454,260.39 14.57% 18.22%
property leasing
employees
and management
Electronics
market and Depreciation and
44,827,864.28 7.28% 24,733,292.44 4.53% 81.25%
property leasing amortization
and management
Electronics
Market and
market and
property service 78,788,149.47 12.79% 74,366,324.46 13.63% 5.95%
property leasing
costs
and management
2017 2016 Year-on-year
Product category Item Percentage of Percentage of increase/decrease
Amount Amount (%)
operating cost operating cost
Trade Goods sales cost 136,585,828.21 93.28% 262,813,004.51 92.30% -48.03%
Trade Lease cost 0.00% 4,060,000.00 1.43%
Trade Manpower cost 2,043,243.43 1.40% 984,567.12 0.35% 107.53%
Trade Others 7,801,295.86 5.33% 16,882,840.01 5.93% -53.79%
2017 2016 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
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2017 2016 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Real estate
Real estate cost 594,819,985.74 100.00% 130,925,844.41 100.00% 354.32%
development
2017 2016 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Finance Lease cost 849,905.88 16.28% 835,447.71 6.72% 1.73%
Financial service
Finance 4,370,004.76 83.72% 11,594,723.35 93.28% -62.31%
cost
2017 2016 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Total remuneration
Hotel 8,170,482.92 22.18% 5,110,635.15 23.55% 59.87%
for employees
Deposition and
Hotel 6,133,311.79 16.65% 3,243,021.27 14.94% 89.12%
amortization
Hotel Lease cost 12,936,830.53 35.12% 8,258,888.25 38.05% 56.64%
Hotel Others 9,597,233.04 26.05% 5,092,540.21 23.46% 88.46%
(6) Is the consolidation scope changed in the reporting period?
√ Yes □ No
14 new entities are incorporated in and two entities are removed from the scope of the consolidated financial
statements in the current period, including::
1. Subsidiaries, special purpose entities, and business entities that gain control by way of commissioning
management or renting newly incorporated in the consolidation scope in the current period
Name Reason for change
Shenzhen-Shantou Cooperation Zone SEG
Newly established
Longyan Energy Technology Co., Ltd.
Shenzhen SEG Lianzhong Internet Technology
Newly established
Co., Ltd.
Shenzhen SEG Zhongtong Technology Co., Ltd. Newly established
Shenzhen SegMaker Co., Ltd. Business combination under common control
Shenzhen SEG Recreation Enterprise
Business combination under common control
Development Co., Ltd.
Shenzhen SEG Property Development Co., Ltd. Business combination under common control
Shenzhen SEG Real Estate Investment Co., Ltd. Business combination under common control
Huizhou Stars Real Estate Development Co., Ltd. Business combination under common control
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Shenzhen SEG Property Management Co., Ltd. Business combination under common control
Shenzhen SEG New Urban Construction
Business combination under common control
Development Co., Ltd.
Shenzhen SEG New Urban Commercial
Business combination under common control
Operation Co., Ltd.
Beijing SEG Property Development Co., Ltd. Business combination under common control
Xi'an SEG Kanghong Real Estate Co., Ltd. Business combination under common control
Shenzhen Hongge Cultural Development Co.,
Business combination under common control
Ltd.
2. Subsidiaries, special purpose entities, and business entities that lose control by way of commissioning
management or leasing removed from the consolidation scope in the current period
Name Reason for change
Suzhou SEG Electronics Market Management Co.,
Transfer of the management right
Ltd.
Wuxi SEG Electronics Market Co., Ltd. Transfer of all the equity
(7) Information about significant changes or adjustments of business, product or service in the reporting
period
□ Applicable √ Not applicable
(8) Information on main customers and main suppliers
Information about the Company's major customers
Sales amount of top 5 customers (Yuan) 146,527,447.10
Percentage of the total sales amount of top 5 customers to
7.40%
the annual sales
Percentage of the sales amount of related parties among
0.00%
top 5 customers to the annual sales
Information about top 5 customers
No. Customer Name Sales amount (Yuan) Percentage of the annual sales amount
Shenzhen Nanfang Yunhe Technology Co.,
1 49,076,962.97 2.12%
Ltd.
2 Shenzhen Suning Yunshang Sales Co., Ltd. 40,672,562.23 2.11%
Traffic Police Office of Public Security
3 28,753,641.51 1.45%
Bureau
4 Jiang Hua（Housing） 17,640,860.95 0.89%
5 Li Yuanmei（Housing） 16,402,241.90 0.83%
Total -- 152,546,269.56 7.40%
Other information on main customers
□ Applicable √ Not applicable
Information about major suppliers
Total purchase amount of top 5 suppliers (Yuan) 209,388,422.70
Percentage of the total purchase amount of top 5 suppliers
14.97%
to the annual purchase
Percentage of the purchase amount of related parties 0.00%
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among top 5 customers to the annual purchase amount
Information about top 5 suppliers
No. Name of supplier Purchase amount (Yuan) Percentage of the annual purchase
China Huashi Enterprises Company
1 41,946,122.20 2.07%
Limited
2 China Telling Telecom Co., Ltd. 41,784,580.54 2.06%
Shenzhen Futian District Security Guard
3 Service Company (office property 28,753,641.51 1.42%
management fee)
Suzhou Shuntong Network Technology
4 17,640,860.95 0.87%
Co., Ltd.
Suzhou Tianxiang Real Estate
5 16,402,241.90 0.81%
Development Co., Ltd.
Total -- 146,527,447.10 7.22%
Other information on main suppliers
□ Applicable √ Not applicable
3. Expense
Unit: Yuan
Year-on-year
2017 2016 increase/decrease Description of significant changes
(%)
There is no significant change in the reporting
Sale expenses 43,173,370.45 41,555,812.57 3.89%
period.
There is no significant change in the reporting
Management expenses 144,029,063.26 142,779,706.02 0.88%
period.
(Nantong SEG Times Plaza has been put into
Financial cost 21,598,611.36 10,466,615.20 106.36% use. The capitalization of the borrowing costs
of the project is ceased..
4. Investment in research and development
□ Applicable √ Not applicable
5. Cash Flow
Unit: Yuan
Year-on-year increase/decrease
Item 2017 2016
(%)
Subtotal of cash inflow from
2,234,172,041.17 2,716,002,642.14 -17.74%
operating activities
Subtotal of cash outflow in
1,726,785,491.96 2,272,467,101.36 -24.01%
operating activities
Net cash flow from operating
507,386,549.21 443,535,540.78 14.40%
activities
Subtotal of cash inflow from
2,304,214,897.00 818,350,725.81 181.57%
investing activities
Subtotal of cash outflow in 2,491,257,058.69 897,641,866.86 177.53%
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Year-on-year increase/decrease
Item 2017 2016
(%)
investing activities
Net cash flow from investing
-187,042,161.69 -79,291,141.05
activities
Subtotal of cash inflow from
1,083,037,998.48 1,731,367,812.30 -37.45%
financing activities
Subtotal of cash outflow in
1,583,423,874.22 1,599,151,616.44 -0.98%
financing activities
Net cash flow arising from
-500,385,875.74 132,216,195.86 -478.46%
financing activities
Net increase in cash and cash
-180,041,035.27 496,460,611.06 -136.26%
equivalents
1. Subtotal of cash inflow from operating activities decreases by 17.74% year on year in the reporting period,
mainly because 1) SEG Industrial and Suzhou Intelligent cut back the trade business and the cash inflow
decreases; 2) cash inflow generated by sales of SEG E-commerce last year is not included in the reporting
period.
2. Subtotal of cash outflow from operating activities decreases by 24.01% year on year in the reporting period,
mainly because 1) SEG Industrial cut back the trade business and the purchasing expenses decrease; 2) cash
outflow generated by sales of SEG E-commerce last year is not included in the reporting period.
3. Subtotal of cash inflow from investing activities increases by 181.57% year on year in the reporting period,
mainly due to increase in investment in bank financing.
4. Subtotal of cash outflow from investing activities increases by 177.53% year on year in the reporting period,
mainly due to increase in investment in bank financing.
5. Subtotal of cash inflow from financing activities decreases by 37.45% year on year in the reporting period,
mainly due to decrease of the scale of financing of SEG Real Estate Investment
6. Subtotal of cash outflow from financing activities decreases by 478.46% year on year in the reporting period,
mainly due to decrease of the scale of financing of SEG Real Estate Investment
7. Net increase in cash and cash equivalents decrease by 136.26% year on year in the reporting period, mainly
due to decrease in the cash received from borrowings and increase in the cash paid for investment.
Description of main factors of significant year-on-year change
√ Applicable □ Not applicable
Reasons for the big difference between the net cash flow arising from operating activities and the annual net
profit in the reporting period
□ Applicable √ Not applicable
III. Analysis of Non-major Business
√ Applicable □ Not applicable
Unit: Yuan
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Percentage of
Amount Reason Sustainable or not
total profit
1. Income from reduction of holding-shares
of Huakong SEG;
1. 2. 3. Unsustainable
Investment income 71,999,915.73 16.81% 2. Sales of holding-shares of Wuxi SEG;
3. Financing income; 4. Sustainable
4. Income from investment in associates.
Changes in fair
value recognized in 0.00 0.00%
profit or loss
SEG Industrial accrued the provision for
Asset impairment 22,034,872.24 5.15% bad debts and provision for loan losses of Partially sustainable
SEG Credit.
Non-operating Government subsidies and income from
13,033,764.81 3.04% Partially sustainable
income counter-party default
Losses arise from the termination of the
contract between SEG Real Estate and
Shenzhen Jinhongyuan Construction
Non-operating Material Co., Ltd.. The Company paid the
6,468,223.22 1.51%
expenses litigation settlements payable by Nanning Unsustainable
SEG. After removal of booths of SEG
CPARK, the decoration expense is written
off before amortization.
IV. Assets and Liabilities
1. Significant Changes in Asset Formation
Unit: Yuan
End of 2017 End of 2016
Increase/decre Description of
Percentage of Percentage of
Amount Amount ase significant changes
total assets total assets
Monetary funds 951,482,605.92 13.61% 1,131,523,641.19 16.34% -2.74%
Accounts
61,934,101.56 0.89% 58,949,389.88 0.85% 0.03%
receivable
Inventory 3,551,100,320.71 50.78% 3,378,533,067.95 48.80% 1.98%
Investment
676,888,184.90 9.68% 708,470,470.81 10.23% -0.55%
properties
Long-term equity
211,973,322.32 3.03% 203,657,322.71 2.94% 0.09%
investment
Fixed assets 62,404,988.93 0.89% 52,029,921.10 0.75% 0.14%
Construction in
71,745,514.32 1.03% 37,092,227.51 0.54% 0.49%
progress
Short-term
534,792,000.00 7.65% 355,000,000.00 5.13% 2.52%
borrowing
Long-term
754,750,000.00 10.79% 1,030,000,000.00 14.88% -4.08%
borrowing
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2. Assets and liabilities measured based on fair value
√ Applicable □ Not applicable
Unit: Yuan
Cumulative
Change in fair change in fair Impairment Amount of Amount of
Opening Closing
Item value of the value accrued in the purchase in the sales in the
balance balance
current period recognized in current period current period current period
the equity
Financial assets
1.
Available-for-sale 683,290.58 -317,372.09 365,918.49
financial assets
Subtotal of
683,290.58 -317,372.09 365,918.49
financial assets
Total 683,290.58 -317,372.09 365,918.49
Financial
0.00 0.00
liabilities
3. Restricted asset rights as of the end of the reporting period
√Applicable □Not applicable
(1) Mortgaged assets
As of the end of the reporting period, the Company mortgaged self-owned houses for bank borrowings. The
following are mortgaged houses and the net value at the end of the reporting period:
Net value at the end of the
Owner House name Remarks
reporting period
Shenzhen SEG Co., Ltd. 4F of SEG Plaza 42,436,948.47 Mortgaged for bank borrowings
Some floors of Window to
Shenzhen SEG Co., Ltd. 50,543,203.67 Mortgaged for bank borrowings
Modernization
Shenzhen SEG Co., Ltd. 31F of Stars Plaza 8,984,817.19 Mortgaged for bank borrowings
Shenzhen SEG Co., Ltd. Other houses 6,432,454.33 Mortgaged for bank borrowings
Shenzhen SEG Real Estate See houses listed in Note
89,019,246.92 Mortgaged for bank borrowings
Investment Co., Ltd. VII (45)
Huizhou Stars Real Estate Some houses of SEG
42,436,948.47 Mortgaged for bank borrowings
Development Co., Ltd. Holiday Plaza
Total 50,543,203.67
(2) Pledged assets
SEG New Urban, a sub-subsidiary of the Company, and Bohai International Trust Co., Ltd. ("Bohai Trust") have
entered into a contract of loan on trust. Bohai Trust shall grant a total loan of RMB 500,000,000.00 to SEG New
Urban. According to the Right Pledge Contract between SEG Real Estate, a subsidiary of the Company, and
Bohai Trust, the pledged right is 52.0461% of the equity of SEG New Urban held by SEG Real Estate.
V. Investment
1. General
25
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
√ Applicable □ Not applicable
Investment over the same period of the
Investment in the reporting period (Yuan) Increase/decrease (%)
previous year (Yuan)
5,527,301,497.49 167,406,096.68 3,201.73%
26
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
2. Significant equity investment in the reporting period
√ Applicable □ Not applicable
Unit: Yuan
Investment
Progress as
profit or
Main Investment Investment Shareholding Source of Investment Product of the Projected Lawsuit Disclosure Disclosure
Investee name Partner loss of the
business mode amount percentage capital horizon type balance income involved date (if any) index (if any)
current
sheet date
period
Shenzhen
Rongqi
Mechanical
and Electrical
Issuance of
Shenzhen SEG Real Equipment
shares and
Real Estate estate 2,113,984,200. Co., Ltd., Real Transfer 188,968,96
Acquisition 79.02% payment of Long-term 0.00 No
Investment develop 00 employees of estate completed 3.11
consideratio
Co., Ltd. ment SEG Real
ns http://www.cnin
Estate, and
fo.com.cn
the labor
union of SEG Announcement
Real Estate of Shenzhen
SEG Co., Ltd.
Electron Acquisition Electroni on Transfer of
Shenzhen SEG ics Issuance of cs
Recreation market shares and Harbin Haige markets January 25, Underlying
310,244,700.0 Transfer 24,428,418. 2017 Assets for Share
Enterprise and 55.00% payment of Group Co., Long-term and 0.00 No Issuance and
0 completed 15
Development property consideratio Ltd property Cash Payment
Co., Ltd. manage ns leasing to Acquire
ment services Assets and
Acquisition Issuance of Raise Funds &
Shenzhen SEG Connected
Property shares and Property
Property 135,235,900.0 Transfer 13,319,993. Transactions
manage 100.00% payment of None Long-term manage 0.00 No
Development 0 completed 34
ment consideratio ment
Co., Ltd.
ns
Electron Acquisition Issuance of Electroni
Shenzhen ics shares and cs
2,597,682,400. Transfer 36,856,492.
SegMaker Co., market, 100.00% payment of None Long-term markets, completed 0.00 No
00 31
Ltd. hotel, consideratio hotels,
property ns property
27
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
manage manage
ment, ment,
and and
makers makers
Longyan http://www.cnin
Energy fo.com.cn
Technology
(Hangzhou) Announcement
Co., Ltd., of Shenzhen
Shenzhen CdTe SEG Co., Ltd.
SEG Longyan Raytai film PV on the
Energy New Newly- Self-owned Technology power In -8,094,335. November Establishment of
82,500,000.00 50.00% Long-term 0.00 No SEG Longyan
Technology energy established capital Photovoltaic station preparation 55 12, 2016
Co., Ltd. Engineering and Energy
Co., Ltd. and BIPV Technology Co.,
Shenzhen Ltd. and Launch
Energy of the CdTe
Nanjing Film PV
Holding Co., Industrial Base
Ltd. Project
Shenzhen SEG Tianjin Allied
Lianzhong Internet eSports Internet
Newly- Self-owned In -2,684,853. November
Internet access 13,640,000.00 55.00% Internet Long-term access 0.00 No
established capital preparation 00 16, 2016
Technology service Technology services
Co., Ltd. Co., Ltd.
http://www.cnin
fo.com.cn
Zhuhai
Zhongtong Announcement
Lexing of Shenzhen
Shenzhen SEG Wi-Fi Network Wi-Fi SEG Co., Ltd. on
Zhongtong project Newly- Self-owned Technology project In April 7, the
980,000.00 49.00% Long-term 0.00 -397,708.99 No Establishment of
Technology of China established capital Co., Ltd. and of China preparation 2017
Co., Ltd. Railway Shenzhen Railway Shenzhen SEG
Donglinde Allied eSports
Investment Co., Ltd. and
Co., Ltd. Launch of the
E-Sports
Stadium Project
Shenzhen SEG SEG http://www.cnin
Newly- Self-owned Shenzhen SEG August 11,
Yicheng maker established 1,020,000.00 51.00% eMaxCity Long-term maker Opening 0.00 -200,019.14 No fo.com.cn
capital 2017
Science and educatio Technology educatio Announcement
28
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Technology n and Co., Ltd. n and of Shenzhen
Co., Ltd. technolo technolo SEG Co., Ltd. on
gy gy the
experien experien Establishment of
ce ce Shenzhen SEG
museum museum Yicheng Science
and Technology
Co., Ltd. and
Construction &
Operation of
SEG Maker
Education and
Technology
Experience
Museum
5,255,287,200.
00 252,196,95
Total -- -- -- -- -- -- -- -- 0.00 -- -- --
0.23
3. Significant non-equity investment in progress in the reporting period
√ Applicable □ Not applicable
Unit: Yuan
Reasons for
failure to
Accumulated Accumulated achieve the
Amount of
Industries amount invested income as of plan Disclosure
Investment Fixed asset investment Source of Projected Disclosure
Project name involved in as of the end of Progress the end of the schedule index (if
mode investment? during the capital income date (if any)
investment the reporting reporting objective any)
reporting period
period period and
expected
income
Self-owned Nantong
Nantong SEG
Self-built No Real estate 152,295,046.49 749,559,894.08 capital and - 0 -17,365,331.27 - SEG Times Self-built
Times Plaza
bank loan Plaza
Land use right of Self-constructed Yes New energy 28,010,000.00 28,010,000.00 Self-owned - - -
29
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
SEG Longyan in capital
Shenzhen-Shantou
Cooperation Zone
CdTe Production
Self-owned
Line of SEG Self-constructed Yes New energy 91,709,251.00 91,709,251.00 - - -
capital
Longyan
Total -- -- -- 272,014,297.49 869,279,145.08 -- -- 0.00 -17,365,331.27 -- -- --
4. Financial assets investment
(1) Security investment
√ Applicable □ Not applicable
Unit: Yuan
Profit or
loss from Amount
changes Accumulative of Amount of Profit or loss
Short form Accounting
Stock Initial Opening book in fair changes in fair purchase sales in the in the Closing book Source of
Stock type of the measurement Accounting item
code investment cost value value in value counted in the current reporting value capital
security mode
the into equity current period period
current period
period
Domestic
Youhao Measurement Available-for-sale Self-owned
and overseas 600778 90,405.00 683,290.58 -317,372.09 0.00 0.00 0.00 365,918.49
Group of fair value financial assets capital
shares
Domestic Measurement
Huakong Long-term Self-owned
and overseas 000068 194,153,799.52 of equity 174,552,073.99 -126.75 -9,125,553.30 5,871,204.49 171,297,598.43
SEG investment capital
shares method
Domestic Measurement
SEG Available-for-sale Self-owned
and overseas 832770 8,275,321.43 of cost 13,515,392.83 0.00 0.00 0.00 13,515,392.83
Navigations financial assets capital
shares method
Total 202,519,525.95 -- 188,750,757.40 -317,498.84 0.00 -9,125,553.30 5,871,204.49 185,178,909.75 - -
30
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
(2) Investment of derived products
□ Applicable √ Not applicable
No investment in derivatives is involved in the reporting period.
5. Use of the collected capital
□ Applicable √ Not applicable
In the reporting period, there was no usage of raised capital.
VI. Sales of Major Assets and Equity
1. Sales of Major Assets
√ Applicable □ Not applicable
Net profit
contributed
Proportion
by the
of the net Implemented
asset to the
profit Association Transfer Transfer as scheduled
listed Impact of Pricing
Transaction contributed with the of all of all or not? If
company the sale principle
Date of price by the Connected counterparty property creditor's not, indicate Disclosure
Counterparty Sold assets from the on the for the Disclosure index
sale (RMB assets to transaction? (applicable rights of rights and reasons and date
beginning Company sale of
10,000) the listed to connected assets debts measures
of the (Note 3) assets
company transactions) involved? involved? taken by the
period to
to total net Company
the date of
profit
sale (RMB
10,000)
51% of the Announcement on the
Zhejiang
equity of Progress of Transfer of the
Xinyuan
Wuxi SEG October Not November Equity of Wuxi SEG
Market 354.2 72.73 88.18 0.40% Fair value No Yes Yes Transferred
Electronics 30, 2017 applicable 7, 2017 Electronics Market Co.,
Management
Market Co., Ltd. disclosed on
Co., Ltd.
Ltd. http://www.cninfo.com.cn
10,000,000 Announcement on the
Secondary 5,521.06
shares of December Not January 5, Progress of Reduction of
market 32.6 5,497.85 25.04% Fair value No Yes Yes Transferred
Huakong 31, 2017 applicable 2018 Holding-shares of
investors
SEG Shenzhen Huakong SEG
31
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Co., Ltd. disclosed on
http://www.cninfo.com.cn
2. Sales of Major Equity
√ Applicable □ Not applicable
Net profit
contributed Proportion
by the asset of the net Implemented
to the listed profit Association as scheduled
Impact of
company contributed Pricing with the Transfer of or not? If
Transaction the sale on
from the by the principle for Connected counterparty all the not, indicate Disclosure
Counterparty Sold assets Date of sale price (RMB the Disclosure index
beginning assets to the the sale of transaction? (applicable equity reasons and date
10,000) Company
of the listed assets to connected involved? measures
(Note 3)
period to company to transactions) taken by the
the date of total net Company
sale (RMB profit
10,000)
51% of the Announcement on the
Zhejiang
equity of Progress of Transfer of the
Xinyuan
Wuxi SEG October 30, November Equity of Wuxi SEG
Market 354.20 72.73 88.18 0.40% Fair value No None Yes Transferred
Electronics 2017 7, 2017 Electronics Market Co.,
Management
Market Co., Ltd. disclosed on
Co., Ltd.
Ltd. http://www.cninfo.com.cn
Announcement on the
10,000,000 Progress of Reduction of
Secondary
shares of December January 5, Holding-shares of
market 5,521.06 32.6 5,497.85 25.04% Fair value No None Yes Transferred
Huakong 31, 2017 2018 Shenzhen Huakong SEG
investors
SEG Co., Ltd. disclosed on
http://www.cninfo.com.cn
VII. Analysis of Controlling and Holding Companies
√ Applicable □ Not applicable
Unit: Yuan
Company Operating
Company type Main business Registered capital Total assets Net assets Operating profit Net profit
name income
32
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Company Operating
Company type Main business Registered capital Total assets Net assets Operating profit Net profit
name income
SEG
Subsidiary Microcredit 150,000,000.00 416,546,602.66 190,973,138.86 49,137,832.39 1,731,652.48 755,531.44
Credit
Property operation and
SEG
Subsidiary management and hotel 61,617,600.00 164,183,305.34 116,255,173.57 96,869,873.70 40,250,767.43 30,152,624.56
Baohua
business
Channel retail terminal of
SEG electronic products and
Subsidiary -11,422,331.0
Industrial property operation and 25,500,000.00 86,982,253.64 36,145,581.24 82,198,407.50 -8,500,999.65
0
management
Nanning Operation and management
Subsidiary
SEG of electronics market 8,000,000.00 64,219.87 -883,662.28 - - -
Longgang Operation and management
Subsidiary
SEG of electronics market 3,000,000.00 25,648,253.66 6,214,456.90 13,256,096.92 2,014,495.42 1,548,656.61
Shunde Operation and management
Subsidiary
SEG of electronics market 6,000,000.00 6,043,296.95 3,451,771.93 3,132,622.73 169,533.17 200,442.34
Changsha Operation and management
Subsidiary
SEG of electronics market 35,000,000.00 96,936,531.45 75,116,508.50 23,401,682.40 7,182,897.53 5,354,076.32
Operation and management
Xi'an SEG Subsidiary
of electronics market 3,000,000.00 39,257,518.45 16,829,133.65 35,732,862.15 9,655,346.25 8,208,153.78
Xi'an
Operation and management
Hairong Subsidiary
of electronics market 3,000,000.00 26,441,880.62 6,055,411.99 21,490,089.74 2,905,148.41 2,544,567.25
SEG
Nanjing Operation and management
Subsidiary
SEG of electronics market 20,000,000.00 22,378,697.30 1,691,287.42 23,846,790.75 -2,772,942.84 -2,745,645.37
Wujiang Operation and management
Subsidiary
SEG of electronics market 3,000,000.00 14,989,334.58 3,986,746.31 16,791,648.67 718,985.39 538,287.33
Wuxi SEG Subsidiary Operation and management
33
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Company Operating
Company type Main business Registered capital Total assets Net assets Operating profit Net profit
name income
of electronics market - - - 4,617,382.93 791,454.88 727,345.49
Suzhou Operation and management
Subsidiary
SEG of electronics market - - - 23,307,308.98 -3,998,924.05 -3,991,359.40
Suzhou
Operation and management
SEG Subsidiary
of electronics market 8,000,000.00 23,471,668.99 3,403,166.56 30,336,445.59 5,398,270.56 5,452,461.09
Digital
SEG
Subsidiary Trade
Intelligent 10,000,000.00 8,001,776.17 4,307,026.47 68,163,413.90 -1,643,178.68 -2,247,926.00
Nantong Real estate development
Subsidiary
SEG and management 30,000,000.00 890,241,708.04 12,634,668.73 4,761,928.47 -8,967,360.38 -8,968,942.11
Nantong
SEG
Commerci Subsidiary Property management -12,576,044.9
- 20,966,086.75 -17,088,193.56 12,689,564.59 -12,586,376.86
5
al
Operation
Yicheng
Science SEG maker education and
and Subsidiary technology experience
1,020,000.00 837,422.08 819,980.86 - -200,019.14 -200,019.14
Technolog museum
y
SEG
Investmen Subsidiary Fund Investment
1,500,000.00 1,500,838.76 1,498,838.76 - -1,161.24 -1,161.24
t
Longyan
Energy New energy technology
Subsidiary
Technolog development 165,000,000.00 160,053,861.94 156,905,664.45 5,602.56 -8,094,254.94 -8,094,335.55
y
SEG Internet and related
Subsidiary
Lianzhong services 24,800,000.00 22,721,321.93 22,115,147.00 109,154.98 -2,684,853.00 -2,684,853.00
SEG Software and information
Subsidiary
Zhongton technology services 2,000,000.00 1,602,291.01 1,602,291.01 - -397,708.99 -397,708.99
34
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Company Operating
Company type Main business Registered capital Total assets Net assets Operating profit Net profit
name income
g
Electronics market leasing
SEG
Subsidiary management services;
Recreation 5,000,000.00 96,160,776.03 35,940,457.53 53,247,077.93 32,564,858.07 24,428,418.15
property leasing
SEG
Property
Subsidiary Property management
Developm 5,000,000.00 144,504,017.25 74,293,428.82 59,405,595.75 17,919,391.79 13,319,993.34
ent
Electronics market leasing
management services;
SegMaker Subsidiary 134,667,240.3
property leasing; hotel 10,000,000.00 355,621,583.83 255,029,470.70 49,295,628.51 36,856,492.31
7
management
Property leasing; property
SEG Real
Subsidiary management; real estate 1,222,751,774 256,639,097.4
Estate 102,500,000.00 3,719,643,993.47 980,502,203.50 188,968,963.11
development .10 2
Manufacturing and
Huakong Shareholding operation of color picture
412,929,685.1
SEG company tube (CPT), CPT materials, 1,006,671,464.00 2,803,698,323.72 1,092,604,871.02 42,111,282.37 32,644,084.17
8
and glass apparatus
Shanghai Shareholding Operation and management
SEG company of electronics market 5,000,000.00 15,400,297.98 9,820,675.31 7,209,054.03 658,646.70 527,804.99
Shareholding
CEEC Electronics exhibition -15,051,102.9
company 30,000,000.00 14,013,554.94 6,766,534.86 8,764,271.43 -15,051,507.20
0
Information on the acquisition and disposal of subsidiaries in the reporting period
√ Applicable □ Not applicable
Mode of acquisition and disposal of subsidiaries in the reporting
Company name Impact on the overall business operation and performance
period
Shenzhen-Shantou Cooperation Zone SEG Longyan
Newly-established It is in preparation and not open for business yet.
Energy Technology Co., Ltd.
Shenzhen SEG Lianzhong Internet Technology Co., Newly-established In the reporting period, the operating income is RMB 109,200 and the loss is
35
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Ltd. RMB 2,684,900.
Shenzhen SEG Zhongtong Technology Co., Ltd. Newly-established It is in preparation and not open for business yet.
In the reporting period, the operating income is RMB 134,667,200 and the
Shenzhen SegMaker Co., Ltd. Business combination under common control
profit is RMB 36,856,500.
Shenzhen SEG Recreation Enterprise Development In the reporting period, the operating income is RMB 53,247,100 and the
Business combination under common control
Co., Ltd. profit is RMB 24,428,400.
In the reporting period, the operating income is RMB 59,405,600 and the
Shenzhen SEG Property Development Co., Ltd. Business combination under common control
profit is RMB 13,320,000.
In the reporting period, the operating income is RMB 106,006,700 and the
Shenzhen SEG Real Estate Investment Co., Ltd. Business combination under common control
profit is RMB 38,367,800.
In the reporting period, the operating income is RMB 87,018,000 and the
Huizhou Stars Real Estate Development Co., Ltd. Business combination under common control
profit is RMB 8,353,600.
In the reporting period, the operating income is RMB 186,813,800 and the
Shenzhen SEG Property Management Co., Ltd. Business combination under common control
profit is RMB 14,710,000.
Shenzhen SEG New Urban Construction In the reporting period, the operating income is RMB 850,037,400 and the
Business combination under common control
Development Co., Ltd. profit is RMB 146,652,700.
Shenzhen SEG New Urban Commercial Operation In the reporting period, the operating income is RMB 0 and the loss is RMB
Business combination under common control
Co., Ltd. 10,580,700.
In the reporting period, the operating income is RMB 92,500 and the loss is
Beijing SEG Property Development Co., Ltd. Business combination under common control
RMB 2,764,700.
In the reporting period, the operating income is RMB 0 and the loss is RMB
Xi'an SEG Kanghong Real Estate Co., Ltd. Business combination under common control
3,857,400.
In the reporting period, the operating income is RMB 0 and the profit is
Shenzhen Hongge Cultural Development Co., Ltd. Business combination under common control
RMB 0.
Suzhou SEG Electronics Market Management Co., In the reporting period, the operating income is RMB 23,307,300 and the
Transfer of management rights
Ltd. loss is RMB 3,991,400.
In the reporting period, the operating income is RMB 4,617,400 and the
Wuxi SEG Electronics Market Co., Ltd. Equity transfer
profit is RMB 727,300.
Information on controlling and holding companies
1. In the reporting period, the operating income of SEG Industrial decreases by 55.27% year on year, mainly because it discontinued related trade in 2017, resulting in
significant decrease in the trade business.
36
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
2. In the reporting period, the operating income of SEG Credit decreases by 37.29% year on year, mainly because the credit business is cut down, resulting in declining
income.
3. In the reporting period, the operating income of Nanjing SEG decreases by 39.69% year on year, mainly because the property rent concession leads to decrease in rent
expenses and losses.
4. In the reporting period, the total profit of Wujiang SEG decreases by 66.69% year on year, mainly because it signed the property lease contract in May 2017, which leads
to increase in rent expenses and decrease in the total profit.
5. In the reporting period, the total profit of Suzhou SEG Digital increases by RMB 4,902,300 year on year. Decrease in the rent cost leads to increase in the profit.
6. In the reporting period, the operating income of Nantong SEG Commercial Operation increases by RMB 11,811,400 and the total profit decreases by RMB 8,085,000
year on year, mainly because Nantong SEG Times Plaza started business in October 2016 and the income from rents and management expenses increased in 2017. As the
fixed expenses and operating costs of the plaza is far higher than the income from rents and management expenses, the loss of this year is RMB 12,586,400 and increases
year on year.
7. In the reporting period, the operating income of SEG Intelligent decreases by 26.83% and the total profit decreases by 34.71%, mainly because the Company adjusted
business types and discontinued digital direct sales, resulting in decrease in the operating income.
8. In the reporting period, the Company sold all its equity of Wuxi SEG. In the reporting period, the operating income of the Company attributable to the listed company
decreases by 20.68% year on year. (For details, see the Announcement on the Progress of Transfer of the Equity of Wuxi SEG Electronics Market Co., Ltd. (No. 2017-071)
released on the information disclosure media designated by the Company on November 7, 2017.
37
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
VIII. Information on Structured Entity Controlled by the Company
□ Applicable √ Not applicable
IX. Development outlook of the Company
(I) Development planning of the Company
In 2018, according to the 13th five-year plan, based on its development reality and existing resource capacities,
the Company will rely on the listed company platform, make full use of the capital market, integrate internal and
external resources, carry out capital operations in the form of "external industrial M&A" and "investment fund",
and transform itself into a platform for strategic emerging industries. On the basis of the electronics markets and
commercial real estate (industrial parks), the Company will also combine multiple business models, develop the
overall resource advantages, accelerate transformation and upgrading of the original electronics market, expand
from operation of a single business platform to the content production and operation, and create a business
model combining multiple business types, including the maker ecosystem, culture & education, intelligent
technology, sports & entertainment, virtual experience and e-sports.
(II) Fulfillment of investment plan of the Company
2017 annual project investment plan of the Company focuses on business transformation and upgrading. The
expected total investment amount is RMB 581,300,000. The fulfillment is shown in the table below:
Unit: RMB 10,000
No. Project name Annual Cumulative Project progress
budget completed
investment investment
1 Nantong SEG Times Plaza 14,500 6,556 The construction cost of the last year is paid.
2 New investment project 43,630 23,926
(1) Construction land has been obtained for the project.
Three shareholders have contributed capital (accounting
for 84%). The project construction planning has been
approved. Relevant equipment purchasing contracts have
SEG Longyan PV project 27,500 21,250 been drafted and submitted for review.
Shenzhen-Shantou Cooperation Zone SEG Longyan was
incorporated at the end of March 2017 which serves to
establish plants. The land leveling and compaction and
equipment purchasing are underway.
(2) 1. Nantong SEG e-sports Internet caféruns steadily.
2. Suzhou SEG e-sports Internet café was put into trial
Allied eSports and small e-sports
3,650 2,578 operation on June 20,2017 and runs steadily now.
stadium project
3. Shenzhen e-sports stadium was put into trial operation
in September, 2017.
(3) Railway Wi-Fi project 980 98
(4) Shenzhen Hongtu SEG Investment Management Co.,
Ltd. has completed the business registration formalities
Hongtu SEG fund project 10,000 - for shareholder changes, and is handling the registration
formalities with Asset Management Association of
China.
(5) New hotel investment project The Mellow Orange Hotel in Dongmen was officially
1,500 - open on May 1, 2017. The Company is looking for new
hotel projects.
Total 58,130 30,482
38
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Reason for the difference between the 2017 project investment plan and the fulfillment: 1. Hongtu SEG
Intelligent Industrial Fund is under approval and has not been funded yet; 2. the Company is looking for new
hotel projects; 3. for prudence, the Company does not invest in new electronics market projects.
(III) Summary of progress of development strategies and operation plans disclosed earlier in the reporting
period
According to the development strategies and operation plans disclosed by the Company in the annual report of
2016, in the reporting period, the main work done by the Company is as follows:
1. Completion of major assets restructuring
In order to reduce horizontal competition at the maximum, enhance the profitability and core competitiveness of
listed company, fully integrate the business of electronics markets by relying on the platform of the listed
company, eventually fulfill the integration, transformation and upgrading of current business of the listed
company, facilitate the Company to develop toward diversified business, extend the industrial chain, expand the
profit margins of the listed company, and enhance the influence of the listed brand, the Company carried out
major assets restructuring in 2016.
For restructuring, the Company intended to purchase 100% of the equity of SegMaker, 55% of the equity of SEG
Recreation, 100% of the equity of SEG Property Development and 79.02% of the equity of SEG Real Estate held
by SEG Group by means of issuing shares and paying cash to acquire assets, in which the percentage of payment
by the equity is 86.90% and that of cash payment 13.10%. At the same time, in order to improve the efficiency of
restructuring, the Company intended to raise the supporting fund for the restructuring from no more than 10
specific investors by means of non-public offering, with the total raised fund no more than 38.78% of the
transaction price of the assets to be acquired. According to the appraised value, the total amount of assets did not
exceed RMB 2 billion.
On November 15, 2016, China Securities Regulatory Commission Acquisition and Restructuring Committee
conditionally approved Shenzhen SEG issuing shares and paying cash to acquire assets and raising supporting
fund as well as related party transaction issues on the 85th Acquisition and Restructuring Committee Working
Meeting of 2016.
On January 17, 2017, the Company received the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to
Shenzhen SEG Group Co., Ltd. to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) issued
by China Securities Regulatory Commission (CSRC), which approved the Company to issue 450,857,239 shares
to SEG Group to acquire relevant assets and raise supporting funds for the said share issuance and asset
acquisition by non-public offering of no more than 201,207,243 new shares. The said approval document issued
by China Securities Regulatory Commission will be valid within 12 months after the issuance.
The transfer formalities of the subject assets were completed on January 19, 2017, and the 450,857,239 new
shares in A-share by non-public offering were listed for trading on March 6, 2017.
On February 15, 2017, the Company received the Acceptance Confirmation of the Application for Share
Registration issued by Shenzhen Branch of China Securities Depository and Clearing Company Limited,
specifying that the new shares were to be listed on March 6, 2017.
Since March 2017, the Company has started non-public offering as planned. The Company held investor
research meeting to find strategic investors for non-public offering. A total of 82 institutional and individual
investor subscription intention letters were collected. The Company also organized roadshows to vigorously
promote non-public offering.
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
On January 5, 2018, the Company released the Announcement on Expiration of the Approval on Issuing Shares,
Acquiring Assets by Cash and Raising Supporting Funds. Due to changes in the capital market, since the
approval document was received, the stock price of the Company was different from the bottom issue price for
raising supporting funds most of the time. The Company fails to raise supporting funds within the approved
validity period. According to the approval document of CSRC, such approval automatically expires.
2. Transformation and upgrading of electronics markets and implementation of new businesses are actively
carried out by the Company.
(1) Consumer Electronic Exhibition/Exchange Center (CEEC) Project
On May 10, 2016, Shenzhen Futian Investment Development Co., Ltd., Shum Yip Land Company Limited and
Shenzhen SEG Co., Ltd. jointly invested and established Shenzhen International Consumer Electronic
Exhibition/Exchange Center Co., Ltd. On March 28, 2018, CEEC started business in Shum Yip UpperHills,
Futian District, Shenzhen. CEEC was jointly built by the Ministry of Industry and Information Technology and
Shenzhen Municipality according to the executed framework agreement. CEEC is designed to create a
world-level consumer electronic exhibition/exchange center that integrates new high-end consumers' electronic
product release, exhibition, user experience, investment and discussion, cooperation and transaction, based in
Shenzhen, serving the whole country, and facing the world. More than 300 international and domestic consumer
electronic brands have settled here.
(2) Railway Wi-Fi project
The Company, Zhuhai Zhongtong Lexing Network Technology Co., Ltd. and Shenzhen Donglinde Investment
Co., Ltd. jointly founded Shenzhen SEG Zhongtong Technology Co., Ltd. (SEG Zhongtong) on April 7, 2017
and participated in the Wi-Fi project of China Railway Corporation. For this purpose, the Company formed the
operation team of SEG Zhongtong to advance work. On July 5, 2017, the CMII ID for the railway Wi-Fi device
of SEG Zhongtong was issued by the Ministry of Industry and Information Technology and Shenzhen
Municipality. On December 4, 2017, the railway Wi-Fi device passed the test of China Railway Test &
Certification Center. Currently, the Company is discussing the railway Wi-Fi project to determine the future
plan.
(3) SEG Taobao e-commerce project
This project is designed for strategic cooperation business between the Company and Taobao. It is intended to
build online and offline business platforms and create innovative value-added services of O2O electronics
markets. After exploration and efforts for nearly one year, due to the impact of the market environment, item
restriction and other objective factors, the project cannot yield considerable income for the Company in short
time. Based on the actual condition of the project, the Company discontinued the SEG Taobao e-commerce
project in October 2017.
(4) Maker business
After restructuring, the maker business of the Company mainly includes the business of SEG CPARK and the
business of SegMaker.
In 2017, to further develop the teenager maker culture and education project and develop a complete SEG maker
ecosystem, the Company and Shenzhen eMaxCity Technology Co., Ltd. jointly contributed RMB 10 million to
found Shenzhen SEG Yicheng Science and Technology Co., Ltd. (subject to business registration) which is
intended to build and operate SEG maker education and technology experience museum and Chinese teenager
STEAM science education standard base (see the Announcement of Shenzhen SEG Co., Ltd. on the Establishment
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
of Shenzhen SEG Yicheng Science and Technology Co., Ltd. and Construction & Operation of SEG Maker
Education and Technology Experience Museum disclosed by the Company on August 11, 2017). The original
project personnel of SEG CPARK are included into the business team of this company.
Skyland Future Technology Museum, SEG maker education and technology experience museum in CEEC, was
officially open to the public on March 28, 2018. With the augmented MR/VR technology, Skyland Future
Technology Museum creates immersive interactive experience scenes, presents curriculum knowledge that
cannot be directly experienced or practiced in true-to-life 3D scenes, and provides teenagers with comprehensive
and systematic STEAM education.
The maker business of SEG CPARK centers on the maker ecosystem and integrates SEG Business Center, SEG
Business Apartment and SegMaker+. Established in June 2015, SegMaker+ relies on the maker business of
Huaqiangbei and business sectors of SEG Group, integrates industry, brand, and capital advantages of SEG
Group, coordinates the industry and market resources in the electronic information industry, provides product
release, display, roadshow, promotion, transaction, financing, and maker communication, training, and other
services for the maker community, supports the industrialization of maker products, and promotes the integration
of the industrial chain and the innovation chain.
In 2017, SegMaker+ opened two new branch stores, and SEG Seed Incubator was open. The sharing office
business forms replicable mature model. In 2017, SegMaker+ held the Innovation and Entrepreneurship Contest,
Innovation and Entrepreneurship Summit Forum, and roadshow meetings in 2017. SegMaker+ won four titles:
"Shenzhen Innovation and Entrepreneurship Demonstration Base", "Shenzhen Overseas Student Pioneer Park",
"Guangdong Maker Space experimental Unit", and "Municipal Incubator Pioneer Park". SegMaker+ had more
advantages in performing the innovation and entrepreneurship service function of the government. In the
reporting period, SegMaker+ was also awarded "1st Batch of Shenzhen Innovation and Entrepreneurship Bases"
and "Shenzhen Overseas Student Pioneer Park" from the Development and Reform Commission of Shenzhen,
Human Resources and Social Security Bureau of Shenzhen, and received the special support fund from the
People's Government of Shenzhen. SegMaker+ hosted "Canada High-end Project Roadshow Meeting", "Taiwan
Youth Entrepreneurship Seminar", "China-Italy Innovation and Entrepreneurship Investment Cooperation
Meeting", "2017 HuaqiangbeiSEG Maker Star Feast", "Huawei LiteOS Hackathon (Shenzhen vs Taiwan)
Contest" and many other maker activities, where SegMaker+ communicated with maker teams from home and
abroad, Mainland China, Hong Kong, Macao, and Taiwan. On the one hand, these activities achieved good social
effects, enhanced publicity of SegMaker+, and brought more maker project resources, laying a foundation for the
sustainable development of SegMaker+.
(5) Hongtu SEG Intelligent Industrial Investment Fund project
As of the end of the reporting period, Shenzhen Hongtu SEG Investment Management Co., Ltd. and Hongtu
SEG Intelligent Industrial Investment Fund (Limited Partnership) has completed business registration and is
handling registration formalities with Asset Management Association of China. Project reserves and research are
also in progress.
(6) New energy business
The new energy market has high potentials, is environment-friendly and ecological, and is an industry
encouraged and supported by the government. Among all enterprises that are engaged in the CdTe solar PV
industry, Advanced Solar Power (Hangzhou) Co., Ltd., as an enterprise that possesses the CdTe film cell module
technology with completely independent intellectual property, is a technically leading enterprise in the industry
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
both at home and abroad. SEG Longyan is committed R&D and manufacturing of CdTe solar cell modules, and
invests in and contracts for distributed PV power stations and BIPV projects.
Production and construction: In April 2017, Shenzhen-Shantou SEG Longyan won the bid for the land use right
of the state-owned construction land (plot No. E2016-0025) located at Ebu Town, Shenzhen-Shantou
Cooperation Zone and intended to use it for the CdTe film PV industrial base project (Shenzhen-Shantou Park
project). Shenzhen-Shantou SEG Longyan carried out land leveling and construction. To advance the
construction of the new energy project and promote the launch of the solar cell module production line, SEG
Longyan and Longyan Energy Technology agreed to rent the existing No. 2 Plant of Longyan Energy to build
and run the first production line. SEG Longyan invested and established a wholly-owned subsidiary in Hangzhou,
namely Hangzhou SEG Longyan, which is responsible for the investment and operation of the first production
line. For details, see the Announcement on Shenzhen SEG Longyan Energy Technology Co., Ltd.'s Investment
and Establishment of Hangzhou SEG Longyan Energy Technology Co., Ltd. disclosed by the Company in
designated information disclosure media on January 19, 2018. Hangzhou SEG Longyan is to start trial
production in 2018 Q4.
Market development: In 2017, (1) SEG Longyan completed the construction and grid connection of the 300 KW
distributed CdTe PV power station; (2) SEG Longyan signed a general contract for the 80 KW PV power station
project; (3) SEG Longyan won the subject of CSOT 2.1 MW distributed power station.
(IV) Main business development problems of the Company
1. Horizontal competition in the electronics market is increasingly intense. Due to weak macro-economic
recovery and continuous impact of e-commerce, the competition for customer and manufacturer resources is
fierce. As the industry grows slump, prices wars become an important way of scrambling for resources and
maintaining the occupancy rate. In the future, decrease in the rent income for the purpose of maintaining the
occupancy rate will add to operation difficulties of the electronics market. Some electronics market business falls
into trouble due to problems of partners.
2. Nantong SEG Times Plaza project faces certain operation risks. Due to increase in the supply of Nantong
commercial real estate in a short time and serious homogeneous competition, based on analysis of the present
and future macro-environment of Nantong commercial real estate, challenges remains in the operation of
Nantong SEG Times Plaza project.
3. New energy business competition is intensifying. On the one hand, the conversion efficiency of
mono-crystalline and polycrystalline products is significantly improved while the conversion efficiency of film
PV modules is hard to improve. On the other hand, as PV modules have plenty of capacity in Chin and the
market competition is fierce, those with outdated capacity are to be eliminated.
(V) Key tasks of the Company in 2018
1. To be a platform for strategic emerging industries, the Company will accelerate the effective integration of
business, personnel, organization, capital and information resources and develop business models and
management models that match the new platform. The Company will also make full use of the capital market
and develop the strategic emerging industries through investment and M&A.
2. The Company will strengthen institutional innovation, advance the mixed-ownership reform, actively respond
to the call of the central government for "strengthening, optimizing, and expanding" state-owned enterprises, and
establish and improve incentive mechanisms that suit the development of the Company with pilot programs in
investees.
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
3. The Company will accelerate the construction of plants and production lines in Shenzhen-Shantou Park and
the establishment and operation of production lines in Hangzhou SEG Longyan, and strive for government
support.
4. Based on the existing electronics markets, the Company will utilize the service advantages and customer
resources of electronics markets, further develop the maker business, culture & education, intelligent technology,
sports & entertainment, virtual experience and e-sports, further create innovative value-added electronics market
services combining multiple business types, actively try innovative projects, vigorously promote the
transformation and upgrading of the original traditional business, and enhance its profitability and core
competitiveness.
5. The Company will further promote the development and operation of commercial real estate (industrial parks),
coordinate resources, and accelerate the construction, investment promotion, sales and operation of commercial
real estate (industrial parks) on the premise of product quality and work safety. The Company will adhere to the
diversified development strategy featuring "real estate + culture + sports + finance + technology", integrate
cultural real estate and sports real estate, enrich the content experience business types, expand its development
scale, and promote its market position.
6. The Company will improve the management quality, strengthen standard operation, and duly perform the
information disclosure obligation of the listed company. The Company will enhance communication with
investors and potential investors and enhance investors' understanding and recognition of the Company. The
Company will manage investor relations at multiple channels and levels, effectively safeguard the legitimate
rights and interests of investors, particularly small and medium investors. The Company will further develop and
implement the total risk management and internal control management systems, strengthen the responsibilities of
the risk subject, raise awareness of decision-making, further improve the risk management and control
mechanism, and conduct risk assessment throughout the cycle of major investment projects.
(VI) Risk warning
The future development planning and investment plan mentioned above do not reflect the profit estimation of
2018 by the Company. The results depend on multiple factors such as changes in market condition, and
uncertainties exist. Investors shall pay special attention to it.
X. Statement of receipt of surveys, communication and visits
1. Registration form for investigations, communication and Interviews in the reporting period
√ Applicable □ Not applicable
Time Means Type Basic information on investigation
Inquire about the progress of major assets restructuring. The
January 5, 2017 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the progress of major assets restructuring. The
January 10, 2017 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the progress of major assets restructuring. The
January 16, 2017 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the main business, transformation, and private
February 8, 2017 Phone call Individual placement of the Company. The Company has given a reply
according to the actual progress disclosed.
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Time Means Type Basic information on investigation
Inquire about the main business, transformation, and private
February 22, 2017 Field research Institution placement of the Company. For details, see the disclosure on
irm.cninfo.com.cn.
Inquire about the number of shareholders as of February 28.
The Company has given a reply according to the register of
February 28, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the main business, transformation, and private
March 10, 2017 Phone call Individual placement of the Company. The Company has given a reply
according to the actual progress disclosed.
Inquire about the number of shareholders as of March 15. The
Company has given a reply according to the register of
March 15, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the main business, transformation, and private
February 8, 2017 Phone call Individual placement of the Company. The Company has given a reply
according to the actual progress disclosed.
Inquire about the main business, transformation, and private
February 22, 2017 Field research Institution placement of the Company. For details, see the disclosure on
irm.cninfo.com.cn.
Inquire about the number of shareholders as of February 28.
The Company has given a reply according to the register of
February 28, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the number of shareholders as of April 15. The
Company has given a reply according to the register of
April 20, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the number of shareholders as of April 28. The
Company has given a reply according to the register of
May 5, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about voting results of the general meeting of the
May 8, 2017 Phone call Individual Company. The Company has given a reply according to the
disclosed notice of the general meeting.
Inquire about the financial data of Q2. The Company asked
June 30, 2017 Phone call Individual investors to pay attention to 2017 semi-annual report of the
Company to be disclosed.
Inquire about the number of shareholders as of June 30. The
Company has given a reply according to the register of
July 5, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the operating result of the Company in the first
July 10, 2017 Phone call Individual half of 2017. The Company advises investors to refer to the
semi-annual report 2017.
Inquire about the progress of raising supporting funds. The
August 15, 2017 Phone call Individual
Company has given a reply according to the actual progress.
Inquire about the number of shareholders as of August 15. The
Company has given a reply according to the register of
August 17, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about when a new director will take position after
resignation of the Chairman of the Board of Directors. The
September 1, 2017 Phone call Individual Company has replied that the chairman will be re-elected soon
according to the Articles of Association and relevant
provisions.
September 10, 2017 Phone call Individual Inquire about the main business, transformation and
supporting fund raising of the Company. The Company has
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Time Means Type Basic information on investigation
given a reply according to the actual progress disclosed.
Inquire about the number of shareholders as of September 15.
The Company has given a reply according to the register of
September 18, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the directors, supervisors and senior executives'
October 11, 2017 Phone call Individual increasing holdings of the Company. The Company has given
a reply according to the actual progress disclosed.
Inquire about the financial data of Q3. The Company asked
October 17, 2017 Phone call Individual investors to pay attention to 2017 Q3 report of the Company to
be disclosed.
Inquire about the number of shareholders as of October 15.
The Company has given a reply according to the register of
October 20, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the number of shareholders as of October 31.
The Company has given a reply according to the register of
November 4, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about stock suspension. The Company has given a
November 13, 2017 Phone call Individual
reply according to the announcement disclosed.
Inquire about stock resumption. The Company has given a
November 15, 2017 Phone call Individual
reply according to the actual progress disclosed.
For details, see the information disclosed by the Company on
November 21, 2017 Field research Individual
irm.cninfo.com.cn.
Inquire about the progress of controlling shareholders'
November 27, 2017 Phone call Individual increasing holdings of the Company. The Company has given
a reply according to the actual progress disclosed.
Inquire about the reason for the resignation of the Secretary of
December 12, 2017 Phone call Individual the Board. The Company has given a reply according to the
announcement disclosed.
Inquire about the number of shareholders as of November 30.
The Company has given a reply according to the register of
December 05, 2017 Phone call Individual
shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the progress of the Company's reducing holdings
of Huakong SEG. The Company advised investors to pay
December 14, 2017 Phone call Individual
attention to the progress report disclosed in the designated
information disclosure media.
Inquire about the operating result of Q4. The Company asked
December 18, 2017 Phone call Individual investors to pay attention to 2017 annual report of the
Company to be disclosed.
Inquire about the reason for the resignation of the Secretary of
December 21, 2017 Phone call Individual the Board. The Company has given a reply according to the
announcement disclosed.
Frequency of reception 35
Number of institutions received 32
Number of individuals received 33
Number of other objects received 0
Is there any important information disclosed? No
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 5 Important Matters
I. Plan of common share profit distribution and plan of transfer of capital reserves into share
capital
Information on the establishment, implementation or adjustment of the ordinary share profit distribution policy,
especially the cash dividend policy:
□ Applicable √ Not applicable
According to the Articles of Association and Shareholder Return Plan for the Next Three Years (2015-2017), the
Annual Profit Distribution Plan of 2016 was formulated by the Company in 2017 and passed by the Board of
Directors and general meeting. The Company accrued 10% of the profit available for distribution (RMB
11,880,703.37) as the statutory surplus reserve, and distributed cash dividend of RMB 0.30 (tax included) for
every 10 shares to all shareholders based on the total share capital of 1,235,656,249 shares after the Company
issued shares to SEG Group through public offering. The total amount of profit distribution of the Company was
RMB 37,069,687.47, in which the cash dividend accounted for 100%. The Company did not transfer reserves
into share capital this year. The annual profit distribution plan of 2016 was completed on August 21, 2017.
Special explanation of cash dividend policy
Does it comply with the Article of Association of the Company
Yes
or the resolutions of the meeting of shareholders?
Are the dividend standard and ratio explicit and clear? Yes
Are the decision-making procedure and mechanism perfect? Yes
Do independent directors fulfill their obligations and play their
Yes
role?
Is there any channel for medium and small shareholders to fully
express themselves? Are their legitimate rights and interests fully Yes
protected?
Are the conditions and procedure for adjustment or change of
Yes
cash dividend policy compliant and transparent?
Information on the ordinary share profit distribution plan (proposal) and the plan of transfer of capital reserves
into share capital (proposal) in the recent three years (including the reporting period)
Pursuant to the Accounting Standard for Business Enterprise 2014, the investment in subsidiaries by the
Company was calculated based on the basis of cost method, the profit of parent company remained bigger
differences with consolidated profit. In accordance with relevant provisions of the Company Law, the profit
distribution was implemented with the parent company as the main body. Therefore, the profit distribution of the
Company in 2017, 2016, and 2015 was implemented depending on the distributable profit of the parent
company.
1. According to audit by Da Hua Certified Public Accountants Co., Ltd., the net profit of the parent company
attributable to the listed company in 2017 is RMB 169,074,330.91, the undistributable profit at the beginning of
the year is RMB 146,342,426.58, and the profit available for distribution among shareholders is RMB
315,416,757.49. According to the Articles of Association and Shareholder Return Plan for the Next Three Years
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
(2015-2017) of Shenzhen SEG Co., Ltd., the profit distribution proposal of 2017 is as follows: The Company has
accrued 10% of the net profit of the current year (RMB 11,880,703.37) as the statutory surplus reserve, and plans
to distribute cash dividend of RMB 0.55 (tax included) for every 10 shares to all shareholders based on
1,235,656,249 share capital. The Company plans not to transfer capital reserves into share capital in 2017.
2. Profit distribution proposal and the proposal for transfer of capital reserves into share capital in 2016:
According to audit by Da Hua Certified Public Accountants Co., Ltd., the net profit of the parent company
attributable to the listed company in 2016 amounted to RMB 118,807,033.67, the undistributed profit at the
beginning of the year is RMB 63,085,510.75, and the current profit available for distribution among shareholders
was RMB 181,892,544.42. According to the Articles of Association and Shareholder Return Plan for the Next
Three Years (2015-2017), the annual profit distribution plan of 2016 is as follows: The Company will accrue
10% of the profit available for distribution (RMB 11,880,703.37) as the statutory surplus reserve, and distribute
cash dividend of RMB 0.30 (tax included) for every 10 shares to all shareholders based on the total share capital
of 1,235,656,249 shares after the Company issued shares to SEG Group through public offering. The total
amount of profit distribution of the Company is RMB 37,069,687.47, in which the cash dividend accounts for
100%. The Company plans not to transfer reserves into share capital this year.
3. Profit distribution proposal and the proposal for transfer of capital reserves into share capital in 2015:
According to audit by Da Hua Certified Public Accountants Co., Ltd., the net profit of the parent company
attributable to the listed company in 2015 amounted to RMB 92,305,001.57, the undistributed profit at the
beginning of the year is RMB -22,209,989.62, and the current profit available for distribution among
shareholders was RMB 70,095,011.95. The annual profit distribution plan of 2015 was as follows: The statutory
surplus reserve was RMB 7,009,501.20, accrued at 10% of the profit available for distribution. Based on
784,799,010 share capital of the Company as of December 31, 2015, the Company distributed cash dividend of
RMB 0.30 (tax included) for every 10 shares to all shareholders. The total amount of profit distribution of the
Company in 2015 was RMB 23,543,970.30, in which the cash dividend accounted for 100%. The Company did
not transfer capital reserves into share capital.
Table of distribution of ordinary share cash dividends by the Company in the recent three years (including the
reporting period)
Unit: Yuan
Net profit
Ratio of net profit
attributable to
attributable to
ordinary
ordinary Amount of cash Percentage of cash
Year for bonus Amount of cash shareholders of
shareholders of dividends otherwise dividends otherwise
distribution bonus (incl. tax) listed company in
listed company in distributed distributed
consolidated
consolidated
statement of bonus
statement (%)
year
2017 67,961,093.70 219,553,261.10 30.95% 0 0.00%
2016 37,069,687.47 107,560,213.41 15.07% 0 0.00%
2015 23,543,970.30 74,242,090.49 13.35% 0 0.00%
The net profit of the Company was positive and the profit of the parent company to be distributed to ordinary
shareholders was also positive, but the proposal for distribution of cash dividends was not put forward.
□ Applicable √ Not applicable
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
II. Plan of profit distribution and plan of transfer of capital reserves into share capital in the
reporting period
√ Applicable □ Not applicable
Number of bonus shares for every 10 shares 0
Dividend for every 10 shares (yuan) (tax
0.55
included)
Reserves transferred into share capital for every
0
10 shares
Equity base of the distribution plan 1,235,656,249
Total cash dividend (yuan) (tax included) 67,961,093.70
Profit available for distribution (yuan) 315,416,757.49
Percentage of cash dividend in total profit
100%
distribution
Information on cash dividend
Others
Details of the profit distribution proposal or the proposal for transfer of capital reserves into share capital
1. According to audit by Da Hua Certified Public Accountants Co., Ltd., the net profit of the parent
company attributable to the listed company in 2017 is RMB 169,074,330.91, the undistributable profit at the
beginning of the year is RMB 146,342,426.58, and the profit available for distribution among shareholders is
RMB 315,416,757.49. According to the Articles of Association and Shareholder Return Plan for the Next
Three Years (2015-2017) of Shenzhen SEG Co., Ltd., the profit distribution proposal of 2017 is as follows: The
Company has accrued 10% of the net profit of the current year (RMB 11,880,703.37) as the statutory surplus
reserve, and plans to distribute cash dividend of RMB 0.55 (tax included) for every 10 shares to all
shareholders based on 1,235,656,249 share capital. The Company plans not to transfer capital reserves into
share capital in 2017.
III. Fulfillment of Commitments
1. Commitments fulfilled in the reporting period or yet to be fulfilled as of the end of the reporting period
by the Company, shareholders, actual controllers, purchaser, directors, supervisors, senior executives or
other associates
√ Applicable □ Not applicable
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Commitment Commitment
Commitments Subject Type Content Performance
date term
Commitment for share
Not applicable
reform
"1. The Company undertakes that as of October 31, 2015, controlling shareholders of
Shenzhen SEG or other related persons who occupy funds of Shenzhen SEG or the
subject company due to non-operating events will repay them before the shareholders'
meeting that is intended to review the restructuring plan;
2. After restructuring, the financial independence of the listed companies shall be
guaranteed and no illegal occupation of funds of listed companies will occur;
3. The Company will abide by and urge listed companies to abide by relevant laws and
administrative regulations such as the Code on Corporate Governance of Listed
Companies, the Notice on Regulating the Funds Transfers between Listed Companies and
Related Parties and the External Guarantee of Listed Companies, and the Listing Rules
of Shenzhen Stock Exchange, regulations, regulatory documents, and Shenzhen Stock
Commitment on Exchange business rules, and improve awareness of compliance;
horizontal
Shenzhen SEG 4. The Company will exercise the rights of shareholders according to law, and will not August 3,
competition,
Group Co., abuse the rights of shareholders to damage the interests of listed companies and other 2016 Long-term In progress
related
Ltd.
transaction, and shareholders;
capital occupation 5. The Company will optimize the governance structure of listed companies, improve the
Commitments in the internal control system, regulate the operation of the three organs, give full play to
Acquisition Report functions and supervisory role of independent directors and the Board of Supervisors, and
and the Report of restrict decision-making and operation by controlling shareholders and actual controllers
Changes on Equity of the Company;
6. The Company will fulfill the obligation of information disclosure strictly in accordance
with relevant provisions, actively cooperate with listed companies on information
disclosure, timely inform major events incurred or to be incurred, and ensure the
authenticity, accuracy, integrity, timeliness and fairness of information disclosure. In case
of breach of the foregoing commitments, the Company will bear all losses thus incurred
to Shenzhen SEG, the subject company, other companies, enterprises, or other economic
organizations controlled by the Company."
"1. When the Company acts as the controlling shareholder of Shenzhen SEG, the
Company, other companies, enterprises, or other economic organizations controlled by
Commitment on the Company, will minimize and regulate connected transactions with Shenzhen SEG or
horizontal the subject company, other companies, enterprises, or other economic organizations
Shenzhen SEG
competition, controlled by the Company. August 3,
Group Co., Long-term In progress
Ltd.
related 2. When the restructuring is completed, the Company, other companies, enterprises, or 2016
transaction, and other economic organizations controlled by the Company will handle connected
capital occupation transactions with Shenzhen SEG or the subject company that are unavoidable or incurred
for reasonable cause at fair and reasonable market price, perform the decision-making
procedure for connected transactions according to relevant laws, regulations, and
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
normative documents, fulfill the obligation of information disclosure and handle the
approval procedures according to the law, do not use the dominant position of the
controlling shareholder to damage the legal rights and interests of Shenzhen SEG and
other shareholders.
3. The Company, other companies, enterprises, or other economic organizations
controlled by the Company will not use the rights of shareholders of the listed company
or the actual control ability to manipulate or instruct the listed company or its directors,
supervisors and senior executives to have the listed company unfairly provide or accept
funds, goods, services or other assets, or engage in any acts detrimental to the interests of
listed companies. In case of breach of the following commitments, the Company will
bear all losses thus incurred to Shenzhen SEG, the subject company, other companies,
enterprises, or other economic organizations controlled by the Company."
"1. In the restructuring, relevant assets, such as some commercial electronics markets of
SEG Group that constitute horizontal competition, have not been injected into the listed
company. SEG Group will trust such assets to Shenzhen SEG or its subsidiaries after the
major asset restructuring. Within 5 years after the major asset restructuring, SEG Group
will take all necessary measures to solve flaws of such assets, and incorporate the
preceding specialized electronics markets that constitute horizontal competition into
Shenzhen SEG or transfer them to the third party in a feasible way such as sales based on
operating needs of Shenzhen SEG and the completeness of the ownership of such assets.
If SEG Group fails to complete the foregoing matters as scheduled, before injecting
relevant assets to Shenzhen SEG, SEG Group shall lease them to Shenzhen SEG for
direct operation and enjoy the income from such property. The annual rent of Shenzhen
SEG is the depreciated value of such property. Profit and loss incurred by leasing of such
property assets shall be shared by Shenzhen SEG. The parties shall separately enter into a
Commitment on leasing agreement.
horizontal 2. Except assets owned and business operated before the validity date of commitment,
Shenzhen SEG
Group Co.,
competition, when acting as a controlling shareholder or actual controller of Shenzhen SEG, in order to August 03, Long-term In progress
Ltd.
related guarantee sustainable development of Shenzhen SEG, the Company will exercise 2016
transaction, and supervision and restriction on operating activities of its own and affiliated enterprises
capital occupation under its control, will not establish new or acquire any assets or business same as or
similar to its main business within the operation area of Shenzhen SEG, and will not be
engaged in any activities that may damage the interests of Shenzhen SEG and other
companies and enterprises controlled by Shenzhen SEG, or other economic organizations.
If in the future there is any business opportunity same as or similar to other main business
within Shenzhen SEG operation area, such opportunity will preferentially be
recommended to Shenzhen SEG and other companies and enterprises controlled by
Shenzhen SEG, or other economic organizations. However, any of the following cases is
an exception: (1) Due to national laws, regulations and policies and other reasons, any
commercial properties and real estate development projects appropriated or allocated
through oriented protocols by the government to SEG Group and any enterprises invested
by it; or (2) when the general conditions of tender, transfer or assignment of specific
commercial properties and real estate development projects have specific requirements
on the bidder or assignee, Shenzhen SEG is not qualified y but SEG Group is qualified.
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Commercial property and real estate development projects that are same as the main
business of Shenzhen SEG or result in horizontal competition subject to the above
exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that
such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written
acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and
transfer such projects to Shenzhen SEG. In case of breach of the foregoing commitments,
the Company will bear all losses thus incurred to Shenzhen SEG, the subject company,
other companies, enterprises, or other economic organizations controlled by the
Company."
"1. The Company will guarantee the independence of personnel of Shenzhen SEG and
subject company: (1) After completion of the restructuring, the labor, personnel and
compensation management of Shenzhen SEG are independent from the Company and
related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (2) After completion of the restructuring, senior executives
of Shenzhen SEG and the subject company hold full-time position at Shenzhen SEG and
the subject company and receive compensation, and will not assume any duties other than
director and supervisor in the Company and related parties, such as other companies,
enterprises, or other economic organizations controlled by the Company. (3) After
completion of the restructuring, the Company will not interfere with the shareholders'
meeting and the Board of Directors' exercise of power in appointment/dismissal of
personnel.
2. The Company will guarantee the independence of organs of Shenzhen SEG and the
subject company: (1) After completion of the restructuring, Shenzhen SEG and the
subject company will develop a sound corporate governance structure and an independent
and complete organizational structure. (2) After completion of the restructuring, the
Shenzhen SEG shareholders' meeting, the Board of Directors, and the Board of Supervisors of Shenzhen
Other August 3,
Group Co., SEG and the subject company will exercise duties and powers according to laws, Long-term In progress
commitment 2016
Ltd. regulations and articles of association of Shenzhen SEG and the subject company.
3. The Company will guarantee the independence and completeness of Shenzhen SEG
and the subject company: (1) After completion of the restructuring, Shenzhen SEG and
the subject company will have independent and complete assets related to production and
management. (2) After completion of the restructuring, the site for business operation of
Shenzhen SEG and the subject company are independent of the Company and related
parties, such as other companies, enterprises, or other economic organizations controlled
by the Company. (3) After completion of the restructuring, except normal operational
contacts, Shenzhen SEG and the subject company are not involved in the following case:
funds or assets are occupied by the Company and related parties, such as other
companies, enterprises, or other economic organizations controlled by the Company.
4. The Company will guarantee the business independence of Shenzhen SEG and the
subject company: (1) After completion of the restructuring, Shenzhen SEG and the
subject company own relevant qualification for independent business operation, and have
the independent and sustainable market-oriented operation capability. (2) Except assets
owned and business operated before the validity date of commitment, when acting as a
controlling shareholder of Shenzhen SEG, in order to guarantee sustainable development
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
of Shenzhen SEG, the Company will exercise supervision and restriction on operating
activities of its own and the affiliated enterprises under its control, will not establish new
or acquire any assets or businesses same as or similar to its main business within the
operation area of Shenzhen SEG, and will also not be engaged in any activities which
may damage the interests of Shenzhen SEG and other companies, enterprises, or other
economic organizations controlled by Shenzhen SEG. If in the future there is any
business opportunity same as or similar to other main business within Shenzhen SEG
operation area, such opportunity will be preferentially recommended to Shenzhen SEG
and other companies, enterprises, or other economic organizations controlled by
Shenzhen SEG. (1) Due to national laws, regulations and policies and other reasons, any
commercial properties and real estate development projects appropriated or allocated
through oriented protocols by the government to SEG Group and any enterprises invested
by it; or (2) When the general conditions of tender, transfer or assignment of specific
commercial properties and real estate development projects have specific requirements
on the bidder or assignee, Shenzhen SEG is not qualified but SEG Group is qualified.
Commercial property and real estate development projects that are same as the main
business of Shenzhen SEG or result in horizontal competition subject to the above
exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that
such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written
acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and
transfer such projects to Shenzhen SEG. (3) After completion of the restructuring, the
Company and related parties, such as other companies, enterprises, or other economic
organizations controlled by the Company will reduce related transactions with Shenzhen
SEG and the subject company and other companies, enterprises, or other economic
organizations controlled by them; for any related transactions that are indeed necessary
and unavoidable, the Company will handle them at fair price based on the market
principle, and fulfill relevant approval procedures and the information disclosure
obligation according to provisions of relevant laws, regulations and normative
documents.
5. The Company will guarantee the financial independence of Shenzhen SEG and the
subject company: (1) After completion of the restructuring, Shenzhen SEG and the
subject company will establish an independent financial department, independent
financial accounting system, and standard and independent financial accounting rules. (2)
After completion of the restructuring, Shenzhen SEG and the subject company will
separately open an account in banks, and do not share accounts with the Company and
related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (3) After completion of the restructuring, financial personnel
of Shenzhen SEG and the subject company will not hold a part-time job in the Company
or related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (4) After completion of the restructuring, Shenzhen SEG and
the subject company will independently make financial decisions, and the Company will
not interfere with fund usage of Shenzhen SEG and the subject company. (5) After
completion of the restructuring, Shenzhen SEG and the subject company will pay taxes
independently according to laws. In case of breach of the foregoing commitments, the
Company will bear all losses thus incurred to Shenzhen SEG, and the subject company."
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
"(I) Contract subjects and date of signing
Shenzhen SEG and SEG Group signed Performance Commitment and Compensation
Agreement on August 3, 2016.
(II) Performance commitment period
Three accounting periods following the completion of the transaction (including the year
of completion and the following consecutive two accounting periods). If the transaction is
completed before December 31, 2016 (included), the performance commitment period
includes 2016, 2017, and 2018. If the transaction is completed between December 31,
2016 and December 31, 2017 (included), the performance commitment period includes
2017, 2018, and 2019. After the completion of the transaction, Shenzhen SEG shall hire
an accounting firm with the qualification of securities that is recognized by SEG Group
within 4 months after the end of each accounting period during the performance
commitment period to respectively issue a special audit report and/or an impairment test
report (hereinafter referred to as the "special audit report") with respect to the promised
net profit/promised cash flow income/promised development profit (hereinafter
collectively referred to as "promised performance") related to assets within the Three
transaction compensation scope agreed in the agreement, and recognize the promised accounting
performance or impairment of assets within the transaction compensation scope in each years from
year during the performance commitment period. the year of
completion
(III) Performance commitment and performance compensation of
Commitments made at Underlying assets injected into Shenzhen SEG in this transaction are subject to multiple
Shenzhen SEG restructuring
the time of Performance appraisal methods: 100% of the equity of SegMaker, 55% of the equity of SEG August 3,
Group Co., (including In progress
restructuring of major Commitment Recreation, and 79.02% of the equity of SEG Property Investment are priced on the basis 2016
Ltd. the year of
assets of appraisal conclusion with the asset-based method, in which property assets are subject completion
to the income method and market method and real estate development in the long-term and the
equity investment is subject to the hypothetical development method; 100% of the equity subsequent
of SEG Property Development and 100% of the equity of SEG Property Management (a two
wholly-owned subsidiary of SEG Property Investment) are subject to the income method. accounting
Therefore, all parties recognize and agree that the performance guarantee of relevant years)
underlying assets of the transaction and the compensation methods shall be carried out
according to the following stipulations:
1. Performance guarantee of underlying assets appraised by income approach and
performance compensation
(1) If the transaction is completed before December 31, 2016 (included), SEG Group
warrants that: 1) Audited net profits of SEG Property Development after the deduction of
non-recurring profits and losses and investment income of 2016, 2017 and 2018
respectively (hereinafter referred to as "guaranteed net profits") shall not be lower than
RMB 8.05 million, RMB 7.85 million and RMB 7.75 million respectively; 2) The
guaranteed net profits of SEG Property Management of 2016, 2017 and 2018 shall not be
lower than RMB 4,05 million, RMB 3.45 million and RMB 3.6 million respectively; 3)
The net profits attributable to the parent company (net profits attributable to the parent
company = shareholding percentage of parent company x [income actually realized by
corresponding property assets (including the income of new area after renovation of
property assets)-depreciation and amortization of the cost of renovation-direct cost and
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
management costs (including urban property tax, business tax, urban construction tax and
education surtax, stamp duty, maintenance tax, insurance premium and land use tax,
excluding depreciation and amortization)-relevant losses caused by renovation (if
any)-other operating costs and taxes of corresponding properties (including income tax)],
hereinafter referred to as "guaranteed net profits") of the property assets (minus the parts
used by the companies) of SegMaker, SEG Recreation and SEG Real Estate of 2016,
2017 and 2018 appraised by income approach shall not be lower than RMB 63,013,500,
RMB 59,995,800 and RMB 77,627,200 respectively.
(2) If the transaction is completed after December 31, 2016 and before December 31,
2017 (included), SEG Group warrants that: 1) Guaranteed net profits of SEG Property
Development of 2017, 2018 and 2019 respectively shall not be lower than RMB 7.85
million, RMB 7.75 million and RMB 7.75 million respectively; 2) The guaranteed net
profits of SEG Property Management of 2017, 2018 and 2019 shall not be lower than
RMB 3.45 million, RMB 3.60 million and RMB 3.75 million respectively; 3) The
guaranteed net profits corresponding to the property assets (minus the parts used by the
companies) of 2017, 2018 and 2019 as appraised by income approach of SegMaker, SEG
Recreation and SEG Real Estate shall not be lower than RMB 59,995,800, RMB
77,627,200 and RMB 94,723,100 respectively.
(3) If the actual net profits on the foregoing assets appraised by income approach after
accumulative deduction of non-operating profits and losses as of the end of any year
during the performance guaranteed period are lower than the accumulatively guaranteed
net profits of corresponding assets as of the end of such year, SEG Group shall use Shen
SEG shares obtained by acquisition of relevant assets as the consideration to make
compensation for Shenzhen SEG in terms of the shares issued to SEG Group according
to the following calculation method. For the part not covered by shares, SEG Group shall
compensate in cash: 1) to compensate 100% of the equity of SEG Property Development
and 100% of the equity of SEG Property Management appraised by income approach: I.
Number of shares to be compensated every year = (accumulated guaranteed net profits as
of the end of the current period -actually accumulated net profits as of the end of the
current period)/total guaranteed net profits of years during the compensation period x
total subscribed shares-amount of compensated shares. Remarks: The "total subscribed
shares" refers to the total number of shares obtained by SEG Group by subscribing all
shares issued by Shenzhen SEG at 100% of the equity of SEG Property Development and
100% of the equity of SEG Property Management appraised, i.e. total subscribed shares =
100% of the equity of SEG Property Development or 100% of the equity of SEG
Property Management as the overall price/offering price of the shares issued this time to
purchase assets. When the number of shares of Shenzhen SEG is calculated by 100% of
the equity of SEG Property Management, the impact of the 79.02% of the equity of SEG
Real Estate (the parent company of SEG Property Management) held by SEG Group
should be taken into consideration. II. The part not covered by shares will be
compensated by SEG Group in cash. Amount of extra cash to be compensated = number
of shares not covered x offering price of the shares issued this time to purchase assets.
2) Compensation of property assets held by all target companies appraised by income
approach
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
I. Number of shares to be compensated every year = (accumulated guaranteed net
profits as of the end of the current period -actually accumulated net profits as of the end
of the current period)/total guaranteed net profits of years during the compensation period
x total subscribed shares-amount of compensated shares. Remarks: The "total subscribed
shares" in the foregoing formula refers to the total number of shares obtained by SEG
Group by subscribing all shares issued by Shenzhen SEG at the price of the property
assets (including the property assets appraised by income approach and are held by
SegMaker, SEG Recreation and SEG Real Estate) appraised by income approach, i.e.
total subscribed shares = appraised price of the property assets appraised by all target
companies with income approach/the offering price of the shares issued this time to
purchase assets. When the number of shares of Shenzhen SEG is calculated, the impact of
the percentages of share rights of all target companies held by SEG Group shall be taken
into consideration. II. The part not covered by shares will be compensated by SEG Group
in cash. Amount of extra cash to be compensated = number of shares not covered x
offering price of the shares issued this time to purchase assets.
(4) When the performance guaranteed period expires, Shenzhen SEG shall hire the
Certified Public Accountants with securities practice qualification recognized by both
parties to carry out impairment test on the foregoing assets appraised by income approach
and issue the impairment test report. If the impairment amount at the end of the current
period of the assets appraised by income approach is greater than the total number of
shares compensated during the performance guaranteed period x offering price of the
shares issued this time to purchase assets + total amount of cash compensated, SEG
Group shall make compensation for the impaired part of such assets of Shenzhen SEG: 1)
Number of shares compensated for the impaired part of the assets appraised by income
approach = impairment amount at the end of the current period of the underlying assets
appraised by income approach/offering price of the shares issued this time - total shares
already compensated during the performance guaranteed period. 2) The part not covered
by shares will be compensated by SEG Group in cash. Amount of extra cash to be
compensated = number of shares not covered x offering price of the shares issued this
time to purchase assets.
(5) Under any circumstances, the total number of shares compensated arising from the
actual net profits less than the guaranteed net profits and the impairment test in total shall
be limited to the total number of Shen SEG shares (including share increase by transfer
and stock dividends) obtained by subscription with 100% of the equity of SEG Property
Development, 100% of the equity of SEG Property Management and property assets of
target companies appraised by SEG Group with income approach. The part not covered
will be compensated in cash by SEG Group, which is limited to the cash consideration
paid for Shen SEG shares with such assets.
2. Performance guarantee of underlying assets appraised by hypothetical development
method and performance compensation
(1) SEG Group warrants that the actual development profits (hereinafter referred to as
"guaranteed development profits") of SEG ECO Phase I Project, Shenzhen SEG
International Electronics Industry Center Project of Shenzhen SEG New City
Construction and Development Co., Ltd. (hereinafter referred to as "SEG New City
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Development"), Xi'an SEG Plaza Project of Xi'an SEG (subsidiary of SEG Real Estate),
and the remaining building of Oriental Venice Project and SEG Holiday Plaza Project of
Huizhou Stars Real Estate Development Co., Ltd. (subsidiary of SEG Real Estate) shall
not be lower than RMB 104,007,500, RMB 449,494,900, RMB 661,619,900, RMB
18,501,000 and RMB 154,605,400 respectively.
(2) The compensation period of the transaction is three fiscal years from the year of
completion of the transaction (included). When the restructuring compensation period
expires, Shenzhen SEG shall hire the Certified Public Accountant with securities practice
qualification recognized by both parties to carry out audit on the realized profits of the
foregoing real estate projects appraised by hypothetical development method (including
the development profits realized in the transitional period) and unrealized development
profits (if any), and issue special audit reports respectively. If, during the period from the
appraisal base date to the expiry date of the three-year guaranteed period, the achieved
sales area of the real estate projects under the underlying assets (hereinafter referred to
the "achieved sales area") fails to reach 90% of the remaining sellable area as of the
appraisal base date or the sellable area after completion, SEG Group agrees to extend the
performance guaranteed period of the real estate projects appraised by hypothetical
development method to the end of the year when the achieved sales area reaches 90%
(i.e. December 31 of that year). All the real estate projects appraised by hypothetical
development method shall be subject to the foregoing stipulations separately. During the
transaction compensation period, the amount of the capital raised this time with impact
shall be deducted from realized and unrealized development profits (if any) of the real
estate projects appraised by hypothetical development method, the calculation formula of
the amount of the supporting capital raised this time with impact is as below: amount of
the supporting capital raised this time with impact on the performance guarantee =
amount of the supporting capital raised this time actually used in funded projects x
interest of loan from the bank of corresponding period x (1 - income tax rate of the
implementation subject of implementation of the funded projects) x actual days of capital
use/365, in which the interest of loan from the bank of corresponding period shall be
determined by the interest rate of loan of 1 to 3 years of the People's Bank of China of the
corresponding period of the actual operation plus 20% extra, and the actual days of use of
the capital raised shall be calculated by the natural days during the period from the date
on which the raised capital is provided to the implementation subject of the funded
project till the earlier one of the expiry date of the compensation period and the date on
which relevant capital is repaid to the listed company. If the total amount of the realized
development profits and the unrealized development profits (if any) of such real estate
projects is lower than the guaranteed development profits, SEG Group shall compensate
Shenzhen SEG with the shares used by Shenzhen SEG as payment consideration
acquired from relevant project subscription according to the following calculation
method, and SEG Group shall compensate in cash the part not covered by shares: 1)
number of shares to be compensated = [accumulated realized development profits from
the base date of appraisal to the expiry date of the performance guarantee period -
unrealized development profits of the projects (if any)]/guaranteed development profits x
total subscribed shares. Remarks: In the foregoing formula, the "total subscribed shares"
refer to the total number of shares obtained by SEG Group by using the real estate
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
projects held indirectly that are appraised by hypothetical development method to
subscribe the total shares issued by Shenzhen SEG. When the number of shares
subscribed of Shenzhen SEG is calculated, the impact of the percentage of equity of SEG
Real Estate held by SEG Group and that of the foregoing real estate projects held by SEG
Real Estate shall be taken into consideration. The realized development profits in the
foregoing formula refer to the net profits of the projects after deducting corresponding
inventory development cost already carried forward, expenses and taxes from the realized
sales income of real estate projects as of the expiry date of the restructuring
compensation period. The unrealized development profits refer to that if there are
development products not sold yet in corresponding real estate projects when the
restructuring compensation period expires, the unrealized development profits
corresponding to the remaining development products shall be determined according to
the following methods: unrealized development profits = estimated unit sales price of the
remaining development products x area - book cost corresponding to development
products - estimated sales cost - estimated sales cost - measured land VAT - measured
income tax. Remarks: In the estimated unit sales price of the remaining development
products, if a sales contract has been signed, the unit price set out in the contract shall
prevail, and if no sales contract has been signed, the unit sales price shall be determined
by the unit sales price of the same type of products sold earlier; the area shall be
determined by the actually sold sales area corresponding to the development product;
estimated sales cost shall be determined according to the percentage of the sales cost
corresponding to the sales product in the sales income; estimated sales taxes shall be
determined according to the fee standard of the real estate industry; and measured land
VAT and income tax shall be calculated according to relevant standards of the tax laws.
2) The part not covered by shares will be compensated by SEG Group in cash.
Amount of extra cash to be compensated = number of shares not covered x offering price
of the shares issued this time to purchase assets.
(3) When the performance guaranteed period expires, Shenzhen SEG shall hire the
Certified Public Accountant with securities practice qualification recognized by both
parties to carry out impairment test on the foregoing assets appraised by hypothetical
development method and issue the impairment test report. If the impairment amount at
the end of period of the real estate projects appraised by hypothetical development
method is greater than the total number of shares compensated during the performance
guaranteed period x offering price of the shares issued this time to purchase assets + total
amount of cash compensated, SEG Group shall make compensation for the impaired part
of such assets of Shenzhen SEG: 1) Number of shares compensated for the impaired part
of the real estate projects appraised by hypothetical development method = impairment
amount at the end of period of the real estate projects appraised by hypothetical
development method/offering price of the shares issued this time - total shares already
compensated during the performance guaranteed period. 2) The part not covered by
shares will be compensated by SEG Group in cash. Amount of extra cash to be
compensated = number of shares not covered x offering price of the shares issued this
time to purchase assets.
(4) Under any circumstances, the total of the total amount of actually realized
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
development profits and unrealized development profits (if any) and the total number of
compensated shares occurred due to impairment test shall not exceed the total number of
shares of Shenzhen SEG (including the shares increased by transferring and stock
dividends) obtained by SEG Group subscribing the shares issued by Shenzhen SEG with
the real estate projects appraised by hypothetical development method. The insufficient
part will be compensated in cash by SEG Group with the limit as the cash consideration
paid for Shen SEG shares with such projects.
3. Performance compensation of assets appraised by market approach
(1) For the property assets appraised by market approach, Shenzhen SEG shall engage
certified public accountants that possess the qualification in practicing the securities
business in the end of every year during the performance guaranteed period to carry out
impairment test, and issue impairment test report. SEG Group shall compensate
Shenzhen SEG with the shares used by Shenzhen SEG as payment consideration
acquired from relevant assets subscription according to the following calculation method,
and SEG Group shall compensate in cash the part not covered by shares: 1) Total number
of shares to be compensated = impairment amount at the end of the current
period/offering price of the shares issued this time to purchase assets -number of shares
already compensated. 2) The part not covered by shares will be compensated by SEG
Group in cash. Amount of extra cash to be compensated = number of shares not covered
x offering price of the shares issued this time to purchase assets.
(2) Under any circumstances, the total number of shares compensated arising from the
impairment test shall not exceed the total amount of Shenzhen SEG shares acquired by
SEG Group with the property assets appraised by market approach previously (including
share increase by transfer and stock dividends). The part not covered by shares and the
amount compensated in cash in total shall not exceed the cash consideration paid for
Shenzhen SEG shares acquired by SEG Group with such property assets. Relevant
compensation methods for the foregoing 100% of the equity of SEG Property
Development, 100% of the equity of SEG Property management and the property assets
held by the target companies appraised by income approach and the real estate projects
appraised by hypothetical development method as well as other property assets appraised
by market approach are independent. The number of shares compensated by assets
appraised by other methods is not considered when the number of shares compensated is
calculated. When the number of shares to be compensated and/or amount of cash
calculation of each year is calculated according to relevant stipulations mentioned above,
if the number of compensated shares calculated is smaller than 0, take 0, i.e. the shares
compensated will not be refunded; if the cash compensation amount calculated is smaller
than 0, take 0, and the cash compensated will not be refunded. When the impairment
amount is calculated, the impact of capital increase, decrease, acceptance of the gift and
profit distribution of the shareholders of underlying assets during the performance
guaranteed period on the amount of impairment shall be eliminated.
(IV) Triggering condition for performance compensation
After the completion of the transaction, if assets within the transaction compensation
scope as specified in the special audit report are impaired or fail to achieve the promised
performance, SEG Group shall make compensation to Shenzhen SEG as agreed in the
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
agreement.
(V) Performance compensation method
After the completion of the transaction, if assets within the transaction compensation
scope are impaired or fail to achieve the promised performance, SEG Group shall
compensate Shenzhen SEG in cash or shares.
(VI) Effectiveness and termination of the agreement
The agreement is made upon signature and seal by the legal representative or authorized
agent of each party. As an integral part of the Asset Purchase Facility, the agreement shall
come into effect from the date of effectiveness of the Asset Purchase Facility.
When the Asset Purchase Facility is rescinded, terminated, or deemed as invalid, the
agreement is also rescinded, terminated, or invalid.
(VII) Liability for breach of the agreement
Except for in case of force majeure, violation of any terms of the agreement by either
party constitutes breach of the agreement. The default party shall compensate for all
losses arising from breach of the agreement to the non-breaching party.
"1. In the restructuring, relevant assets, such as some commercial electronics markets of
SEG Group that constitute horizontal competition, have not been injected into the listed
company. SEG Group will trust such assets to Shenzhen SEG or its subsidiaries after the
major asset restructuring. Within 5 years after the major asset restructuring, SEG Group
will take all necessary measures to solve flaws of such assets, and incorporate the
preceding specialized electronics markets that constitute horizontal competition into
Shenzhen SEG or transfer them to the third party in a feasible way such as sales based on
operating needs of Shenzhen SEG and the completeness of the ownership of such assets.
If SEG Group fails to complete the foregoing matters as scheduled, before injecting
relevant assets to Shenzhen SEG, SEG Group shall lease them to Shenzhen SEG for
direct operation and enjoy the income from such property. The annual rent of Shenzhen
SEG is the depreciated value of such property. Profit and loss incurred by leasing of such
Commitment on
property assets shall be shared by Shenzhen SEG. The parties shall separately enter into a
horizontal
Shenzhen SEG leasing agreement.
competition, August 3,
Group Co., 2. Except assets owned and business operated before the validity date of commitment, 2016 Long-term In progress
related
Ltd.
transaction, and when acting as a controlling shareholder or actual controller of Shenzhen SEG, in order to
capital occupation guarantee sustainable development of Shenzhen SEG, the Company will exercise
supervision and restriction on operating activities of its own and affiliated enterprises
under its control, will not establish new or acquire any assets or business same as or
similar to its main business within the operation area of Shenzhen SEG, and will not be
engaged in any activities that may damage the interests of Shenzhen SEG and other
companies and enterprises controlled by Shenzhen SEG, or other economic organizations.
If in the future there is any business opportunity same as or similar to other main business
within Shenzhen SEG operation area, such opportunity will preferentially be
recommended to Shenzhen SEG and other companies and enterprises controlled by
Shenzhen SEG, or other economic organizations. However, any of the following cases is
an exception: (1) Due to national laws, regulations and policies and other reasons, any
commercial properties and real estate development projects appropriated or allocated
through oriented protocols by the government to SEG Group and any enterprises invested
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
by it; or (2) when the general conditions of tender, transfer or assignment of specific
commercial properties and real estate development projects have specific requirements
on the bidder or assignee, Shenzhen SEG is not qualified y but SEG Group is qualified.
Commercial property and real estate development projects that are same as the main
business of Shenzhen SEG or result in horizontal competition subject to the above
exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that
such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written
acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and
transfer such projects to Shenzhen SEG. In case of breach of the foregoing commitments,
the Company will bear all losses thus incurred to Shenzhen SEG, the subject company,
other companies, enterprises, or other economic organizations controlled by the
Company."
"1. When the Company acts as the controlling shareholder of Shenzhen SEG, the
Company, other companies, enterprises, or other economic organizations controlled by
the Company, will minimize and regulate connected transactions with Shenzhen SEG or
the subject company, other companies, enterprises, or other economic organizations
controlled by the Company.
2. When the restructuring is completed, the Company, other companies, enterprises, or
other economic organizations controlled by the Company will handle connected
transactions with Shenzhen SEG or the subject company that are unavoidable or incurred
Commitment on for reasonable cause at fair and reasonable market price, perform the decision-making
horizontal procedure for connected transactions according to relevant laws, regulations, and
Shenzhen SEG
competition, normative documents, fulfill the obligation of information disclosure and handle the August 3,
Group Co., Long-term In progress
related approval procedures according to the law, do not use the dominant position of the 2016
Ltd.
transaction, and controlling shareholder to damage the legal rights and interests of Shenzhen SEG and
capital occupation other shareholders.
3. The Company, other companies, enterprises, or other economic organizations
controlled by the Company will not use the rights of shareholders of the listed company
or the actual control ability to manipulate or instruct the listed company or its directors,
supervisors and senior executives to have the listed company unfairly provide or accept
funds, goods, services or other assets, or engage in any acts detrimental to the interests of
listed companies. In case of breach of the foregoing commitments, the Company will
bear all losses thus incurred to Shenzhen SEG, the subject company, other companies,
enterprises, or other economic organizations controlled by the Company."
1. The subject company is a limited liability company or stock-limited company
established and validly existing according to law with legitimate business qualification;
the subject company has obtained all approvals, permission, authorization and permits
required for its setting up and operation of business, all such approvals, permission,
Shenzhen SEG
Other authorization and permits are valid and there exists no reasons or situations which may August 3,
Group Co., Long-term In progress
commitment cause the above approvals, permission, authorization and permits invalid. 2016
Ltd.
2. The subject company has not been involved in any severe violation of laws or
regulations during production operation nor any situations where termination is required
according to the requirements of relevant laws, regulations, normative documents and
articles of association. As of the date of issuance of this commitment letter, the subject
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
company has no pending or predictable significant lawsuit, arbitration or administrative
penalty with amount of subject of more than one million or which will generate adverse
impact on its operation.
3. The subject company will independently and fully fulfill the labor contracts it signed
with employees.
4. If the subject company is subject to any recovery of fees or penalty from the relevant
competent organization in industrial and commerce, tax, employee salaries, social
insurance, housing fund, business qualification or competent authorities due to any facts
existing before this restructuring, the Company will fully indemnify the subject company
for all fees owned by subject company and assume all losses occurred by subject
company and Shenzhen SEG as a result of this.
5. The subject company legally possesses the ownership and/or right of usage of office
space, office equipment, trademark and other assets as necessary to guarantee normal
production operation, has independent and complete assets and business structure, has
legal ownership to its main assets with independent, complete and clear indication of
ownership.
6. The subject company has not been involved in any lawsuit, arbitration, judicial
mandatory enforcement and other situations which interferes with the transfer of
company ownership, and has not incurred any external guarantee that is against laws and
articles of association of the Company. After completion of this restructuring, if any loss
is caused to Shenzhen SEG and the subject company due to the Company's breach of the
above commitment, the Company agrees to assume the above mentioned liability of
indemnity/compensation to Shenzhen SEG/subject company.
"1. 100% shares of SEG Property have been entrusted to a share entrusting agency as
required. Its equity form is authentic and valid, and the equity structure and ownership
are clear. The Company has no objection to the share ownership, share quantity, and The assets have
share holding percentage of SEG Property. The Company has no disputes over share been
Before
Shenzhen SEG ownership with SEG Property and other shareholders. transferred and
Other August 3, completion
Group Co., this
commitment 2. In case any dispute over ownership of the 3.85% shares of SEG Property of which 2016 of
Ltd. commitment
ownership has not been determine as of July 26, 2016 occurs in the future, the Company restructuring
has been
commits to SEG Property that the Company will provide any necessary assistant to SEG fulfilled.
Property to solve the dispute, protect SEG Property from any loss caused thereby, and
undertake corresponding responsibilities."
"1. The Company will guarantee the independence of personnel of Shenzhen SEG and
subject company: (1) after completion of the restructuring, the labor, personnel and
compensation management of Shenzhen SEG are independent from the Company and
Shenzhen SEG related parties, such as other companies, enterprises, or other economic organizations
Other controlled by the Company. (2) Guarantee that after completion of this restructuring the August 3,
Group Co., Long-term In progress
commitment senior executives of Shenzhen SEG and the subject company hold full-time position at 2016
Ltd.
Shenzhen SEG and the subject company and receive compensation, and will not assume
any duties other than director and supervisor in the Company and other companies,
enterprises or other economic organizations and other related parties under control of the
Company. (3) Guarantee not to after completion of this restructuring interfere with the
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
shareholders' meeting and board of directors meeting's exercise of power in
appointment/dismissal of personnel.
2. Guarantee the independence of institutions of Shenzhen SEG and subject company (1)
guarantee that after completion of this restructuring Shenzhen SEG and subject company
will have sound corporate governance structure and independent, complete organization.
(2) Guarantee that after completion of this restructuring the shareholders' meeting, board
of directors meeting and board of supervisors meeting of Shenzhen SEG and subject
company will exercise duties and powers according to laws, regulations and articles of
association of Shenzhen SEG and subject company.
3. The Company will guarantee the independence and completeness of Shenzhen SEG
and the subject company: (1) After completion of the restructuring, Shenzhen SEG and
the subject company will have independent and complete assets related to production and
management. (2) Guarantee that after completion of this restructuring the site for
business operation of Shenzhen SEG and subject company are independent of the
Company and other companies, enterprises or other economic organizations and other
related parties under control of the Company. (3) Except normal operational intercourse,
guarantee that after completion of this restructuring Shenzhen SEG and subject company
do not exist any situation that funds or assets are possessed by the Company and other
companies, enterprises or other economic organizations and other related parties under
control of the Company.
4. Guarantee the businesses of Shenzhen SEG and subject company are independent (1)
guarantee that after completion of this restructuring Shenzhen SEG and subject company
have relevant qualification for independently carrying out operational activities, and
possess independent, sustainable market-oriented operational capability. (2) Except the
assets owned and business operated before validity date of commitment, during the
period as controlling shareholder of Shenzhen SEG, in order to guarantee sustainable
development of Shenzhen SEG, the Company will exercise supervisory and restriction on
operating activities of its own and the affiliated enterprises under its control, and will not
establish new or acquire any assets or businesses same or similar with its main businesses
within the operation area of Shenzhen SEG, and will also not be engaged in any activities
which may damage the interests of Shenzhen SEG and other companies, enterprises or
other economic organizations under control of Shenzhen SEG; if in future there exists
any business opportunity same or similar with other main businesses within Shenzhen
SEG operation area, such opportunity will preferentially recommended to Shenzhen SEG
and other companies, enterprises or other economic organizations under control of
Shenzhen SEG. (1) Due to national laws, regulations and policies and other reasons, any
commercial properties and real estate development projects appropriated or allocated
through oriented protocols by the government to SEG Group and any enterprises invested
by it; or (2) When the general conditions of tender, transfer or assignment of specific
commercial properties and real estate development projects have specific requirements
on the bidder or assignee, Shenzhen SEG is not qualified but SEG Group is qualified.
Commercial property and real estate development projects that are same as the main
business of Shenzhen SEG or result in horizontal competition subject to the above
exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written
acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and
transfer such projects to Shenzhen SEG. (3) Guarantee that after completion of this
restructuring, the Company and other companies, enterprises, other economic
organizations or other related parties under control of the Company will reduce connected
transactions with Shenzhen SEG and subject company and other companies, enterprises,
other economic organizations or other related parties under their control; for any
connected transactions which are indeed necessary and unavoidable, guarantee to carry
out fair operation following market principle at fair price and fulfill relevant approval
procedure and information disclosure obligations according to the provisions of relevant
laws, regulations and normative documents.
5. The Company will guarantee the financial independence of Shenzhen SEG and the
subject company: (1) After completion of the restructuring, Shenzhen SEG and the
subject company will establish an independent financial department, independent
financial accounting system, and standard and independent financial accounting rules. (2)
After completion of the restructuring, Shenzhen SEG and the subject company will
separately open an account in banks, and do not share accounts with the Company and
related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (3) After completion of the restructuring, financial personnel
of Shenzhen SEG and the subject company will not hold a part-time job in the Company
or related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (4) After completion of the restructuring, Shenzhen SEG and
the subject company will independently make financial decisions, and the Company will
not interfere with fund usage of Shenzhen SEG and the subject company. (5) After
completion of the restructuring, Shenzhen SEG and the subject company will pay taxes
independently according to laws. In case of breach of the foregoing commitments, the
Company will bear all losses thus incurred to Shenzhen SEG, and the subject company."
1. The Company does not exist any of the following situations as specified in Clause 6,
Administrative Measures On Acquisition Of Listed Companies: (1) Damage legitimate
rights and interests of the company acquired and its shareholders utilizing acquisition of
listed company; (2) With large amount of outstanding debts and this in-debt status has The assets have
lasted for a certain period of time; (3) Has actual or alleged serious illegal activities in been
recent three years; (4) Has serious behaviors of breaching promises in securities market Before
Shenzhen SEG transferred and
Other in recent three years; (5) Other situations in which no acquisition of listed companies are August 3, completion
Group Co., this
commitment allowed according to laws and administrative regulations and in the opinions of CSRC. 2016 of
Ltd. commitment
restructuring
2. The Company and its main managers have not suffered from any administrative has been
punishment (administrative punishment obviously unrelated to security market excluded), fulfilled.
criminal punishment, major civil lawsuit or arbitration related to economic disputes
within the last five years. In case of breach of the foregoing commitments, the Company
will bear all losses thus incurred to Shenzhen SEG, and the subject company."
"1. The Company is an enterprise incorporated in China that owns the full capacity for Before The assets have
Shenzhen SEG
Other civil conduct and has the legal body qualification for participating in the restructuring, August 3, completion been
Group Co.,
commitment signing agreements with Shenzhen SEG, and performing rights and obligations under the 2016 of transferred and
Ltd.
agreement. restructuring this
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
2. Except that the property located at 4F, Block 2, SEG Industrial Building of SEG commitment
Property Investment funded by the Company is to handle the transfer formality (with no has been
legal impediment), the Company has fulfilled the obligation of contributing capital to the fulfilled.
subject company, and has no acts against its obligations and responsibilities as a
shareholder, such as false contribution, deferred investment, or withdrawal of capital.
There are no circumstances that may affect the legal existence of the subject company.
3. There is no dispute or potential dispute over ownership of equities of the subject
company. There are no circumstances that may affect the legal existence of the subject
company.
4. The equities held by the Company in the subject company are actually legally owned.
There is no dispute or potential dispute over ownership of equities, no trust, shareholding
under entrustment or similar arrangement, no commitment or arrangement of forbidden
transfer or limited transfer, no pledge, freezing, seals up, property preservation or other
limitation of rights, and no lawsuit, arbitration or other forms of dispute which would
affect the restructuring. Meanwhile, the Company guarantees that the equities it held in
the subject company will maintain the status until the equities are registered under
Shenzhen SEG after change of registration.
5. The equities held by the Company in the subject company are assets with clear
ownership. The Company undertakes that there are no legal obstacles to stock transfer
after the restructuring of Shenzhen SEG is approved by CSRC, and no credit and debt
disputes. The Company promises to complete formalities for ownership transfer of these
equities within the agreed period.
6. Before the equities are registered under Shenzhen SEG after change of registration, the
Company undertakes that the subject company will maintain normal, orderly, and
legitimate operation, and will not take actions irrelevant to normal production and
management, such as disposal of assets, external guarantee, or additional major debts, or
illegally transfer or conceal assets and business. If the foregoing actions are indeed
necessary, provided that national laws, regulations, and normative documents are not
violated, these actions can be taken only after written approval of Shenzhen SEG.
7. The Company undertakes that there are not any ongoing or potential litigation,
arbitration, or dispute that may affect the Company's equity transfer, and all agreements
or contracts do not contain restrictive clauses that may affect the Company's equity
transfer. The articles of association, internal management system documents, and
contracts or agreements do not contain restrictive clauses that may affect the Company's
equity transfer. In case of breach of the foregoing commitments, the Company will bear
all losses thus incurred to Shenzhen SEG."
Before
Shenzhen SEG "The Company has not disclosed any insider information about the restructuring or
Other August 3, completion
Group Co., utilized such insider information for insider trading. In case of breach of the foregoing Fulfilled
commitment 2016 of
Ltd. commitments, the Company will bear all losses thus incurred to Shenzhen SEG."
restructuring
Shenzhen SEG "1. Shares of Shenzhen SEG subscribed by the Company in the restructuring will be August 3,
Other
Group Co., locked up for 36 months from the date of listing. Shares of Shenzhen SEG acquired in the 2016 Long-term In progress
commitment
Ltd. restructuring shall not be traded or transferred or managed by others under entrustment or
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
repurchased by Shenzhen SEG within 36 months from the date of completion of the
offering. After the completion of this offering, additional shares held due to bonus shares
and converted equity capital shall be also subject to the foregoing agreement. When the
foregoing lockup period expires, share transfer and transaction will be subject to the valid
laws, regulations, and provisions, rules, and requirements of China Securities Regulatory
Commission and Shenzhen Stock Exchange.
2. If the closing price of Shenzhen SEG stocks is lower than the initial offer price for
consecutively 20 trading days within 6 months after the completion of the restructuring or
the closing price of Shenzhen SEG stocks is lower than the initial offer price at the end of
6 months after the completion of the restructuring, the lockup period of Shenzhen SEG
stocks will be automatically extended for 6 months.
3. If the information provided or disclosed in the restructuring is suspected of false
representations, misleading statements, or material omissions and the judicial authority or
China Securities Regulatory Commission investigates and places the case on file, shares
of Shenzhen SEG held by the Company will not be transferred.
4. Before the restructuring, all stocks of Shenzhen SEG held by the Company shall not be
transferred within 12 months after the completion of the restructuring.
5. If relevant laws, regulations, and normative documents have special requirements on
the lockup period of shares, these laws, regulations, and normative documents shall
prevail.
6. If the foregoing lockup period is not consistent with the latest regulation requirement
of the security regulatory authority, the Company agrees to adjust it according to the
latest regulation opinion of the regulation suggestion of the security regulatory authority
and implement the relevant provision of China Securities Regulatory Commission and
Shenzhen Stock Exchange after the lockup period expires.
"1. In the recent 5 years, the Company has not been subject to any administrative penalty
(except those not related to the securities market) or criminal penalty.
2. In the recent 5 years, except for those cases that have been concluded, such as the case
of Hainan SEG International Trust and Investment Company, Zhongshi case, GTJA case
and Dasheng case, the Company is not involved in other major civil proceedings or
arbitration (the subject in dispute of 10 million yuan) related to economic disputes. Before
Shenzhen SEG
Other 3. The Company has never been suspected of insider trading related to major asset August 3, completion
Group Co., Fulfilled
commitment restructuring and placed on file for investigation or placed on file with the case not 2016 of
Ltd.
settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill restructuring
commitments, or been subject to administrative supervision measures by the CSRC or
disciplinary action by the Stock Exchange due to insider trading related to major assets
restructuring, or been held criminally liable by the judicial authorities according to law.
In case of breach of the foregoing commitments, the Company will bear all losses thus
incurred to Shenzhen SEG."
Bo Hongxi, Before
"1. I have not been subject to any administrative penalty by the CSRC in recent 36
Cao Xiang, Fan Other months, or public censure by the Stock Exchange in the recent 12 months.
August 3, completion
Fulfilled
Zhiqing, Li commitment 2016 of
Luoli, Liu 2. I have not been investigated by judicial authorities due to alleged crimes or by CSRC restructuring
65
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Fusong, Liu due to alleged irregularities.
Zhijun, Ru In case of breach of the following commitments, I will bear all losses thus incurred to
Guiqin, Song Shenzhen SEG."
Pingping, Tang
Chongyin,
Wang Li, Xu
Ning, Yu Qian,
Zhang
Guangliu,
Zhang Haifan,
Zheng Dan,
Zhu Longqing
"1. In the recent 5 years, the Company has not been subject to any administrative penalty
or criminal penalty or involved in other major civil proceedings or arbitration related to
Directors, economic disputes.
supervisors, 2. The Company has never been suspected of insider trading related to major asset Before
and senior restructuring and placed on file for investigation or placed on file with the case not August 3,
Other completion
executives of settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill 2016 Fulfilled
commitment of
Shenzhen SEG commitments, or been subject to administrative supervision measures by the CSRC or restructuring
Group Co., disciplinary action by the Stock Exchange due to insider trading related to major assets
Ltd. restructuring, or been held criminally liable by the judicial authorities according to law.
In case of breach of the following commitments, I will bear all losses thus incurred to
Shenzhen SEG."
SegMaker,
SEG "1. In the recent 3 years, the Company has not been subject to any major administrative
Recreation, punishment or criminal punishment or involved in other major civil proceedings or
SEG Property arbitration related to economic disputes.
Development,
SEG Property 2. The Company has never been suspected of insider trading related to major asset Before
Investment, Other restructuring and placed on file for investigation or placed on file with the case not August 3, completion
settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill 2016 Fulfilled
SEG New City commitment of
Construction, commitments, or been subject to administrative supervision measures by the CSRC or restructuring
SEG Property disciplinary action by the Stock Exchange due to insider trading related to major assets
Management, restructuring, or been held criminally liable by the judicial authorities according to law.
Huizhou In case of breach of the following commitments, I will bear all losses thus incurred to
Qunxing, Xi'an Shenzhen SEG."
SEG, Beijing
"1. SEG Group has legal ownership of lands, properties, and equities transferred to
SegMaker without compensation before the restructuring, and there is no dispute over the Before
Shenzhen SEG
Other ownership of transferred assets. Except for some mortgaged properties that require the August 3, completion
Group Co., Fulfilled
commitment consent of the mortgagee, there is no legal obstacle to the registration of ownership 2016 of
Ltd.
change. restructuring
2. The Company undertakes to complete the formalities of ownership registration change
66
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
of assets transferred to SegMaker before the Board of Directors reviews the restructuring
draft. The Company will compensate SegMaker in full if SegMaker is held responsible or
punished, or suffer any other loss due to the Company's violation of the foregoing
commitment or defects of the transferred assets."
"As of the date of issuance of the commitment letter, SEG Recreation owns 9 properties
with the total construction area of 12,941.28 m2. The actual proprietor of the property
located at 1F, Block 1, SEG Industrial Building with an area of 902 m2 is SEG Group.
Due to the provision that industrial buildings in Shenzhen shall be transferred as a whole,
the transfer registration formality for the property has not been handled. The actual
proprietor of Room 508, Block 4, SEG Residential Quarter is SEG Recreation, but the
property is registered under SEG Group and the transfer formality for the property has
not been handled. The Company undertakes that all parties have no disputes over the
ownership of the foregoing property whose registered proprietor is SEG Recreation but
whose actual proprietor is SEG Group and the property whose registered proprietor is
SEG Group but whose actual proprietor is SEG Recreation. SEG Group will assist SEG
Recreation in completing the division and transfer registration formalities for the
foregoing properties. After the restructuring, if Shenzhen SEG suffers any losses due to
ownership of such properties, SEG Group will compensate Shenzhen SEG in full.
2. The construction in process-assembly workshop that SEG Group uses to contribute
capital to SEG Property Investment is 4F, Block 2, SEG Industrial Building (real estate
proprietorship certificate No.: S. F. D. Zi. No. 3000759297) with the total area of
1,936.71 m2. The property was delivered to SEG Property Investment upon capital
contribution, but the transfer formality could not be handled without the certificate on Before
Shenzhen SEG
Other capital contribution. Due to negligence of the handler, the property was registered under August 3, completion
Group Co., Fulfilled
commitment SEG Group together with other properties of SEG Industrial Building belonging to SEG 2016 of
Ltd.
Group. Due to the restriction of transfer of industrial buildings as a whole, the transfer restructuring
formality has not been handled. SEG Property Investment has been occupying, using, and
acquiring operating revenue from the property since capital contribution. The Company
will assist SEG Property Investment in completing the transfer registration formality of
the foregoing property. After the restructuring, if Shenzhen SEG suffers any losses due to
ownership of such properties, SEG Group will compensate Shenzhen SEG in full.
3. The Company will help and propel the subject company and its subsidiaries to
complete ownership registration of land and property assets and regulate the land
purpose.
4. If due to land use rights and property assets existing before the completion of the
restructuring, the subject company and its subsidiaries (1) fail to timely handle the land
use rights and the proprietorship certificate (excluding results not caused by the subject
company and its subsidiaries, such as force majeure, laws, policies, government
management, and change in planned land purpose); or (2) cannot handle the relevant land
use rights and real estate proprietorship certificate (excluding results not caused by the
subject company and its subsidiaries, such as force majeure, laws, policies, government
management, and change in planned land purpose); or (3) are subject to other
circumstances of nonstandard land use rights and properties (excluding results not caused
by the subject company and its subsidiaries, such as force majeure, laws, policies,
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
government management, and change in planned land purpose), and suffer actual losses
including but not limited to compensation, fines, expenses, and interests damage, the
Company will compensate the subject company and its subsidiaries in full.
Before issuance date of the restructuring report of Shenzhen SEG, SEG Group will finish
formalities related to transfer of ownership of the property (4F, Block 2, SEG Industrial
Building). If SEG Group fails to finish the formalities at expiration, SEG Group agrees to
Before
Shenzhen SEG compensate SEG Property Investment RMB 1.5 million in currency, and allows SEG
Other August 3, completion
Group Co., Property Investment to continue to use the property for free until SEG Group transfers Fulfilled
commitment 2016 of
Ltd. the ownership of the property to SEG Property Investment. SEG Group agrees to
restructuring
compensate SEG Property Investment for any operating loss or other economic loss of
SEG Property Investment caused by SEG Group's failure in transferring the ownership of
the property.
"After updating and restructuring of SEG Industrial Building, SEG Economy Building,
and SEG Recreation Industry Building, the area of added part that belongs to SegMaker,
SEG Recreation and SEG Property is 2,855.20 m2. SEG Group undertakes that the use of
the temporary buildings belonged to SegMaker, SEG Recreation and SEG Property will
be renewed after expiration of the two-year use duration. In case when, due to failure in
renewal of use of temporary buildings, the listed company has any loss or the income
during the period from expiration of the performance commitment period to expiration of
the evaluated income expected period is lower than the expected compensation, or the
listed company has any loss because the temporary buildings are required to be
dismantled by governmental organs during the period from expiration of the performance
commitment period to expiration of the evaluated income expected period, SEG Group
will compensate the listed company timely and in full amount according to the following
compensation methods:
1. SEG Group has made commitments for the performance of the subject company within
three years after completion of major asset restructuring. Influence of the updating and
Shenzhen SEG
Other restructuring project has been taken into account in the commitments. August 3,
Group Co., Long-term In progress
commitment 2. The amount of compensation for the income that is lower than the expected income 2016
Ltd.
during the period from expiration of the performance commitment period to expiration of
the evaluated income expected period = (the predicted accumulated income to the end of
the report period - actual accumulated income to the end of the report period) - the
compensated amount.
3. The loss caused when the temporary buildings are required to be dismantled by
governmental organs during the period from expiration of the performance commitment
period to expiration of the evaluated income expected period = the dismantling cost and
compensation amount related - (the accumulated total income to the time the buildings
are dismantled- predicted accumulated income during the predication period). Note: the
predicted income refers to the net value remained after the predicted total income from
the newly added temporary buildings in the evaluation reports of the subject companies
minuses the allocated investment cost during the operating period and the amount
influenced by permanent rent termination predicted in the evaluation report. Shenzhen
SEG should employ an audit agency with security practice qualification recognized by
SEG Group to provide a formal audit report on the compensation methods for the
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
property investment within the compensation scope of the report period within four
months at the end of each accounting year during the compensation period. SEG Group
should compensate in cash any property investment and compensation items within the
compensation scope of the report period. Shenzhen SEG should calculate the payable
compensation amount within 15 working days upon final specific review opinions
provided by the audit agency, and send a written notice to SEG Group. Within 30
working days upon receipt of the written notice from Shenzhen SEG, SEG Group should
pay the compensation in cash in full amount."
"1. In case when, after the restructuring, the land/property use should be changed based
on the actual operating demands of the subject company or because the subject company
is required by the relevant house property management organ or the land regulatory
department to change the land/property use, SEG Group will assist the subject company
Shenzhen SEG in finishing the relevant formalities.
Other August 3,
Group Co., Long-term In progress
commitment 2. In case when the subject company suffers from administrative penalty by relevant land 2016
Ltd.
and/or house property management department because the actual use of the
land/property is different from those recorded in the certificate, SEG Group will
compensate the subject company for any expenditures and economic loss caused
thereby."
"1. Since the issuance date of this commitment letter, SEG Group will assist SegMaker in
restoring for business purpose the part currently functioning as a parking garage on the
first floor of the podium of SEG Jingyuan Building within five years. Within five
years from
Shenzhen SEG 2. If the restoration work cannot be finished within the above mentioned period of time, August 3,
Other the date of
Group Co., SEG Group agrees to process the subject assets as follows: (1) paying in cash the 2016 In progress
commitment issue of the
Ltd. evaluated value of the parking garage and the bank interest of the evaluated value in the commitment
same period from the restructuring closing date to the expiration of this commitment letter
time; or (2) purchasing in cash the first floor of the podium of SEG Jingyuan Building at
a price no less than the evaluated value of the building during this restructuring."
"1. If after the restructuring, Shen SEG is requested to make a supplementary payment
for land transfer and pay the overdue fine due to inconsistency between the actual use and
Shenzhen SEG the registered use of the above property, the Company undertakes to bear such expenses August 3,
Other
Group Co., in full. Long-term In progress
commitment 2016
Ltd.
2. In case of breach of the foregoing commitments, the Company will bear all losses thus
incurred to Shen SEG."
According to the Article Five of the Equity Transfer Agreement signed by the Company
Commitment on
with SEG Group when the Company was listed, SEG Group agreed that the Company
horizontal
Shenzhen SEG and its subsidiaries and associated companies to use the eight trademarks registered by
Commitment made at Group Co., competition,
SEG Group at the National Trademark Bureau; SEG Group agreed that the Company July 1, 1996 Long-term In progress
the time of initial related
Ltd. used the aforesaid trademarks or similar signs as the Company's logo and used the
public offerings or transaction, and
trademarks and signs during its operation; the Company need not pay any fee to SEG
refinancing capital occupation
Group for using the aforesaid trademarks or signs.
Shenzhen SEG Commitment on As for the problem pointed out by Shenzhen Office of China Securities Regulatory September Long-term In progress
Group Co., horizontal Commission during on-site inspection in 2007 in the Company that the Company and 14, 2007
69
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Ltd. competition, SEG Group are competitive in the electronic business, the Company has received a
related written Commitment Letter from SEG Group on September 14, 2007. The content of the
transaction, and Commitment Letter is as follows: "The competition in electronic business between SEG
capital occupation Group and Shenzhen SEG Co., Ltd. occurs due to historical reasons and objective market
development background. SEG Group hereby commits that, we will not separately
operate businesses similar to those of Shenzhen SEG in the same city."
As 100% of the
equity of
SegMaker that
holds SEG
Communication
The 6th interim meeting of the 5th Board of Directors held on January 26, 2011
Commitment on Market was
deliberated and adopted the Proposal of Solving the Horizontal Competition between the From
horizontal transferred to
Shenzhen SEG Company and Its Controlling Shareholder. After friendly consultation, SEG Group agreed February 1,
competition, January 26, the Company,
Group Co., to entrust the Company to operate and manage with full authority SEG Communications 2011 to
related 2011 the Company is
Ltd. Market under direct management of SEG Group. Therefore, the two parties have signed January 31,
transaction, and no longer
the entrustment operation and management contract, and SEG Group will pay the 2017
capital occupation commissioned
Company RMB 200,000 Yuan as entrust management expenses.
to operate SEG
Communication
Market, and has
fulfilled this
commitment.
Commitment on
Not applicable
equity incentives
Some directors,
supervisors,
senior Some directors, supervisors, senior executives, and middle managers of Shenzhen SEG
executives, and Group Co., Ltd. that increase holdings undertakes not to reduce holding-shares of the
Other September March 26,
middle Company or carry out insider trading, trading of shares in the sensitive period, or In progress
commitment 26, 2017 2019
managers of short-term trading according to relevant provisions in the period of increase in holdings,
Shenzhen SEG within the statutory period and for a period of 12 months after completion of the plan.
Group Co.,
Other commitments Ltd.
made to the medium
and small shareholders Directors,
of the Company supervisors,
senior Directors, supervisors, senior executives, middle managers, and managers of level-3
executives, subsidiaries of the Company that increase holdings undertakes not to reduce
middle Other holding-shares of the Company or carry out insider trading, trading of shares in the September September
In progress
managers, and commitment sensitive period, or short-term trading according to relevant provisions in the period of 26, 2017 26, 2018
managers of increase in holdings, within the statutory period and for 12 months after completion of
level-3 the plan.
subsidiaries of
Shenzhen SEG
70
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Co., Ltd. that
increase
holdings
Due to confidence in the future development prospect of the Company and recognition of
the Company's value, the holding shareholder of the Company, Shenzhen SEG Group
Shenzhen SEG Commitment on
Co., Ltd. plans to increase holding-shares of the Company according to relevant November November
Group Co., increase in In progress
provisions of the CSRC and Shenzhen Stock Exchange, and undertakes not to reduce the 15, 2017 15, 2018
Ltd. holdings
newly-increased holding-shares of the Company in the period of increase in holdings and
for12 months after increase in holdings.
Whether commitments
Yes
were fulfilled on time
71
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
2. The attainment of forecasts for the assets or projects of the Company which were profitable and the
description of the reasons with the reporting period remaining in the forecasting period
□ Applicable √ Not applicable
IV. Non-operating Capital Occupation on the Listed Company by the Controlling
Shareholders and Related Parties
□ Applicable √ Not applicable
No non-operating capital occupation on the listed company by controlling shareholders and related parties is
involved in the reporting period.
V. Explanations of the Board of Directors, the Board of Supervisors and Independent
Directors (if any) to the "Non-standard Audit Report" made by the accounting firm in the
reporting period
□ Applicable √ Not applicable
VI. Information on changes in accounting policies, accounting estimates and accounting
methods compared with the financial reports of the last year
√ Applicable □ Not applicable
On May 10, 2017, the Ministry of Finance issued the Revised Accounting Standards for Business Enterprises No.
16 — Government Subsidies (2017) (C. K. [2017] No. 15), which is implemented from June 12, 2017.
The Accounting Standards for Business Enterprises No. 42 — Non-Current Assets and Disposal Groups Held for
Sale and Termination of Business Operation specify the classification, measurement, and presentation of
non-current assets and disposal groups held for sale and presentation of termination of business operation.
VII. Information on retroactive restatements in corrections of major accounting errors in the
reporting period
□ Applicable √ Not applicable
There is no retrospective restatement due to corrections on significant accounting errors in the reporting period.
VIII. Information on changes in the scope of consolidation compared with the financial
report of the last year
√ Applicable □ Not applicable
35 entities are included in the current consolidated financial statements, namely:
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) rights (%)
Shenzhen SEG Baohua Enterprise Development Holding
I 66.58 66.58
Co., Ltd. subsidiary
Shenzhen Mellow Orange Business Hotel Holding 66.58 66.58
II
Management Co., Ltd subsidiary
72
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) rights (%)
Wholly-owned 100 100
Shenzhen SEG Industrial Investment Co., Ltd. I
subsidiary
Holding 46 51
Changsha SEG Development Co., Ltd. I
subsidiary
Shenzhen SEG Electronics Market Management Share-controlled
I 70 70
Co., Ltd. subsidiary
Holding
Shenzhen SEG Credit Co., Ltd. I 65 65
subsidiary
Shenzhen SEG Nanjing Electronics Market Wholly-owned
I 62 62
Management Co., Ltd. subsidiary
Holding
Xi'an Hairong SEG Electronics Market Co., Ltd. I 51 51
subsidiary
Holding
Wujiang SEG Electronics Market Co., Ltd. I 51 51
subsidiary
Shunde SEG Electronics Market Management Co., Wholly-owned
I 100 100
Ltd. subsidiary
Nanning SEG Electronics Market Management Co., Wholly-owned
I 100 100
subsidiary
Ltd.
Wholly-owned
Nantong SEG Times Plaza Development Co., Ltd. I 100 100
subsidiary
Holding
Yantai SEG Times Plaza Development Co., Ltd. I 90 90
subsidiary
Nantong SEG Commercial Operation Management Wholly-owned
I 100 100
Co., Ltd. subsidiary
Wholly-owned
Suzhou SEG Digital Plaza Management Co., Ltd. I 100 100
subsidiary
Xi'an Fengdong New Town SEG Times Plaza Wholly-owned
I 100 100
Properties Co., Ltd. subsidiary
Wholly-owned
Suzhou SEG Intelligent Technology Co., Ltd. I 100 100
subsidiary
Shenzhen SEG Longyan New Energy Application Holding
I 50 50
and Development Co., Ltd. subsidiary
Wholly-owned
Shenzhen SEG Investment Management Co., Ltd. I 100 100
subsidiary
Shenzhen SEG Longyan Energy Technology Co., Holding
I 50 50
Ltd. subsidiary
73
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) rights (%)
Shenzhen-Shantou Cooperation Zone SEG Longyan Wholly-owned
II 100 100
Energy Technology Co., Ltd. subsidiary
Shenzhen SEG Lianzhong Internet Technology Co., Holding
I 55 55
Ltd. subsidiary
Holding
Shenzhen SEG Zhongtong Technology Co., Ltd. I 49 49
subsidiary
Wholly-owned
Shenzhen SegMaker Co., Ltd. I 100 100
subsidiary
Shenzhen SEG Recreation Enterprise Development Holding
I 55 55
Co., Ltd. subsidiary
Wholly-owned
Shenzhen SEG Property Development Co., Ltd. I 100 100
subsidiary
Holding
Shenzhen SEG Real Estate Investment Co., Ltd. I 79.02 79.02
subsidiary
Holding
Huizhou Stars Real Estate Development Co., Ltd. II 88 88
subsidiary
Holding
Shenzhen SEG Property Management Co., Ltd. II 45 45
subsidiary
Shenzhen SEG New Urban Construction Holding
II 72.05 72.05
Development Co., Ltd. subsidiary
Shenzhen SEG New Urban Commercial Operation Wholly-owned
III 100 100
Co., Ltd. subsidiary
Holding
Beijing SEG Property Development Co., Ltd. II 50 50
subsidiary
Holding
Xi'an SEG Kanghong Real Estate Co., Ltd. II 55 55
subsidiary
Wholly-owned
Shenzhen Hongge Cultural Development Co., Ltd. II 100 100
subsidiary
For reasons for the difference between the proportion of shareholding and the proportion of voting rights and the
basis for control of the investee with half or less than half of the voting rights, see "(I) Equity in subsidiaries of
Note VIII Equity in other entities".
14 new entities are incorporated in and two entities are removed from the scope of the consolidated financial
statements in the current period, including:
1. Subsidiaries, special purpose entities, and business entities that gain control by way of commissioned
management or renting newly incorporated in the consolidation scope in the current period
74
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Name Reason for change
Shenzhen-Shantou Cooperation Zone SEG Longyan Energy Technology Co.,
Newly established
Ltd.
Shenzhen SEG Lianzhong Internet Technology Co., Ltd. Newly established
Shenzhen SEG Zhongtong Technology Co., Ltd. Newly established
Shenzhen SegMaker Co., Ltd. Business combination under common control
Shenzhen SEG Recreation Enterprise Development Co., Ltd. Business combination under common control
Shenzhen SEG Property Development Co., Ltd. Business combination under common control
Shenzhen SEG Real Estate Investment Co., Ltd. Business combination under common control
Huizhou Stars Real Estate Development Co., Ltd. Business combination under common control
Shenzhen SEG Property Management Co., Ltd. Business combination under common control
Shenzhen SEG New Urban Construction Development Co., Ltd. Business combination under common control
Shenzhen SEG New Urban Commercial Operation Co., Ltd. Business combination under common control
Beijing SEG Property Development Co., Ltd. Business combination under common control
Xi'an SEG Kanghong Real Estate Co., Ltd. Business combination under common control
Shenzhen Hongge Cultural Development Co., Ltd. Business combination under common control
2. Subsidiaries, special purpose entities, and business entities that lose control by way of commissioning
management or leasing removed from the consolidation scope in the current period
Name Reason for change
Suzhou SEG Electronics Market Management Co.,
Transfer of the management right
Ltd.
Wuxi SEG Electronics Market Co., Ltd. Transfer of all the equity
IX. Engagement and dismissal of the accounting firm
Engaged accounting firm
Name of accounting firm engaged from China Da Hua Certified Public Accountants (Special General Partnership)
Remuneration for the accounting firm engaged from
105
China (RMB 10,000)
Duration of audit services offered by accounting
6
firm engaged from China
Name of certified public accounts from the
Zhang Zhaocheng and Liu Guoping
accounting firm engaged from China
Duration of audit services offered by CPAs of
3 years by Zhang Zhaocheng and 1 year by Liu Guoping
accounting firm engaged from China
Name of accounting firm engaged from outside
Not applicable
China (if any)
Remuneration for the overseas accounting firm
0
(RMB 10,000)
Consecutive years of service offered by the overseas Not applicable
75
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
accounting firm (if any)
Name of certified public accounts from the overseas
Not applicable
accounting firm
Is another accounting firm engaged in current period?
□ Yes √ No
Engagement of internal control audit accounting firm, financial adviser or sponsor
□ Applicable √ Not applicable
X. Information on Listing Suspension or Abortion after Disclosure of Annual Report
□ Applicable √ Not applicable
XI. Bankruptcy and Reorganization
□ Applicable √ Not applicable
No bankruptcy and reorganization matter is involved in the reporting period.
76
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
XII. Major lawsuits and arbitrations
√ Applicable □ Not applicable
Estimated Judgment
Amount Judgment
Basic information about lawsuits and arbitrations liabilities Progress result and Disclosure date Disclosure index
(RMB: 10,000) incurred or not execution
impact
First instance
judgment:
Nanning SEG
shall pay the
liquidated
damages of
RMB
666,666.66 and
pay the case It is being
acceptance fee executed. As
of RMB 5,416. of April 4,
Case number: 2016 G. 0102 M. C. No. 3653 Yes. The Second Nanning http://www.cninfo.com.cn
estimated The second instance instance Xingning Announcement of
Dispute over the lease contract arose between Nanning
liability of was decided. The judgment: Court blocked Shenzhen SEG Co., Ltd.
Haiqi Real Estate Development Co., Ltd. and Shenzhen 1026.3 September 26, 2016
RMB Company has applied Nanning SEG two accounts on Receipt of Court
SEG Co., Ltd.
666,700.00 is for retrial. shall pay the of the Summons and the Civil
accrued. liquidated Company and Complaint
damages of deducted
RMB 8 RMB
million, pay the 8,476,600
attorney fee of
RMB 263,000
to Nanning
Haiqi, and pay
the case
acceptance fee
of RMB
134,238.
Case number: 2016 G. 0102 M. C. No. 3654 1. The contract http://www.cninfo.com.cn
The first instance was
between the Announcement of
Dispute over the property service contract between decided. The
246.98 No. parties shall be Not executed June 2, 2017 Shenzhen SEG Co., Ltd.
Nanning Yuanpeng Property Service Co., Ltd. and counterparty has
terminated. on the Progress of the
Shenzhen SEG Co., Ltd. appealed.
2. All other Lawsuit with Nanning
77
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
claims of Yuanpeng Property
Yuanpeng shall Service Co., Ltd.
be dismissed.
Nanning SEG
Yes. The shall pay the
2016 G. 0102 M. C. No. 4612 estimated decoration loss The Company http://www.cninfo.com.cn
Nanning Haiqi Real Estate Development Co., Ltd. sued liability of The second instance of RMB has paid the
104.19 August 28, 2017 Semi-Annual Report 2017
against Nanning SEG for compensation for the decoration RMB was decided. 394,964.8 and executed
417,964.8 is pay the money. of Shenzhen SEG Co., Ltd.
loss.
accrued. attorney fee of
RMB 23,000.
http://www.cninfo.com.cn
As the parties
reached a settlement, Announcement of
(2016) J. Z. A. Zi. No. 2294 the counterparty Shenzhen SEG Co., Ltd.
compensated for our Not on the Progress of the
Arbitration case between Shenzhen SEG Co., Ltd. and 2460 No Not applicable June 2, 2017
losses of RMB applicable Lawsuit and Arbitration
Zongheng International Electronic Expo City (Suzhou)
3,500,000, and we with Zongheng
Co., Ltd.
canceled the International Electronic
arbitration. Expo City (Suzhou) Co.,
Ltd.
http://www.cninfo.com.cn
The parties reached a Announcement of
2016 S. 0505 M. C. No. 5176 settlement. The Shenzhen SEG Co., Ltd.
counterparty repaid Not on the Progress of the
Loan dispute between Suzhou SEG Electronics Market 1900.08 No Not applicable June 2, 2017
the loan interest to applicable Lawsuit and Arbitration
Management Co., Ltd. and Zongheng International
us. We the canceled with Zongheng
Electronic Expo City (Suzhou) Co., Ltd.
arbitration. International Electronic
Expo City (Suzhou) Co.,
Ltd.
The properties have Our claims are http://www.cninfo.com.cn
(2017) Y. 0304 M. C. No. 5092 been preserved. The substantially Announcement of
Dispute over the purchase and sales contract among first instance was supported, Not Shenzhen SEG Co., Ltd.
839.41 No January 5, 2018
Shenzhen Wonder Industry Co., Ltd., Liu Guiyun and Liu decided. The except for the applicable on the Progress of the
Yu counterparty has claim for the Lawsuit Involving
appealed. overdue fine. Holding Subsidiaries
The properties have Our claims are http://www.cninfo.com.cn
(2017) Y. 0304 M. C. No. 5088 been preserved. The substantially Announcement of
Dispute over the purchase and sales contract among first instance was supported, Not Shenzhen SEG Co., Ltd.
1480.57 No January 5, 2018
Shenzhen Yixin Zhongtian Technology Co., Ltd., Zhe decided. The except for the applicable on the Progress of the
Shaojun, and Zhao Xiaoyan counterparty has claim for the Lawsuit Involving
appealed. overdue fine. Holding Subsidiaries
78
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
(2017) Y. 0304 M. C. No. 7976
SEG Industrial sued against Shenzhen Comnet Technology The properties has http://www.cninfo.com.cn
Co., Ltd., Xiao Qingshan, Zhou Ronghua, Anhua Meishan been heard and has Not
515.54 No Not applicable August 28, 2017 Semi-Annual Report 2017
Small Loan Co., Ltd., and Shenzhen Baiyide Technology not yet been applicable
adjudicated of Shenzhen SEG Co., Ltd.
Co., Ltd. for a dispute over the purchase and sales
contract.
(2017) Y. 0304 M. C. No. 7977
SEG Industrial sued against Shenzhen Runneng Digital T The properties has http://www.cninfo.com.cn
Technology Co., Ltd., Xiao Qingshan, Zhou Ronghua, been heard and has Not
1534.5 No Not applicable August 28, 2017 Semi-Annual Report 2017
Anhua Meishan Small Loan Co., Ltd., and Shenzhen not yet been applicable
adjudicated of Shenzhen SEG Co., Ltd.
Baiyide Technology Co., Ltd. for a dispute over the
purchase and sales contract.
Case number: (2016) J. 0102. M. C. No. 21435 After http://www.cninfo.com.cn
Plaintiff: Beijing SEG Property Development Co., Ltd. The case has been mediation by
2004.74 No Executed August 28, 2017 Semi-Annual Report 2017
Defendant: Beijing Furao Real Estate Development Co., settled. the court, the
case has ended. of Shenzhen SEG Co., Ltd.
Ltd.
79
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
XIII. Punishment and Rectification Issues
□ Applicable √ Not applicable
No punishment and rectification is involved in the reporting period.
XIV. Integrity of the Company and its Controlling Shareholders and Actual Controllers
□ Applicable √ Not applicable
XV. Implementation of Equity Incentive Plan, Employee Shareholding Plan or Other
Employee Incentives
□ Applicable √ Not applicable
No stock incentive plan and implementation is involved in the reporting period.
80
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
XVI. Major Connected Transactions
1. Transactions related to routine operation
√ Applicable □ Not applicable
Amount of Approved Exceeding
Pricing Available
Party of Content of Price of connected Percentage in transaction the
Transaction principle of Clearing similar Disclosure
connected Association connected connected transaction similar amount approved Disclosure index
type connected form market date
transaction transaction transaction (RMB transactions (RMB quota or
transaction
10,000) price
10,000) not
1-416, Building
101, SEG
Industrial Zone;
1F, Optical Fiber
Building;
Shenzhen Determined According
Controlling Renting the 6F, Plant No. 2; 40.57 April 18,
SEG Group 403, Qingyi by the 190.20 0.18% 200 not to the -
shareholder property Yuan/m2 2017
Co., Ltd. Building, market agreement
Nanyuan Road; 48
houses in Qing'an
Building, No.
1705, covering
3,907.13 m2
81
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Amount of Approved Exceeding
Pricing Available
Party of Content of Price of connected Percentage in transaction the
Transaction principle of Clearing similar Disclosure
connected Association connected connected transaction similar amount approved Disclosure index
type connected form market date
transaction transaction transaction (RMB transactions (RMB quota or
transaction
10,000) price
10,000) not
1F, SEG
Recreation
Building; 8F, SEG
Industrial
Building; West
Zone, 8F, Building
2, SEG Industrial
Building; 3F,
Building 101,
Shangbu Industrial Determined
Shenzhen According
Controlling Renting the Zone; Room 506, 67.53
SEG Group 783.73 0.74% 800 No to the -
shareholder property Building 303, by the Yuan/m2
Co., Ltd. agreement
Pengji Shangbu market
Bachelor
Apartment; 61
houses including
the connecting
corridor in 4F, April 18,
Tower A & Tower 2017
B, 101 Zhenxing
Road, covering
9,672.12 m2.
Offering
Shenzhen Offering property Determined According
Controlling property RMB
SEG Group management by the 88.71 0.02% 80 No to the -
shareholder management 114,500
Co., Ltd. services market agreement
services http://www.cninfo.com.cn
Shenzhen Subsidiary Offering Announcement of
Offering property Determined According
SEG Talent of its property RMB
management by the 31.5 0.02% 222 No to the - Shenzhen SEG Co., Ltd.
Training controlling management 102,400
services market agreement on 2017 Expected Daily
Center shareholder services
Shenzhen Operating Connected
Subsidiary Offering
SEG High Offering property Determined According Transactions
of its property RMB
Technology management by the 18.31 0.01% 200 No to the -
controlling management 91,600
Investment services market agreement
shareholder services
Co., Ltd.
82
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Amount of Approved Exceeding
Pricing Available
Party of Content of Price of connected Percentage in transaction the
Transaction principle of Clearing similar Disclosure
connected Association connected connected transaction similar amount approved Disclosure index
type connected form market date
transaction transaction transaction (RMB transactions (RMB quota or
transaction
10,000) price
10,000) not
Entrusting
the
Entrusting the
management
Shenzhen management of Determined According
Controlling of the RMB
SEG Group the underground by the 14.34 0.01% 30 No to the -
shareholder underground 68,800
Co., Ltd. parking lot of SEG market agreement
parking lot
Plaza
of SEG
Plaza
Shenzhen Determined According
Controlling Leasing the 61F & 62F of RMB
SEG Group by the 157.38 0.13% 260 No to the -
shareholder property SEG Plaza 786,900
Co., Ltd. market agreement
Total -- -- 1284.17 -- -- -- -- -- --
Details of returns on sold goods of large amount Not applicable
Actual implementation of routine connected transactions
to occur in the current period with total amount estimated Not applicable
by category in the reporting period (if any)
Reasons for a great difference (if applicable) between the
Not applicable
transaction price and the market reference price
2. Connected transactions arising from asset or equity sales and acquisition
√ Applicable □ Not applicable
Book value Estimated
Pricing of the value of the Price of Transaction
Party of Type of Content of
principle of transferred transferred transfer profit or Disclosure
connected Association connected connected Clearing form Disclosure index
connected assets assets (RMB loss (RMB date
transaction transaction transaction
transaction (RMB (RMB 10,000) 10,000)
10,000) 10,000)
Shenzhen 55% of the Issuance of http://www.cninfo.com.cn
Controlling Stock Fair market February 4,
SEG Group equity of 87,707.86 515,714.72 515,714.72 shares and 0 Proposal of Shenzhen
shareholder purchase value 2016
Co., Ltd. SEG payment for SEG Group Co., Ltd. for
83
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Recreation, considerations Share Issuance and Cash
100% of the Payment to Acquire
equity of Assets and Raise Funds
SEG Property & Connected
Development, Transactions
100% of the
equity of
SegMaker,
and 79.02%
of the equity
of SEG Real
Estate
Reason for a great difference (if any) between the transfer The transfer price is consistent with the estimated value. Difference between the transfer price and book value is caused by appreciation
price and book value or estimated value in appraisal.
1. In the reporting period, the operating income of SEG Real Estate is RMB 122,2751,800, and the net profit attributable to the parent
company is RMB 120,198,700.
2. In the reporting period, the operating income of SEG Recreation is RMB 53,247,100, and the net profit attributable to the parent
Impact on the operating result and financial condition of the company is RMB 24,428,400.
Company 3. In the reporting period, the operating income of SEG Property is RMB 59,405,600, and the net profit attributable to the parent
company is RMB 13,320,000.
4. In the reporting period, the operating income of SegMaker is RMB 134,667,200, and the net profit attributable to the parent company
is RMB 36,856,500.
In the reporting period, the total operating income of the four target companies is RMB 1,470,071,700, and the total net profit
Fulfillment of agreed performance (if any)
attributable to the parent company is RMB 194,803,600.
84
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
3. Connected transactions arising from joint external investment
□ Applicable √ Not applicable
There is no connected transaction arising from joint external investment in the reporting period.
4. Claim and debt with related parties
√ Applicable □ Not applicable
Debt payable to related parties
Increased Recovered
Interest in
amount in amount in
Opening the Closing
the the
Related balance Interest reporting balance
Association Cause reporting reporting
party (RMB rate period (RMB
period period
10,000) (RMB 10,000)
(RMB (RMB
10,000)
10,000) 10,000)
8%，0%；
There is no
interest on
the stock
exchange
Considera price, and
Shenzhen the other
Controlling tion for
SEG Group 17,795.14 69,104.79 15,069.60 Seger 576.25 71,830.33
shareholder stock
Co., Ltd. Group's
purchase
funding
support
rate for
Seger Real
Estate is
8%
5. Other Important Transactions
□ Applicable √ Not applicable
XVII. Important contracts and implementation
1. Trusteeship, Contracting, and Leasing Issues
(1) Trusteeship Issues
□ Applicable √ Not applicable
No trusteeship issue is involved in the reporting period.
(2) Contracting Issues
□ Applicable √ Not applicable
No contracting issue is involved in the reporting period.
(3) Leasing Issues
□ Applicable √ Not applicable
No leasing issue is involved in the reporting period.
85
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
2. Major guarantees
√ Applicable □ Not applicable
(1) Guarantee
Unit: ten thousand yuan
External guarantee of the Company and its subsidiaries (excluding guarantee for its subsidiaries)
Disclosur Guaran
Actual date of
e date of tee for
occurrence Actual
Name of guarantee notices Guarante Guarantee Guarantee Fulfille a
(date of guarantee
object related to e quota type period d or not related
signing the amount
guarantee party
agreement)
quota or not
Mortgage guarantee Joint
clients of China May 26, liability
26000 2017.7.6 21,000.00 one year No No
CITIC Bank, SEG 2017 guarantee
New City Branch
Housing guarantee Joint
clients of China liability
Three
Construction Bank, 45,000 2015.5.5 4,561.82 guarantee yes No
years
Huizhou Stars
Branch
Mortgage guarantee Joint
clients of China liability
30,000 2016.5.6 19,216.50 ten years No No
CITIC Bank, SEG guarantee
New City Branch
Clients purchasing Joint
the SEG New City liability
house properties 50,000 2016.5.6 0.00 guarantee one year No No
(Agricultural Bank
of China)
Clients purchasing Joint
the SEG New City liability
house properties guarantee
(Bank of 20,000 2016.7.4 1,582.00 three years No No
Agriculture and
Commerce of
China)
Clients purchasing Joint
the SEG New City liability
house properties 50,000 2016.5.6 11,802.00 guarantee ten years No No
(China Merchants
Bank)
Clients purchasing Joint
the SEG New City liability
30,000 2016.5.6 15,609.00 ten years No No
house properties guarantee
(Bank of China)
Clients purchasing Joint
the SEG New City liability
house properties 2017.2.7 930.00 guarantee five years Yes No
(China Construction
Bank)
Total amount of actually
Total amount of approved
occurred external
external guarantee quota in the 26,930.00 74,701.32
guarantee in the reporting
reporting period (A1)
period (A2)
Total amount of actual
Total amount of approved
external guarantee
external guarantee quota by the 201,000.00 74,701.32
balance by the end of the
end of the reporting period (A3)
reporting period (A4)
86
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Guarantee of the Company for its subsidiaries
Disclosur Guaran
Actual date of
e date of teed for
occurrence Actual Comple
Name of guarantee notices Guarante Guarantee Guarantee a
(date of guarantee ted or
object related to e quota type period related
signing the amount not
guarantee party
agreement)
quota or not
Total amount of approved Total amount of actual
guarantee quota for its guarantee incurred for its
subsidiaries in the reporting subsidiaries in the
period (B1) reporting period (B2)
Total amount of approved Total amount of actual
guarantee quota for its guarantee balance for its
subsidiaries by the end of the subsidiaries by the end of
reporting period (B3) the reporting period (B4)
Guarantee between subsidiaries
Disclosur Guaran
Actual date of
e date of teed for
occurrence Actual Comple
Name of guarantee notices Guarante Guarantee Guarantee a
(date of guarantee ted or
object related to e quota type period related
signing the amount not
guarantee party or
agreement)
quota not
Shenzhen SEG New
Joint
Urban Construction
50000 2015.10.30 50000 liability Two years Yes Yes
Development Co.,
guarantee
Ltd.
Total amount of approved Total amount of actual
guarantee quota for its guarantee incurred for its
0 50,000.00
subsidiaries in the reporting subsidiaries in the
period (C1) reporting period (C2)
Total amount of approved Total amount of actual
guarantee quota for its guarantee balance for its
50,000.00 50,000.00
subsidiaries by the end of the subsidiaries by the end of
reporting period (C3) the reporting period (C4)
Total guarantee amount of the Company (sum of the foregoing three items)
Total amount of actual
Total amount of approved
guarantee incurred in the
guarantee quota in the reporting 26,930.00 124,701.32
reporting period
period (A1+B1+C1)
(A2+B2+C2)
Total amount of actual
Total amount of approved
guarantee balance by the
guarantee quota by the end of the 251,000.00 124,701.32
end of the reporting
reporting period (A3+B3+C3)
period (A4+B4+C4)
Percentage of the total actual guarantee amount (A4+B4+C4) in
65.04%
the Company's net assets
Including:
Guarantee balance for shareholders, actual controllers, and
0
other related parties (D)
Debt guarantee balance directly or indirectly for guarantee
0
objects with an asset-liability ratio higher than 70% (E)
Amount of the total guarantee amount minus 50% of net assets
28,839.90
(F)
Sum of the foregoing three guarantee items (D+E+F)
Note to guarantee not yet due with actual or potential guarantee
responsibility in the reporting period (if any)
Note to external guarantee against the prescribed procedure (if
any)
87
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
(2) Illegal external guarantee
□ Applicable √ Not applicable
The Company has no illegal external guarantee in the reporting period.
3. Information on cash asset management entrusted to others
(1) Entrusted financing
√ Applicable □ Not applicable
Information on entrusted financing in the reporting period
Unit: ten thousand yuan
Source of fund
Amount of entrusted Overdue amount
Type under entrusted Balance not yet due
financing unrecovered
financing
Bank financial 247,524.00 43,021.00
Self-owned fund 0
product
Total 247,524.00 43,021.00 0
Information on risky entrusted financing with a significant amount or featuring low security, poor liquidity, and
no capital guarantee
88
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Unit: ten thousand yuan
Actual
Actual Entrust
return Summa
loss and Accrued ed
Type Remuneratio of gains Through ry and
Fund Referenc Expecte gain provision financi
Name of of Fund n and legal related
Product type Amount Start date End date usag e annual d yield amount s for ng plan
trustee truste source confirmation losses procedur query
e yield (if any) in the impairme in the
e method in the es or not index
reportin nt (if any) future
reportin (if any)
g period or not
g period
Industrial Jinxueqiu 2015 1st 2016.11. Floating
Bank 2300 2017.2.3 4.10% 9.82 9.82 Yes Yes
Bank No. 3301C 28 income
Industrial Jinxueqiu 2015 1st 2016.12. Floating
Bank 10000 2017.1.10 4.10% 32.58 32.58 Yes Yes
Bank No. 3301B 12 income
China Citic 2016.12. Floating
Bank Interbank deposit 1000 2017.1.3 3.40% 0.47 0.47 Yes Yes
Bank 29 income
Shanghai
Pudong Tiantianli No. 1 Floating
Bank 8300 2017.4.7 2017.5.5 3.05% 19.01 19.01 Yes Yes
Development 2301147031 income
Bank
Shanghai
Pudong Yuetianli 2017.4.1 Floating
Bank 3000 2017.5.11 4.40% 10.85 10.85 Yes Yes
Development 2301137335 0 income
Bank
Shanghai
Pudong Yuetianli 2017.6.2 Floating
Bank 5000 2017.7.21 5.15% 22.58 22.58 Yes Yes
Development 2301137335 2 income
Bank
Shanghai
Fixed holding term
Pudong 2017.6.2
Bank of the Company 4000 2017.7.27 Fixed income 4.00% 15.55 15.55 Yes Yes
Development 2
JG901
Bank
Shanghai
Pudong Yuetianli 2017.9.2 2017.10.2 Floating
Bank 8400 5.00% 34.52 34.52 Yes Yes
Development 2301137335 6 7 income
Bank
Shanghai
Pudong Yuetianli 2017.12. Floating
Bank 10000 2018.1.26 Yes Yes
Development 2301137335 27 income
Bank
Industrial and Bank ICBC financial 3000 2016.10. 2017.1.16 Floating 3.90% Yes Yes
89
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Commercial win-win and profit 15 income 29.81 29.81
Bank of increase
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit 2016.12. Floating
Bank 1000 2017.1.16 3.70% Yes Yes
Bank of increase 6 income 4.16 4.16
China SZWL1560
Industrial and ICBC financial
Commercial win-win and profit Floating
Bank 2000 2017.1.4 2017.2.14 3.70% Yes Yes
Bank of increase income 8.31 8.31
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit Floating
Bank 2000 2017.1.4 2017.4.7 3.90% Yes Yes
Bank of increase income 19.87 19.87
China SZWL1560
Industrial and ICBC financial
Commercial win-win and profit 2017.1.1 Floating
Bank 3000 2017.4.20 3.90% Yes Yes
Bank of increase 7 income 29.81 29.81
China SZWL1560
Industrial and
ICBC financial
Commercial 2017.2.1 2017.12.2 Floating
Bank win-win and profit 2000 3.50% Yes Yes
Bank of 5 6 income 60.03 60.03
increase SZDL1301
China
Industrial and ICBC financial
Commercial win-win and profit 2017.1.1 Floating
Bank 1000 2017.3.1 3.70% Yes Yes
Bank of increase 9 income 4.16 4.16
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit Floating
Bank 1000 2017.3.7 2017.4.17 3.70% Yes Yes
Bank of increase income 4.16 4.16
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit 2017.4.1 Floating
Bank 2000 2017.7.12 4.20% Yes Yes
Bank of increase 0 income 21.40 21.40
China SZWL1560
Industrial and ICBC financial
Commercial win-win and profit 2017.4.2 Floating
Bank 3000 2017.7.27 4.20% Yes Yes
Bank of increase 5 income 32.10 32.10
China SZWL1560
Industrial and ICBC financial 2017.4.2 Floating
Bank 1000 2017.6.5 4.00% Yes Yes
Commercial win-win and profit 5 income 4.49 4.49
90
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Bank of increase
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit Floating
Bank 1000 2017.6.5 2017.7.16 4.20% Yes Yes
Bank of increase income 4.72 4.72
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit 2017.7.1 2017.10.1 Floating
Bank 2000 4.40% Yes Yes
Bank of increase 5 6 income 22.42 22.42
China SZWL1560
Industrial and ICBC financial
Commercial win-win and profit 2017.7.2 Floating
Bank 1000 2017.9.4 4.20% Yes Yes
Bank of increase 5 income 4.72 4.72
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit Floating
Bank 3000 2017.8.2 2017.11.3 4.40% Yes Yes
Bank of increase income 33.63 33.63
China SZWL1560
Industrial and ICBC financial
Commercial win-win and profit 2017.9.2 Floating
Bank 1000 2017.11.7 4.40% Yes Yes
Bank of increase 7 income 4.94 4.94
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit 2017.10. Floating
Bank 2000 2018.1.18 4.70% Yes Yes
Bank of increase 17 income - -
China SZWL1560
Industrial and ICBC financial
Commercial win-win and profit 2017.11. Floating
Bank 3000 2018.2.3 4.70% Yes Yes
Bank of increase 3 income - -
China SZWL1561
Industrial and ICBC financial
Commercial win-win and profit 2017.11. 2017.12.2 Floating
Bank 1000 4.40% Yes Yes
Bank of increase 10 1 income 4.94 4.94
China SZWL1550
Industrial and ICBC financial
Commercial win-win and profit 2017.12. Floating
Bank 1000 2018.2.5 4.40% Yes Yes
Bank of increase 26 income - -
China SZWL1550
Industrial and ICBC financial From
Floating
Commercial Bank win-win and profit 2000 2017/12/ 3.50% Yes Yes
income - -
Bank of increase SZDL1301 27
91
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
China
Bank of BOC wealth 2016.12. 2016.12.3 Floating
Bank 1.3 1.3 Yes Yes
China accumulation plan 5 0 income
China Qianyuan -
2016.12. Floating
Construction Bank Premium 2016 No. 500 2017.3.31 4.30% 5.36 5.36 Yes Yes
29 income
Bank 86
China Qianyuan – Silu
2017.1.2 Floating
Construction Bank (Premium) 2017-01 500 2017.5.18 3.90% 6.3 6.3 Yes Yes
0 income
Bank financial product
BOC wealth
Bank of accumulation 2017.1.2 Floating
Bank 200 2017.4.7 3.90% 1.65 1.65 Yes Yes
China financial plan 2017 0 income
No. 017
BOC wealth
Bank of accumulation 2017.1.2 Floating
Bank 500 2017.5.12 4.30% 6.6 6.6 Yes Yes
China financial plan 2017 0 income
No. 018
BOC wealth
Bank of accumulation Floating
Bank 50 2017.2.7 2017.5.16 4.30% 0.58 0.58 Yes Yes
China financial plan 2017 income
No. 033
Bank of Accumulation day Floating
Bank 50 2017.2.7 2017.3.31 2.55% 0.21 0.21 Yes Yes
China by day income
BOC wealth
Bank of accumulation 2017.3.1 Floating
Bank 100 2017.9.5 4.20% 2.06 2.06 Yes Yes
China financial plan 2017 0 income
No. 079
BOC wealth
Bank of accumulation Floating
Bank 800 2017.4.7 2017.6.20 4.30% 6.97 6.97 Yes Yes
China financial plan 2017 income
No. 119
China Qianyuan – Silu
Floating
Construction Bank (Premium) 2017-22 500 2017.4.7 2017.10.8 4.40% 11.09 11.09 Yes Yes
income
Bank financial product
BOC wealth
Bank of accumulation 2017.4.2 Floating
Bank 250 2017.6.6 4.10% 1.18 1.18 Yes Yes
China financial plan 2017 5 income
No. 142
Bank of Accumulation day 2017.5.1 Floating
Bank 550 2017.6.30 2.30% 1.53 1.53 Yes Yes
China by day 7 income
92
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
China Qianyuan - Silu
2017.5.1 Floating
Construction Bank Tiantianying open 500 2017.6.2 0.42 0.42 Yes Yes
9 income
Bank financial product
China Qianyuan - Silu
Floating
Construction Bank Tiantianying open 300 2017.6.5 6.70% 11.33 11.33 Yes Yes
income
Bank financial product
China Qianyuan - Silu
2017.6.3 2017.12.2 Floating
Construction Bank Tiantianying open 200 3.55% 3.5 3.5 Yes Yes
0 7 income
Bank financial product
BOC stable
Bank of financial plan – Floating
Bank 150 2017.7.6 2017.8.10 4.10% 0.59 0.59 Yes Yes
China Zhihui series income
product
China Qianyuan - Silu
2017.12.2 Floating
Construction Bank Tiantianying open 30 2017.8.2 0.43 0.43 Yes Yes
7 income
Bank financial product
China Qianyuan – Yangyi
2017.10. Guaranteed
Construction Bank Sanqin financial 500 2018.1.16 3.70% Yes Yes
16 income
Bank product
BOC guaranteed
Bank of 2017.10. Guaranteed
Bank financing – 100 2017.11.8 2.80% 0.1 0.1 Yes Yes
China 25 income
CNYAQKF
BOC guaranteed
Bank of 2017.10. 2017.11.1 Guaranteed
Bank financing – 400 3.30% 0.76 0.76 Yes Yes
China 25 5 income
CNYAQKF
BOC guaranteed
Bank of 2017.10. 2017.11.2 Guaranteed
Bank financing – 300 3.30% 0.95 0.95 Yes Yes
China 25 9 income
CNYAQKF
BOC guaranteed
Bank of 2017.11. 2017.12.1 Guaranteed
Bank financing – 150 3.30% 0.47 0.47 Yes Yes
China 13 9 income
CNYAQKF
BOC guaranteed
Bank of 2017.11. 2017.12.1 Guaranteed
Bank financing – 300 3.30% 0.57 0.57 Yes Yes
China 24 5 income
CNYAQKF
BOC guaranteed
Bank of 2017.11. 2017.12.2 Guaranteed
Bank financing – 300 3.30% 0.57 0.57 Yes Yes
China 29 0 income
CNYAQKF
BOC guaranteed
Bank of 2017.11. 2017.12.2 Guaranteed
Bank financing – 100 3.30% 0.19 0.19 Yes Yes
China 30 1 income
CNYAQKF
93
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
BOC wealth
BOC SEG
accumulation Promised
Plaza Bank 1,300 2016.1.8 2017.1.6 4.15% 53.8 53.8 Yes Yes
financial plan 2016 income
Sub-branch
No. 005
BOC wealth
BOC SEG
accumulation 2016.3.2 Promised
Plaza Bank 1,600 2017.3.24 4.00% 64.35 64.35 Yes Yes
financial plan 2016 2 income
Sub-branch
No. 100
Industrial and
Commercial
ICBC financial
Bank of 2016.9.2 2016.12.3 Promised
Bank win-win and profit 2,500 3.90% 25.64 25.64 Yes Yes
China, 9 0 income
increase
Baohua
Sub-branch
Industrial and
Commercial
ICBC financial
Bank of 2016.11. Promised
Bank win-win and profit 1,000 2017.2.3 3.70% 9.43 9.43 Yes Yes
China, 3 income
increase
Baohua
Sub-branch
Industrial and
Commercial
ICBC financial
Bank of 2016.11. Promised
Bank win-win and profit 1,500 2017.3.1 3.90% 14.91 14.91 Yes Yes
China, 29 income
increase
Baohua
Sub-branch
BOC SEG BOC Zhihui
Promised
Plaza Bank financing plan 2017 2,500 2017.1.5 2017.4.13 4.20% 28.19 28.19 Yes Yes
income
Sub-branch No. [002-G]
BOC SEG BOC stable
Promised
Plaza Bank financing plan - 1,400 2017.1.9 2017.5.8 4.20% 19.17 19.17 Yes Yes
income
Sub-branch Zhihui series
BOC SEG BOC stable
Promised
Plaza Bank financing plan - 1,000 2017.2.9 2017.5.18 4.30% 11.55 11.55 Yes Yes
income
Sub-branch Zhihui series
Industrial and
ICBC financial
Commercial
win-win No. 3 2017
Bank of 2017.3.1 Promised
Bank No. 4 Type A 1,500 2017.8.31 4.60% 31.95 31.95 Yes Yes
China, 5 income
(customer
Baohua
expansion product)
Sub-branch
94
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
BOC wealth
BOC SEG
accumulation 2017.3.3 Promised
Plaza Bank 1,600 2017.5.9 4.40% 7.52 7.52 Yes Yes
financial plan No. 1 income
Sub-branch
2017-116-HQ
Industrial and
ICBC financial
Commercial
win-win No. 3 2017
Bank of 2017.4.2 2017.10.1 Promised
Bank No. 8 Type B 3,000 4.30% 62.91 62.91 Yes Yes
China, 1 6 income
(customer
Baohua
expansion product)
Sub-branch
BOC wealth
BOC SEG
accumulation 2017.5.1 Promised
Plaza Bank 3,000 2018.5.11 4.50% Yes Yes
financial plan No. 6 income
Sub-branch
2017180
Industrial and
Commercial ICBC financial
Bank of win-win and profit 2017.6.1 Promised
Bank 500 2017.7.22 4.20% 2.42 2.42 Yes Yes
China, increase 2 income
Baohua SZWL1550
Sub-branch
Industrial and
Commercial
ICBC financial
Bank of Promised
Bank win-win and profit 500 2017.7.6 2017.7.13 2.60% 0.24 0.24 Yes Yes
China, income
increase SZDL1301
Baohua
Sub-branch
Industrial and
Commercial
ICBC financial
Bank of Promised
Bank win-win and profit 500 2017.7.6 2017.9.27 3.40% 3.87 3.87 Yes Yes
China, income
increase SZDL1301
Baohua
Sub-branch
Industrial and
Commercial
ICBC financial
Bank of 2017.9.1 Promised
Bank win-win and profit 2,200 2017.9.27 3.20% 2.7 2.7 Yes Yes
China, 3 income
increase SZDL1301
Baohua
Sub-branch
Industrial and ICBC financial
Commercial win-win and profit 2017.9.2 2017.12.3 Promised
Bank 2,000 4.70% Yes Yes
Bank of increase 9 0 income
China, SZWL1560
95
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Baohua
Sub-branch
BOC wealth
BOC SEG
accumulation 2017.10. Promised
Plaza Bank 3,000 2018.4.23 4.95% Yes Yes
financial plan 2017 26 income
Sub-branch
No. 406
Industrial and
Commercial ICBC financial
Bank of win-win and profit 2017.11. Promised
Bank 500 2018.2.9 4.70% Yes Yes
China, increase 9 income
Baohua SZWL1560
Sub-branch
Bank of
BOC accumulation
China,
day by day - daily 2016.11. Promised
Nantong Bank 2017.5.15 2.25% Yes Yes
plan product 1,500.00 25 income 4.97
Gangzha
GSRJYL01
Sub-branch
Bank of
BOC accumulation
China,
day by day - daily Promised
Nantong Bank 2017.3.3 2017.5.27 2.25% Yes Yes
plan product 1,000.00 income 3.56
Gangzha
GSRJYL01
Sub-branch
Bank of
BOC accumulation
China,
day by day - daily 2017.4.1 Promised
Nantong Bank 2017.6.13 2.50% Yes Yes
plan product 700.00 2 income 4.67
Gangzha
GSRJYL01
Sub-branch
Bank of
BOC accumulation
China,
day by day - daily 2017.6.2 Promised
Nantong Bank 2017.6.30 2.50% Yes Yes
plan product 1,000.00 2 income 1.50
Gangzha
GSRJYL01
Sub-branch
Bank of
BOC accumulation
China,
day by day - daily Promised
Nantong Bank 2017.7.5 2017.8.31 2.50% Yes Yes
plan product 1,000.00 income 5.49
Gangzha
GSRJYL01
Sub-branch
Bank of
BOC accumulation
China,
day by day - daily 2017.10.3 Promised
Nantong Bank 2017.9.5 2.50% Yes Yes
plan product 700.00 1 income 1.10
Gangzha
GSRJYL01
Sub-branch
96
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Bank of
BOC accumulation
China,
day by day - daily 2017.11. 2017.11.3 Promised
Nantong Bank 2.50% Yes Yes
plan product 1,000.00 9 0 income 1.49
Gangzha
GSRJYL01
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of 2017.1.1 ed and 0.59942 0.59942
Bank corporate financing 30.00 2017.8.21 3.30% Yes Yes
China, 0 floating 5 5
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of 2017.1.1 ed and 0.59942 0.59942
Bank corporate financing 30.00 2017.8.21 3.30% Yes Yes
China, 0 floating 5 5
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of 2017.1.1 ed and 0.59942 0.59942
Bank corporate financing 30.00 2017.8.21 3.30% Yes Yes
China, 0 floating 5 5
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of 2017.1.1 ed and 0.59942 0.59942
Bank corporate financing 30.00 2017.8.21 3.30% Yes Yes
China, 0 floating 5 5
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of 2017.1.1 ed and 0.59942 0.59942
Bank corporate financing 30.00 2017.8.21 3.30% Yes Yes
China, 0 floating 5 5
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.3.2 0.08630 0.08630
Bank stable income RMB 30.00 2017.5.2 and floating 3.00% Yes Yes
China, 8 1 1
corporate finance income
Sipailou
Sub-branch
Industrial and Bank Guaranteed 35-day 30.00 2017.3.2 2017.5.2 Guaranteed 3.00% 0.08630 0.08630 Yes Yes
97
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Commercial stable income RMB 8 and floating 1 1
Bank of corporate finance income
China,
Sipailou
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.3.2 0.08630 0.08630
Bank stable income RMB 30.00 2017.5.2 and floating 3.00% Yes Yes
China, 8 1 1
corporate finance income
Sipailou
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.3.2 0.08630 0.08630
Bank stable income RMB 30.00 2017.5.2 and floating 3.00% Yes Yes
China, 8 1 1
corporate finance income
Sipailou
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.3.2 0.08630 0.08630
Bank stable income RMB 30.00 2017.5.2 and floating 3.00% Yes Yes
China, 8 1 1
corporate finance income
Sipailou
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of ed and
Bank corporate financing 30.00 2017.5.8 2017.8.21 3.30% 0.27937 0.27937 Yes Yes
China, floating
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of ed and
Bank corporate financing 30.00 2017.5.8 2017.8.21 3.30% 0.27937 0.27937 Yes Yes
China, floating
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of ed and
Bank corporate financing 30.00 2017.5.8 2017.8.21 3.30% 0.27937 0.27937 Yes Yes
China, floating
for income increase
Sipailou income
Sub-branch
Industrial and Bank "Rishengyueheng" 30.00 2017.5.8 2017.8.21 Non-guarante 3.30% 0.27937 0.27937 Yes Yes
98
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Commercial corporate financing ed and
Bank of for income increase floating
China, income
Sipailou
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of ed and
Bank corporate financing 30.00 2017.5.8 2017.8.21 3.30% 0.27937 0.27937 Yes Yes
China, floating
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of ed and 0.20128 0.20128
Bank corporate financing 30.00 2017.6.1 2017.8.21 3.10% Yes Yes
China, floating 8 8
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial Non-guarante
"Rishengyueheng"
Bank of ed and 0.20128 0.20128
Bank corporate financing 30.00 2017.6.1 2017.8.21 3.10% Yes Yes
China, floating 8 8
for income increase
Sipailou income
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.11. 2017.12.1 0.09205 0.09205
Bank stable income RMB 30.00 and floating 3.20% Yes Yes
China, 14 9 5 5
corporate finance income
Sipailou
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.11. 2017.12.1 0.09205 0.09205
Bank stable income RMB 30.00 and floating 3.20% Yes Yes
China, 14 9 5 5
corporate finance income
Sipailou
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.11. 2017.12.1 0.09205 0.09205
Bank stable income RMB 30.00 and floating 3.20% Yes Yes
China, 14 9 5 5
corporate finance income
Sipailou
Sub-branch
Industrial and Bank Guaranteed 35-day 30.00 2017.11. 2017.12.1 Guaranteed 3.20% 0.09205 0.09205 Yes Yes
99
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Commercial stable income RMB 14 9 and floating 5 5
Bank of corporate finance income
China,
Sipailou
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.11. 2017.12.1 0.09205 0.09205
Bank stable income RMB 30.00 and floating 3.20% Yes Yes
China, 14 9 5 5
corporate finance income
Sipailou
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.11. 2017.12.1 0.09205 0.09205
Bank stable income RMB 30.00 and floating 3.20% Yes Yes
China, 14 9 5 5
corporate finance income
Sipailou
Sub-branch
Industrial and
Commercial
Guaranteed 35-day Guaranteed
Bank of 2017.11. 2017.12.1
Bank stable income RMB 20.00 and floating 3.20% 0.06137 0.06137 Yes Yes
China, 14 9
corporate finance income
Sipailou
Sub-branch
BOC stable Non-guarante
Bank of financing plan - 2016. ed and
Bank 400 2017.6.22 3.80% 14.87 14.87 Yes Yes
China Zhihui series No. 6.30 floating
Q16301-G income
BOC wealth Non-guarante
Bank of accumulation 2016.8.2 ed and
Bank 200 2017.3.10 3.45% 3.71 3.71 Yes Yes
China financial plan No. 6 floating
2016.319 income
BOC stable Non-guarante
Bank of financing plan - ed and
Bank 150 2016. 9.8 2017.3.13 3.45% 2.64 2.64 Yes Yes
China Zhihui series No. floating
Q16437-G income
BOC stable Non-guarante
Bank of financing plan - 2016.10. 2017.10.1 ed and
Bank 400 3.60% 14.20 14.20 Yes Yes
China Zhihui series No. 24 9 floating
Q16514-G income
BOC Zhihui Non-guarante
Bank of 2016.12.
Bank financing plan 2016 800 2017.5.25 ed and 3.70% 14.19 14.19 Yes Yes
China 1
No. 473-G floating
100
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
income
Non-guarante
BOC Zhihui
Bank of ed and
Bank financing plan No. 300 2017.1.5 2017.4.13 4.20% 3.38 3.38 Yes Yes
China floating
2017.002-G
income
BOC stable Non-guarante
Bank of financing plan - 2017.3.1 ed and
Bank 300 2017.9.14 4.20% 6.28 6.28 Yes Yes
China Zhihui series No. 6 floating
Q17195-G income
BOC stable Non-guarante
Bank of financing plan - ed and
Bank 600 2017.6.1 2017.8.3 4.10% 4.25 4.25 Yes Yes
China Zhihui series No. floating
Q17444-G income
BOC wealth Non-guarante
Bank of accumulation 2017.6.2 ed and
Bank 640 2017.12.8 4.60% 13.23 13.23 Yes Yes
China financial plan No. 7 floating
2017.229 income
BOC wealth Non-guarante
Bank of accumulation 2017.10.1 ed and
Bank 500 2017.8.8 4.00% 3.51 3.51 Yes Yes
China financial plan No. 1 floating
2017.285 income
BOC guaranteed
Bank of 2017.10. Guaranteed
Bank financing – 500 2018.7.11 3.60% Yes Yes
China 12 income
CNYAQKF
BOC guaranteed
Bank of 2017.10. 2018.10.2 Guaranteed
Bank financing – 300 3.50% Yes Yes
China 20 2 income
CNYAQKF
BOC guaranteed
Bank of 2017.12. Guaranteed
Bank financing – 950 2018.3.13 3.50% Yes Yes
China 11 income
CNYAQKF
Bank of
BOC accumulation
China,
day by day - daily 2017.11. Promised
Nantong Bank 1000 2.25% 1.23 Yes Yes
plan product 30 income
Gangzha
GSRJYL01
Sub-branch
Product code -
Shanghai
2301137338
Pudong 2016.9.2 Floating
Bank Product name - 400 2017.3.25 3.65% 7.20 Yes Yes
Development 9 income
Caifubanche Jinqu
Bank
No. 4
101
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Shanghai Product code -
Pudong 2301137337 2016.11. Floating
Bank 600 2017.2.4 3.55% 5.31 Yes Yes
Development Caifubanche Jinqu 4 income
Bank No. 3
Shanghai Product code -
Pudong 2301137338 2016.12. Floating
Bank 800 2017.3.8 3.80% 7.50 Yes Yes
Development Caifubanche Jinqu 7 income
Bank No. 4
Shanghai Product code -
Pudong 2301137337 2017.2.1 Floating
Bank 400 2017.5.11 4.25% 4.19 Yes Yes
Development Caifubanche Jinqu 0 income
Bank No. 3
Shanghai Product code -
Pudong 2301137337 2017.3.1 Floating
Bank 600 2017.6.13 4.25% 6.21 Yes Yes
Development Caifubanche Jinqu 5 income
Bank No. 4
Shanghai Product code -
Pudong 2301137338 Floating
Bank 600 2017.4.7 2017.10.9 4.65% 14.14 Yes Yes
Development Caifubanche Jinqu income
Bank No. 4
Shanghai Product code -
Pudong 2301137337 2017.5.1 2017.11.1 Floating
Bank 400 4.50% 8.88 Yes Yes
Development Caifubanche Jinqu 7 3 income
Bank No. 4
Shanghai
Product code –
Pudong 2017.6.1 Floating
Bank 2301177101 600 2017.6.29 3.80% 0.94 Yes Yes
Development 5 income
Bubugaosheng
Bank
Shanghai Product code -
Pudong 2301137337 Floating
Bank 600 2017.7.4 2017.10.9 4.90% 7.81 Yes Yes
Development Caifubanche Jinqu income
Bank No. 3
Shanghai Product code -
Pudong 2301137337 2017.10. Floating
Bank 600 2018.1.8 5.00% Yes Yes
Development Caifubanche Jinqu 11 income
Bank No. 3
Shanghai Product code -
Pudong 2301137338 2017.10. Floating
Bank 200 2018.4.8 5.00% Yes Yes
Development Caifubanche Jinqu 11 income
Bank No. 4
Shanghai Bank Product code - 400 2017.11. 2018.2.14 Floating 5.00% Yes Yes
102
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Pudong 2301137337 16 income
Development Caifubanche Jinqu
Bank No. 3
Bank of Yuntong fortune -
2017.1.1 Promised
Communicati Bank daily profit increase 1100 2017.5.10 2.95% 10.5 Yes Yes
7 income
ons 0191120108
Bank of Yuntong fortune -
2017.5.1 Promised
Communicati Bank daily profit increase 1100 2017.7.14 3.70% 7.02 Yes Yes
2 income
ons 2171171686
China
2017.3.1 Promised
Merchants Bank Suiyueliujin 51457 200 2017.7.26 3.30% 2.42 Yes Yes
4 income
Bank
China
Promised
Merchants Bank Suiyueliujin 51460 100 2017.4.6 2017.8.18 3.50% 1.28 Yes Yes
income
Bank
China
2017.5.1 Promised
Merchants Bank Suiyueliujin 51466 1000 2017.8.17 3.50% 8.92 Yes Yes
6 income
Bank
China
2017.6.1 Promised
Merchants Bank Suiyueliujin 51470 150 2017.9.11 3.70% 1.38 Yes Yes
2 income
Bank
China
2017.6.2 Promised
Merchants Bank Suiyueliujin 51472 150 2017.9.11 4.00% 1.26 Yes Yes
6 income
Bank
China
2017.7.1 Promised
Merchants Bank Suiyueliujin 51475 1100 2017.10.9 4.00% 10.12 Yes Yes
7 income
Bank
China
Promised
Merchants Bank Suiyueliujin 51477 350 2017.8.4 2017.11.9 3.80% 3.53 Yes Yes
income
Bank
Bank of Yuntong fortune -
2017.8.2 2017.11.2 Promised
Communicati Bank daily profit increase 1200 3.90% 11.67 Yes Yes
8 7 income
ons 2171173527
China
2017.9.1 2017.12.1 Promised
Merchants Bank Suiyueliujin 51482 350 3.80% 3.53 Yes Yes
2 8 income
Bank
China
2017.10. Promised
Merchants Bank Suiyueliujin 51485 1200 2018.1.18 3.80% Yes Yes
10 income
Bank
China Bank Suiyueliujin 51490 380 2017.11. 2018.2.22 Promised 4.00% Yes Yes
103
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Merchants 14 income
Bank
Bank of Yuntong fortune -
2017.12. Promised
Communicati Bank daily profit increase 1200 2018.3.5 4.30% Yes Yes
4 income
ons 2171175231
China
2017.12. Promised
Merchants Bank Suiyueliujin 51494 100 2018.3.23 4.20% Yes Yes
12 income
Bank
China
2017.12. Promised
Merchants Bank Suiyueliujin 51495 300 2018.4.12 4.20% Yes Yes
19 income
Bank
BOC stable and
Bank of 2016.11. Promised
Bank smart financial 400 2017.3.2 3.60% 3.88 3.88 Yes Yes
China 24 income
product
Industrial and
ICBC financial
Commercial Promised
Bank win-win and profit 1500 2016.9.6 2016.12.8 3.90% 14.91 14.91 Yes Yes
Bank of income
increase
China
Industrial and
ICBC financial
Commercial 2016.11. Promised
Bank win-win and profit 1500 2017.1.3 3.50% 5.9 5.9 Yes Yes
Bank of 23 income
increase
China
Industrial and
ICBC financial
Commercial 2016.11. Promised
Bank win-win and profit 700 2017.1.8 3.70% 2.82 2.82 Yes Yes
Bank of 28 income
increase
China
Industrial and
ICBC financial
Commercial 2016.12. Promised
Bank win-win and profit 1000 2017.1.19 3.70% 4.15 4.15 Yes Yes
Bank of 9 income
increase
China
Industrial and
ICBC financial
Commercial 2016.10. Promised
Bank win-win and profit 1300 2017.1.26 3.70% 12.26 12.26 Yes Yes
Bank of 25 income
increase
China
Industrial and
ICBC financial
Commercial 2016.11. Promised
Bank win-win and profit 1300 2017.2.3 3.70% 12.26 12.26 Yes Yes
Bank of 3 income
increase
China
Industrial and 2016.12. Promised
Bank ICBC financial 600 2017.2.8 3.70% 2.49 2.49 Yes Yes
Commercial 29 income
win-win and profit
Bank of
104
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
China increase
Industrial and
ICBC financial
Commercial Promised
Bank win-win and profit 400 2017.1.3 2017.2.13 3.70% 1.66 1.66 Yes Yes
Bank of income
increase
China
Industrial and
ICBC financial
Commercial Promised
Bank win-win and profit 1000 2017.1.4 2017.2.14 3.70% 4.15 4.15 Yes Yes
Bank of income
increase
China
Industrial and
ICBC financial
Commercial 2017.1.1 Promised
Bank win-win and profit 800 2017.2.21 3.70% 3.32 3.32 Yes Yes
Bank of 1 income
increase
China
Industrial and
ICBC financial
Commercial Floating 3.2-3.5
Bank win-win and stable 1000 2016.8.2 2017.7.11 26.58 26.58 Yes Yes
Bank of income %
profit increase
China
Industrial and
ICBC financial
Commercial 2017.1.2 Floating
Bank win-win and stable 1000 Yes Yes
Bank of 1 income
profit increase
China
Industrial and
ICBC financial
Commercial Promised
Bank win-win and profit 2000 2017.2.9 2017.3.2 3.70% 8.3 8.3 Yes Yes
Bank of income
increase
China
Industrial and
ICBC financial
Commercial Floating 3.2-3.5
Bank win-win and stable 800 2017.2.9 2017.3.24 0.97 0.97 Yes Yes
Bank of income %
profit increase
China
Industrial and
ICBC financial
Commercial 2017.12.2 Floating 2.2-3.5
Bank win-win and stable 1800 2017.3.9 41.13 41.13 Yes Yes
Bank of 9 income %
profit increase
China
Industrial and
ICBC financial
Commercial Floating 2.2-3.5
Bank win-win and stable 300 2017.3.9 2017.6.19 2.33 2.33 Yes Yes
Bank of income %
profit increase
China
BOC stable and
Bank of Promised
Bank smart financial 400 2017.3.6 2017.5.23 3.90% 3.32 3.32 Yes Yes
China income
product
105
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Industrial and
ICBC financial
Commercial 2017.3.2 Floating 2.2-3.5
Bank win-win and stable 100 2017.6.19 1.17 1.17 Yes Yes
Bank of 9 income %
profit increase
China
Industrial and
ICBC financial
Commercial 2017.3.2 Floating 2.2-3.5
Bank win-win and stable 300 2017.5.24 3.4 3.4 Yes Yes
Bank of 9 income %
profit increase
China
Industrial and
ICBC financial
Commercial Floating
Bank win-win and stable 400 2017.4.1 2017.5.24 Yes Yes
Bank of income
profit increase
China
Industrial and
ICBC financial
Commercial Floating 2.2-3.5
Bank win-win and stable 200 2017.5.2 2017.5.10 0.1 0.1 Yes Yes
Bank of income %
profit increase
China
BOC stable and
Bank of 2017.5.2 Promised
Bank smart financial 400 2017.8.24 4.30% 4.28 4.28 Yes Yes
China 5 income
product
Industrial and
ICBC financial
Commercial Promised
Bank win-win and profit 500 2017.8.2 2017.11.3 4.40% 6 6 Yes Yes
Bank of income
increase
China
Industrial and
ICBC financial
Commercial 2017.12.2 Floating 2.2-3.5
Bank win-win and stable 300 2017.8.9 6.46 6.46 Yes Yes
Bank of 9 income %
profit increase
China
Industrial and
ICBC financial
Commercial 2017.8.1 Floating 2.2-3.5
Bank win-win and stable 100 2017.8.29 0.09 0.09 Yes Yes
Bank of 6 income %
profit increase
China
Industrial and
ICBC financial
Commercial 2017.8.1 2017.12.2 Floating 2.2-3.5
Bank win-win and stable 150 4.7 4.7 Yes Yes
Bank of 6 9 income %
profit increase
China
Industrial and
ICBC financial
Commercial 2017.8.1 Floating 2.2-3.5
Bank win-win and stable 150 2017.9.6 0.26 0.26 Yes Yes
Bank of 6 income %
profit increase
China
Bank of BOC Zhifu Ronghui 2017.8.2 2017.11.2 Promised
Bank 400 4.60% 4.6 4.6 Yes Yes
China series 8 6 income
106
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Bank of BOC guaranteed 2017.9.2 2017.12.2 Promised
Bank 250 3.09% 1.94 1.94 Yes Yes
China financing 9 9 income
Bank of BOC accumulation 2017.9.3 Floating
Bank 350 3.00% 1.78 1.78 Yes Yes
China day by day 0 income
Industrial and
ICBC financial
Commercial 2017.10. Floating 2.2-3.5
Bank win-win and stable 100 2017.11.8 0.25 0.25 Yes Yes
Bank of 9 income %
profit increase
China
Industrial and
ICBC financial
Commercial 2017.10. 2017.10.2 Floating 2.2-3.5
Bank win-win and stable 100 0.14 0.14 Yes Yes
Bank of 9 6 income %
profit increase
China
Industrial and
ICBC financial
Commercial 2017.10. Promised
Bank win-win and profit 200 2017.12.4 4.40% 0.99 0.99 Yes Yes
Bank of 24 income
increase
China
Industrial and
ICBC financial
Commercial 2017.11. 2017.12.1 Promised
Bank win-win and profit 500 4.40% 2.47 2.47 Yes Yes
Bank of 7 8 income
increase
China
Bank of Ronghui series 2017.11. Promised
Bank 400 2018.1.31 4.40% Yes Yes
China financial plan 29 income
Bank of Ronghui series 2017.12. 2017.12.3 Promised
Bank 500 4.50% Yes Yes
China financial plan 4 1 income
Industrial and
ICBC financial
Commercial 2017.12. 2017.12.2 Floating
Bank win-win and stable 150 0-3.5% 0.04 0.04 Yes Yes
Bank of 5 9 income
profit increase
China
Floating
Bank Yes Yes
income
Bank of BOC guaranteed 2017.12. Promised
Bank 500 2018.1.16 3.05% Yes Yes
China financing 20 income
Bank of BOC guaranteed 2017.12. Promised
Bank 750 2018.1.18 3.05% Yes Yes
China financing 22 income
Industrial and
ICBC financial
Commercial 2017.12. Floating
Bank win-win and stable 350 0-3.5% Yes Yes
Bank of 25 income
profit increase
China
Industrial and Bank ICBC financial 300 0-3.5% 6.46 6.46 Yes Yes
2017.12. 2017.12.2 Floating
Commercial win-win and stable
107
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Bank of profit increase 27 9 income
China
Industrial and
ICBC financial
Commercial 2017.12. Floating
Bank win-win and stable 100 0-3.5% Yes Yes
Bank of 31 income
profit increase
China
Industrial and
ICBC financial
Commercial 2017.12. Promised
Bank win-win and profit 1000 2018.4.6 4.70% Yes Yes
Bank of 31 income
increase
China
Industrial and
ICBC financial
Commercial 2017.12. Floating
Bank win-win and stable 1550 0-3.5% Yes Yes
Bank of 31 income
profit increase
China
Bank of Ronghui series 2017.12. Promised
Bank 250 2018.1.29 4.75% Yes Yes
China financial plan 29 income
"Xinjiaxin No. 16" 2016.11. Floating
CGB Bank 2017.2.8 2.60% 8.02 Yes Yes
XJXSLJ4829 1,000.00 4 income
BOC accumulation
Bank of 2016.11. Floating
Bank day by day - daily 2017.9.8 2.68% Yes Yes
China 1,550.00 16 income 19.42
plan GSRJYL01
"Penman Boying" 2016.12. Floating
CGB Bank 500.00 2017.1.9 2.60% 1.94 Yes Yes
Ririying 5 income
"Penman Boying" 2016.12. Floating
CGB Bank 900.00 2017.1.5 2.60% 2.53 Yes Yes
Ririying 5 income
BOC accumulation
day by day - daily
Bank of 2016.12. Floating
Bank plan 2017.1.14 2.25% 4.40 Yes Yes
China 1,000.00 26 income
GSRJYL01GSRJY
L01
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 2017.1.1 2017.1.26 3.60% 4.91 Yes Yes
Bank of 2,200.00 income
SZYL1401
China
"Xinjiaxin No. 16" Floating
CGB Bank 2017.1.6 2017.4.12 2.60% Yes Yes
XJXSLJ5225 1,500.00 income 13.81
"Xinjiaxin No. 16" 2017.1.1 Floating
CGB Bank 2017.4.12 2.60% Yes Yes
XJXSL5319 2,300.00 2 income 20.13
Bank of 2017.1.2 Floating
Bank CNYAQKFTPO 700.00 2017.2.8 2.68% 0.77 Yes Yes
China 4 income
108
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 2,200.00 2017.2.1 2017.2.28 3.60% 5.47 Yes Yes
Bank of income
SZYL1401
China
"Xinjiaxin No. 16" 2017.2.1 Floating
CGB Bank 1,000.00 2017.5.11 2.60% 9.12 Yes Yes
XJXSLJ5237 0 income
Industrial and
ICBC financial
Commercial 2017.2.1 Floating
Bank win-win Yuetianli 500.00 2017.2.28 3.60% 0.55 Yes Yes
Bank of 7 income
SZYL1401
China
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 2017.3.1 2017.3.31 3.60% 8.80 Yes Yes
Bank of 3,250.00 income
SZYL1401
China
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 2017.4.1 2017.4.30 8.65 Yes Yes
Bank of 3,250.00 income
SZYL1401
China
Gongying
China Citic 2017.3.1 Floating
Bank Bubugaosheng 348.00 Yes Yes
Bank 0 income
B160C0184
"Xinjiaxin No. 16" 2017.4.1 Floating
CGB Bank 2,300.00 2017.7.14 4.05% 23.22 Yes Yes
XJXSLJ5272 4 income
Ririying 2017.4.1 Floating
CGB Bank 1,500.00 2017.4.19 1.60% 0.31 Yes Yes
PMBYTJ0002 4 income
"Xinjiaxin No. 16" 2017.4.1 Floating
CGB Bank 1,500.00 2017.5.19 3.85% 4.75 Yes Yes
XJXSLJ5983 9 income
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 750.00 2017.5.2 2017.5.31 3.60% 2.48 Yes Yes
Bank of income
SZYL1401
China
Industrial and
ICBC financial
Commercial 2017.5.1 Floating
Bank win-win Yuetianli 500.00 2017.5.31 3.60% 0.65 Yes Yes
Bank of 8 income
SZYL1401
China
"Xinjiaxin No. 16" Floating
CGB Bank 2,000.00 2017.5.4 2017.8.2 4.10% 20.22 Yes Yes
XJXSLJ6159" income
"Xinjiaxin No. 16" 2017.5.1 Floating
CGB Bank 2017.8.10 3.85% 9.62 Yes Yes
XJXSLJ5285" 1,000.00 2 income
109
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
"Xinjiaxin No. 16" 2017.5.1 Floating
CGB Bank 1,500.00 2017.8.17 4.10% Yes Yes
XJXCKJ0059'' 9 income 15.16
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 950.00 2017.6.2 2017.6.30 3.60% 2.72 Yes Yes
Bank of income
SZYL1401
China
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 950.00 2017.7.4 2017.7.31 3.60% 2.72 Yes Yes
Bank of income
SZYL1401
China
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 500.00 2017.7.6 2017.7.31 3.60% 1.13 Yes Yes
Bank of income
SZYL1401
China
"Xinjiaxin No. 16" Floating
CGB Bank 560.00 2017.7.7 2017.10.9 4.15% 5.99 Yes Yes
XJXSLJ6903" income
Industrial and
ICBC financial
Commercial 2017.7.2 Floating
Bank win-win Yuetianli 500.00 2017.7.31 3.60% 0.55 Yes Yes
Bank of 0 income
SZYL1401
China
CGB
2017.7.1 2017.10.1 Floating
CGB Bank ''Minglishuangshou" 2,800.00 4.10% Yes Yes
4 2 income 28.31
XJXCKJ0292
Industrial and
ICBC financial
Commercial Floating
Bank win-win Yuetianli 2017.8.1 2017.8.28 3.60% 5.77 Yes Yes
Bank of 1,950.00 income
SZYL1401
China
"Xinjiaxin No. 16" Floating
CGB Bank 2017.8.4 2018.11.2 4.15% 25.58 Yes Yes
XJXSLJ6911'' 2,500.00 income
"Xinjiaxin No. 16" 2017.8.1 2017.11.1 Floating
CGB Bank 2,300.00 4.30% 24.66 Yes Yes
XJXSLJ6762'' 8 7 income
Industrial and
Commercial Suixin E 2017.9.1 2017.12.1 Floating
Bank 1,000.00 3.50% Yes Yes
Bank of "SXE17BBX 3 5 income
China
Bank of 2017.9.3 2017.12.2 Floating
Bank CNYAQKF 700.00 3.40% Yes Yes
China 0 9 income
"Penman Boying"
2017.10. Floating
CGB Bank Ririying 2,665.00 2017.11.6 1.00% 1.75 Yes Yes
13 income
PMBYTJ0002
110
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
"Xinjiaxin No. 16" 2017.10. 2017.12.1 Floating
CGB Bank 4.20% Yes Yes
XJXSLJ7159'' 1,000.00 13 3 income
"Xinjiaxin No. 16" 2017.11. Floating
CGB Bank 2018.2.6 4.45% Yes Yes
XJXSL7336" 5,191.00 6 income
"Xinjiaxin No. 16" 2017.11. Floating
CGB Bank 2018.5.16 4.45% Yes Yes
XJXCKJ0840" 2,300.00 17 income
247,524. 1,556.0
Total -- -- -- -- -- -- 0 -- 0 -- -- --
00 3
Circumstances where the principal of entrusted financing cannot be recovered or that may otherwise cause impairment
□Applicable √ Not applicable
(2) Entrusted loaning
□ Applicable √ Not applicable
4. Other Important Contracts
√ Applicable □ Not applicable
Book Appraisal
value of value of
assets assets
Base Transaction Implementation
involved involved Appraisal Connected
Contracting Contract Date of date of Pricing price as of the end of Disclosure Disclosure
Counterparty in the in the agency (if transaction Association
party subject signing appraisal principle (RMB the reporting date index
contract contract any) or not
(if any) 10,000) period
(RMB (RMB
10,000) 10,000)
(if any) (if any)
Shenzhen Shenzhen Shenzhen Shenzhen
Short-term January Market Holding
SEG Co., SEG Credit 3,000 None None Fulfilled SEG Co., SEG Credit
financing 13, 2016 price subsidiary
Ltd. Co., Ltd. Ltd. Co., Ltd.
Shenzhen Shenzhen Shenzhen Shenzhen
Short-term April 12, Market Holding
SEG Co., SEG Credit 3,000 None None Fulfilled SEG Co., SEG Credit
financing 2017 price subsidiary
Ltd. Co., Ltd. Ltd. Co., Ltd.
Shenzhen Shenzhen Shenzhen Shenzhen
Short-term April 14, Market Holding
SEG Co., SEG Credit 3,000 None None Being fulfilled SEG Co., SEG Credit
financing 2017 price subsidiary
Ltd. Co., Ltd. Ltd. Co., Ltd.
Shenzhen Shenzhen Shenzhen Shenzhen
Short-term April 20, Market Holding
SEG Co., SEG Credit 4,500 None None Being fulfilled SEG Co., SEG Credit
financing 2017 price subsidiary
Ltd. Co., Ltd. Ltd. Co., Ltd.
111
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Shenzhen Shenzhen Shenzhen Shenzhen
Short-term May 17, Market Holding
SEG Co., SEG Credit 6,000 None None Being fulfilled SEG Co., SEG Credit
financing 2017 price subsidiary
Ltd. Co., Ltd. Ltd. Co., Ltd.
Shenzhen Shenzhen Shenzhen Shenzhen
Short-term May 19, Market Holding
SEG Co., SEG Credit 3,500 None None Being fulfilled SEG Co., SEG Credit
financing 2017 price subsidiary
Ltd. Co., Ltd. Ltd. Co., Ltd.
SPDB SPDB
Shenzhen Shenzhen Shenzhen Shenzhen
Financial April 7, Market
SEG Co., Branch 8,300 None None None Fulfilled SEG Co., Branch
management 2017 price
Ltd. Tairan Ltd. Tairan
Sub-branch Sub-branch
SPDB
Shenzhen SPDB Tairan Shenzhen
Financial April 10, Market Tairan
SEG Co., Sub-branch, 3,000 None None None Fulfilled SEG Co.,
management 2017 price Sub-branch,
Ltd. Shenzhen Ltd.
Shenzhen
Agricultural Agricultural
Bank of Bank of
Shenzhen Shenzhen
China Co., May 11, Market China Co.,
SEG Co., Borrowing 18,000 None None None Being fulfilled SEG Co.,
Ltd. 2017 price Ltd.
Ltd. Ltd.
Shenzhen Shenzhen
Branch Branch
Agricultural Agricultural
Shenzhen Bank of Shenzhen Bank of
April 27, Market
SEG Co., China Credit 25,000 None None None Being fulfilled SEG Co., China
2017 price
Ltd. Shenzhen Ltd. Shenzhen
Branch Branch
SPDB
Shenzhen SPDB Tairan Shenzhen
Financial June 22, Market Tairan
SEG Co., Sub-branch, 5,000 None None None Fulfilled SEG Co.,
management 2017 price Sub-branch,
Ltd. Shenzhen Ltd.
Shenzhen
SPDB
Shenzhen SPDB Tairan Shenzhen
Structured June 22, Market Tairan
SEG Co., Sub-branch, 4,000 None None None Fulfilled SEG Co.,
deposit 2017 price Sub-branch,
Ltd. Shenzhen Ltd.
Shenzhen
Agricultural Agricultural
Shenzhen Bank of Cushman Shenzhen Bank of
April 27,
SEG Co., China Mortgage 32,943 32,943 & Fair value 32,943 None None Being fulfilled SEG Co., China
2017
Ltd. Shenzhen Wakefield Ltd. Shenzhen
Branch Branch
Shenzhen Shenzhen Partnership March Market Shenzhen Shenzhen
9,000 None None None Being fulfilled
SEG Co., Hongtu SEG agreement 15, 2017 price SEG Co., Hongtu SEG
112
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Ltd. Investment Ltd. Investment
Management Management
Co., Ltd. and Co., Ltd.
Shenzhen and
Guiding Shenzhen
Fund Guiding
Investment Fund
Co., Ltd. Investment
Co., Ltd.
Shenzhen Shenzhen
Shenzhen SEG Shenzhen SEG
August Free of Holding
SEG Co., Industrial Borrowing 4,200 None None Being fulfilled SEG Co., Industrial
1, 2014 interest subsidiary
Ltd. Investment Ltd. Investment
Co., Ltd. Co., Ltd.
Suzhou SEG Suzhou SEG
Shenzhen Shenzhen
Digital Plaza June 8, Free of Holding Digital Plaza
SEG Co., Borrowing 1,000 None None Being fulfilled SEG Co.,
Management 2015 interest subsidiary Management
Ltd. Ltd.
Co., Ltd. Co., Ltd.
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XVIII. Social Responsibility
1. Fulfillment of the social responsibility for targeted poverty alleviation
(1) Overview of annual targeted poverty alleviation
According to the national decision to fight against poverty and the work arrangements of the CPC Committee of
Guangdong Province, People's Government of Guangdong Province, CPC Committee of Shenzhen, People's
Government of Shenzhen, State-owned Assets Supervision and Administration Commission of Shenzhen, and
SEG Group on three-year targeted poverty alleviation, SEG Group was designated to provide poverty alleviation
aid for Zishi Village, Zishi Town, Longchuan County, Heyuan. In recent years, the CPC Committee and leaders
of the Company have attached great importance to and carried out poverty alleviation, subjected thoughts and
actions to the spirits conveyed by important talks of Xi Jinping, CPC General Secretary, and decisions and
arrangements on targeted poverty alleviation of government at all levels and the upper CPC committee. SEG
Group arranged for special personnel to stay at the village for poverty alleviation. The Company and its
controlling subsidiaries aided 20 low-income families and 44 impoverished persons.
In 2017, the Company organized "targeted poverty alleviation on campus and study assistance". In March, the
Company donated caring materials to the Central Primary School of Zishi Town, Heyuan and brought STEAM
creative programs to students. In May, the Company arranged for merchants to visit Zishi Village and consoled
low-income families. In December, under the leadership of the Secretary of the CPC Committee of the Company,
some middle managers of the Company, heads of enterprises in Shenzhen and party workers went to Zishi
Village, visited poverty-stricken families, and sent consolation money and gifts for the Spring Festival.
(2) Overview of subsequent targeted poverty alleviation
1. The Company will work on the PV power generation project. 2. The Company will increase efforts on
industrial projects for targeted poverty alleviation, and promote the pigeon eco-breeding program in the form of
enterprises + farmers according to the uniform arrangement of Longchuan CPC Committee. 3. The Company
will promote infrastructure construction and complete the villager cultural activity plaza, road hardening project,
and drinking water purification transformation.
2. Environmental protection
Are the listed company and its subsidiaries key polluters publicized by the environmental protection department?
No
XIX. Notes on Other Major Events
√ Applicable □ Not applicable
Inquiry Index for the Websites Disclosing the
Overview of Major Events Disclosure Date
Temporary Reports
1. Progress of major assets restructuring January 18, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
Transfer of Underlying Assets for Share
Issuance and Cash Payment to Acquire
Assets and Raise Funds & Connected
Transactions
January 18, 2017 http://www.cninfo.com.cn
Report of Shenzhen SEG Co., Ltd. on
Transfer of Underlying Assets for Share
Issuance and Cash Payment to Acquire
Assets and Raise Funds & Connected
Transactions (Draft)
January 25, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
Transfer of Underlying Assets for Share
Issuance and Cash Payment to Acquire Assets
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and Raise Funds & Connected Transactions
March 4, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
Transfer of Underlying Assets for Share
Issuance and Cash Payment to Acquire Assets
and Raise Funds & Connected Transactions
& Public Offering of New Shares
2. Extension of the lockup period by the controlling May 17, 2017 http://www.cninfo.com.cn
shareholder SEG Group Announcement of Shenzhen SEG Co., Ltd. on
Extension of the Lockup Period by the
Controlling Shareholder
3. Investment and establishment of Shenzhen SEG April 7, 2017 http://www.cninfo.com.cn
Zhongtong Technology Co., Ltd. and participation Announcement of Shenzhen SEG Co., Ltd. on
in the Wi-Fi project of China Railway Corporation Investment and Establishment of Shenzhen
SEG Zhongtong Technology Co., Ltd. and
Participation in the Wi-Fi Project of China
Railway Corporation
4. 2016 annual equity distribution of the Company July 6, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
the Profit Distribution Proposal and the
Proposal for Transfer of Capital Reserves
into Share Capital in 2016
August 11, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
2016 Annual Equity Distribution
5. Changes in directors and supervisors July 6, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
Resignation of Directors and Supervisors
July 21, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
the 4th Extraordinary General Meeting in
2017
August 31, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
Resignation of the Chairman
September 26, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
the 5th Extraordinary General Meeting in
2017
6. Investment and establishment of Shenzhen SEG August 11, 2017 http://www.cninfo.com.cn
Yicheng Science and Technology Co., Ltd. and Announcement of Shenzhen SEG Co., Ltd. on
construction and operation of SEG maker education the Establishment of Shenzhen SEG Yicheng
and technology experience museum Science and Technology Co., Ltd. and
Construction & Operation of SEG Maker
Education and Technology Experience
Museum
7. Adjustment of the price and number of shares August 22, 2017 http://www.cninfo.com.cn
involved in share issuance and cash payment to Announcement of Shenzhen SEG Co., Ltd. on
acquire assets and raise funds after 2016 annual Adjustment of the Price and Number of
equity distribution Shares Involved in Share Issuance and Cash
Payment to Acquire Assets and Raise Funds
after 2016 Annual Equity Distribution
8. Reduction of holding-shares of Shenzhen September 9, 2017 http://www.cninfo.com.cn
Huakong SEG Co., Ltd. Announcement of Shenzhen SEG Co., Ltd. on
Reduction of Holding-shares of Shenzhen
Huakong SEG Co., Ltd.
9. Increase in holding-shares of the Company by September 26, 2017 http://www.cninfo.com.cn
115
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
some directors, supervisors, senior executives, and Announcement of Shenzhen SEG Co., Ltd. on
middle managers of the controlling shareholder and Increase in holding-shares of the Company
some directors, supervisors, and senior executives of by Some Directors, Supervisors, Senior
the Company Executives, and Middle Managers of the
Controlling Shareholder and Some
Directors, Supervisors, and Senior
Executives of the Company
10. Equity transfer of Wuxi SEG Electronics Market October 7, 2017 http://www.cninfo.com.cn
Co., Ltd. Announcement of Shenzhen SEG Co., Ltd. on
the Progress of Equity Transfer of Wuxi SEG
Electronics Market Co., Ltd.
11. Financial aid to affiliates October 18, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
Financial Aid to Affiliates
12. Increase in holding-shares of the Company by November 15, 2017 http://www.cninfo.com.cn
the controlling shareholder Announcement of Shenzhen SEG Co., Ltd. on
the Controlling Shareholder's Plan to
Increase Holding-shares of the Company
November 27, 2017 http://www.cninfo.com.cn
Announcement of Shenzhen SEG Co., Ltd. on
the Progress of Increase in Holding-shares
of the Company by the Controlling
Shareholder and Persons Acting in Concert
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Chapter 6 Changes in Share Capital and Information on
Shareholders
I. Information on Changes in Share Capital
1. Changes in shares
Unit: Share
Before the change Increase/decrease by (+, -) After the change
Capitalization
New share Bonus
Quantity Percentage of public Others Subtotal Quantity Percentage
offering share
reserve
I. Restricted shares 77,439 0.01% 450,857,239 0 0 112,500 450,969,739 451,047,178 36.50%
1. State-owned shares 0 0.00% 0 0 0 0 0 0 0.00%
(2) State-owned legal
0 0.00% 450,857,239 0 0 0 450,857,239 450,857,239 36.49%
person's shares
3. Other domestic
77,439 0.01% 0 0 0 112,500 112,500 189,939 0.01%
shares
Including: Shares
held by overseas legal 0 0.00% 0 0 0 0 0 0 0.00%
persons
Shares held
by domestic natural 77,439 0.01% 0 0 0 112,500 112,500 189,939 0.01%
persons
4. Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
foreign units
Including: Shares
held by overseas legal 0 0.00% 0 0 0 0 0 0 0.00%
persons
Shares held
by foreign natural 0 0.00% 0 0 0 0 0 0 0.00%
persons
II. Unrestricted shares 784,721,571 99.99% 0 0 0 -112,500 -112,500 784,609,071 63.49%
1. RMB ordinary
538,260,253 68.59% 0 0 0 -112,500 -112,500 538,147,753 43.55%
shares
2. Domestically listed
246,461,318 31.40% 0 0 0 0 0 246,461,318 19.95%
foreign shares
3. Overseas listed
0 0.00% 0 0 0 0 0 0 0.00%
foreign shares
4. Others 0 0.00% 0 0 0 0 0 0 0.00%
III. Total shares 784,799,010 100.00% 450,857,239 0 0 0 450,857,239 1,235,656,249 100.00%
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Reason for change
√ Applicable □ Not applicable
(1) On January 17, 2017, the Company received the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to
Shenzhen SEG Group Co., Ltd. to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) issued
by the CSRC. Shenzhen SEG was approved to issue 450,857,239 shares to Shenzhen SEG Group for asset
purchase. The said shares were issued on March 6, 2017, and the total share capital of the Company is increased
to 1,235,656,249 shares.
(2) The Company completed the general election of the Board of Directors and the Board of Supervisors in July
2016. The number of restricted shares held by directors, supervisors, and senior executives are changed due to
changes in directors and supervisors of the Company in July and August 2017.
Approval of changes in share capital
□ Applicable √ Not applicable
Share transfer
□ Applicable √ Not applicable
Impact of changes in share capital on such financial indicators as basic EPS, diluted EPS, and net asset per share
attributable to common shareholders of the Company in the last year and previous reporting period
√ Applicable □ Not applicable
Considering the Announcement of Shenzhen SEG Co., Ltd. on Transfer of Underlying Assets for Share Issuance
and Cash Payment to Acquire Assets and Raise Funds & Connected Transactions disclosed by the Company on
January 25, 2017, according to the Accounting Standards for Enterprises, the asset acquisition and share
issuance of the Company in 2017 is business combination under common control. In the consolidated financial
statements of 2017, both the profit in the same period of the last year and the profit this year include the annual
profit of the underlying assets acquired by major assets restructuring and share issuance of the Company. As a
result, it has no significant impact on the basic earnings per share and diluted earnings per share of the Company.
As the Company had to pay the consideration of RMB 670 million to SEG Group after asset acquisition and
share issuance in January 2017, the net assets at the end of year and net assets attributable to common
shareholders of the Company decreased year on year.
Other contents as deemed necessary by the Company or required by the securities regulatory authority to be
disclosed
□ Applicable √ Not applicable
2. Information on changes in restricted shares
√ Applicable □ Not applicable
Unit: Share
Restricted shares Restricted shares Restricted shares
Name of Restricted shares Reason for Date for releasing
at period released in the increased in the
shareholder at period end restricted trade restricted trade
beginning current period current period
Shenzhen SEG Secondary public
0 0 450,857,239 450,857,239 2020.9.5
Group Co., Ltd. offering
Wang Bao 0 0 17,250 17,250 Senior Lock-up or
executive-targeted circulation
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share according to rules
Senior based on changes
Zhang Guangliu 0 0 15,750 15,750 executive-targeted in holding shares
share of directors,
supervisors and
Senior senior executives
Liu Zhijun 7,500 0 15,000 22,500 executive-targeted
share
Senior
Zhu Longqing 12,000 0 15,750 27,750 executive-targeted
share
Senior
Bo Hongxi 0 0 3,750 3,750 executive-targeted
share
Senior
Tang Chongyin 0 0 14,250 14,250 executive-targeted
share
Senior
Zhang Haifan 0 0 7,500 7,500 executive-targeted
share
Senior
Lu Guiqin 0 0 13,500 13,500 executive-targeted
share
The shares
transferred per
year shall not
exceed 25% of
the total holding
Resignation of the shares of the
Zheng Dan 31,939 0 15,750 47,689
director Company for the
term and for six
months upon
expiration of the
term determined
at appointment.
Removal of the
Ying Huadong 10,000 10,000 0 0 supervisor after 2017.1.16
election
Removal of the
Tian Jiliang 1,000 1,000 0 0 supervisor after 2017.1.16
election
The shares
transferred per
year shall not
exceed 25% of
the total holding
Resignation of the shares of the
Xu Ning 15,000 0 5000 20,000
supervisor Company for the
term and for six
months upon
expiration of the
term determined
at appointment.
Total 77,439 11,000 450,980,739 451,047,178 -- --
II. Issuance and listing of shares
1. Issuance of securities (preferential shares excluded) in the reporting period
√ Applicable □ Not applicable
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Name of Shares
Termination
stock and Date of Offering Number of approved for Disclosure Disclosure
Listing date date of
derivative issuance price (or rate) shares listed index date
transaction
securities transaction
Stock
http://www.c
ninfo.com.cn
Announceme
nt of
Shenzhen
SEG Co., Ltd.
on Transfer of
Underlying
Assets for
March 6, March 6, March 6, Share March 4,
000058 9.94 450,857,239 450,857,239 Issuance and 2017
2017 2017 2017
Cash
Payment to
Acquire
Assets and
Raise Funds
& Connected
Transactions
& Public
Offering of
New Shares
Note to issuance of securities (preferential shares excluded) in the reporting period
2. Explanations to changes in the sum of shares and the shareholder structure as well as changes in the
asset and debt structure of the company.
√ Applicable □ Not applicable
On January 17, 2017, the Company received the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to
Shenzhen SEG Group Co., Ltd. to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) issued
by China Securities Regulatory Commission (CSRC), which approved the Company to issue 450,857,239 shares
to SEG Group to acquire relevant assets. The shares were issued on March 6, 2017. The total share capital of the
Company increased from 784,799,010 shares to 1,235,656,249 shares. The four target companies, SEG Real
Estate, SEG Entertainment, SegMaker, and SEG Property Development completed the asset transfer formalities
on January 19, 2017. As of December 2017，the business income is RMB6,9,2259,000,the asset-liability ratio is
63.09%。
3. Information of existing staff shares
□ Applicable √ Not applicable
III. Information on Shareholders and Actual Controllers
1. Information on the number of shareholders and their shareholding status
Unit: Share
Total number of Total
Total number of Total number of
ordinary number of
ordinary preferred shareholders
shareholders at the 69900 restored with the preferred
shareholders at the 71,481 0 0
end of the month shareholders
end of the voting rights (if any)
immediately before restored
reporting period (see Note 8)
the disclosure of the with the
120
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
annual report voting
rights at the
end of the
month
immediately
before the
disclosure
of the
annual
report (if
any) (see
Note 8)
Information on the shareholders holding more than 5% shares or top 10 shareholders
Shares held Share Information on pledged
by the end increase/ Quantity of Quantity of or frozen shares
Nature of Shareholding
Name of shareholder of the decrease in restricted unrestricted
shareholder percentage Share
reporting the reporting shares held shares held Quantity
status
period period
Shenzhen SEG Group State-owned
56.70% 237,359,666 +463,269,093 450,857,239 12,411,854
Co., Ltd. legal person
Domestic
Liu Guocheng 0.55% 6,891,302 +86,800 0 6,891,302
natural person
Domestic
Zhang Jiao 0.33% 4,046,989 0 0 4,046,989
natural person
Domestic
Liu Guohong 0.25% 3,069,939 -230,649 0 3,069,939
natural person
Overseas
Gong Qianhua 0.24% 2,940,000 0 0 2,940,000
natural person
China Securities Domestic
Finance Corporation non-state-owned 0.18% 2,271,900 0 0 2,271,900
Limited legal person
Domestic 0.17%
Bian Xueping 2,184,100 +2,184,100 0 2,184,100
natural person
Shanghai Juzhang
Domestic
Investment
non-state-owned 0.16% 1,974,641 +1,336,220 0 1,974,641
Management Co.,
legal person
Ltd.
China Hi-tech Group State-owned
0.12% 1,500,000 0 0 1,500,000
Corporation legal person
Domestic
Zeng Ying 0.10% 1,300,000 -1,000,000 0 1,300,000
natural person
Strategic investors or general legal
entities who became one of the top ten
N/A
shareholders by participating in rights
issue (If any)
Explanations on the association Shenzhen SEG Group Co., Ltd has no association relationship with other shareholders, nor
relationship or concerted action among it is a concerted action unit as described by the Management Methods for Disclosure of
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
the above-mentioned shareholders Information on Changes in Shareholding Status of Shareholders of Listed Companies It is
unknown whether other shareholders have an association relationship or are concerted
action units or not.
Unrestricted Tradable Shares Held by Top Ten Shareholders
Unrestricted shares held at Type of share
Name of shareholder
the period end Type of share Quantity
Shenzhen SEG Group Co., Ltd. 12,411,854 RMB ordinary shares 12,411,854
Liu Guocheng 6,891,302 Domestically listed foreign shares 6,891,302
Zhang Jiao 4,046,989 RMB ordinary shares 4,046,989
Liu Guohong 3,069,939 Domestically listed foreign shares 3,069,939
Gong Qianhua 2,940,000 Domestically listed foreign shares 2,940,000
China Securities Finance Corporation
2,271,900 RMB ordinary shares 2,271,900
Limited
Bian Xueping 2,184,100 RMB ordinary shares 2,184,100
Shanghai Juzhang Investment
1,974,641 RMB ordinary shares 1,974,641
Management Co., Ltd.
China Hi-tech Group Corporation 1,500,000 RMB ordinary shares 1,500,000
Zeng Ying 1,300,000 Domestically listed foreign shares 1,300,000
Explanations on the association
Shenzhen SEG Group Co., Ltd has no association with other shareholders, nor it is a
relationship or concerted action among
concerted action unit as described by the Management Methods for Disclosure of
the top ten shareholders of unrestricted
Information on Changes in Shareholding Status of Shareholders of Listed Companies It is
shares, and between the top ten
unknown whether other shareholders have an association relationship or are concerted
shareholders of unrestricted shares and
action units or not.
the top ten shareholders
Among the above top 10 shareholders, Zhang Jiao holds 0 shares of the Company in an
Information of top ten ordinary ordinary account and 4,046,989 shares in a margin trading investor credit account, totaling
shareholders participating in financing 4,046,989 shares of the Company. Bian Xueping holds 0 share of the Company in an
business (if any) (see Note 4) ordinary account and 2,184,100 shares in a margin trading investor credit account, totaling
2,184,100 shares of the Company.
Do the top ten ordinary shareholders of the Company or top ten ordinary shareholders of non-restricted shares
conduct agreed repurchase transactions in the reporting period?
□ Yes √ No
The top ten ordinary shareholders of the Company or top ten ordinary shareholders of non-restricted shares did
not conduct agreed repurchase transactions in the reporting period.
2. Information about controlling shareholders of the Company
Nature of controlling shareholder: local state-owned control
Type of controlling shareholder: legal person
Name of controlling Legal representative/ Organization
Date of incorporation Main business
shareholder Company manager code
Electronic products, household appliances,
Shenzhen SEG Group Wang Bao August 23, 1984 9144030019218
toys, electronic and telecommunications
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Name of controlling Legal representative/ Organization
Date of incorporation Main business
shareholder Company manager code
Co., Ltd. 0930F facilities and equipment, instrument,
automobile and motorcycle accessories,
computers and accessories, office
automation equipment and supplies,
production research of electronic chemical
projects (the license of the production site
to be separately applied for); electronic
system engineering projects; electronics
and telecommunications markets; talent
training; real estate development (on the
land with legally acquired land use rights);
real estate brokerage; freight forwarding;
logistics and warehousing; sightseeing and
catering, shopping mall and exhibition
business of Shenzhen SEG Plaza;
development and maintenance of network
and information engineering technology;
import and export business; paid use
license of SEG registered trademark;
investment consulting; investment
management; agency accounting; business
registration agency.
Equity of other overseas listed companies in which the controlling shareholders have a controlling share and hold shares
Proportion of
Abbreviations of held stock Number of shares held
No. Company name shareholding
and securities code (Unit: Share)
(%)
1 Shenzhen SEG Group Co., Ltd. Huakong SEG 000068 58,325,983 5.79
2 SEG (HONGKONG) Company Limited Shen Huafa B200020 16,569,560 5.85
GOOD HOPE CORNER
3 Shen Huafa 200020 12,700,000 4.49
INVESTMENTS LTD
4 SEG (HONGKONG) Company Limited NewOcean Energy 0342 100,000 0.01
Changes in controlling shareholders in the reporting period
□ Applicable √ Not applicable
In the reporting period, the controlling shareholders of the Company are not changed.
3. Actual controller of the Company
Nature of actual controller: local state-owned assets management institution
Type of actual controller: legal person
Legal representative/ Date of
Name of actual controller Organization code Main business
Company manager incorporation
Shenzhen State-owned Assets Peng Haibin Not applicable Not applicable
123
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Supervision and Administration
Commission
Equities of other listed companies
at home or abroad controlled by
Not applicable
the actual controller in the
reporting period
Changes in the actual controllers in the reporting period
□ Applicable √ Not applicable
In the reporting period, controlling shareholders of the Company remain unchanged.
The following is the block diagram of the property rights and controlling relationship between the Company and
controlling shareholders as of the disclosure date of the report:
State-owned Assets
Supervision and 100% Shenzhen Oriental China Great Wall Shenzhen Kunpeng
Shenzhen Capital
Administration Fortune Capital Asset Management Equity Investment
Co., Ltd.
Commission of Co., Ltd. Co., Ltd. Co., Ltd.
Shenzhen
42.85% 26.12% 13.72 9.8% 7.51%
Shenzhen SEG Group Co., Ltd.
56.7%
Shenzhen SEG Co., Ltd.
The actual controllers control the Company by trust or other asset management methods.
□ Applicable √ Not applicable
4. Other legal-person shareholders who hold more than 10% shares
□ Applicable √ Not applicable
5. Limited unloading of shares by controlling shareholder, actual controller, restructured entity and other
commitment makers
□ Applicable √ Not applicable
Chapter 7 Preferred Shares
□ Applicable √ Not applicable
124
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
No preferred share is involved in the reporting period.
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Chapter 8 Information on Directors, Supervisors, Senior Executives and Employees
I. Changes in Shares Held by Directors, Supervisors and Senior Executives
Increase of Decrease of shares
Shares held at Increase or Shares held at
Employment Beginning date of Ending date of shares held in the held in the
Name Title Gender Age period beginning decrease period end
status office term office term reporting period reporting period
(share) (Share) (share)
(share) (share)
September 25,
Wang Bao Chairman Incumbent Male 53 July 15, 2019 0 23,000 0 0 23,000
2017
Xu Laping Director Incumbent Male 39 July 21, 2017 July 15, 2019 0 0 0 0 0
Zhang
Director Incumbent Male 55 July 15, 2016 July 15, 2019 0 21,000 0 0 21,000
Guangliu
Yu Qian Director Incumbent Male 49 July 15, 2016 July 15, 2019 0 0 0 0 0
Director/ General
Liu Zhijun Incumbent Male 49 July 15, 2016 July 15, 2019 10,000 20,000 0 0 30,000
Manager
Independent
Li Luoli Incumbent Male 70 July 15, 2016 July 15, 2019 0 0 0 0 0
Director
Independent
Song Pingping Incumbent Female 50 July 15, 2016 July 15, 2019 0 0 0 0 0
Director
Independent
Fan Zhiqing Incumbent Male 68 July 15, 2016 July 15, 2019 0 0 0 0 0
Director
Wang Li Chairman Retired Male 56 July 15, 2016 August 30, 2017 0 0 0 0 0
Cao Xiang Director Retired Male 49 July 15, 2016 July 4, 2017 0 0 0 0 0
Director/Vice
General
December 20,
Zheng Dan Manager/Secretary Retired Female 52 July 15, 2016 42,586 21,000 0 0 63,586
2017
of the Board of
Directors
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Chairman of the
Liu Rongzhi Board of Incumbent Male 59 July 21, 2017 July 15, 2019 0 0 0 0 0
Supervisors
Tang Chongyin Supervisor Incumbent Male 57 July 15, 2016 July 15, 2019 0 19,000 0 0 19,000
Liu Fusong Supervisor Incumbent Male 47 July 15, 2016 July 15, 2019 0 0 0 0 0
Ru Guiqin Supervisor Incumbent Female 53 July 15, 2016 July 15, 2019 0 18,000 0 0 18,000
Zhang Haifan Supervisor Incumbent Female 44 July 15, 2016 July 15, 2019 0 10,000 0 0 10,000
Chairman of the
Xu Ning Board of Retired Male 52 July 15, 2016 July 4, 2017 20,000 0 0 0 20,000
Supervisors
Vice General
Zhu Longqing Incumbent Male 56 August 1, 2016 July 15, 2019 12,000 20,000 0 0 33,000
Manager
Vice General
Bo Hongxi Incumbent Male 59 August 1, 2016 July 15, 2019 0 5,000 0 0 5,000
Manager
Total -- -- -- -- -- -- 84,586 157,000 0 0 242,586
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II. Changes in Directors, Supervisors, and Senior Executives
Name Position Type Date Reason
Cao Xiang Director Retired July 4, 2017 Resignation
Wang Li Director/Chairman Retired August 30, 2017 Resignation
Director/Secretary of
Zheng Dan Retired December 20, 2017 Resignation
the Board of Directors
Supervisor/Chairman
Xu Ning of the Board of Retired July 4, 2017 Resignation
Supervisors
III. Information on Position
Professional background, work experience and main responsibility of current directors, supervisors, and senior
executives
(I) Members of the Board of Directors
1. Wang Bao, male, born in 1964, Master, is Chairman of the Board of Directors of the Company, Secretary of
the CPC Committee & Chairman of SEG Group and Vice Chairman of STMicroelectronics. He was former
Secretary of the CPC Committee, Chairman and General Manager of Shenzhen SDG Information Co., Ltd.,
Deputy General Manager of Shenzhen SDG Liming Group Co., Ltd., Economist of Department of Trade
and Industry of Shenzhen Construction Investment Holding Co., Ltd., Office Director of Shenzhen Luohu
District Tianbei Industrial Co., Ltd., and Officer of the People's Government of Huainan, Anhui.
2. Yu Qian, male, born in 1968, Bachelor, economist, is Director of the Company, Vice General Manager of
Guangxi Zhuang Autonomous Region Branch of China Orient Asset Management Co., Ltd. and Director of
SEG Group. He was former Section Chief & Deputy Director of Credit Bureau of Bank of China Hunan
Branch, Director of Changsha Office & Senior Manager of China Orient Asset Management Co., Ltd., and
Assistant General Manager and Deputy General Manager of Dong Yin Development (Holdings) Limited.
3. Xu Laping, male, born in 1968, Ph.D, is Director of the Company and Director of Strategic Research
Department of Shenzhen Capital Co., Ltd. He was former Deputy Director and Senior Manager of Strategic
Research Department of Shenzhen Capital Co., Ltd., specially-appointed researcher of the Capital
Operation Division of State-owned Assets Supervision and Administration Commission of the People's
Government of Shenzhen, researcher of Development Research Center of Bao'an District, Shenzhen, and
assistant researcher of Peking University Shenzhen Graduate School and Nankai University Top Human
SME Research Center.
4. Zhang Guangliu, male, born in 1962, Bachelor, is Director of the Company, Vice General Manager of SEG
Group, Chairman of SEG Recreation and Chairman of the Board of Supervisors of Shenzhen Si
Semiconductors Co., Ltd. He was former Chairman of the Board of Supervisors of Huakong SEG,
Chairman of SEG (HONGKONG) Company Limited, and Finance Chief and Director of Shenzhen
Building Materials Group Co., Ltd., Shenzhen Pharmaceutical Production and Supply Corporation, and
Shenzhen Hua Sheng Enterprise Group Company Limited.
5. Liu Zhijun, male, born in 1968, Master, is Secretary of the CPC Committee, Director & General Manager of
the Company, Chairman of Nantong SEG, Chairman of Longgang SEG, Chairman of Xi'an SEG, Chairman
of Xi'an Hairong SEG, Chairman & General Manager of SEC Investment, Director of SEG Credit, Director
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of SEG Lianzhong, member of Hongtu SEG Investment Decision-making Commission, Supervisor of
Kashgar Shenzhen City Co., Ltd, and General Manager of CEEC. He was former Deputy Secretary of the
CPC Committee of the Company, Chairman & General Manager of Longyan Application, Chairman of
SEG E-commerce, Chairman of Shanghai SEG, Manager of Business Department of SEG Group, and Vice
General Manager of SEG Baohua.
6. Fan Zhiqing, male, born in December 1949, Master, senior accountant & senior economist, is Independent
Director of the Company and Independent Director of Shenbao Industrial Co., Ltd. He was former
Independent Director of Shenzhen Universal Group, Shahe Industrial Co., Ltd., Ocean's King and
Kingsigna, Senior Executive accredited by the Ministry of Electronics Industry to large enterprises and
state-owned enterprises in Shenzhen, judge and review expert of Guangdong senior titles, review expert of
Shenzhen government projects, and visiting professor of Shenzhen University and Shenzhen Managers'
College.
7. Li Luoli, male, born in 1947, Master, a professor & doctoral supervisor of Nankai University, is
Independent Director of the Company, Vice Chairman of China Development Institute, Vice President of
China Society of Economic Reform, and Chairman of Shenzhen Ma Hong Foundation for Economic
Improvement Research. He was former Deputy Director of the Institute of Economics of Nankai University,
Deputy Director of the Price Institute of the State Administration for Commodity Prices, Deputy Director of
the Office of the People's Government of Shenzhen, Director of Shenzhen Information Center, Deputy
Secretary-General & Director of the Reception Office of Shenzhen CPC Committee, Vice Chairman &
Secretary-General of China Development Institute, and President of China Opening Journal.
8. Song Pingping, female, born in March 1967, Master, is Independent Director of the Company, partner of
Shenzhen Oriental Fortune Capital Co., Ltd., arbitrator of South China International Economic and Trade
Arbitration Commission, and Independent Director of Shenzhen Yantian Port Group Co., Ltd. She was
former partner of King & Wood Mallesons.
(II) Members of the Board of Supervisors
1. Liu Rongzhi, male, born in 1958, junior college, is Chairman of the Board of Supervisors of the Company
and Director & CFO of SEG Group. He was former Chairman of the Board of Supervisors of Shenzhen Bus
Group Co., Ltd., Director & CFO of Shenzhen Capital Group Co., Ltd., Director & CFO of Shenzhen
Yantian Port Group Co., Ltd., Director & CFO of Shenzhen Great Bay Port Investment Development Co.,
Ltd., Chairman of the Board of Supervisors of Shenzhen Laiyingda Group Co., Ltd., Director of General
Department, Director of Audit Department, Deputy Director of Assets Verification Office & Principal Staff
Member of Industry and Communications Department of Shenzhen Investment Management Company, and
Principal Staff Member of Shenzhen Finance Bureau.
2. Liu Fusong, male, born in 1970, Bachelor, is Supervisor of the Company, Member of the CPC Committee
& Vice General Manager of Shenzhen Office of China Great Wall Asset Management Co., Ltd. He was
former Section Member of Hebei Branch of Agricultural Bank of China, Deputy Senior Staff Member of
Asset Management Department of Shijiazhuang Office of China Great Wall Asset Management Co., Ltd.,
Deputy Leader of the Manager Team of Changzhou Project, Deputy Senior Manager of Asset Management
Department No. 3, Deputy Senior Manager of Investment Management Department, Deputy Senior
Manager of Investment Banking Department, and Senior Manager and General Manager Assistant of
Appraisal Business Department.
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3. Tang Chongyin, male, born in 1960, Ph.D, is Supervisor of the Company, Director of Capital and Property
Management Department, Chairman of Shenzhen Si Semiconductors Co., Ltd., Chairman of Shenzhen
Daming Electronics Co., Ltd., Director of Shenzhen SEG Hi-tech Investment Co., Ltd., Director of Tianjin
SEG Haijing Co., Ltd., Director of Shenzhen SEG Yuren Technology Co., Ltd., and Chairman of the Board
of Supervisors of SEG Credit. He was former Director of Property Right Management Department, Director
of Property Right Department, Chief Legal Adviser, Director of Audit Department & Director of Legal
Affairs Office of SEG Group, Secretary of the Board of Gemdale Group Co., Ltd., Director of SEG
E-commerce and Vice Chairman of Shenzhen Zhongheng Hwafa Co., Ltd.
4. Ru Guiqin, female, born in 1964, Bachelor, is Employee Supervisor, Director of General Affairs
Department, and Chairman of Immediate Labor Union of the Company, Director of Longgang SEG, and
Director of SEG Baohua. She was former Director, Deputy Director, and Director Assistant of the Office of
the Company, Business Assistant of Joint-stock System Preparation Office of SEG Group, and Business
Assistant of Marketing Department of SEG Group.
5. Zhang Haifan, female, born in 1973, Master, is Employee Supervisor and Business Manager of Finance and
Asset Management Department of the Company. She was former accountant responsible for consolidating
financial statements of Finance and Asset Management Department, auditor of Audit Department, audit
manager of Shenzhen Zhongqing Certified Public Accountants, and technician of Technology Department
of Chengdu 745 Plant.
(III) Senior executives
1. Liu Zhijun is General Manager. For details, see the above introduction to directors.
2. Zheng Dan, female, born in 1965, Master, senior economist, is Vice Secretary of the CPC Committee,
Secretary of the Committee for Discipline Inspection & Vice General Manager of the Company, Standing
Committee Member of the Second Committee of Secretaries of China Association for Public Companies, a
joint member of Hong Kong Institute of Chartered Secretaries, Chairman of SEG Baohua, Chairman of
SEG Lianzhong, Director of Suzhou SEG, Director of SEG Investment, Chairman of the Board of
Supervisors of Changsha SEG, Chairman of the Board of Supervisors of SEG Yicheng, Chairman of the
Board of Supervisors of Huakong SEG, and Supervisor of Hongtu SEG. She was former Chairman of
Wujiang SEG, Chairman of Suzhou SEG, Chairman of Suzhou SEG Digital, Chairman of Suzhou SEG
Intelligent, Director of Nantong SEG, Director of Nantong SEG Commercial Operation, Director of SEG
Zhongtong, Director & Chairman of the Board of Supervisors of SEG Credit, Director of Huakong SEG,
Chairman of the Board of Supervisors of SEG Baohua, Chairman of the Board of Supervisors of SEG
Storage and Transportation, and Chairman of the Board of Supervisors of SEG Navigations.
3. Zhu Longqing, male, born in 1961, MBA, is Vice General Manager of the Company, Chairman of SEG
Industrial, Chairman of Changsha SEG, Chairman of Nanjing SEG, Chairman of Nanning SEG, Chairman of
Shanghai SEG, Director of SEG Credit, Director of Nantong SEG, Director of Nantong SEG Operation,
Director of SEG Navigations, and Chairman of the Board of Supervisors of SEG Baohua. He was former
Director of the Company, Chairman of Wuxi SEG, Chairman of the Board of Directors & Chairman of the
Board of Supervisors of Shenzhen SEG Storage and Transportation, Director of Longyan Application,
Director of SEG Baohua, Director & General Manager of SEG Industrial, and Director of SEG
E-commerce.
4. Bo Hongxi, male, born in 1958, Bachelor, senior accountant, is Vice General Manager of the Company,
Director and General Manager of SEG Baohua, and Chairman of Nantong SEG Operation.
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Information about directors, supervisors and senior executives serving in shareholders' units
√ Applicable □ Not applicable
Receiving remuneration
Name of Beginning date of Ending date of
Name Position in shareholders' units from shareholders' units
shareholders' units office term office term
or not
Wang Bao SEG Group Chairman August 21, 2017 Yes
November 1,
Yu Qian SEG Group Director October 1, 2012 No
2017
Xu Laping SEG Group Director June 1, 2017 No
Zhang
SEG Group Vice General Manager March 1, 2003 Yes
Guangliu
Liu Rongzhi SEG Group CFO March 1, 2011 No
Liu Fusong SEG Group Director July 1, 2016 - No
Tang Director of Capital and Property
SEG Group April 1, 2003 Yes
Chongyin Management Department
Position at shareholders None
Information about directors, supervisors and senior executives serving in other units
√ Applicable □ Not applicable
Receiving
Position in other Beginning date of Ending date of remuneration
Name Name of other units
units office term office term from other units
or not
Chairman September 1, August 1,
Shenzhen SDG Information Co., Ltd. Secretary of the Yes
Wang 2010 2017
CPC Committee
Bao September 1,
STMicroelectronics Vice Chairman No
2017
Shenzhen Office of China Orient Asset Vice General November 1, May 1, 2017 Yes
Management Co., Ltd. Manager 2009
Yu Qian
Guangxi Zhuang Autonomous Region
Branch of China Orient Asset Head May 1, 2017 Yes
Management Co., Ltd.
Director of
Xu
Strategic January 1, 2014
Shenzhen Capital Co., Ltd. Yes
Laping Research
Department
SEG Recreation Enterprise Chairman No
August 1, 2011
Development Co., Ltd.
Zhang
Chairman of the
Guangliu
Shenzhen Si Semiconductors Co., Ltd. Board of July 1, 2010 No
Supervisors
Nantong SEG Chairman January 1, 2013 No
Longgang SEG Chairman June 1, 2010 No
Liu
Zhijun Xi'an SEG Chairman May 1, 2013 No
Xi'an Hairong SEG Chairman May 1, 2013 No
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Receiving
Position in other Beginning date of Ending date of remuneration
Name Name of other units
units office term office term from other units
or not
Chairman, November 1,
SEG Investment No
General Manager 2015
Director September 1, No
SEG Credit
2011
SEG Lianzhong Director December 1, No
2016
Member of
Hongtu SEG Decision-making May 1, 2016 No
Commission
Kashgar Shenzhen City Co., Ltd. Supervisor October 1, 2012 No
Director, General
Longyan Application May 1, 2016 March 1, 2017 No
Manager
CEEC General Manager May 1, 2016 No
December 1,
China Development Institute Vice Chairman Up to now No
1993
Shenzhen Ma Hong Foundation for November 1,
Chairman Up to now No
Economic Improvement Research 2011
Eternal Asia Supply Chain Management Independent
June 22, 2016 Up to now Yes
Co., Ltd. Director
Li Luoli
Professor &
September 1,
Nankai University Doctoral Up to now No
1994
Supervisor
China Society of Economic Reform Vice President June 1, 1999 June 26, 2017 No
September 1,
Shenzhen Charity Federation Chief Executive Up to now No
2016
Independent October 12,
Shenbao Industrial Co., Ltd. Up to now Yes
Fan Director 2012
Zhiqing Independent
Shahe Industrial Co., Ltd. April 1, 2011 April 1, 2017 Yes
Director
Shenzhen Oriental Fortune Capital Co., December 1,
Partner October 1, 2011 Yes
Ltd. 2017
Independent September 19,
Shenzhen Yantian Port Group Co., Ltd. Yes
Song director 2014
Pingping Secretary-Genera
China Merger & Acquisition Fund Co., l of the Risk December 1,
October 1, 2014 Yes
Ltd. Control 2017
Commission
Liu Chairman of the November 1,
Shenzhen Bus Group Co., Ltd. Board of April 1,2015 No
Rongzhi 2017
Supervisors
Member of the
Liu Shenzhen Office of China Great Wall CPC Committee February 1,
Yes
Fusong Asset Management Co., Ltd. & Vice General 2015
Manager
Shenzhen Si Semiconductors Co., Ltd. Chairman October 1, 2017 No
Tang Shenzhen Daming Electronics Co., Ltd. Chairman July 1, 2006 No
Chongyin
Shenzhen SEG Hi-tech Investment Co., No
Director July 1, 2006
Ltd.
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Receiving
Position in other Beginning date of Ending date of remuneration
Name Name of other units
units office term office term from other units
or not
December 1, No
Tianjin SEG Haijing Co., Ltd. Director
2006
Shenzhen SEG Yuren Technology Co., No
Director May 1, 2015
Ltd.
Chairman of the
SEG Credit Board of May 1, 2014 No
Supervisors
Ru SEG Baohua Director April 1, 2013 No
Guiqin Longgang SEG Director May 1, 2014 No
Second Committee of Directors and Standing
November 1,
Secretaries of China Association for committee No
2015
Public Companies member
November 1,
Wujiang SEG Chairman June 1, 2012 No
2017
January 1,
SEG Baohua Chairman April 1, 2013 No
2018
November 1,
Suzhou SEG Digital Chairman August 1, 2014 No
2017
November 1,
SEG Intelligent Chairman January 1, 2016 No
2017
December 1, January 1,
SEG Lianzhong Chairman No
2016 2018
January 1,
Suzhou SEG Director July 1, 2016 No
2018
September 1, September 1,
SEG Credit Director No
2011 2017
Zheng September 1,
Nantong SEG Director January 1, 2013 No
2017
Dan
September 1,
Nantong SEG Operation Director May 1, 2014 No
2017
May 1, 2017 September 1,
SEG Zhongtong Director No
2017
November 1, January 1,
SEG Investment Director No
2015 2018
Chairman of the
January 1,
Changsha SEG Board of March 1, 2009 No
2018
Supervisors
Chairman of the September 1,
January 1,
SEG Yicheng Board of No
2017 2018
Supervisors
Chairman of the
January 1,
Huakong SEG Board of March 1, 2014 No
2018
Supervisors
May 1, 2016 January 1,
Hongtu SEG Supervisor No
2018
SEG Industrial Chairman May 1, 2013 No
Zhu
Changsha SEG Chairman June 1, 2010 No
Longqing
Nanjing SEG Chairman April 1, 2011 No
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Receiving
Position in other Beginning date of Ending date of remuneration
Name Name of other units
units office term office term from other units
or not
October 1,
Wuxi SEG Chairman August 1, 2012 No
2017
Nanning SEG Chairman April 1, 2013 No
Shanghai SEG Chairman June 1, 2014 No
September 1,
SEG Credit Director No
2017
Nantong SEG Director January 1, 2013 No
Nantong SEG Operation Director May 1, 2014 No
February 1, No
SEG Navigations Director
2012
Longyan Application Director May 1, 2016 March 1, 2017 No
Chairman of the
SEG Baohua Board of April 1, 2013 No
Supervisors
February 1,
SEG Baohua General Manager March 1, 2005 Yes
2018
Bo
Hongxi SEG Baohua Director March 1, 1999 Yes
Nantong SEG Operation Chairman May 1, 2014 No
Position
in other
None
organizati
ons
Information on punishment of the current and former directors, supervisors and senior executives in the reporting
period by the securities regulatory authority in the recent three years
□ Applicable √ Not applicable
IV. Information about Remuneration of Directors, Supervisors and Senior Executives
Decision-making procedure and establishment criteria for the remuneration to the directors, supervisors and
senior executives, and actual payment
The Company implements the position wage system. The annual remuneration of Senior Executives comprises
three parts, namely, the wage (the position wage and allowance), year-end bonus, and legal welfare. The wage is
decided and monthly paid by the Board of Directors in accordance with the functions of a position and the
position wage system of the Company; the year-end bonus is decided based on the completing of annual
operation targets and work tasks laid out in the General Meeting of Shareholders, and is implemented after being
approved by the Board of Directors.
According to the Articles of Association, the remuneration of directors and supervisors is determined by the
General Meeting of Shareholders, but, at present, the Company has not implemented the remuneration system
for non-independent directors and supervisors except for independent directors. The directors and supervisors of
the Company only receive the wages corresponding to their administrative positions. In the reporting period, four
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current directors (including independent directors), two current supervisors (including employee supervisors)
and two senior executives received total remuneration of RMB 3,278,800 (tax included) from the Company. The
Company shall issue RMB 100,000 (pre-tax) per year as the subsidies for independent directors according to the
resolution passed at the seventeenth General Meeting of Shareholders (2011) on April 20, 2012. The travel and
accommodation expenses of Independent Directors due to attendance of the meetings of the Board and the
General Meeting of Shareholders as well as the expenses incurred by Independent Directors due to exercising of
their powers according to the Articles of Association are reimbursed by the Company according to the actual
expenses.
Remuneration for directors, supervisors and senior executives in the reporting period
Unit: RMB 10,000
Total pre-tax
Remuneration
Employment remuneration
Name Title Gender Age acquired from
Status from the
associates
Company
Wang Bao Chairman Male 53 Incumbent 0 Yes
Yu Qian Director Male 49 Incumbent 0 Yes
Xu Laping Director Male 39 Incumbent 0 Yes
Zhang
Director Male 55 Incumbent 0 Yes
Guangliu
Liu Zhijun Director Male 49 Incumbent 79.48 No
Wang Li Chairman Male 56 Retired 0 Yes
Cao Xiang Director Male 49 Retired 0 Yes
Fan Zhiqing Independent Male Incumbent No
68 10
Director
Independent Male Incumbent
Li Luoli 70 10 No
Director
Independent Female Incumbent
Song Pingping 50 10 No
Director
Chairman of
Liu Rongzhi the Board of Male 59 Incumbent 0 Yes
Supervisors
Liu Fusong Supervisor Male 47 Incumbent 0 Yes
Tang Chongyin Supervisor Male 57 Incumbent 0 Yes
Employee Female Incumbent No
Ru Guiqin 53 53.39
Supervisor
Employee Female Incumbent No
Zhang Haifan 44 30.33
Supervisor
Chairman of
Xu Ning the Board of Male 52 Former 0 Yes
Supervisors
Zheng Dan Vice General Female Incumbent No
52 67.34
Manager
Zhu Longqing Male 56 Incumbent 67.34 No
Vice General
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Manager
Vice General Male Incumbent No
Bo Hongxi 59 0
Manager
Total -- -- -- -- 327.88 --
Information on equity incentives bestowed to directors and senior executives in the reporting period
□ Applicable √ Not applicable
V. Information on Employees of the Company
1. Number, profession composition and education background of on-the-job employees
Number of on-the-job employees in the parent company 140
Number of on-the-job employees in the major subsidiaries 2623
Total number of on-the-job employees 2763
Total number of paid employees in the current period 2763
Number of retired workers to whom the Company pays pension
2
benefits assumed by parent company and major subsidiaries
Profession composition
Profession composition Number of employees
Production staff 1544
Sales staff 353
Technical staff 379
Financial staff 152
Administrative staff 335
Total 2763
Education background
Education background Number of employees
Doctor 0
Master 49
Bachelor 432
Junior college graduate 494
Technical secondary school (Polytechnic school) graduate 207
Senior high school and below 1581
Total 2763
2. Remuneration policy
Priority to effectiveness: Remuneration structure and level are related to operation performance. Rationally set
up salary differences based on value of position as well as individual performance and competence, and incline
to core positions to reflect effective incentives of remuneration.
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Performance and capability orientation: Correlate remuneration adjustment and payment to organization
performance, employee performance and employee capability to reflect value of organization of individuals.
Salary varying with position: The remuneration system supports employee career development; remuneration is
strictly matched to position.
Dynamic adjustment: Based on development strategy and operation strategy as well as industrial development,
when business model and organization structure are significantly changed, organization functions and positions
change, and remuneration structure, payment and adjustment process must be dynamically adjusted for business
development.
3. Training plan
To build a knowledge-based organization, develop a mobile training system, share learning resources, optimize
training costs, expand the coverage of training in depth and breadth, and further improve the comprehensive
abilities of employees, the Company has promoted Zhi-niao Mobile Learning Platform in all departments of the
headquarters and invested and holding enterprises in 2017.
1. Pushing recommended courses regularly: The Company regularly pushes general courses to all employees,
utilizes the existing general micro-courses on the Zhi-niao platform and practice courses shared by famous
enterprises in the industry, and offers training on management, leadership and know-how to employees,
innovating in ways of thinking and work.
2. Organizing examinations: The Company has set up different test question banks and organized tests.
4. Labor outsourcing
□ Applicable √ Not applicable
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Chapter 9 Corporate Governance
I. Basic information on corporate governance
(I) In the reporting period, the Company strictly abides by the Company Law, the Security Law, Administrative
Regulations on Listed Companies, and the Regulations on Stock Listing of Shenzhen Securities Exchange, and
relevant laws and regulations of China Securities Regulatory Commission, continuously improves the structure
for company legal person management, establishes and improves internal control system, makes further efforts
on Company management, so that the Company may further standardize its operation, increase information
disclosure, and actively engage in the management of investor relationships. As of the end of the reporting period,
the Company generally meets the specifications set forth in the regulation documents on listed companies as
published by China Securities Regulatory Commission. The followings are particulars on the Company's
management:
1. Information on the Company and controlling shareholders
Controlling shareholders of the Company, exercising shareholder's rights through the General Meeting of
Shareholders, imposes rules on shareholder's behaviors in strict compliance with Administrative Regulations on
Listed Companies, the Regulations on Stock Listing of Shenzhen Securities Exchange, and the Articles of
Association of the Company. Controlling shareholders are not found to have directly intervened the Company's
business and decision-making by acting without consulting with the General Meeting of Shareholders and the
Board of Directors. The Company is capable of independent business operation, and is independent from the
controlling shareholders in respect of its business, asset, personnel, organization and finance. The Board of
Directors, the Board of Supervisors, and the internal organizations can work independently.
2. Shareholders and the General Meeting of Shareholders
The Company convened and held the General Meeting of Shareholders in strict compliance with the Guidance of
the Articles of Association and the Rules of Procedure of the Board of Directors. No proposal to hold the interim
meeting of shareholders was put forward by shareholders representing more than 10% of the Company's voting
shares in the reporting period, nor is there a meeting of shareholders held at the proposal of the Board of
Supervisors. In the reporting period, the Company complied with the Company Law and the Articles of
Association by making decisions subject to the deliberation at the general meeting of shareholders without
overriding the general meeting of shareholders or implementation before deliberation.
3. Directors and the Board of Directors
The Company elected its directors in strict compliance with the Articles of Association. The Board of Directors
comprised of 9 directors, including 3 independent directors. The number and composition of personnel in the
Board of Directors was in compliance with laws and regulations. The Board of Directors had three special
committees under its management. The Board of Directors conscientiously fulfilled its obligations in strict
compliance with the Articles of Association, Regulations on Work of Independent Directors, and the Rules of
Procedure of the Board of Directors. All directors of the Company attended the meeting of directors and general
meeting of shareholders, and actively took part in relevant trainings, and studies relevant laws and regulations.
Independent directors protected the overall interests of the Company by performing their obligations in an
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independent manner, and by paying special attention to the lawful interests of medium and small shareholders.
Also, independent directors expressed their independent opinions on matters of importance and significance.
4. Supervisors and the Board of Supervisors
The Company elected supervisors in strict compliance with the Company Law and the Articles of Association.
The number and composition of the Board of Supervisors complied with laws and regulations. The Company
formulated Rules of Procedure of the Board of Supervisors; the eligibility and election of supervisors complied
with regulations. All supervisors of the Company attended the meeting of supervisors, and reviewed the regular
reports prepared by the Board of Directors and gave written opinions by attending the general meeting of
shareholders as non-voting members, attending the meeting of the Board of Directors and holding the meeting of
the Board of Supervisors. The supervisors were effective at supervising matters of importance, connected
transactions and finance status of the Company, and at overseeing the legality and regulation compliance of the
Company's directors and senior executives in performing their duties.
5. Management
The management of the Company performs duties strictly according to provisions of the Articles of Association,
carries out resolutions of the Board of Directors, and does not act beyond its authority. Matters beyond the
authority of the management are submitted to the Board of Directors for review. There is no tendency of "insider
control". The management is diligent and dedicated to work, strengthens normative operation with honesty
during daily operation, and does not unfaithfully perform duties or breach faith.
6. Information disclosure and transparency
The Company designates the works on information disclosure, shareholder visitation and consultation reception
to the Secretary's Office of Board of Directors of the Company in strict compliance with the Management
Methods for Disclosure of Information and the System on Investor Relationship Management. The Company
appoints China Securities Journal, Securities Times, Securities Daily, Hong Kong Commercial Daily, and the
Cninfo Website as the newspapers and website on which the Company discloses its information. In the reporting
period, the Company published 76 public announcements in total, disclosing information on the Company's
business activities and major issues in a truthful, accurate, complete and timely manner. The Company imposed
strict, sufficient and effective internal control on information disclosure without violating regulations of relevant
supervisory organs. In the future, the Company will further strengthen communication and information exchange
with the supervisory organs by pro-actively reporting Company issues and by having a better understanding of
disclosure requirements.
(II) Non-compliance in the reporting period
1. The controlling shareholders exert the "Property Right Representatives Report System" for managing the
Company. The Company's controlling shareholder SEG Group is a state-controlled corporation in Shenzhen and
Shenzhen State-owned Assets Supervision and Administration Bureau is a controlling shareholder of SEG Group.
It must implement the Property Right Representatives Report System for state-owned assets management
according to the management methods of Shenzhen for state-owned assets.
2. In the respect of personnel rating, our controlling shareholder SEG Group evaluates the annual operation
performance of the general manager based on the accomplishment of indexes of its annual operation plan and
other indexes.
3. The company reports the non-public information to the major shareholders and the actual controllers.
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The company reports the non-public information to the major shareholders and the actual controls based on the
property right representative reporting system and requirements of the national statistical departments. In
accordance with the requirements of state-owned assets supervision department, the Company has been
submitting monthly flash reports to the majority shareholder and the actual controller and reporting important
issues to the majority shareholder and the actual controller before they are disclosed. The Company submitted
the Undisclosed Information Provided by Listed Companies for the Majority Shareholder or Actual Controller
and Letter of Commitment to Shenzhen Securities Regulatory Bureau on October 18, 2007. SEG Group offered
the Letter of Commitment on Strengthening Management of Undisclosed Information to Shenzhen Securities
Regulatory Bureau. Meanwhile, the Company has established and implemented the Non-public Information
Insider Reporting System and the Confidentiality System of Shenzhen SEG Co., Ltd for Insiders of Non-public
Information and has monthly reported to Shenzhen Securities Regulatory Bureau about its reports of
unpublicized information. Senior executives and all employees at the headquarters signed a Confidentiality
Agreement with the Company on July 15, 2009. The Confidentiality Agreement clearly stipulates that all
employees are obligated to hold confidential the business secrets and undisclosed information of the Company.
The unpublicized information the Company offered to the Company's majority shareholder and actual controller
in the reporting period is as follows:
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
The invested corporation of
the Company and the The document Notice
financial staff at the about Formulation of the
The flash
Headquarters prepare the Monthly Flash Report of
report of main
report and consolidate the Enterprises Supervised Approved
financial
Controlling statements, which are by Stated-owned Assets by the
1 SEG Group indicators of Monthly
shareholder reviewed by the leadership Supervision and Board of
the Company
of the Financial Administration Directors
registered in
Department and reported Commission of the State
Shenzhen
through the State-owned Council (SASAC [2003]
Asset Management 23)
Information System.
The invested corporation of The document Notice
the Company and the about Formulation of the
financial staff at the Monthly Flash Report of
Summary sheet
Headquarters prepare the Enterprises Supervised Approved
of
Controlling sheet and consolidate the by Stated-owned Assets by the
2 SEG Group implementation Monthly
shareholder statements, which are Supervision and Board of
of monthly
reported through the Administration Directors
expense budget
State-owned Asset Commission of the State
Management Information Council (SASAC [2003]
System. 23)
Controlling Summary sheet The invested corporation of The document Notice Approved
3 SEG Group Monthly
shareholder of monthly the Company and the about Formulation of the by the
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
cash flow financial staff at the Monthly Flash Report of Board of
Headquarters prepare the Enterprises Supervised Directors
sheet and consolidate the by Stated-owned Assets
statements, which are Supervision and
reported through the Administration
State-owned Asset Commission of the State
Management Information Council (SASAC [2003]
System. 23)
The document Notice
about Formulation of the
The financial personnel at Monthly Flash Report of
Summary sheet
the Headquarters prepare Enterprises Supervised Approved
of deposits,
Controlling the sheet that is reported by Stated-owned Assets by the
4 SEG Group financing, and Quarterly
shareholder through the State-owned Supervision and Board of
loans of the
Asset Management Administration Directors
Headquarters
Information System. Commission of the State
Council (SASAC [2003]
23)
The invested corporation of The document Notice
Summary sheet the Company and the about Formulation of the
of quarterly financial staff at the Monthly Flash Report of
non-operating Headquarters prepare the Enterprises Supervised Approved
Controlling gains and sheet and consolidate the by Stated-owned Assets by the
5 SEG Group Quarterly
shareholder losses of the statements, which are Supervision and Board of
Company reported through the Administration Directors
registered in State-owned Asset Commission of the State
Shenzhen Management Information Council (SASAC [2003]
System. 23)
It has been reported since
June 2009. The document Notice
Summary sheet The invested corporation of about Formulation of the
of quarterly the Company and the Monthly Flash Report of
information on financial staff at the Enterprises Supervised Approved
Controlling investment Headquarters prepare the by Stated-owned Assets by the
6 SEG Group Quarterly
shareholder properties of sheet and consolidate the Supervision and Board of
the Company statements, which are Administration Directors
registered in reported through the Commission of the State
Shenzhen State-owned Asset Council (SASAC [2003]
Management Information 23)
System.
Controlling Monthly They should be reported The Notice of Shenzhen Approved
7 SEG Group Monthly
shareholder consolidated every month after being SEG Co., Ltd on by the
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
statements printed, signed and sealed Submitting of Monthly Board of
(including the and reported every quarter Statements issued by Directors
Balance Sheet, through the State-owned Shenzhen SEG Group
the Profit Asset Management Co., Ltd.
Statement, the Information System. They
Cash Flow have been reported on line
Statement, the from July 2008.
Notes to
Preparation of
the Statements
and the
Financial
Statements)
Controlling It was provided by
SEG Group
shareholder Article Three of the
Statistics Law of the
People's Republic of
China that state organs,
social organizations,
corporations, public
institutions and privately
or individually owned
businesses, on which
Statistical statistical survey is
survey on the implemented, must
statements or comply with the
monthly and Statistics Law and the Approved
Monthly
annual reports regulations of the state by the
8 Shenzhen Sealed by the Company and
Government of the and provide statistical Board of
Statistics annually
branch production of data faithfully but not Directors
Bureau electronics make a false report,
information conceal data, refuse to
industry report, delay the report,
or fabricate or falsify
data. Self-governing
mass organizations at the
grass roots level and
citizens have the
obligation to provide
truthfully the
information required by
the statistical survey of
the state.
142
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Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
The document Notice
about Formulation of the
Monthly Flash Report of
Enterprises Supervised Approved
Summary sheet
Controlling by Stated-owned Assets by the
9 SEG Group of quarterly Sealed by the Company Quarterly
shareholder Supervision and Board of
financial assets
Administration Directors
Commission of the State
Council (SASAC [2003]
23)
The hard copy of the
The Board
Register of top official website of Requirements from 2016
of
Shenzhen Actual 100 A and B Shenzhen Branch of China Shenzhen state-owned
10 Quarterly Directors
SASAC controller shareholders in Securities Depository and enterprise capital
agrees to
2017 Clearing Corporation operation meeting
report.
Limited
Is there any significant variance between the actual governance of the Company and normative documents on
listed companies released by China Securities Regulatory Commission?
□ Yes √ No
II. Description about the Company's independence from controlling shareholders in terms of
business, personnel, asset, organization and finance
The controlling shareholders of the Company execute rights of contributors through the general meeting and do
not interfere in decision-making and operating activities of the Company in ways other than exercise of the rights
of making motions and voting. The Board of Directors, Board of Supervisors, and internal management organs
operate independently. The Company has basically achieved independence from controlling shareholders in
respect of business, personnel, assets, organs, and finance.
(I) In the aspect of business, Shenzhen Securities Regulatory Bureau pointed out that there was horizontal
competition between the Company and SEG Group in regard to the electronics market business. The Company
received a written commitment letter from SEG Group on September 14, 2007, saying "We have similar business
to Shenzhen SEG Co., Ltd. (hereinafter referred to as Shenzhen SEG) in regard to the electronics market of
Shenzhen because of historical reasons with an objective market development background. We hereby promise
that we will not individually operate a market in a same city whose business is similar with that of Shenzhen
SEG. The aforesaid matter was disclosed on Securities Times, China Securities Journal and Hong Kong Wen Wei
Po and the Cninfo Website on September 18, 2007. In order to solve the issue of horizontal competition between
the Company and its controlling shareholder, SEG Group, due to historical reasons, the 6th temporary meeting of
the 5th Board of Directors held on January 26, 2011 deliberated and adopted the Proposal of Solving the
Horizontal Competition between the Company and Its Controlling Shareholder. After friendly consultation, SEG
Group agreed to entrust the Company to operate and manage with full authority SEG Communications Market
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under direct management of SEG Group. Therefore, the two parties have signed the entrustment operation and
management contract:
(1) SEG Group has the ownership and the income right of SEG Communication Market and assumes all
creditor's rights and liabilities occurring during the operation of SEG Communications Market. (2) The
management representative from the Company shall operate and management SEG Communications Market
during the period of entrustment operation and management, who has a sufficient authority in operation and
management of SEG Communications Market. (3) In accordance with the provisions of the Company on
entrustment management of the electronics market and with full consideration to the maturity of the entrusted
market and whether the market is located in a primary business area, the Company shall collect from SEG Group
the management fee and profit fee as follows based on the market sound value: the total income of SEG
Communications Market in 2010, RMB 20,000,000 Yuan, shall be regarded as the base number; the Company
shall collect a management fee of RMB 200,000 Yuan should the total income of the market in the current year is
equal to or less than RMB 20,000,000 Yuan; the Company shall take 20% from the part beyond the base number
apart from the management fee that is RMB 200,000 Yuan should the total income in the current year exceed
RMB 20,000,000 Yuan. The detailed information about the above-mentioned matter may be referred to in the
Public Notice on Shenzhen SEG Co., Ltd on the Connected Transaction for the Purpose of Solving the Issue of
Horizontal Competition between the Company and the Controlling Shareholder that was disclosed on the China
Securities Journal, the Securities Times, the Hong Kong Commercial Daily and the Cninfo Website on January
28, 2011. Till the disclosure date of this report, the Company had received the timely payment of the
management fee of 2011-2016, RMB 200,000 Yuan, from SEG Group. In the reporting period, as 100% of the
equity of SegMaker that holds SEG Communication Market was transferred to the Company, the Company is no
longer commissioned to operate SEG Communication Market, and has fulfilled relevant commitments to SEG
Group.
In the reporting period, the Company has finished major assets restructuring and reduced horizontal competition
to the largest extent. After major assets restructuring, the majority of property assets of the controlling
shareholder SEG Group, which are engaged in the operation of the electronics market, have been injected into
the Company. However, the information registered in the proprietorship certificate is inconsistent with the actual
ownership. Some property assets are owned by other external actual proprietors not included in the real estate
proprietorship certificate or have no proprietorship certificate. These problems cannot be resolved in the short
term. The company will take all necessary measures to address flaws of such properties.
To eliminate the remaining small-scale horizontal competition with the Company, SEG Group made a
commitment to reduce horizontal competition on August 3, 2016. For details, see Section 5 - III. Fulfillment of
Commitments.
In the reporting period, SEG Group and SegMaker (a wholly-owned subsidiary of the Company now) entered
into the House Lease Contract. SEG Group leased 61 properties without proprietorship certificates to SegMaker,
which was also an effective way to eliminate the remaining horizontal competition between the parties.
(II) In respect of personnel, the Company's Senior Executives including General Manager, Vice General
Manager and Secretary of the Board of Directors take full-time posts; they receive wages from the Company and
do not take concurrent posts in the Company's first majority shareholder enterprise; the Company has a complete
management system for labor, human resources and wages, which can keep the independence of the personnel.
(III) In respect of assets, at the beginning of the Company's establishment, the equity of the eight enterprises
separated from SEG Group to the Company was already audited and evaluated by domestic and overseas
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
accounting firms, which was acknowledged by the state-owned assets management departments of the state and
Shenzhen Municipality. The controlling shareholder of the eight enterprises was changed from SEG Group to the
Company, which was registered at the Industrial and Commercial Administration. The Company independently
makes registration, establishes accounts, and implements accounting and management so as to maintain the
completeness and independence of the assets. According to the Article Five of the Equity Transfer Agreement
signed by the Company with SEG Group when the Company was listed, SEG Group agreed that the Company
and its subsidiaries and associated companies to use the eight trademarks registered by SEG Group at the
National Trademark Bureau; SEG Group agreed that the Company used the aforesaid trademarks or similar signs
as the Company's logo and used the trademarks and signs during its operation; the Company need not pay any
fee to SEG Group for using the aforesaid trademarks or signs.
(IV) In respect of organization, the Company has set up organizations and arranged corresponding personnel
fully in accordance with its own demand of operation and management; its production and administrative
departments are totally independent from the majority shareholder.
(V) In respect of finance, as a legal entity that implements independent operation and accounting and assumes
sole responsibility for its profits and losses, the Company has set up an independent financial and audit
department, an independent accounting system and an financial management system, has its independent bank
account, pays taxes independently according to law, and keeps absolute independence in its financial work.
III. Horizontal Competition
□ Applicable √ Not applicable
IV. Annual meeting of shareholders and interim meeting of shareholders held in the
reporting period
1. Annual general meeting of shareholders in the reporting period
Percentage of
Meeting No. Meeting Type Investor Date Disclosure Date Disclosure Index
Participation
First Interim http://www.cninfo.com.cn
Interim general Announcement on Resolutions of
Meeting of
meeting of 30.55% March 2, 2017 March 3, 2017 the First Interim General
Shareholders in Meeting of Shareholders (2017)
shareholders
2017 of Shenzhen SEG Co., Ltd.
http://www.cninfo.com.cn
Second Interim Interim general Announcement on Resolutions of
Meeting of
meeting of 55.89% March 16, 2017 March 17, 2017 the Second Interim General
Shareholders in
Meeting of Shareholders (2017)
2017 shareholders
of Shenzhen SEG Co., Ltd.
http://www.cninfo.com.cn
22nd General Annual general Announcement on Resolutions of
Meeting of meeting of 56.05% May 9, 2017 May 10, 2017 the 22nd General Meeting of
Shareholders (2016) of Shenzhen
Shareholders (2016) shareholders
SEG Co., Ltd.
http://www.cninfo.com.cn
Third Interim Interim general Announcement on Resolutions of
Meeting of
meeting of 55.90% June 12, 2017 June 13, 2017 the Third Interim General
Shareholders in
Meeting of Shareholders (2017)
2017 shareholders
of Shenzhen SEG Co., Ltd.
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
http://www.cninfo.com.cn
Fourth Interim Interim general Announcement on Resolutions of
Meeting of
meeting of 55.92% July 21, 2017 July 22, 2017 the Fourth Interim General
Shareholders in
Meeting of Shareholders (2017)
2017 shareholders
of Shenzhen SEG Co., Ltd.
http://www.cninfo.com.cn
Fifth Interim Interim general Announcement on Resolutions of
Meeting of September 25, September 25,
meeting of 55.87% the Fifth Interim General
Shareholders in 2017 2017
Meeting of Shareholders (2017)
2017 shareholders
of Shenzhen SEG Co., Ltd.
2. Preferred shareholders restored with the voting rights proposed to hold interim general meeting of
shareholders
□ Applicable √ Not applicable
V. Performance of independent directors in the reporting period
1. Attendance of independent directors in meetings of the Board of Directors and the general meeting of
shareholders
Attendance of independent directors in meetings of the Board of Directors of the Company
Number of Absence from Times of
Name of meetings to be Times of Times of Times of the meeting in presence at the
Times of
independent attended in the presence in presence by presence by person in two general
absence
director reporting person communication proxy consecutive meeting
period times
Li Luoli 17 2 15 0 0 No 3
Song Pingping 17 2 15 0 0 No 3
Fan Zhiqing 17 1 15 1 0 No 4
Explanation for failure to attend the meeting of the Board of Directors for two consecutive times
Not applicable
2. Objections raised by independent directors against relevant matters of the Company
Have independent directors raised objections against relevant matters of the Company
□ Yes √ No
3. Other descriptions about the performance of independent directors
Do independent directors accept proposals of the Company?
√ Yes □ No
Explanation of independent directors for proposals accepted or unaccepted
In the reporting period, three independent directors have adequately exercised powers specified by national
regulations and the Articles of Association, given play to professional expertise, fulfilled their obligations with
reasonable care and diligence, promoted scientific decisions and decision-making process of the Board of
Directors, and protected the overall interests of the Company, particularly legal rights and interests of small and
medium-sized shareholders.
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(I) Attended the meeting of the Board of Directors on time, and actively fulfilled obligations of independent
directors. Independent directors deeply understood and investigated resolutions deliberated on by the Board of
Directors, actively participated in discussions, and gave rational suggestions. Besides, they always paid attention
to important matters of the Company, independently fulfilled obligations without being affected by controlling
shareholders, actual controllers or units or individuals having interest in the Company and its controlling
shareholders or actual controllers, objectively and cautiously deliberated on self-evaluation reports on connected
transactions, financial aid and internal control, expressed independent opinions and fulfilled the obligation of
supervision.
(II) Actively cooperated with the professional committees of the Board of Directors. Independent directors were
members of Development Strategy Committee, Audit Committee and Wage and Assessment Committee of the
Board of Directors. In compliance with the working rules of the professional committees, they actively
participated in daily work of the committees, gave professional opinions and suggestions on the Company
development planning, feasibility study of major projects, and major assets restructuring, and supported
scientific and cautious decision making of the Board of Directors.
(III) Paid attention to internal control of the Company. Independent directors communicated repeatedly with the
management and relevant departments over construction and evaluation of the internal control system, and gave
suggestions based on their professional experience. In this way, they played the role of supervisors, supervised
and urged the Company to continuously perfect corporate management structure, perfect the internal control
system, continuously and deeply carry out corporate management activities and improve normalized operation.
(IV) Deeply understood the Company. In 2017, independent directors took advantage of the Company meetings
and specially took time to conduct field investigation of the Company and its investors to deeply understand the
Company's daily operation and project construction. Meanwhile, independent directors kept in close touch with
other directors, senior executives and personnel by means of phone and e-mails, always paid attention to
influences of changes in the external environment and market on the Company, and timely understood the
progress of important matters of the Company. In addition, independent directors always paid attention to
information disclosure, supervised and check such disclosure, and ensure fair and timely disclosure of the
Company information so that public shareholders could be timely updated about the development of the
Company.
(V) Proposals raised by independent directors in regard to normalized development and the adoption of
proposals
Proposal raised by Proposal content Form Adoption status
Li Luoli, Song Pingping, and Fan
Proposal for business transformation and upgrading Oral Adopted
Zhiqing
Li Luoli, Song Pingping, and Fan Proposal for the emerging strategic cooperation business
Oral Adopted
Zhiqing
Li Luoli, Song Pingping, and Fan Proposal for business development of the new energy
project of SEG Longyan Oral Adopted
Zhiqing
Proposal for available capital operation modes for the
Song Pingping and Fan Zhiqing Company Oral Adopted
Li Luoli and Song Pingping Proposal for the rolling operation plan in 2017-2019 Oral Adopted
(VI) Independent directors' on-the-spot work, on-the-spot inspection, time and specific information
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Name of Work location Work time On-the-spot inspection
independent
director
Li Luoli Meeting room of the January 17, 2017, Ask the Office of the Secretary to the Chairman about the
Company 15:00-16:00 pm subsequent progress of major assets restructuring and offer
opinions and suggestions.
Meeting room of the August 4, 2017, Ask the Finance and Asset Management Department about the
Company 11:30-12:00 am operating result of the first half of the year.
Meeting room of the November 15, 2017, Ask the Company about the operation result of SEG e-sports
Company 15:00-17:00 pm stadium after opening and offer opinions and suggestions.
Song Pingping Meeting room of the January 9, 2017, Ask the Office of the Secretary to the Chairman about the
Company 15:00-16:00 pm subsequent progress of major assets restructuring and offer
opinions and suggestions.
Meeting room of the August 1, 2017, Ask the Finance and Asset Management Department about the
Company 11:30-12:00 am operating result of the first half of the year.
Meeting room of the October 19, 2017, Ask the Office of the Secretary about the progress of the project of
Company 9:00-10:00 am SEG Longyan.
Meeting room of the November 14, 2017, Ask about the operating condition of Nantong SEG Times Plaza
Company 15:00-17:00 pm after opening and offer opinions and suggestions.
Fan Zhiqing Meeting room of the March 17, 2017, Ask the Risk Control Department about the audit progress of 2016
Company 15:00-16:00 pm annual report.
Meeting room of the August 7, 2017, Ask the Finance and Asset Management Department about the
Company 11:30-12:00 am operating result of the first half of the year.
Meeting room of the November 20, 2017, Ask the Secretary about the reception of investors.
Company 15:00-16:00 pm
VI. Performance of duties by special committees of the Board of Directors
In the reporting period, the Audit Committee, Wage and Assessment Committee, and Development Strategy
Committee under the Board of Supervisors conscientiously performed their duties in compliance with the Code
of Corporate Governance for Listed Companies, the Articles of Association, the Rules of Procedure of the Board
of Directors, and functions, powers and obligations conferred by implementation rules of the special committees.
(I) Performance of duties by the Audit Committee of the Board of Directors
In accordance with the requirements of the Working Rules of the Audit Committee of Shenzhen SEG Co., Ltd and
the Working Procedures of the Audit Committee of Shenzhen SEG Co., Ltd for the Annual Report, the Audit
Committee, in the reporting period, performed its duty in a serious way, implemented supervision and inspection
on the establishment and improvement of the internal control system of the Company and a comprehensive
inspection on the annual financial audit.
1. The review opinion of the Audit Committee on the 2017 Financial Statements of the Company
In the reporting period, the Audit Committee reviewed the annual financial statements and issued opinions for
twice in accordance with relevant provisions of CSRC.
(1) Before the entrance of the certified public accountant for annual audit, the Audit Committee reviewed the
financial statements to be audited and issued the first opinion in writing. The Audit Committee believed that the
Company formulated reasonable accounting policies and appropriate accounting estimates in accordance with
relevant requirements of the accounting standard and based on the actual conditions of the Company; the
financial statements prepared by the Company truthfully reflected the financial status of the Company as of
December 31, 2017 and the operating results and cash flow of the Company in 2017. The Committee approved
the use of these financial statements as the basis for implementation of the audit work for 2017.
(2) After the completing of the first draft by the CPA, the Audit Committee read the draft in time and
communicated with the CPA. There was no dispute on the important issues mentioned by the 2017 Financial
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Statements between the Committee and the CPA. The financial statements comply with the provisions of the
Accounting Standard for Business Enterprises and relevant laws and regulations. The Audit Committee approved
the use of these financial statements as the basis for the preparation of the 2017 Annual Report and Report
Summary.
2. Supervision on and impelling over the audit work of the accounting firm
After consultation with Da Hua Certified Public Accountants Co., Ltd., the audit institution of 2017, the
arrangement for 2017 audit was decided by the Company in December 2017, which was reported to the Audit
Committee in time. After communication with the audit institution, the Audit Committee believed that the
Company had made preparations in advance based on the actual situation and its time arrangement for the annual
audit was appropriate. The Audit Committee approved the annual audit plan formulated by the audit institution.
After the entrance of the audit institution, the Audit Committee communicated with the main responsible person
of the project, the CPA whose signature was provided and relevant personnel, got known about the progress of
the audit and the issues concerned about by the CPA, and reported the progress and the issues to relevant
department of the Company in time.
3. The work summary of the Audit Committee for the 2017 audit conducted by Da Hua Certified Public
Accountants Co., Ltd.
In order to conduct timely and accurate audit on the financial status and business results of 2017 of the Company,
Da Hua Certified Public Accountants Co., Ltd. carried out preliminary investigation and pre-audit in December
2017, and completed the audit work in March 2018.
The audit committee exchanged ideas with the CPAs on December 29, 2017, and continued the communication
during audit. Also, the audit committee reviewed the draft of the annual audit report issued by the CPAs. The
Audit Committee believed that the CPA could perform his duty in strict accordance with audit laws, regulations
and principles, focused on the Company's operating environment, understood the establishment, improvement
and implementation of the internal control system of the Company, had a strong awareness of risks, and could
finish the audit work in time in accordance with the arranged audit schedule. The CPA was capable of being
independent and discreet, well finished auditing the Financial Statements and internal control of the Company
for the Year 2017, and issued an objective and fair audit report.
4. The Audit Committee implemented supervision and inspection on the establishment and improvement of the
internal control system and the defect rectification status, and listened to the report about the establishment of the
internal control standardization system.
5. Two meetings were held by the Audit Committee of the Board of Directors in the reporting period and the
details were as follows:
(1) At the first meeting of 2017 held by means of voting communication on March 27, 2017, the Audit
Committee of the Company deliberated and adopted the Work Summary for 2016 and Work Plan for 2017 of the
Audit Committee, Opinions of the Audit Committee on 2016 Financial Statements, and Summary of the Audit
Committee on 2016 Audit Work of Da Hua Certified Public Accountants (Special General Partnership).
(2) At the second meeting of 2017 held by means of voting communication on December 31, 2017, the Audit
Committee of the Company deliberated and adopted the Audit Work Plan for 2017 of Shenzhen SEG Co., Ltd.
(II) Performance of duties by the Wage and Assessment Committee of the Board of Directors
The review opinion of the Wage and Assessment Committee on the disclosed remuneration of the current
directors, supervisors and senior executives of the Company: Liu Zhijun (managing director & finance chief),
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Zheng Dan (director, vice general manager & secretary of the Board of Directors), Zhu Longqing (vice general
manager), Ru Guiqin (supervisor), and Zhang Haifan (supervisor) only received the wages corresponding to their
respective administrative positions in the Company; independent directors Li Luoli, Song Pingping, and Fan
Zhiqing received allowances for independent directors; other directors and supervisors did not receive wages
from the Company. The Company has not implemented a remuneration system for non-independent directors
and supervisors.
Two meetings were held by the Wage and Assessment Committee of the Board of Directors in the reporting
period and the details were as follows:
1. At the first meeting of 2017 held by means of communication on April 7, 2017, the Wage and Assessment
Committee of the Company deliberated and adopted the Proposal of Shenzhen SEG Co., Ltd. on the
Implementation of 2016 Budget for Directors, Supervisors, and Senior Executives.
2. At the second meeting of 2017 held by means of communication on December 31, 2017, the Wage and
Assessment Committee of the Company deliberated and adopted the Proposal of Shenzhen SEG Co., Ltd. on
2018 Budget for Directors, Supervisors, and Senior Executives.
(V) Performance of duties by the Development Strategy Committee of the Board of Directors
Two meetings were held in the reporting period by the Development Strategy Committee of the Board of
Directors and the details were as follows:
1. At the first meeting of 2017 held by means of communication on December 30, 2017, the Development
Strategy Committee of the Company deliberated and adopted the Rolling Business Plan for 2018-2020 of
Shenzhen SEG Co., Ltd.
2. At the second meeting of 2017 held by means of communication on December 31, 2017, the Development
Strategy Committee of the Company deliberated and adopted the 2017 Operation Analysis Report Proposal of
Shenzhen SEG Co., Ltd.
VII. Performance of the Board of Supervisors
Has the Board of Supervisors found any risk in the Company during supervision in the reporting period?
□ Yes √ No
The Board of Supervisors raised no objections against the supervised matters in the reporting period.
VIII. Assessment and incentive system for senior executives
Principles on performance management of senior executives of the Company
(I) Target management principle: the target management over senior executives is carried out in light of
enterprise annual target and enterprise management requirements.
(II) Categorized assessment principle: categorized assessment is carried out in accordance with the industry
engaged in by the enterprise and the industrial characteristics.
(III) The principle of coupling incentives with restrictions: senior executives were rewarded or punished in
accordance with the completion of annual targets, and the assessment system is carried out where incentives are
coupled with restrictions.
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IX. Internal control
1. Information about the major defects discovered in the reporting period in the internal
control self-assessment report
□ Yes √ No
2. Internal Control Self-assessment Report
Disclosure date of the internal control
April 24, 2018
self-assessment report
Disclosure index of the internal control
Cninfo Website: http://www.cninfo.com.cn
self-assessment report
Proportion of total assets of enterprises
included in the assessment scope to total
assets in the consolidated financial
99.28%
statement of the Company
Proportion of operating income of
enterprises included in the assessment
scope to operating income in the 98.53%
consolidated financial statement of the
Company
Defect Identification Standard
Category Financial Statements Non-financial statements
Major defects: extremely negative
Major defect: malpractice by directors, impact due to the lack of scientific
supervisors and senior executives; correction decision-making procedures, the
to major errors in published financial report; intended result being in contrary to the
current financial report included major result achieved, or extremely low
faults, and internal control failed to detect decision-making efficiency, rendering the
such faults in the process; the internal Company impossible to grasp market
control and supervision by the Audit opportunities; major miscalculation due
Committee and Internal Audit Division on to the Company's decision-making
the internal control of the financial report is procedures; the Company is given
invalid. warnings from the securities agency or
Important defects: failure in selecting and the securities exchange; serious loss of
applying accounting policies according to medium and high level management and
Identification standards
publicly recognized accounting standards; senior technical staff; frequent negative
failure in establishing anti-malpractice news on media, with widespread
procedures and control measures; failure in negative influence and long-term impact;
establishing corresponding control lack of systematic control over major
mechanism or implementing corresponding business or failure of the system; failure
compensatory control on non-conventional in correcting major or significant internal
or special transaction accounting treatments; control defects of the Company.
one or more defects in the process of Important defects: serious negative
controlling closing financial report, and impact due to a lack of scientific
failure in ensuring the truthfulness and decision-making procedure, the result
accuracy of the financial statements achieved is far from the intended target,
prepared. or the decision-making efficiently is very
low, with frequent cases where market
151
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
opportunities are lost; general
miscalculation in the Company's
decision-making procedures; failure in
correcting important or general defects in
the Company's internal control; serious
loss of personnel in important positions;
regional impact of negative news on
media; defects in institution or system
for important business.
Major defects: satisfying one or more
conditions as follows: erroneous reporting ≥
10% of total profit; erroneous reporting ≥
1% of total asset; erroneous reporting ≥ 2%
of business income; erroneous reporting ≥
Major defects: absolute value of direct
1% of owner's equity.
property loss ≥ 10% of total profit.
Important defects: satisfying one or more
Quantification Important defects: absolute value of
conditions as follows: 5% of total profit ≤
direct property loss ≥ 5% of total profit
erroneous reporting < 10% of total profit;
but <10% of total profit.
0.5% of total assets ≤ erroneous reporting <
1% of total asset; 1% of business income ≤
erroneous reporting < 2% of total business
income; 0.5% of owner's equity ≤ erroneous
reporting < 1% of owner's equity.
Number of major defects in financial report 0
Number of major defects in non-financial
0
report
Number of important defects in financial
0
report
Number of important defects in financial
0
report
X. Internal Control Audit Report
√ Applicable □ Not applicable
Opinion paragraph in the internal control audit report
Da Hua Certified Public Accountants thinks that the Company has maintained effective internal financial control in every major
aspect in accordance with the Basic Standard for Enterprise Internal Control and relevant rules and regulations on December 31,
2017.
Disclosure on internal audit report Disclosure
Disclosure date of the internal
April 24, 2018
control audit report
Disclosure index of the internal Cninfo Website: http://www.cninfo.com.cn
control audit report Announcement on Internal Control Report (2017) of Shenzhen SEG Co., Ltd.
Type of advice on disclosure on
No conservation in standard
internal audit report
152
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Whether or not major defects exist
No
in non-financial report
Chapter 10 Corporate Bonds
Has the Company issued and listed on the stock exchange corporate bonds that are not due or due but cannot be
repaid in full on the approved release data of the annual report?
No
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Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 11 Financial Report
I. Auditor's Report
Type of auditor's opinion Standard unqualified opinion
Signing date of Audit Report April 20, 2018
Da Hua Certified Public Accountants (Special General
Name of audit firm
Partnership)
Auditor's Report Document No. Da Hua Shen Zi [2018] No. 006253
154
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
Shenzhen SEG Co., Ltd.
Audit Report and Financial Statements
From January 1, 2016 to December 31, 2016
CONTENTS Page
I. Audit Report 121-122
II. Financial Statements 122-140
Consolidated Balance Sheet
Consolidated Profit Statement
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Owners' Equity
Balance Sheet of the Parent Company
Profit Statement of the Parent Company
Cash Flow Statement of the Parent Company
Statement on Changes of Owners' Equity of the Parent
Company
Notes to the Financial Statements 141-218
155
Full Text of 2017 Annual Report of Shenzhen SEG Co., Ltd.
156
Audit Report
D. H. S. Zi. [2018] No. 006253
All Shareholders of Shenzhen SEG Co., Ltd.,
I. Auditor's opinions
We have audited the Financial Statements of Shenzhen SEG Co., Ltd. (hereinafter referred to as "Shen SEG"),
including the Consolidated Balance Sheet Statement and the Balance Sheet Statement of the Parent Company as
of December 31, 2017, the Consolidated Profit Statement, the Profit Statement of the Parent Company, the
Consolidated Cash Flow Statement, the Cash Flow Statement of the Parent Company, the Consolidated
Statement of Changes in Owners' Equity, the Statement of Changes in Owners' Equity of the Parent Company,
and Notes to Financial Statements for the year 2017.
We believe that the attached Financial Statements have been prepared in accordance with the provisions of the
Accounting Standard for Business Enterprises in all major aspects, which fairly reflect the consolidated and the
parent company's financial condition as of December 31, 2017 as well as the consolidated and the parent
company's operating results and cash flow for the year 2017.
II. Basis for auditor's opinions
Our audit work was conducted in accordance with China Auditing Standards for Certified Public Accountants.
"Responsibilities of the CPAs for financial statements" herein further explains our responsibility under such
standards. According to the Professional Ethics Code of China Certified Public Accountants, we are independent
of Shen SEG and have performed other responsibilities for professional ethics. We believe that we have obtained
adequate and appropriate auditing evidences, which serve as the basis for us to express auditing opinions.
III. Key audit items
Key audit items are the most important items in this financial statement audit according to our professional
judgment. These items shall be handled provided that financial statements are audited and auditor's opinions are
given. We do not express opinions on such items separately.
We confirm that the following are key audit items to be included in the audit report:
1. Major assets restructuring
2. Income recognition of real estate development projects
(I) Major assets restructuring
1. Item description
157
For the accounting policies and amount of major assets restructuring, see Note IV (V) and Note VII (I) of the
notes to consolidated financial statements.
Shen SEG purchased 100% of the equity of SegMaker, 55% of the equity of SEG Recreation, 100% of the equity
of SEG Property Development, and 79.02% of the equity of SEG Real Estate held by the controlling shareholder
SEG Group by share issuance and cash payment. This connected transaction has great impacts on the business
structure and net profit of Shen SEG.
As such major assets restructuring is a connected transaction, incorporation of the target companies into the
consolidation scope has a great impact on the business structure, current profit and loss, and net assets of
Shenzhen SEG. As the price of the connected transaction is subject to the estimation and judgment of the
management, we take major assets restructuring as a key audit item.
2. Audit response
Our major audit procedures for major assets restructuring include:
(1) We access, appraise and test the design and operating effectiveness of key internal control related to related
parties and connected transactions.
(2) We check the consideration of each equity transaction adopted by the management, book value at the
consolidation date, and percentage of identifiable net assets at the acquisition date.
(3) We check the equity purchase or sales agreement, approval documents of relevant departments, and
payment for the equity, and review the conclusion of the management's control right of the equity.
(4) Based on terms of contracts or agreement and other factors, we judge whether the determination of the
consolidation date by the management conforms to the Accounting Standards for Enterprises No. 20 –
Business Combination and relevant provisions.
(5) According to the Accounting Standards for Enterprises No. 33 – Consolidated Financial Statements, we
audit major accounting policies of companies in the consolidation scope and verify them against accounting
policies of Shen SEG.
According to our audit procedures, we conclude that the management's judgment and handling of major assets
restructuring are acceptable.
(II) Income recognition of real estate development projects
1. Item description
For accounting policies on income recognition of Shen SEG and information on the carrying amount, see Note V
(XXVII) and Note VI (39).
The income from real estate development projects of Shen SEG in 2017 is RMB 883,601,000, accounting for
43.52% of the operating income. Shen SEG has received the full payment for house after conclusion of the
purchase and sales contract with customers. After giving the occupation notice or announcement, Shen SEG has
158
delivered the property or recognized the income from real estate development projects upon expiration of the
delivery date agreed in the contract.
Considering that the income from real estate development projects is important to financial statements of Shen
SEG, the compliance of the income recognition criteria with accounting policies is subject to the judgment of the
management, and incompliance may affect the entry of income in the proper financial report period and result in
misstatement, we take income recognition of real estate development projects as a key audit item.
2. Audit response
(1) We access and appraise the design and operating effectiveness of key internal control related to income
recognition of real estate development projects.
(2) We select sample real estate sales contracts and interview the management to determine whether the income
recognition policies on real estate development projects of Shen SEG conform to accounting standards.
(3) We select real estate sales samples, check the sales contract and supporting documents proving that a
property is qualified for delivery to determine whether the property sales income has been recognized
according to the income recognition policies of Shen SEG.
(4) We obtain the sales schedule control table, sales account, and statements from business departments and
filing information with the real estate management department, and watch the occupation procedures on site
to judge the actual sales and consistency with financial data.
(5) We select samples for the property sales income recognized this year, and compare the average price per
square meter with the price per square available to the public.
(6) We conduct cut-off test of the income from real estate development projects, and check the sales income
recognized before or after the balance sheet date against the delivery procedures and other supporting
documents to determine the income is recognized in the proper period.
(7) We assess whether the management properly discloses income in financial statements.
According to our audit procedures, we conclude that the management's recognition of the income from real
estate development projects conforms to accounting policies of Shen SEG.
IV. Other information
The management of Shen SEG shall be responsible for other information, including information in 2017 annual
report but excluding financial statements and our audit report.
The auditor's opinions do not cover other information. We do not make authentication conclusions in any form
on other information.
Based on our audit of financial statements, our responsibility is to read other information and find major
inconsistency between other information and financial statements or our findings during audit or any
misstatement.
159
Based on our existing work, if we confirm any misstatement of other information, we shall report such fact. In
this respect, we have nothing to report.
V. Responsibilities of the management and the governance for financial statements
It is the responsibility of the management of Shen SEG to prepare and fairly present financial statements, and
design, implement and maintain necessary internal control in order to avoid major misstatements resulting from
fraud or errors.
It is the responsibility of the governance of Shen SEG to assess the going-concern ability of Shen SEG, disclose
matters related to going concern (if applicable), and use the going concern assumption unless the management
plans to liquidate Shen SEG or cease business operation or has no other realistic options.
It is the responsibility of the governance to supervise the financial statements throughout the process.
VI. Responsibilities of CPAs for financial statement audit
Our responsibility is to obtain reasonable assurance for no major misstatements resulting from fraud or errors in
financial statements and issue an audit report with auditor's opinions. Reasonable assurance ensures expertise,
but it cannot be always obtained during audit according to audit standards in case a major misstatement exists.
Misstatements may result from fraud or errors. If it is reasonably expected that misstatements may separately or
collectively affect the economic decisions made by financial statement users, such misstatements are major
misstatements.
During audit according to audit standards, we use professional judgment and maintain professional skepticism.
We also perform the following tasks:
1. We identify and assess major misstatements resulting from fraud or errors in financial statements, design
and implement audit procedures to deal with such risks, and obtain adequate and appropriate auditing
evidence as a basis for auditor's opinions. As fraud may involve collusion, falsification, intentional omission,
misrepresentation or precedence over internal control, the risk of failure to find misstatements resulting
from fraud is higher than that of failure to find misstatements resulting from errors.
2. We learn internal control related to audit to design appropriate audit procedures.
3. We assess the appropriateness of accounting policies and the rationality of accounting estimates and related
disclosure made by the management.
4. We draw a conclusion on the appropriateness of the going concern assumption used by the management. At
the same time, according to the audit evidence obtained, we may draw a conclusion on whether material
uncertainty exists for events or circumstances casting substantial doubt on the going-concern ability of Shen
SEG. If we conclude that material uncertainty exists, we are required to advise users to pay attention to such
disclosure in financial statements in the audit report according to audit standards. If such disclosure is
inadequate, we shall express unqualified opinions. Our conclusions are based on the information available
as of the date of the audit report. However, future events or circumstances may result in the failure of Shen
SEG to continue operations.
5. We assess the overall presentation, structure and content (including disclosure) of financial statements, and
assess whether financial statements fairly reflect relevant transactions and events.
160
6. We obtain adequate and appropriate auditing evidence for financial information on entity or business
activities of Shen SEG as a basis for opinions on consolidated financial statements. It is our responsibility to
guide, supervise and implement audit for the Group. We are solely responsible for auditor's opinions.
We communicate with the governance about the contemplated audit scope, schedule and major audit findings,
including internal control defects we identify during audit.
We also made representations to the management on compliance with professional ethics requirements related to
independence, and communicate with the governance on all relationships and other matters that may reasonably
be deemed to affect our independence, as well as related preventive measures (if applicable).
Among matters that we have communicated with the governance about, we take matters that are the most
important to financial statements of 2017 as key audit items. We describe such items in the audit report unless it
is prohibited to disclose such matters by law or in rare circumstances, if it is reasonably expected that the
negative consequences of communicating an item in the audit report will outweigh the benefits for the public
interest, we determine that such item should not be communicated in the audit report.
Da Hua Certified Public Accountants (Special
Certified Public Accountant:
General Partnership)
(Project partner)
Beijing, China
Certified Public Accountant:
April 20, 2018
161
II. Financial Statements
Unit in the notes to financial statements: RMB/Yuan
1. Consolidated Balance Sheet Statement
Prepared by: Shenzhen SEG Co., Ltd.
December 31, 2017
Unit: Yuan
Item Closing balance Opening balance
Current assets:
Monetary funds 951,482,605.92 1,131,523,641.19
Deposit reservation for balance
Loans to other banks 40,000,000.00
Financial assets measured by fair value with
changes recognized in current profit or loss
Derivative financial assets
Notes receivable 0.00 100,792.00
Accounts receivable 61,934,101.56 58,949,389.88
Prepayment 34,718,079.54 56,142,960.81
Premiums receivable
Reinsurance accounts receivable
Reinsurance deposit receivable
Interest receivable 0.00 287,698.63
Dividends receivable 2,000,000.00 0.00
Other accounts receivable 94,057,159.50 117,036,077.02
Redemptory monetary capital for resale
Inventory 3,551,100,320.71 3,378,533,067.95
Held-for-sale assets
Non-current assets due within one year
Other current assets 565,577,916.34 460,229,847.59
Total current assets 5,260,870,183.57 5,242,803,475.07
Non-current assets:
Loans and prepayment issued 399,387,108.14 480,405,158.45
Available-for-sale financial assets 34,161,311.32 34,478,683.41
Held-to-maturity investment
Long-term receivables
Long-term equity investment 211,973,322.32 203,657,322.71
Investment properties 676,888,184.90 708,470,470.81
Item Closing balance Opening balance
Fixed assets 62,404,988.93 52,029,921.10
Construction in progress 71,745,514.32 37,092,227.51
Engineering materials
Disposal of fixed assets
Productive biological assets
Oil & gas assets
Intangible assets 31,831,783.09 2,681,527.40
Development expenses
Goodwill 10,328,927.82 10,328,927.82
Long-term expenses to be amortized 109,813,025.95 109,009,684.16
Deferred income tax assets 29,898,440.39 28,511,034.74
Other non-current assets 93,287,630.00 13,804,660.46
Total non-current assets 1,731,720,237.18 1,680,469,618.57
Total assets 6,992,590,420.75 6,923,273,093.64
Current liabilities:
Short-term borrowing 534,792,000.00 355,000,000.00
Loans from central bank
Deposits from customers and interbank
Loans from other banks
Financial liabilities measured by fair value with
changes recognized in current profit or loss
Derivative financial liabilities
Notes payable 0.00
Accounts payable 470,088,158.63 31,010,953.20
Prepayment from customers 707,031,729.23 923,965,168.05
Financial assets sold for repurchase
Service charges and commissions payable
Payroll payable 41,014,602.99 35,464,329.86
Taxes payable 243,477,530.43 254,715,544.38
Interest payable 3,599,878.48 3,357,745.13
Dividends payable 3,340,969.82 15,132,970.78
Other payables 1,290,431,866.37 798,082,723.93
Reinsurance accounts payable
Insurance deposit
Customer brokerage deposits
Securities underwriting brokerage deposits
Held-for-sale liabilities
Item Closing balance Opening balance
Non-current liabilities due within one year 258,414,693.92 491,561,661.33
Other current liabilities
Total current liabilities 3,552,191,429.87 2,908,291,096.66
Non-current liabilities:
Long-term borrowing 754,750,000.00 1,030,000,000.00
Bonds payable
Preferred stock
Perpetual capital securities
Long-term payables
Payroll payable
Special payables
Estimated liabilities 1,137,019.85 232,500.00
Deferred income 12,336,620.96 17,331,602.84
Deferred income tax liabilities 91,251,453.07 93,885,145.21
Other non-current liabilities
Total non-current liabilities 859,475,093.88 1,141,449,248.05
Total liabilities 4,411,666,523.75 4,049,740,344.71
Owners' equity:
Share capital 1,235,656,249.00 784,799,010.00
Other equity instruments
Preferred stock
Perpetual capital securities
Capital reserve 166,019,870.19 798,273,541.65
Less: Treasury shares
Other comprehensive income 137,629.12 296,235.62
Special reserve 0.00
Surplus reserve 138,710,473.33 121,803,040.24
General risk provision
Undistributed profits 376,704,148.51 707,129,242.53
Total owners' equity attributable to the parent company 1,917,228,370.15 2,412,301,070.04
Minority shareholders' equity 663,695,526.85 461,231,678.89
Total owners' equity 2,580,923,897.00 2,873,532,748.93
Total liabilities and owners' equity 6,992,590,420.75 6,923,273,093.64
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun
Responsible person of the accounting institution: Ying Huadong
2. Balance Sheet Statement of the Parent Company
Unit: Yuan
Item Closing balance Opening balance
Current assets:
Monetary funds 104,463,125.70 90,504,836.76
Financial assets measured by fair value with
changes recognized in current profit or loss
Derivative financial assets
Notes receivable
Accounts receivable 1,105,493.93 426,069.15
Prepayment 46,153.86
Interest receivable
Dividends receivable 2,000,000.00 0.00
Other accounts receivable 1,027,163,364.11 724,658,970.18
Inventory 395,764.94 442,920.87
Held-for-sale assets
Non-current assets due within one year
Other current assets 321,967,708.13 438,146,382.10
Total current assets 1,457,141,610.67 1,254,179,179.06
Non-current assets:
Available-for-sale financial assets 33,515,392.83 33,515,392.83
Held-to-maturity investment
Long-term receivables
Long-term equity investment 1,419,623,352.33 453,584,470.91
Investment properties 263,361,638.46 273,880,749.30
Fixed assets 17,919,657.80 19,149,224.71
Construction in progress 4,175,779.03 0.00
Engineering materials
Disposal of fixed assets
Productive biological assets
Oil & gas assets
Intangible assets 1,367,666.09 425,708.10
Development expenses
Goodwill
Long-term expenses to be amortized 7,673,085.72 7,743,293.52
Deferred income tax assets 8,380,569.73 8,664,455.49
Other non-current assets
Total non-current assets 1,756,017,141.99 796,963,294.86
Item Closing balance Opening balance
Total assets 3,213,158,752.66 2,051,142,473.92
Current liabilities:
Short-term borrowing 530,000,000.00 355,000,000.00
Financial liabilities measured by fair value with
changes recognized in current profit or loss
Derivative financial liabilities
Notes payable
Accounts payable 206,374.11 155,213.00
Prepayment from customers 23,072,035.80 25,448,125.00
Payroll payable 5,391,313.71 7,817,501.76
Taxes payable 18,757,359.46 23,485,483.97
Interest payable 687,210.64 475,177.74
Dividends payable 119,803.29 119,803.29
Other payables 748,458,822.72 75,858,657.13
Held-for-sale liabilities
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 1,326,692,919.73 488,359,961.89
Non-current liabilities:
Long-term borrowing
Bonds payable
Preferred stock
Perpetual capital securities
Long-term payables
Payroll payable
Special payables
Estimated liabilities 1,137,019.85
Deferred income 8,883,045.38 11,183,333.34
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 10,020,065.23 11,183,333.34
Total liabilities 1,336,712,984.96 499,543,295.23
Owners' equity:
Share capital 1,235,656,249.00 784,799,010.00
Other equity instruments
Preferred stock
Perpetual capital securities
Item Closing balance Opening balance
Capital reserve 240,542,997.30 498,654,523.66
Less: Treasury shares
Other comprehensive income 51.46 178.21
Special reserve
Surplus reserve 138,710,473.33 121,803,040.24
Undistributed profits 261,535,996.61 146,342,426.58
Total owners' equity 1,876,445,767.70 1,551,599,178.69
Total liabilities and owners' equity 3,213,158,752.66 2,051,142,473.92
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun
Responsible person of the accounting institution: Ying Huadong
3. Consolidated Profit Statement
Unit: Yuan
Amount incurred in the current Amount incurred in the previous
Item
period period
I. Total operating income 2,030,445,390.62 1,459,575,791.50
Including: Operating income 1,981,307,558.23 1,371,044,982.11
Interest income 48,036,230.86 67,560,598.14
Earned premiums
Service charges and commissions income 1,101,601.53 20,970,211.25
II. Total operating cost 1,687,151,513.35 1,262,036,286.18
Including: Operating cost 1,398,497,691.27 1,012,112,271.54
Interest expenses 596,875.00 3,004,288.89
Commissions 0.00 0.00
Surrender value
Net compensation pay-outs
Net insurance deposit accrued
Insurance dividends
Reinsurance expenses
Operating tax and surcharges 57,221,029.77 54,422,583.04
Sale expenses 43,173,370.45 41,555,812.57
Management expenses 144,029,063.26 142,779,706.02
Financial cost 21,598,611.36 10,466,615.20
Loss from asset impairment 22,034,872.24 -2,304,991.08
Income from changes in fair value (enter "-" for
0.00 0.00
loss)
Income from investment (enter "-" for loss) 71,999,915.73 109,715,641.65
Including: Income from investment in joint
296,114.99 0.00
ventures and associated enterprises
Income from exchange (enter "-" for loss)
Income from asset disposal (enter "-" for loss) 0.00 116,977.79
Other income 6,406,623.72
III. Operating profit (enter "-" for loss) 421,700,416.72 307,372,124.76
Add: Non-operating income 13,033,764.81 117,716,771.09
Less: Non-operating expenses 6,468,223.22 8,145,885.48
IV. Total profit (enter "-" for total loss) 428,265,958.31 416,943,010.37
Less: Income tax 120,241,267.37 107,663,792.52
V. Net profit (enter "-" for net loss) 308,024,690.94 309,279,217.85
(I) Net profit from continuing operations (enter "-"
311,288,704.85 309,279,217.85
for net loss)
Amount incurred in the current Amount incurred in the previous
Item
period period
(II) Net profit from discontinuing operations (enter
-3,264,013.91
"-" for net loss)
Net profit attributable to owners of the parent
219,553,261.10 246,062,783.31
company
Profit and loss of minority shareholders 88,471,429.84 63,216,434.54
VI. Net of tax of other comprehensive incomes -238,155.82 -45,789.16
Total owners' net of tax of other comprehensive
-158,606.50 -30,426.86
incomes attributable to the parent company
1. Other comprehensive incomes not to be
0.00 0.00
reclassified into profit and loss
(1) Changes in net liabilities or net assets of
the re-measured defined benefit plans
(2) Shares of the investee of other
comprehensive incomes not to be reclassified into profit
and loss under the equity method
2. Other comprehensive incomes to be reclassified
-158,606.50 -30,426.86
into profit and loss
(1) Shares of the investee of other
comprehensive incomes to be reclassified into profit and -126.75 178.21
loss under the equity method
(2) Profit and loss from changes in fair
-158,479.75 -30,605.07
value of the available-for-sale financial assets
(3) Held-to-maturity investments
categorized as profit or loss from the available-for-sale
financial assets
(4) Effective gains or loss from cash flows
(5) Foreign currency translation differences
(6) Others
Net of tax of other comprehensive incomes
-79,549.32 -15,362.30
attributable to minority shareholders
VII. Total comprehensive income 307,786,535.12 309,233,428.69
Total comprehensive income attributable to
219,394,654.60 246,032,356.45
shareholders of the parent company
Total comprehensive income attributable to
88,391,880.52 63,201,072.24
minority shareholders
VIII. Earnings per share
1. Basic earnings per share 0.1777 0.1991
2. Diluted earnings per share 0.1777 0.1991
In case of merger of enterprises under common control in the current period, the net profit of the merged party
before merger is RMB , and the net profit of the merged party in the previous period is RMB .
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun
Responsible person of the accounting institution: Ying Huadong
4. Profit Statement of the Parent Company
Unit: Yuan
Amount incurred in the current Amount incurred in the previous
Item
period period
I. Operating income 85,112,846.04 100,960,545.53
Less: Operating cost 75,540,023.72 74,670,318.50
Operating tax and surcharges 4,865,820.50 5,063,045.37
Sale expenses 0.00 0.00
Management expenses 22,225,515.05 40,538,467.44
Financial cost 17,833,274.38 -17,489,447.63
Loss from asset impairment 27,725.05 6,305.06
Income from changes in fair value (enter "-" for
0.00
loss)
Income from investment (enter "-" for loss) 209,993,445.00 141,237,490.92
Including: Income from investment in joint
-387,059.05
ventures and associated enterprises
Income from asset disposal (enter "-" for net
0.00
loss)
Other income 3,402,987.96
II. Operating profit (enter "-" for loss) 178,016,920.30 139,409,347.71
Add: Non-operating income 8,021,889.83 1,830,706.13
Less: Non-operating expenses 2,283,897.04 3,905,790.35
III. Total profit (enter "-" for total loss) 183,754,913.09 137,334,263.49
Less: Income tax 14,680,582.18 18,527,229.82
IV. Net profit (enter "-" for net loss) 169,074,330.91 118,807,033.67
(I) Net profit from continuing operations (enter "-"
169,074,330.91 118,807,033.67
for net loss)
(II) Net profit from discontinuing operations (enter
"-" for net loss)
V. Net of tax of other comprehensive incomes -126.75 178.21
1. Other comprehensive incomes not to be
0.00 0.00
reclassified into profit and loss
(1) Changes in net liabilities or net assets of
the re-measured defined benefit plans
(2) Shares of the investee of other
comprehensive incomes not to be reclassified into profit
and loss under the equity method
2. Other comprehensive incomes to be reclassified
-126.75 178.21
into profit and loss
(1) Shares of the investee of other
comprehensive incomes to be reclassified into profit and -126.75 178.21
loss under the equity method
(2) Profit and loss from changes in fair
value of the available-for-sale financial assets
(3) Held-to-maturity investments
categorized as profit or loss from the available-for-sale
financial assets
(4) Effective gains or loss from cash flows
(5) Foreign currency translation differences
(6) Others
VI. Total comprehensive income 169,074,204.16 118,807,211.88
VII. Earnings per share
1. Basic earnings per share
2. Diluted earnings per share
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun
Responsible person of the accounting institution: Ying Huadong
5. Consolidated Cash Flow Statement
Unit: Yuan
Amount incurred in the current Amount incurred in the previous
Item
period period
I. Cash flow from operating activities:
Cash received from sales of goods and rendering of
1,843,459,991.17 2,167,856,613.31
services
Net increase in deposits from customers and
interbank
Net increase in loans from central bank
Net increase in borrowing from other financial
institutions
Cash received from premiums of primary insurance
contracts
Net cash received from reinsurance business
Net increase in deposits from policyholders and
investment
Net increase in financial assets measured by fair
value with changes recognized in current profit or loss
Cash received from interest and commissions 51,931,798.60 88,530,809.39
Net increase in loans from other banks 40,000,000.00
Net increase in redemption capital
Tax refunds 857,341.82 82,932,677.81
Other cash received related to operating activities 297,922,909.58 376,682,541.63
Subtotal of cash inflow from operating activities 2,234,172,041.17 2,716,002,642.14
Cash paid for goods and service 871,402,977.70 1,404,204,686.90
Net increase in loans to customers and prepayment -71,579,285.19 877,622.60
Net increase in deposits with central bank and
interbank
Cash paid for compensation pay-outs of primary
insurance contracts
Cash paid for interest, service charges, and
0.00
commissions
Cash paid as insurance dividends
Cash paid to and on behalf of employees 296,228,299.78 245,122,638.85
Taxes paid 289,106,815.42 230,803,870.50
Other cash paid related to operating activities 341,626,684.25 391,458,282.51
Subtotal of cash outflow in operating activities 1,726,785,491.96 2,272,467,101.36
Net cash flow from operating activities 507,386,549.21 443,535,540.78
II. Cash flows from investing activities:
Amount incurred in the current Amount incurred in the previous
Item
period period
Cash received from withdrawal of investment 2,229,650,000.00 792,844,658.58
Cash received from investment income 73,207,072.76 18,893,192.14
Net cash received from disposal of fixed assets,
22,960.00 224,258.00
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries and
1,334,864.24 4,388,617.09
other business units
Other cash received related to investing activities 2,000,000.00
Subtotal of cash inflow from investing activities 2,304,214,897.00 818,350,725.81
Cash paid for purchase and construction of fixed
156,617,057.69 103,755,706.86
assets, intangible assets and other long-term assets
Cash paid for investment 2,334,640,001.00 776,386,160.00
Net increase in mortgage loans
Net cash paid for acquisition of subsidiaries and
0.00 17,500,000.00
other business units
Other cash paid related to investing activities 0.00 0.00
Subtotal of cash outflow in investing activities 2,491,257,058.69 897,641,866.86
Net cash flow from investing activities -187,042,161.69 -79,291,141.05
III. Cash flow from financing activities:
Cash received by absorbing investment 178,037,998.48 0.00
Including: Cash received by subsidiaries from
178,037,998.48 0.00
investment of minority shareholders
Borrowings received 905,000,000.00 1,730,020,000.00
Cash received from bond issue 0.00 0.00
Other cash received related to financing activities 0.00 1,347,812.30
Subtotal of cash inflow from financing activities 1,083,037,998.48 1,731,367,812.30
Cash repayment 1,233,458,000.00 1,323,179,630.48
Cash paid for dividend and profit distribution or
211,121,814.06 164,667,476.90
interest payment
Including: Dividends and profit paid by
65,580,423.41 10,647,780.72
subsidiaries to minority shareholders
Other cash paid related to financing activities 138,844,060.16 111,304,509.06
Subtotal of cash outflow in financing activities 1,583,423,874.22 1,599,151,616.44
Net cash flow arising from financing activities -500,385,875.74 132,216,195.86
IV. Influence of exchange rate fluctuation on cash and
452.95 15.47
cash equivalents
V. Net increase in cash and cash equivalents -180,041,035.27 496,460,611.06
Add: Opening balance of cash and cash equivalents 1,127,923,641.19 631,463,030.13
VI. Closing balance of cash and cash equivalents 947,882,605.92 1,127,923,641.19
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun
Responsible person of the accounting institution: Ying Huadong
6. Cash Flow Statement of the Parent Company
Unit: Yuan
Amount incurred in the current Amount incurred in the previous
Item
period period
I. Cash flow from operating activities:
Cash received from sales of goods and rendering of
95,462,342.42 105,235,891.60
services
Tax refunds 0.00 0.00
Other cash received related to operating activities 32,468,417.84 228,693,257.76
Subtotal of cash inflow from operating activities 127,930,760.26 333,929,149.36
Cash paid for goods and service 66,076,921.93 82,096,021.68
Cash paid to and on behalf of employees 40,595,839.30 43,976,017.80
Taxes paid 36,901,586.64 59,381,044.41
Other cash paid related to operating activities 311,872,565.33 336,858,224.56
Subtotal of cash outflow in operating activities 455,446,913.20 522,311,308.45
Net cash flow from operating activities -327,516,152.94 -188,382,159.09
II. Cash flows from investing activities:
Cash received from withdrawal of investment 943,000,000.00 852,392,256.58
Cash received from investment income 206,606,456.63 67,578,674.96
Net cash received from disposal of fixed assets,
18,700.00 10,000.00
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries and
3,542,000.00 0.00
other business units
Other cash received related to investing activities 0.00 2,000,000.00
Subtotal of cash inflow from investing activities 1,153,167,156.63 921,980,931.54
Cash paid for purchase and construction of fixed
4,099,402.79 1,809,071.46
assets, intangible assets and other long-term assets
Cash paid for investment 924,640,000.00 828,881,900.00
Net cash paid for acquisition of subsidiaries and
0.00
other business units
Other cash paid related to investing activities 0.00
Subtotal of cash outflow in investing activities 928,739,402.79 830,690,971.46
Net cash flow from investing activities 224,427,753.84 91,289,960.08
III. Cash flow from financing activities:
Cash received by absorbing investment 0.00 0.00
Borrowings received 550,000,000.00 355,000,000.00
Cash received from bond issue
Other cash received related to financing activities 7,812.30
Subtotal of cash inflow from financing activities 550,000,000.00 355,007,812.30
Amount incurred in the current Amount incurred in the previous
Item
period period
Cash repayments of amounts borrowed 375,000,000.00 315,000,000.00
57,953,311.96 38,780,262.58
Other cash paid related to financing activities 0.00 0.00
Subtotal of cash outflow in financing activities 432,953,311.96 353,780,262.58
Net cash flow arising from financing activities 117,046,688.04 1,227,549.72
IV. Influence of exchange rate fluctuation on cash and
15.47
cash equivalents
V. Net increase in cash and cash equivalents 13,958,288.94 -95,864,633.82
Add: Opening balance of cash and cash equivalents 90,504,836.76 186,369,470.58
VI. Closing balance of cash and cash equivalents 104,463,125.70 90,504,836.76
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun
Responsible person of the accounting institution: Ying Huadong
7. Consolidated Statement of Changes in Owners' Equity
Amount incurred in the current period
Unit: Yuan
Current period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Total owners'
Less: Other General
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
reserve profits equity
capital Others
Shares shares income provision
securities
I. Closing
balance of the 784,799,010.00 0.00 798,273,541.65 0.00 296,235.62 0.00 121,803,040.24 707,129,242.53 461,231,678.89 2,873,532,748.93
previous year
Plus:
Change of
0.00
accounting
policies
Correction to
0.00
errors of the
previous period
Merger
of the enterprises
0.00
under the control
of a same entity
Others 0.00
II. Opening
balance of the 784,799,010.00 0.00 798,273,541.65 0.00 296,235.62 0.00 121,803,040.24 707,129,242.53 461,231,678.89 2,873,532,748.93
current year
III. Increase and 450,857,239.00 0.00 -632,253,671.46 0.00 -158,606.50 0.00 16,907,433.09 -330,425,094.02 202,463,847.96 -292,608,851.93
Current period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Total owners'
Less: Other General
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
capital Others reserve profits equity
Shares shares income provision
securities
decrease of the
current year
(enter "-" for
decrease)
1. Total
comprehensive -158,606.50 219,553,261.10 88,471,429.84 307,786,535.12
income
2. Capital
invested or
450,857,239.00 0.00 -632,253,671.46 0.00 0.00 0.00 0.00 -496,097,594.24 171,639,107.91 -505,854,918.79
decreased by
owners
(1) Ordinary
shares invested
450,857,239.00 -249,044,853.42 178,037,998.48 379,850,384.06
by the
shareholders
(2) Capitals
invested by other
0.00
equity instrument
holders
(3) Amount of
share-based
payment 0.00
included in
owners' equity
Current period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Total owners'
Less: Other General
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
capital Others reserve profits equity
Shares shares income provision
securities
(4) Others -383,208,818.04 -496,457,594.24 -6,398,890.57 -885,705,302.85
3. Profit
0.00 0.00 0.00 0.00 0.00 0.00 16,907,433.09 -53,880,760.88 -57,646,689.79 -94,540,468.26
distribution
(1) Accrual of
16,907,433.09 -16,907,433.09 0.00
surplus reserve
(2) Accrual of
general risk
provision
(3) Amount
distributed to
-36,973,327.79 -57,567,140.47 -94,540,468.26
owners (or
shareholders)
(4) Others 0.00
4. Internal
carrying forward 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
of owners' equity
(1) Capital
reserve
transferred to 0.00 0.00
increase capital
(or share capital)
(2) Surplus 0.00 0.00
reserve
Current period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Total owners'
Less: Other General
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
capital Others reserve profits equity
Shares shares income provision
securities
transferred to
increase capital
(or share capital)
(3) Surplus
reserve
0.00 0.00
compensating
losses
(4) Others 0.00
5. Special reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(1) Accrual of
0.00
the current year
(2) Amount
utilized in the 0.00
current period
6. Others
IV. Closing
balance of the 1,235,656,249.00 0.00 166,019,870.19 0.00 137,629.12 0.00 138,710,473.33 376,704,148.51 663,695,526.85 2,580,923,897.00
current period
Amount of the previous period
Unit: Yuan
Previous period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
reserve profits equity
capital Others
Shares shares income provision
securities
I. Closing balance
784,799,010.00 0.00 506,545,831.11 0.00 326,662.48 0.00 109,922,336.87 73,532,388.70 205,218,511.74 1,680,344,740.90
of the previous year
Plus: Change
of accounting 0.00
policies
Correction
to errors of the 0.00
previous period
Business
combination under 101,949,000.00 423,084,188.36 224,336,643.55 749,369,831.91
common control
Others 0.00
II. Opening balance
784,799,010.00 0.00 608,494,831.11 0.00 326,662.48 0.00 109,922,336.87 496,616,577.06 429,555,155.29 2,429,714,572.81
of the current year
III. Increase and
decrease of the
0.00 0.00 189,778,710.54 0.00 -30,426.86 0.00 11,880,703.37 210,512,665.47 31,676,523.60 443,818,176.12
current year (enter
"-" for decrease)
Previous period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Total owners'
Less: Other General
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
capital Others reserve profits equity
Shares shares income provision
securities
1. Total
comprehensive -30,426.86 246,062,783.31 63,201,072.24 309,233,428.69
income
2. Capital invested
or decreased by 0.00 0.00 198,905,837.01 0.00 0.00 0.00 0.00 0.00 -4,334,661.84 194,571,175.17
owners
(1) Ordinary shares
invested by the 198,605,476.86 -14,700,000.00 183,905,476.86
shareholders
(2) Capitals invested
by other equity 0.00
instrument holders
(3) Amount of
share-based
0.00
payment included in
owners' equity
(4) Others 300,360.15 10,365,338.16 10,665,698.31
3. Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 11,880,703.37 -35,550,117.84 -27,189,886.80 -50,859,301.27
(1) Accrual of
11,880,703.37 -11,880,703.37 0.00
surplus reserve
(2) Accrual of
general risk
provision
Previous period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Total owners'
Less: Other General
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
capital Others reserve profits equity
Shares shares income provision
securities
(3) Amount
distributed to
-23,669,414.47 -27,189,886.80 -50,859,301.27
owners (or
shareholders)
(4) Others 0.00
4. Internal carrying
forward of owners' 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
equity
(1) Capital reserve
transferred to
0.00 0.00
increase capital (or
share capital)
(2) Surplus reserve
transferred to
0.00 0.00
increase capital (or
share capital)
(3) Surplus reserve
0.00 0.00
compensating losses
(4) Others
5. Special reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(1) Accrual of the
0.00
current year
Previous period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Total owners'
Less: Other General
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
capital Others reserve profits equity
Shares shares income provision
securities
(2) Amount utilized
0.00
in the current period
6. Others -9,127,126.47 -9,127,126.47
IV. Closing balance
784,799,010.00 0.00 798,273,541.65 0.00 296,235.62 0.00 121,803,040.24 707,129,242.53 461,231,678.89 2,873,532,748.93
of the current period
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
8. Statement on Changes in Owners' Equity of the Parent Company
Amount incurred in the current period
Unit: Yuan
Amount incurred in the current period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
I. Closing balance of the
784,799,010.00 0.00 498,654,523.66 0.00 178.21 0.00 121,803,040.24 146,342,426.58 1,551,599,178.69
previous year
Plus: Change of
0.00
accounting policies
Correction to
errors of the previous 0.00
period
Others 0.00
II. Opening balance of the
784,799,010.00 0.00 498,654,523.66 0.00 178.21 0.00 121,803,040.24 146,342,426.58 1,551,599,178.69
current year
III. Increase and decrease
of the current year (enter 450,857,239.00 0.00 -258,111,526.36 0.00 -126.75 0.00 16,907,433.09 115,193,570.03 324,846,589.01
"-" for decrease)
1. Total comprehensive
-126.75 169,074,330.91 169,074,204.16
income
2. Capital invested or
450,857,239.00 0.00 -258,111,526.36 0.00 0.00 0.00 0.00 0.00 192,745,712.64
decreased by owners
(1) Ordinary shares
invested by the 450,857,239.00 -249,044,853.42 201,812,385.58
shareholders
Amount incurred in the current period
Other equity instruments
Less: Other
Item Special Undistributed Total owners'
Perpetual
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
(2) Capitals invested by
other equity instrument 0.00
holders
(3) Amount of share-based
payment included in 0.00
owners' equity
(4) Others -9,066,672.94 -9,066,672.94
3. Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 16,907,433.09 -53,880,760.88 -36,973,327.79
(1) Accrual of surplus
16,907,433.09 -16,907,433.09 0.00
reserve
(2) Amount distributed to
-36,973,327.79 -36,973,327.79
owners (or shareholders)
(3) Others 0.00
4. Internal carrying
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
forward of owners' equity
(1) Capital reserve
transferred to increase 0.00 0.00
capital (or share capital)
(2) Surplus reserve
transferred to increase 0.00 0.00
capital (or share capital)
(3) Surplus reserve
0.00 0.00
compensating losses
Amount incurred in the current period
Other equity instruments
Less: Other
Item Special Undistributed Total owners'
Perpetual
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
(4) Others 0.00
5. Special reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(1) Accrual of the current
0.00
year
(2) Amount utilized in the
0.00
current period
6. Others
IV. Closing balance of the
1,235,656,249.00 0.00 240,542,997.30 0.00 51.46 0.00 138,710,473.33 261,535,996.61 1,876,445,767.70
current period
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
Amount of previous period
Unit: Yuan
Previous period
Other equity instruments
Less: Other
Item Special Undistributed Total owners'
Perpetual
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
I. Closing balance of the
784,799,010.00 0.00 507,773,837.83 0.00 0.00 0.00 109,922,336.87 63,085,510.75 1,465,580,695.45
previous year
Plus: Change of
0.00
accounting policies
Previous period
Other equity instruments
Less: Other
Item Special Undistributed Total owners'
Perpetual
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
Correction to
errors of the previous 0.00
period
Others 0.00
II. Beginning balance of
784,799,010.00 0.00 507,773,837.83 0.00 0.00 0.00 109,922,336.87 63,085,510.75 1,465,580,695.45
the current year
III. Increase and decrease
of the current year (enter 0.00 0.00 -9,119,314.17 0.00 178.21 0.00 11,880,703.37 83,256,915.83 86,018,483.24
"-" for decrease)
1. Total comprehensive
178.21 118,807,033.67 118,807,211.88
income
2. Capital invested or
0.00 0.00 7,812.30 0.00 0.00 0.00 0.00 0.00 7,812.30
decreased by owners
(1) Ordinary shares
invested by the 0.00
shareholders
(2) Capitals invested by
other equity instrument 0.00
holders
(3) Amount of
share-based payment 0.00
included in owners' equity
(4) Others 7,812.30 7,812.30
3. Profit distribution 0.00 0.00 0.00 0.00 0.00 0.00 11,880,703.37 -35,550,117.84 -23,669,414.47
Previous period
Other equity instruments
Less: Other
Item Special Undistributed Total owners'
Perpetual
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
(1) Accrual of surplus
11,880,703.37 -11,880,703.37 0.00
reserve
(2) Amount distributed to
-23,669,414.47 -23,669,414.47
owners (or shareholders)
(3) Others 0.00
4. Internal carrying
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
forward of owners' equity
(1) Capital reserve
transferred to increase 0.00 0.00
capital (or share capital)
(2) Surplus reserve
transferred to increase 0.00 0.00
capital (or share capital)
(3) Surplus reserve
0.00 0.00
compensating losses
(4) Others 0.00
5. Special reserve 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(1) Accrual of the current
0.00
year
(2) Amount utilized in the
0.00
current period
6. Others -9,127,126.47 -9,127,126.47
Previous period
Other equity instruments
Less: Other
Item Special Undistributed Total owners'
Perpetual
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
IV. Closing balance of the
784,799,010.00 0.00 498,654,523.66 0.00 178.21 0.00 121,803,040.24 146,342,426.58 1,551,599,178.69
current period
Legal representative: Chen Huijie Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
Shenzhen SEG Co., Ltd.
Notes to 2017 Financial Statements
I. Company profile
(I) Registered place, organizational form and headquarters address
Shenzhen SEG Co., Ltd. (hereinafter referred to as "the Company") was incorporated on July 16, 1996 through
public offering with Shenzhen SEG Group Co., Ltd. as the sole initiator upon the approval of relevant
departments of Shenzhen and the state in accordance with the Company Law of the People's Republic of China.
The Company holds the Enterprise Corporation Business License with the unified social credit code
91440300279253776E and the registration number 440301103573251. Upon the approval of the securities
administration departments of Shenzhen and the state, the Company's B shares and A shares were listed on
Shenzhen Stock Exchange respectively in July 1996 and December 1996.
On June 7, 2006, the Company passed a resolution at the general meeting of shareholders concerning the equity
division reform. According to the transfer plan of capital reserve into common shares, the Company distributed
4.6445 shares to tradable A share shareholders for each 10 shares, which totaled 40,233,322 transferred shares.
As a result, its non-tradable A shares were qualified for listing and circulating. Among the converted and
increased capital share obtained by the tradable A-share shareholders, 6,997,054 shares were received due to the
company's share capital expansion and the rest of 33,236,268 shares were the consideration paid to the tradable
A-share shareholders by non-tradable A-share holders under fixed arrangements.
On February 3, 2016, Shenzhen SEG Co., Ltd. and Shenzhen SEG Group Co., Ltd. entered into the Framework
Agreement of Share Issuance and Cash Payment to Acquire Assets. The Company intended to purchase the
equity of subject companies held by SEG Group by non-public offering of shares and in cash (including 55% of
equity of SEG Recreation, 100% of equity of SEG Property, 100% of equity of SEG SegMaker, and 79.02% of
equity of SEG Real Estate) by non-public offering of shares and in cash, and issue private placement to no more
than 10 specific investors to raise supporting funds of no more than RMB 2 billion. On January 17, 2017, the
Company received the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to Shenzhen SEG Group Co., Ltd.
to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) issued by the CSRC. On February 15,
2017, the Company received the Acceptance Confirmation of the Application for Share Registration issued by
Shenzhen Branch of China Securities Depository and Clearing Company Limited. As confirmed, 450,857,239 A
shares are issued for non-public offering, the new shares are restricted outstanding shares issued on March 6,
2017.
As of December 31, 2017, the total capital share of the Company amounts to 1,235,656,249 shares, including
451,047,178 restricted shares and 784,609,071 unrestricted shares. The registered capital is RMB 1,235,656,249.
The registered address is 31F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen. The
controlling shareholder is Shenzhen SEG Group Co., Ltd., and its final controller is Shenzhen State-owned
Assets Supervision and Administration Commission.
(II) Business scope
General items: Investment in industrial projects (specific items to be declared separately); operation and
management of electronics markets; online trade; Internet technology development; advertising business;
Notes to Financial Statements Page 1
housing leasing; sales of computers, software, auxiliary equipment, and electronic products; cultural and artistic
exchange activity planning (excluding performances); exhibition activities; investment in and management of
children's industrial chain projects; children's playground equipment leasing (excluding financial leasing
activities); playground management and services (limited to branch management); catering services (limited to
branch management); business management consulting; education consulting; wholesale and retail of
pre-packaged food, unpacked food, and dairy products (including infant formula milk powder) (limited to branch
management); sales of stationery, craft gifts, toys, children's clothing, electronic products, handicrafts, and daily
necessities; photography services; technical development of new energy; EPC of photovoltaic power generation
and building integrated photovoltaic (BIPV) engineering; technical development and services of CdTe film solar
cell modules; investment in photovoltaic power plants, contracting of BIPV curtain wall engineering; domestic
trade (excluding franchised goods, proprietary goods, and goods under special control). (Any item subject to
approval pursuant to laws can be operated only after approval.)
Licensed items: information services (limited to Internet information services); sales of food; manufacturing and
sales of CdTe solar cell modules.
(III) Business property and business operations
The Company engages in business service industry, involving products and service mainly in operation and
management of special electronics markets, lease business and other tertiary industries.
(IV) Approval for disclosure of the financial statements
The Financial Statements are approved for disclosure by all directors of the Company on April 20, 2018.
II. Scope of consolidated financial statements
35 entities are included in the current consolidated financial statements, namely:
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) right (%)
Shenzhen SEG Baohua Enterprise Development Holding
I 66.58 66.58
Co., Ltd. subsidiary
Shenzhen Mellow Orange Business Hotel Holding 66.58 66.58
II
Management Co., Ltd subsidiary
Wholly-owned 100 100
Shenzhen SEG Industrial Investment Co., Ltd. I
subsidiary
Holding 46 51
Changsha SEG Development Co., Ltd. I
subsidiary
Shenzhen SEG Electronics Market Management Share-controlled
I 70 70
Co., Ltd. subsidiary
Holding
Shenzhen SEG Credit Co., Ltd. I 65 65
subsidiary
Shenzhen SEG Nanjing Electronics Market Wholly-owned
I 62 62
Management Co., Ltd. subsidiary
Holding
Xi'an Hairong SEG Electronics Market Co., Ltd. I 51 51
subsidiary
Notes to Financial Statements Page 2
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) right (%)
Holding
Wujiang SEG Electronics Market Co., Ltd. I 51 51
subsidiary
Shunde SEG Electronics Market Management Co., Wholly-owned
I 100 100
Ltd. subsidiary
Nanning SEG Electronics Market Management Co., Wholly-owned
I 100 100
subsidiary
Ltd.
Wholly-owned
Nantong SEG Times Plaza Development Co., Ltd. I 100 100
subsidiary
Holding
Yantai SEG Times Plaza Development Co., Ltd. I 90 90
subsidiary
Nantong SEG Commercial Operation Management Wholly-owned
I 100 100
Co., Ltd. subsidiary
Wholly-owned
Suzhou SEG Digital Plaza Management Co., Ltd. I 100 100
subsidiary
Xi'an Fengdong New Town SEG Times Plaza Wholly-owned
I 100 100
Properties Co., Ltd. subsidiary
Wholly-owned
Suzhou SEG Intelligent Technology Co., Ltd. I 100 100
subsidiary
Shenzhen SEG Longyan New Energy Application Holding
I 50 50
and Development Co., Ltd. subsidiary
Wholly-owned
Shenzhen SEG Investment Management Co., Ltd. I 100 100
subsidiary
Shenzhen SEG Longyan Energy Technology Co., Holding
I 50 50
Ltd. subsidiary
Shenzhen-Shantou Cooperation Zone SEG Longyan Wholly-owned
II 100 100
Energy Technology Co., Ltd. subsidiary
Shenzhen SEG Lianzhong Internet Technology Co., Holding
I 55 55
Ltd. subsidiary
Holding
Shenzhen SEG Zhongtong Technology Co., Ltd. I 49 49
subsidiary
Wholly-owned
Shenzhen SegMaker Co., Ltd. I 100 100
subsidiary
Shenzhen SEG Recreation Enterprise Development Holding
I 55 55
Co., Ltd. subsidiary
Notes to Financial Statements Page 3
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) right (%)
Wholly-owned
Shenzhen SEG Property Development Co., Ltd. I 100 100
subsidiary
Holding
Shenzhen SEG Real Estate Investment Co., Ltd. I 79.02 79.02
subsidiary
Holding
Huizhou Stars Real Estate Development Co., Ltd. II 88 88
subsidiary
Holding
Shenzhen SEG Property Management Co., Ltd. II 45 45
subsidiary
Shenzhen SEG New Urban Construction Holding
II 72.05 72.05
Development Co., Ltd. subsidiary
Shenzhen SEG New Urban Commercial Operation Wholly-owned
III 100 100
Co., Ltd. subsidiary
Holding
Beijing SEG Property Development Co., Ltd. II 50 50
subsidiary
Holding
Xi'an SEG Kanghong Real Estate Co., Ltd. II 55 55
subsidiary
Wholly-owned
Shenzhen Hongge Cultural Development Co., Ltd. II 100 100
subsidiary
For the cause of difference between the proportion of shareholding and the proportion of voting rights and the
basis for control of the invested entity even with half of voting rights or less, see "Attachment 8: Equities in
other entities – (1) Equities in subsidiaries".
Compared with the previous period, 14 more entities are included in and 2 entities are excluded from the
consolidated financial statements in the current period, including:
1. Subsidiaries, special purpose entities, and business entities that gain control by way of commissioning
management or renting included in the consolidation scope in the current period
Name Reason for change
Shenzhen-Shantou Cooperation Zone SEG Longyan Energy
Newly established
Technology Co., Ltd.
Shenzhen SEG Lianzhong Internet Technology Co., Ltd. Newly established
Shenzhen SEG Zhongtong Technology Co., Ltd. Newly established
Shenzhen SegMaker Co., Ltd. Business combination under common control
Shenzhen SEG Recreation Enterprise Development Co., Ltd. Business combination under common control
Shenzhen SEG Property Development Co., Ltd. Business combination under common control
Shenzhen SEG Real Estate Investment Co., Ltd. Business combination under common control
Huizhou Stars Real Estate Development Co., Ltd. Business combination under common control
Shenzhen SEG Property Management Co., Ltd. Business combination under common control
Shenzhen SEG New Urban Construction Development Co., Ltd. Business combination under common control
Shenzhen SEG New Urban Commercial Operation Co., Ltd. Business combination under common control
Notes to Financial Statements Page 4
Beijing SEG Property Development Co., Ltd. Business combination under common control
Xi'an SEG Kanghong Real Estate Co., Ltd. Business combination under common control
Shenzhen Hongge Cultural Development Co., Ltd. Business combination under common control
2. Subsidiaries, special purpose entities, and business entities that lose control by way of commissioning
management or leasing excluded from the consolidation scope in the current period
Name Reason for change
Suzhou SEG Electronics Market Management Co., Ltd. Transfer of the management right
Wuxi SEG Electronics Market Co., Ltd. Transfer of all equities
For details of entity change in the consolidation scope, see "Note VII. Change in consolidation scope".
III. Basis of preparation of the financial statements
(I) Basis of preparation of the financial statements
The Company has conducted confirmation and measurement based on the transactions and events that have been
actually incurred and in accordance with the Accounting Standards for Business Enterprises (ASBE) and specific
standards, the application guide of ASBE, the interpretation of ASBE and other relevant regulations (hereinafter
collectively referred to as "the ASBE"). According to Listed Company Information Disclosure Preparation Rules
No. 15—General Regulations on Financial Report (amended in 2014) released by CSRC, the Company prepared
the financial statements.
(II) Going-concern ability
The Company has evaluated the going-concern ability for the 12-month period from the end of the reporting
period, and no matters or circumstances of major concern were found. Accordingly, the financial statements are
prepared on a going-concern basis.
IV. Main accounting policies and accounting estimates
(I) Statement on compliance with ASBE
The financial statements prepared by the Company comply with the requirements of the Accounting Standard for
Business Enterprises and truthfully and completely reflect relevant information on the financial position,
operating results, and cash flows of the Company.
(II) Accounting period
A fiscal year lasts from January 1st to December 31st of the Gregorian Calendar.
(III) Business period
The business period is 12 months, which is a criterion for the liquidity division of assets and liabilities.
(IV) Recording currency
Renminbi is the recording currency of the financial statements of the Company.
(V) Accounting treatment methods for business combination under or not under common control
1. If the terms and conditions or economic influences of deals involved in business merger by steps are
consistent with the following case(s), several deals will be treated as a package deal for accounting treatment.
(1) Those deals are made at the same time or in consideration of mutual influences;
(2) A complete business result can be achieved only with the deals as integrity;
Notes to Financial Statements Page 5
(3) The occurrence of one deal depends on the occurrence of at least one deal.
(4) A single deal is uneconomical but the integration with other deals is economical.
2. Business combination under common control
Assets and liabilities acquired by the Company in the merger are calculated based on the book value of the
merged party's assets and liabilities (including goodwill resulting from the acquisition of the merged party) in the
consolidated financial statements of the ultimate controlling party on the date of merger. The capital stock
premium of capital reserve is adjusted based on the difference between the book value of net assets acquired in
the merger and that of the consideration of the merger (or the total book value of issued shares). The retained
earnings are adjusted if the capital stock premium is not sufficient for writing off.
If contingent consideration exists and the estimated liabilities and assets have to be recognized, the capital
reserve (capital surplus or capital stock premium) is adjusted based on the difference between the estimated
liabilities and assets and the subsequent contingent consideration. The retained earnings are adjusted if the
capital reserve is not sufficient for writing off.
For business merger through several deals, deals in a package will be treated as one deal with control right
acquired for accounting treatment; for deals not in a package, the capital reserve is adjusted based on the
difference between the initial cost of long-term equity investment and the sum of book value of long-term equity
investment before merger and book value of consideration payment for new shares. The retained earnings are
adjusted if the capital reserve is not sufficient for writing off. For equity investment held before merger, other
comprehensive income recognized by the equity method, financial instruments or calculation standards will not
be subject to accounting treatment, and until the disposal of such investment such accounting treatment is carried
out on the same basis as the direct disposal of related assets and liabilities by the invested party; other changes in
owners' equity excluding net profit and loss, other comprehensive income and profit distribution in the net assets
of the invested party recognized by the equity accounting method will not be subject to accounting treatment and
is transferred to current profit and loss after the disposal of such investment.
3. Business combination not under common control
The date of acquisition means the date when the Company actually acquires the control right of the acquiree,
namely, the date when the net asset or the control right of business operation decisions of the acquiree is
transferred to the Company. The control right of the Company is transferred when all the following conditions
are met:
(1) The business merger contract or agreement has been adopted by the internal power organ of the
Company.
(2) Business merger matters subject to approval of national competent departments have been approved.
(3) The necessary formalities for property right transfer have been handled.
(4) The Company has paid most of the consideration for merger and is able to pay the remaining part as
scheduled.
(5) The Company has actually controlled the financial and operational policies of the acquiree, enjoys the
corresponding benefits and bear corresponding risks.
The assets paid and the liabilities incurred or undertaken by the Company as the consideration on the date of
merger are calculated based on fair value. The difference between fair value and book value will be recognized
in current profit or loss.
Notes to Financial Statements Page 6
If the merger cost is higher than the fair value of the net identifiable assets of the acquired party acquired by
merger, the difference is recognized as goodwill. If the merger cost is lower than the fair value of the net
identifiable assets of the acquired party acquired by merger, the difference is recognized in current profit or loss.
For business merger through several deals, deals in a package will be treated as one deal with control right
acquired for accounting treatment; for deals not in a package, the sum of book value of long-term equity
investment before merger and new investment cost is treated as the initial cost of long-term equity investment on
the date of merger. For equity investment held before merger, other comprehensive income recognized with the
equity accounting method, accounting treatment of such investment is carried out on the same basis as the direct
disposal of related assets and liabilities by the invested party. If the equity investment held before merger is
subject to recognition by financial instruments and accounting by measure standards, the sum of book value of
long-term equity investment on the date of merger and new investment cost is treated as the initial cost of
long-term equity investment on the date of merger. The difference between the fair value and book value of the
equity previously held and accumulative changes in fair value originally included in other comprehensive
income are transferred to the investment income of the period of the date of merger.
4. Expenses incurred due to merger
The auditing, legal, appraisal and consulting, and other relevant direct fees incurred for business merger are
recognized in current profit or loss at occurrence. The transaction expenses of equity securities issued for
business merger which are directly attributable to equity transaction are deducted from the equity.
(VI) Preparation method of the consolidated financial statements
1. Consolidation scope
The scope of the consolidated financial statements of the Company is determined based on share-holding status,
and all subsidiaries are included in the scope.
2. Consolidation procedure
The Company prepares the consolidated financial statements based on the financial statements of its own and its
subsidiaries and other related materials. In the preparation of consolidated financial statements, the whole group
is deemed as an accounting entity. According to the recognition, calculation and presentation requirements of
related accounting standards and consistent accounting policies, the overall financial condition, operation results
and cash flow are reflected.
The accounting policies and accounting period adopted by all subsidiaries included in the consolidation scope
are consistent with those of the Company. Otherwise, the Company shall make necessary adjustments according
to its own accounting policies and accounting period when preparing the consolidated financial statements.
During the consolidation, the influences of internal transactions between the Company and its subsidiaries and
among the subsidiaries on the consolidated balance sheet statement, the consolidated profit statement, the
consolidated cash flow statement and the consolidated statement of changes in owner's equity will be
counteracted. If judgment on the same transaction differs from the group perspective and with the Company or a
subsidiary as the accounting entity, the transaction shall be adjusted from the group perspective.
The owner's equity of subsidiaries, current net profit and loss and minority shares in current comprehensive
income are separately listed in the owner's equity of the consolidated balance sheet statement, net profit and total
comprehensive income of the consolidated profit statement respectively. If the current losses undertaken by
minority shareholders of a subsidiary exceed the owners' equity shared by minority shareholders of a subsidiary,
the balance will be used to offset the minority shareholders' equity.
Notes to Financial Statements Page 7
For a subsidiary acquired by business combination under common control, its financial statements are adjusted
based on the book value of its assets and liabilities (including goodwill resulting from acquisition of this
subsidiary) in the financial statements of the ultimate controlling party.
For a subsidiary acquired by business combination not under common control, its financial statements are
adjusted based on the fair value of net identifiable assets on the date of acquisition.
(1) Expansion of subsidiaries or business
In the current reporting period, in case of expansion of subsidiaries or business due to business combination
under common control, the opening amount of the consolidated balance sheet is adjusted. The income, expenses
and profits of such subsidiaries and business from the beginning of merger to the end of the current reporting
period are included in the consolidated profit statement. The cash flow of such subsidiaries from the beginning
of merger to the end of the current reporting period is included in the consolidated cash flow statement and
relevant items of comparative statements are also adjusted. The reporting entity after merger is deemed to exist
since the ultimate controlling party starts control.
If the Company exerts control on an invested party under common control due to additional investment, it is
deemed that all parties involved in merger make adjustments in the present condition since the ultimate
controlling party starts control. For the equity investment held before acquisition of control right of the acquiree,
relevant income and loss, other comprehensive income and other changes in net asset are recognized from the
later one between the date of acquisition of the original equity and the date of the acquirer and the acquiree under
common control to the date of merger, which are used to offset the opening retained earnings or current profit
and loss respectively.
In the current reporting period, in case of expansion of subsidiaries or business due to merger of enterprises not
under common control, the opening amount of the consolidated balance sheet is not adjusted. The income,
expenses and profits of such subsidiaries and business from the date of acquisition to the end of the current
reporting period are included in the consolidated profit statement. The cash flow of such subsidiaries from the
date of acquisition to the end of the current reporting period is included in the consolidated cash flow statement
If the Company exerts control on an invested party not under common control due to additional investment, the
equity of the acquiree held before the date of acquisition shall be re-measured based on its fair value on the date
of acquisition, and the difference between the fair value and book value of the equity shall be included in current
investment income. If the equity of the acquiree held before the date of acquisition is involved in other
comprehensive income and other changes in owner's equity except net profit and loss, other comprehensive
income and profit distribution with the equity method, the relevant other comprehensive income and other
changes in owner's equity are included in current investment income, excluding other comprehensive income
due to re-measurement of changes in net liabilities and net assets in defined benefit plans.
(2) Disposal of subsidiaries or business
1) General disposal method
If the Company disposes of a subsidiary in the current reporting period, the income, expenses and profits of the
subsidiary from the beginning period to the disposal date are included in the consolidated profit statement and
the cash flow of the subsidiary in the same period is included in the consolidated cash flow statement.
If the Company loses control of its subsidiary due to disposal of part of equity investment or other reasons, the
remaining equity shall be re-measured at fair value on the day when the Company losses control of the
subsidiary. The difference between the sum of consideration acquired due to equity disposal & fair value of the
Notes to Financial Statements Page 8
remaining equity and the sum of net assets to be enjoyed based on the original shareholding proportion since the
date of acquisition or merger & goodwill is included in the investment income in the period of loss of control.
Other comprehensive income and other changes in owner's equity except net profit and loss, other
comprehensive income and profit distribution relevant to the equity investment in any previous subsidiary are
transferred to current investment income at the time of loss of control, excluding other comprehensive income
due to re-measurement of changes in net liabilities and net assets in defined benefit plans.
2) Disposal of subsidiaries by steps
If the Company disposes of equity investment in a subsidiary in several deals by steps until its loss of control and
the terms and conditions or economic influences of deals are consistent with the following case(s), several deals
will be treated as a package deal for accounting treatment.
A. Those deals are made at the same time or in consideration of mutual influences;
B. A complete business result can be achieved only with the deals as integrity;
C. The occurrence of one deal depends on the occurrence of at least one deal.
D. A single deal is uneconomical but the integration with other deals is economical.
If deals incurred for disposal of equity investment in a subsidiary until the loss of control belong to a package
deal, the Company treats all deals as one for accounting treatment. However, the difference between the
consideration acquired from every disposal and the net asset to be enjoyed such subsidiary based on such equity
investment before loss of control is recognized as other comprehensive income of the consolidated financial
statements and transferred to the current profit and loss at the time of loss of control.
For deals not in a package, before loss of control, the accounting treatment is based on policies about disposal of
part of equity investment in a subsidiary in case of no loss of control while at the time of loss of control, the
accounting treatment is based on general methods for disposing of such subsidiary.
(3) Acquisition of minority shares of subsidiary
Based on the difference between long-term equity investment acquired due to acquisition of minority shares and
net assets to be enjoyed from such subsidiary since the date of acquisition (or merger), the capital stock premium
of the consolidated balance sheet statement is adjusted. The retained earnings are adjusted if the capital stock
premium is not sufficient for writing off.
(4) Disposal of part of equity investment in a subsidiary in case of no loss of control
The difference between the consideration acquired due to disposal of party of long-term equity investment in a
subsidiary and net assets to be enjoyed from such subsidiary since the date of acquisition (or merger), the capital
stock premium of the consolidated balance sheet statement is adjusted. The retained earnings are adjusted if the
capital stock premium is not sufficient for writing off.
(VII) Classification of joint venture arrangement and accounting treatment method of joint operation
1. Classification of joint venture arrangement
Based on the structure and legal form of joint venture arrangement, terms agreed in joint venture arrangement
and other facts and condition, the Company classifies joint venture arrangement into joint operation and joint
venture.
Joint venture arrangement agreed not by individual entities is defined as joint operation. Joint venture
arrangement agreed by individual entities is generally defined as joint venture. If any joint venture arrangement
Notes to Financial Statements Page 9
satisfies any of the following conditions and conforms to relevant laws and regulations with conclusive evidence,
such joint venture arrangement is defined as joint operation:
(1) The legal form of joint venture arrangement shows that joint ventures share rights and obligations for assets
and liabilities in such arrangement.
(2) It is agreed in the terms of joint venture arrangement that joint ventures share rights and obligations for assets
and liabilities in such arrangement.
(3) Other facts and condition show that joint ventures share rights and obligations for assets and liabilities in
such arrangement. For example, the joint ventures enjoy nearly all output relevant to such arrangement and
settlement of liabilities in such arrangement constantly depends on the support of joint ventures.
2. Accounting treatment method of joint operation
The Company recognizes the following items in interest shares during joint operation, and carries out accounting
treatment in accordance with Accounting Standards for Business Enterprises:
(I) Recognizing the assets held separately and assets shared based on shares;
(2) Recognizing the liabilities undertaken separately and liabilities shared based on shares;
(3) Recognizing the income from sales of the share in joint operation output;
(4) Recognizing the income from sales of joint operation output based on shares;
(5) Recognizing the expenses individually incurred and expenses incurred by joint operation based on shares.
If the Company invests or sells assets (excluding assets that constitute business) to the joint operation, before
such assets are sold by the joint operation to the third party, only the part of profit and loss attributed to other
parties in the joint operation incurred by such transaction is recognized. If any impairment losses occur to the
assets invested or sold in accordance with Accounting Standards for Business Enterprises No. 8 - Asset
Impairment, the Company recognizes the losses in full.
If the Company purchases assets from the joint operation, before such assets are sold to the third party, only the
part of profit and loss attributed to other parties in the joint operation incurred by such transaction is recognized.
If any impairment losses occur to the assets purchased in accordance with Accounting Standards for Business
Enterprises No. 8 — Asset Impairment, the Company recognizes the losses based on shares.
The Company enjoys no common control of the joint operation. If the Company enjoys assets in the joint
operation and undertakes liabilities in the joint operation, the Company shall still carry out accounting treatment
based on the foregoing principles. Otherwise, the Company shall carry out accounting treatment in accordance
with the Accounting Standards for Business Enterprises.
(VIII) Standards for determination of cash and cash equivalents
In the preparation of the cash flow statement, the cash on hand and the bank deposits available for payment at
any time of the Company are recognized as cash. The investments that meet four conditions at the same time, i.e.
short term (due within 3 months since the date of purchase), strong liquidity, easiness in being converted into
known cash, fairly small risk of value fluctuation are recognized as cash equivalents.
(IX) Foreign currency business and translation of foreign currency financial statements
1. Foreign currency business
In the initial recognition, a foreign currency business transaction is converted to RMB for bookkeeping based on
the spot exchange rate at the date of transaction.
Notes to Financial Statements Page 10
On the balance sheet date, monetary items in foreign currency are converted based on the spot exchange rate on
the balance sheet date. The exchange difference thus incurred is recognized in current profit or loss while the
exchange difference incurred by special foreign currency borrowings for acquisition and construction of assets
eligible for capitalization is treated with the principle of capitalization of borrowing costs. Non-monetary items
in foreign currency measured by the historical cost method are converted based on the spot exchange rate at the
date of transaction, and the amount in the recording currency is not changed.
Non-monetary items in foreign currency measured by fair value are converted based on the spot exchange rate at
the date of recognition of the fair value while the translation difference thus incurred is recognized in current
profit or loss as profit or loss from changes in fair value. For non-monetary items in available-for-sale foreign
currency, the translation difference is included in other comprehensive income.
2. Translation of foreign currency financial statements
In the balance sheet statement, assets and liabilities are converted based on the spot exchange rate at the date of
balance sheet statement, and items other than "undistributed profits" in the owner's equity are converted based on
the spot exchange rate. The income and expense in the profit statement are converted based on the spot exchange
rate at the date of transaction. The translation difference of foreign currency financial statements with the
foregoing method is included in other comprehensive income.
At the disposal of overseas business, the translation difference of foreign currency financial statements that is
listed in other comprehensive income of the balance sheet statement and relevant to such overseas business is
transferred from other comprehensive income to current profit and loss in the period of disposal. The equity
proportion in overseas business is reduced due to disposal of part of equity investment or other reasons but the
control right on the overseas business remains, the translation difference of foreign currency financial statements
relevant to such overseas business is not transferred to current profit and loss. At the disposal of part of equity
investment in overseas business in the form of associate or joint venture, the translation difference of foreign
currency financial statements relevant to such overseas business is transferred to current profit and loss in the
period of disposal based on the proportion of disposal.
(X) Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
1. Classification of financial instruments
According to the contract terms and economic nature of financial instruments rather than in the legal form only,
in combination of the purposes of acquisition and holding of financial assets and undertaking of financial debts,
during initial confirmation, the Company classifies financial assets and liabilities as follows: financial assets (or
liabilities) measured by fair value with changes recognized in current profit or loss, held-to-maturity investment,
accounts receivable, available-for-sale financial assets, and other financial liabilities.
2. Confirmation basis for and measurement method of financial instruments
(1) Financial assets (liabilities) measured by fair value with changes recognized in current profit or loss
Financial assets or liabilities measured by fair value with changes recognized in current profit or loss include
transactional financial assets or liabilities and financial assets or liabilities to be measured by fair value with
changes recognized in current profit or loss through direct designation.
Transactional financial assets or liabilities refer to financial assets or liabilities that satisfy any of the following
conditions:
Notes to Financial Statements Page 11
1) Such financial assets or liabilities are acquired for the purpose of sales, repurchase or redemption in a short
term;
2) Such financial assets or liabilities are part of identifiable financial instruments portfolio available for central
management, and objective evidence shows that the Company has recently managed the portfolio for short-term
gains;
3) Such financial assets or liabilities belong to derivative financial instruments, excluding the designated
derivative instruments which are effective hedging instruments, derivative instruments for financial guarantee
contracts, and derivative instruments that are connected with equity instrument investments for which there is no
quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by
delivering the said equity instruments.
Financial assets or liabilities can be measured by fair value with changes recognized in current profit or loss
through designation only when one of the following conditions is met.
1) Through such designation, inconsistency in recognition or measurement of profit and loss resulting from
different measurement basis of financial assets or liabilities can be eliminated or obviously reduced;
2) It has been set forth in formal written documents about risk management or investment strategy that such
financial asset portfolio, financial liability portfolio, or the portfolio of such financial assets or liabilities shall be
managed, evaluated and reported to key management based on fair value;
3) A mixed instrument with one and several embedded derivative instrument (s), unless the embedded derivative
instruments cause no major changes to the cash flow of such mixed instrument or shall not be separated from the
derivative instrument (s) obviously;
4) A mixed instrument with embedded derivative instrument (s) that needs to be separated but cannot be
separately measured at the time of acquisition or the subsequent balance sheet date.
The Company treats the fair value of financial assets or liabilities measured by changes in fair value included in
current profit or loss at the time of acquisition as the initial recognized amount, and includes relevant transaction
expenses in current profit and loss. The interests and cash dividends acquired during the period of holding are
recognized as investment income. At the time of disposal, the difference between the fair value and the initial
amount entered in the account is recognized as investment income and the profit or loss from changes in fair
value are adjusted at the same time.
(2) Accounts receivable
Accounts receivable are non-derivative financial assets with fixed and determinable payments that are not quoted
in an active market.
For credit receivable arising from commodities sold or labor services provided by the Company and credit of
other enterprises (other than the credit of debt tools that are quoted in an active market) held by the Company,
including accounts receivable and other receivables, the amount receivable in contracts or agreements from the
purchaser is treated as the initial recognition amount. For those of a financing nature, the present value is treated
as the initial recognition amount.
At the time of collection or disposal, the difference between the amount acquired and the book value of such
accounts receivable are recognized in current profit or loss.
(3) Held-to-maturity investment
Notes to Financial Statements Page 12
Held-to-maturity investment refers to non-derivative financial assets with fixed maturity date and fixed or
definite recovery amount which the Company may hold to maturity with clear intention and ability.
For held-to-maturity investment, the Company treats the sum of fair value at the time of acquisition (deducting
bond interests matured but not collected) and relevant transaction expenses as the initial recognition amount.
During the period of share-holding, the interest income is calculated and confirmed in accordance with the
amortized and the actual interest rate, which is included in the investment income. The actual interest rate is
determined at the time of acquisition and remains unchanged within the anticipated existence period or a shorter
period applicable. At the time of disposal, the difference between the price of acquisition and the book value of
such investment is included in investment income.
If the amount of held-to-maturity investment disposed of or reclassified into other financial assets is larger than
the total amount of held-to-maturity investment before sales or reclassification, the remaining held-to-maturity
investment shall be immediately reclassified into available-for-sale financial assets after disposal or
reclassification. The difference between book value and fair value of such investment is included in other
comprehensive income at the date of reclassification, and transferred to current profit and loss in case of
impairment of such available-for-sale financial assets or termination of recognition. However, the following
cases are exceptional:
1) The date of sales or reclassification is close to the due date or redemption date of such investment (e.g. within
3 months before the due date), and changes in the market interest rate have no significant influence on the fair
value of such investment.
2) The enterprise has recovered almost all initial principal with the payment method agreed in the contract.
3) The sales or reclassification arise from independent events beyond the control that are not expected to recur
and is difficult to predict reasonably.
(4) Available-for-sale financial assets
Available-for-sale financial assets refer to non-derivative available-for-sale financial assets through designation
at initial recognition and financial assets other than other financial asset categories.
For available-for-sale financial assets, the Company treats the sum of fair value at the time of acquisition
(deducting bond interests matured but not collected) and relevant transaction expenses as the initial recognition
amount. The interests or cash dividends obtained during the time of holding are recognized as investment income.
Profit or loss from change in the fair value of available-for-sale financial assets, excluding impairment loss and
exchange difference of monetary financial assets in foreign currency, are directly included in other
comprehensive income. At the time of disposal, the difference between the price of acquisition and the book
value of such financial assets is included in investment profit and loss. At the same time, the amount of assets
disposed originally included in the accumulative amount of changes in the fair value of other comprehensive
income is transferred to investment profit and loss.
Equity instruments with no quotes in the active market and with fair value not reliably measured and derivative
instruments that are connected with the said equity instruments and settled by delivery of the said equity
instruments are measured by cost.
(5) Other financial liabilities
The sum of the fair value of such assets and relevant transaction expenses is taken as the initial recognition
amount. The amortized cost is adopted in the subsequent measurement.
Notes to Financial Statements Page 13
3. Recognition basis and measurement method of financial assets transfer
In case of financial assets transfer of the Company, if almost all risks and returns in the ownership rights of
financial assets are transferred to the assignee, the recognition of such financial assets is terminated, and if
almost all risks and returns in the ownership rights of such financial assets are retained, the recognition of such
financial assets is not terminated.
In the judgment whether a financial asset transfer meets the foregoing conditions for termination of its
recognition, the principle of more focus on substance than form is adopted. The Company divides financial
assets transfer into the complete and the partial transfer. Where the complete transfer of financial assets meets the
conditions for termination of recognition, the difference between the following two amounts is recognized in
current profit or loss.
(1) Book value of the transferred financial assets;
(2) The sum of consideration acquired due to transfer and the accumulative amount of changes in fair value
originally included in owners' equity (involving the case where the transferred financial assets are the
available-for-sale financial assets).
If the partial transfer of financial assets meets conditions for termination of recognition, the part with its
recognition terminated and that with its recognition not terminated, among the book value of all the transferred
financial assets, are apportioned separately based on their relevant fair value while the difference between the
following two amounts is recognized in current profit or loss.
(1) Book value of the part with its recognition terminated;
(2) The sum of consideration of the part with its recognition terminated and the amount of the part with its
recognition terminated originally included in the accumulative amount of changes in the fair value of owners'
equity (involving the case where the transferred financial assets are the available-for-sale financial assets).
In case that financial assets transfer does not meet the conditions for termination of recognition, the recognition
of such financial assets is continued. The consideration acquired is recognized as a financial liability.
4. Conditions for termination of recognition of financial liabilities
If current obligations for a financial liability are discharged wholly or partially, the recognition of the financial
liability is terminated wholly or partially. If the Company signs an agreement with the creditor to substitute an
existing financial liability with a new financial liability and the contract terms about the new liability and the
existing liability are inconsistent, the recognition of the existing financial liability is terminated and the new
financial liability is recognized at the same time.
If material alterations have been made to contract terms of the existing financial liability wholly or partially, the
recognition of the existing liability is wholly or partially terminated and, in the meantime, the liability after
alterations is recognized as a new financial liability.
If the confirmation of all or a part of a financial liability is terminated, the difference between the book value of
the liability with its confirmation terminated and the consideration (including non-cash assets transferred or the
new liability assumed) is recognized in current profit or loss.
If the Company repurchases part of a financial liability, the total book value of such liability is allocated on the
date of purchase based on the relative fair value of the part with its recognition continued and that with its
recognition terminated. The difference between the book value allocated to the part with its recognition
Notes to Financial Statements Page 14
terminated and the consideration (including non-cash assets or the new liability) is recognized in current profit or
loss.
5. Methods for the determination of the fair value of financial assets and liabilities
For financial assets and liabilities in an active market, the Company determines respective fair value based on
the quotation in the active market. The quotation in the active market includes the quotation of an asset or
liability that can be easily and regularly obtained from exchanges, dealers, brokers, industry groups, pricing
agencies, or regulators and can represent the actual and frequent trading on the basis of fair trade.
For financial assets initially acquired or derivative financial assets or liabilities undertaken, the Company
determines their fair value based on the market price.
For financial assets and liabilities that do not exist in an active market, their fair values are determined with
appraisal techniques. In appraisal, the Company adopts applicable appraisal techniques in the current case with
sufficient data and other information support, chooses the input values that are consistent with features of assets
or liabilities taken into consideration by market participants in relevant transactions, and makes priority use of
relevant observable input values. In case that relevant observable input values cannot be obtained or it is
unpractical to obtain them, unobservable input values will be used.
6. Accrual of impairment provision for financial assets (excluding accounts receivable)
The Company shall verify the book value of financial assets measured by fair value with changes recognized in
current profit or loss on the balance sheet date. If any objective evidence shows impairment of such financial
assets, an impairment provision shall be made.
Objective evidence for impairment of such financial assets includes but is not limited to:
(1) A serious financial difficulty occurs to the issuer or debtor;
(2) The debtor breaches any contract terms, for example, fails to pay or delays the payment of interests or the
principal;
(3) The creditor makes any concession to the debtor which is in financial difficulties due to economic or legal
factors;
(4) The debtor will probably become bankrupt or carry out other financial reorganizations;
(5) The financial asset can no longer continue to be traded in the active market due to serious financial
difficulties of the issuer;
(6) It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial
assets has decreased or not. But after an overall appraisal according to the public data available, it is found that
the predicted future cash flow of the said combination of financial assets has indeed decreased since it was
initially recognized and such decrease can be measured, for example, the ability of the debtor of the said
combination of financial assets worsens gradually, the unemployment rate of the country or region where the
debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the
industrial sector concerned is in slump;
(7) Any seriously disadvantageous change has occurred to technical, market, economic or legal environment
wherein the issuer operates its business, which makes the investor of an equity instrument unable to withdraw its
investment cost;
(8) Where the fair value of the equity instrument investment drops significantly or not temporarily.
Notes to Financial Statements Page 15
Specific impairment methods of financial assets are as follows:
(1) Impairment provision for available-for-sale financial assets
The Company shall appraise individual available-for-sale equity instrument investment on the balance sheet date.
In case the fair value of the equity instrument investment on the balance sheet date is lower than over 50%
(included) of its cost or is lower than its cost for over 12 months (included) consecutively, it indicates that such
asset is impaired. In case the fair value of such equity instrument investment on the balance sheet date is lower
than over 20% (included) but below 50% of its cost, the Company will determine whether such equity
instrument investment is impaired by taking into consideration other relevant factors such as price volatility.
The cost described in the preceding paragraph is determined at the initial acquisition cost of available-for-sale
equity instrument investment less the recovered principal, amortized amount, and impairment losses originally
included in profit or loss. The fair value of available-for-sale equity instrument investment that does not exist in
an active market is determined at the present value of the future cash flows discounted at the current market yield.
The fair value of available-for-sale equity instrument investment that is quoted in an active market is determined
at the closing price of the stock exchange at the end of the period, unless such available-for-sale equity
instrument investment is subject to restricted period. The fair value of available-for-sale equity instrument
investment that is subject to restricted period is determined at the closing price of the stock exchange at the end
of the period less the amount of compensation claimed by market participants for bearing the risk of being
unable to sell such equity instrument in the open market for a specified period.
When an available-for-sale financial asset is impaired, even if the recognition of the financial asset has not been
terminated, the accumulative losses arising from decrease in the fair value of the owner's equity which was
directly included in other comprehensive income shall be transferred out and recognized in current profit or loss.
The accumulative losses that are transferred out shall be the balance between the initial costs of the financial
asset available for sale and the principals as taken back, the current fair value and the impairment-related losses
as was recognized in current profit or loss.
As for the available-for-sale debt instruments whose impairment losses have been recognized, if, within the
accounting period thereafter, the fair value has risen and such instruments are objectively related to the
subsequent events that occur after the original impairment losses were recognized, the originally recognized
impairment losses shall be written back and recognized in current profit or loss. The impairment loss of
available-for-sale equity instruments shall be written back when the value of such equity instruments rebound.
However, for equity instruments investment with no quotes in the active market and with fair value not reliably
measured and derivative instruments that are connected with the said equity instruments and settled by delivery
of the said equity instruments, the impairment loss shall not be written back.
(2) Impairment provision for held-to-maturity investments
If any objective evidence shows impairment of held-to-maturity investments, the impairment loss shall be
calculated based on the difference between the book value of those investments and the current value of the
expected future cash flow. If any evidence indicates that the investment value has recovered after provision, the
originally recognized impairment loss can be written back and recognized in current profit or loss. However, the
write-back book value shall not exceed the amortized cost of such financial assets at the date of reversal in case
that the impairment provision has not been made.
7. Counteraction of financial assets and liabilities
Notes to Financial Statements Page 16
Financial assets and liabilities are separately listed in the balance sheet statement and not counteracted. However,
if the following conditions are satisfied at the same time, the balance after counteraction may be listed in the
balance sheet statement.
(1) The Company has the legal right to counteract the recognized amount which is currently enforceable.
(2) The Company plans to settle in net amount or realize such financial assets and liquidate such financial
liabilities at the same time.
(XI) Accounts receivable
1. Accounts receivable with single significant amount and single provision for bad debts
Recognition criteria for accounts receivable with single significant amount and single provision for bad debts:
Top 5 accounts receivable
Recognition criteria for accounts receivable with single significant amount: impairment tests are carried out
separately, and the difference between the expected future cash flow and its book value is accrued for bad debt
provision and recognized in current profit or loss. Accounts receivable with no impairment by test shall be
included in the bad debt provision for a certain combination.
2. Accounts receivable with bad debt provision accrued based on credit risk feature combinations
(1) Determination basis for credit risk feature combinations
Accounts receivable with no single significant amount and accounts receivable with single significant amount
and no impairment by test are classified into several combinations according to credit risk feature. Based on the
actual loss rate of the accounts receivable combinations with similar credit risk feature in the previous year, the
bad debt provision accrual shall be determined according to the present condition.
Determination basis for combination:
Name of combination Method of accrual Determination basis for combination
The Company makes the best appraisal of the provision proportion of
Combination of aging accounts receivable based on the previous experience and classifies
Aging analysis method
analysis method the credit risk feature combinations by reference to aging of accounts
receivable
Based on the property of accounts receivable, the bad debt provision
Combination of
No bad debt provision accrual is not accrued, including rental deposit, deposit, account with related
specific object
parties, etc.
(2) Accrual method based on credit risk feature combinations:
Bad debt provision accrued with the aging analysis method
Provision proportion of accounts Provision proportion of other accounts
Aging
receivable (%) receivable (%)
Within 1 year
1-2 years 5.00 5.00
2-3 years 10.00 10.00
Over 3 years 20.00 20.00
3. Accounts receivable with no single significant amount but with single provision for bad debts
Notes to Financial Statements Page 17
Reason for single provision for bad debts: Any objective evidence indicates that the Company is unable to
recover the accounts receivable according to the original terms.
Accrual method for bad debt provision: The difference between the expected future cash flow and its book value
is accrued for bad debt provision.
(XII) Inventory
1. Classification of inventory
Inventory refers to finished products or commodities held for sale by the Company in daily activities, products in
process, and materials consumed in the production or labor service process. It mainly includes raw materials,
circulating materials, finished products (stock goods), development costs, developed products, etc.
Development costs refer to properties not completed for sale purposes. Lands to be developed refer to the land
which is purchased and planned for developed products after its completion. Developed products refer to
properties which have been completed and are to be sold. In the overall development of a project, lands to be
developed are transferred to development costs. In the development by phases, the land developed in phases is
transferred to development costs while the land not developed remains in the land to be developed.
2. Pricing method of inventory
Initial measurement will be carried out at the time of acquisition of the inventory based on its costs, including
procurement cost, processing cost and other costs. The pricing of the inventory is based on the weighted-average
method at the time of delivery.
3. Determination basis for net realizable value of inventory and accrual method for inventory depreciation
provision
After a complete check on the inventory at the end of the period, the inventory depreciation provision is accrued
or adjusted based on the lower one between the inventory cost and the net realizable value. The net realizable
value of commodity inventory directly for sale including finished products, stock goods and materials for sale is
determined by the estimated selling price of such inventory minus estimated selling expenses and relevant taxes
during production and operation. The net realizable value of material inventory to be processed is determined by
the estimated selling price of the finished product minus estimated cost to be incurred until completion,
estimated selling expenses and relevant taxes during production and operation. The net realizable value of
inventory held for fulfilling sales contract or labor service contract is calculated based on the contract price. If
quantity of inventories held is more than the ordered quantity in the sales contract, the net realizable value of the
inventory for the excess part is calculated based on general selling price.
At the end of the period, the inventory depreciation provision is accrued based on separate items. However, for
inventories in large quantity at low unit price, the depreciation provision is accrued based on types of inventories.
For inventories that are related to product series produced and sold in the same area for same or similar final use
or purpose and difficult to be measured separately from other items, inventory depreciation provision is
consolidated for accrual.
Where factors that caused decrease in value of inventory disappear, the amount written down shall be recovered
and written back from the accrued inventory depreciation provision. The amount written back shall be
recognized in current profit or loss.
4. Inventory system
The perpetual inventory system is adopted.
Notes to Financial Statements Page 18
5. Amortization method of low-value consumables and packages
(1) For low-value consumables, one-off amortization method is adopted.
(2) For packages, one-off amortization method is adopted.
(3) Other turnover materials are amortized with one-off write-off method.
6. Accounting method of land for development
The expenses incurred by pure land development project shall constitute the land development cost alone.
For projects with overall development of property, the expenses with definite payers are generally amortized to
the commodity house cost based on the actual area.
7. Accounting method of public facility expenses
For public facilities not available for paid transfer, the expenses shall be included in the commodity house cost
based on the benefit ratio;
For public facilities available for paid transfer, all supporting facilities are treated as the accounting object and
the costs incurred are collected.
8. Accounting method of maintenance fund
According to relevant provisions at the location of the developed project, the maintenance cost is collected from
the house purchaser or included in the development cost when the relevant developed product is sold (or
pre-sold), and turned in to maintenance cost management department.
9. Accounting method of quality deposit
The quality deposit is retained from the project fund of the construction party according to the construction
contract. Maintenance expenses incurred during the warranty period of the developed product are used to offset
the quality deposit. When the agreed warranty period expires, the remaining quality deposit is returned to the
construction party.
(XIII) Loans and prepayment issued
1. Loan
Loan refers to the money in RMB lent to medium and small enterprise corporations, individual businessmen and
individuals according to the market interest rate, the principal of which issued will be taken as the amount for
initial recognition. The earnings of interest recognized during the holding of the loan shall be calculated
according to actual interest rate, which will be determined when the loan is issued, and will remain unchanged
during the holding of the loan or shorter period.
2. Reserve for loss of loan
In the end of every quarter, the Company will divide every unit loan into such five categories as normal, focused,
secondary, suspicious and lost according to the quality of the credit assets and incorporate into daily credit
management to carry out classified supervision.
The Company shall reasonably estimate possible loss that might arise from the loan to accrue reserve for loss of
loan in time, which shall include general reserve and special reserve. General reserve is accrued according to
certain percentage of the total balance of loan, used for compensating the reserve of potential loss not recognized.
Special reserve is the provision accrued for compensating special loss according to the level of the loss of every
loan after classifying the risks of the loan in light with the Guiding Principles o Classification of Risks of Loan.
Notes to Financial Statements Page 19
The scope of provision of reserve for loss of loan comprises the assets to bear risks and losses, in details,
including all kinds of small loans (including loan by mortgage, pledge, guarantee and credit, etc.) and bill
discount, etc.
The Company shall withdraw general serve every quarter. The year-end balance of general reserve shall not be
lower than 1% of the balance of the loan in the end of the year.
The Company shall withdraw special reserve per quarter according to the following percentages:
(1) Normal loan: the percentage of provision is 1%;
(2) Focused loan: the percentage of provision is 2%;
(3) Secondary loan: the percentage of provision is 25%;
(4) Suspicious loan: the percentage of provision is 50%;
(5) Lost loan: the percentage of provision is 100%.
(XIV) Held-for-sale assets
1. Standards for recognition as held-for-sale
The Company will recognize non-current assets or disposal groups that meet all the following conditions as the
held-for-sale part:
(1) Such non-current assets or disposal groups can be sold immediately under current situations according to the
practice of sales of such non-current assets or disposal groups in similar transactions.
(2) The sales are likely to occur. That is, the Company has made a resolution on a sale plan, obtained approval
from the regulatory department, and obtained a firm commitment on purchase. The sales are expected to occur
within one year.
A firm commitment on purchase means a binding purchase agreement made by and between the Company and
other parties. Such agreement shall specify the transaction price, time and severe punishment for breach of
contract and it is unlikely to substantially modify or cancel the agreement.
2. Accounting method for categorizing as held-for-sale
The Company does not accrue depreciation or amortization of a held-for-sale non-current asset or disposal group.
If its book value is higher than the net value after the fair value minus the sales expense, the book value is
written down to the net value after the fair value minus the sales expense. The amount written down is
recognized as an assets impairment loss and recognized in current profit or loss, and at the same time it is
recorded as a provision for the impairment of the held-for-sale asset.
During the initial measurement of the non-current asset or disposal group that is categorized as held-for-sale on
the day of its acquisition, the lower one between its initial measured value in case of non-categorization as
held-for-sale and the net value after the fair value minus the sales expense will be calculated.
The foregoing principle applies to all non-current assets, but does not include investment properties that are
subsequently measured by the fair value, biological assets that are measured by the net value of fair value minus
the sales expense, assets arising from employee compensation, deferred income tax assets, and the rights arising
from financial assets subject to accounting standards for financial instruments and insurance contracts subject to
relevant accounting standards of insurance contracts.
(XV) Long-term equity investment
1. Determination of initial investment cost
Notes to Financial Statements Page 20
(1) Long-term equity investment formed by consolidation of enterprises. For specific accounting policies, see
Note IV (V) Accounting treatment methods for business combination under or not under common control.
(2) Long-term equity investment obtained by other methods
Concerning the long-term equity investment obtained by paying cash, the purchasing price actually paid will be
taken as initial investment cost, which includes costs, taxes and other necessary expenditures directly related
with the acquisition of long-term equity investment.
Concerning the long-term equity investment obtained by issuing equity securities, the fair value of the equity
securities issued shall be taken as the initial investment cost. Transaction cost arising from issuance or acquiring
own equity tools, if can be directly attributed to equity transaction, can be deducted from equity.
Under the preconditions that the non-monetary assets exchange possesses commercial nature and the fair value
of assets exchanged in or out can be reliably measured, the initial investment cost of long-term equity investment
exchanged in by non-monetary assets shall be determined based on the fair value of assets exchanged out, unless
there is solid evidence proving that the fair value of the assets exchanged in is more reliable. For the exchange of
non-monetary assets not satisfying aforesaid preconditions, the book value of the assets exchanged out and
relevant taxes payable shall be recognized as the initial investment cost of long-term equity investment
exchanged in.
The initial investment cost of the long-term equity investment obtained by restructure of debts shall be
determined based on fair value.
2. Subsequent measurement and recognition of profit or loss
(1) Cost method
The Company can adopt cost method to account the long-term equity investment controlled by the invested unit,
and priced according to the investment cost, add or recover the investment and adjust the cost of long-term
equity investment.
Except the cash dividends or profits included in the price or the consideration actually paid when acquiring the
investment but not issued, the Company shall recognize the cash dividends or profits announced to distribute by
the invested unit as the current investment earnings.
(2) Equity method
The Company adopts equity method to account the long-term equity investment to the affiliated business and
jointly operated enterprise. For equity investment of the jointly operated enterprise indirectly held by similar
subject including venture investment organization, joint fund, trust company or unit-linked insurance fund, fair
value shall be adopted for measurement and the changes will be recognized in profit or loss.
For the balance between the initial investment cost of long-term equity investment higher than the identifiable
net assets fair value of the invested unit at the time of investment, initial investment cost of long-term equity
investment shall not be adjusted. The balance between the initial investment costs lower than the fair value
shares of identifiable net assets of the invested unit at the time of investment shall be recognized in current profit
or loss.
After the Company acquires long-term equity investment, according to the net profit or loss recognized by the
invested unit to be enjoyed or shared and other comprehensive earnings, investment earnings and other
comprehensive earnings shall be recognized respectively, meanwhile book value of long-term equity investment
shall be adjusted. Moreover, according to the profits or cash dividends announced by the invested unit to be
Notes to Financial Statements Page 21
distributed, the part to be received will be calculated and book value of long-term equity investment shall be
reduced accordingly. Concerning other changes in owner's equity of the invested unit apart from net profit or loss,
other comprehensive earnings and profits distribution, book value of long-term equity investment shall be
adjusted and incorporated into owner's rights and interests.
When recognizing the shares of net profit or loss of the invested unit to be received, based on the fair value of
each identifiable asset of the invested unit at the time of acquiring the investment, recognition shall be made after
adjusting the net profits of the invested unit. Profits and losses from internal transactions not realized between
the Company and the joint ventures and jointly operated enterprises shall be amortized according to the part
attributable to the Company that is calculated based on the percentage receivable, and on such basis investment
profits and losses are recognized.
When the Company recognizing the losses of the invested unit to be shouldered, it shall be handled according to
the following sequence: firstly, to write down the book value of the long-term equity investment; secondly, if the
book value of long-term equity investment is not sufficient to write down, investment loss shall be recognized
continuously based on the book value of long-term equity that has materially formed net investment to the
invested unit, and write down the book value of long-term receivable items. At last, after aforesaid disposal,
according to investment contract or agreement, if it is stipulated that the enterprise shall undertake extra
obligations, estimated liabilities shall be recognized according to the estimated obligations for undertaking,
incorporated into current investment loss.
If profits are realized by the invested unit in subsequent period, after the Company deducts the shares to be
shouldered for the losses not recognized, the treatment shall be made according to reverse sequence as above
mentioned. After writing down the book balance of estimated liabilities, recovering the long-term equity that
actually forms net investment to the invested unit as well as the book value of long-term equity investment,
investment earnings shall be recovered in recognition.
3. Conversion of accounting method for long-term equity investment
(1) Measurement of fair value changed to accounting by equity method
Concerning the equity investment on which accounting treatment is carried out held by the Company previously
that has no control, joint control or significant influences on the invested unit according to the recognition as
financial instruments and measurement rules, after increasing investment, if the Company is able to impose
significant influences on the invested unit or performs joint control by not control, the total of the fair value of
the equity investment held according to Enterprise Accounting Rules No. 22-Recognition and Measurement of
Financial Instruments plus the newly increased investment cost shall be recognized as the initial investment cost
accounted by equity method.
If the originally held equity investment is classified as available-for-sale financial asset, the balance between its
fair value and book as well as the total changes in fair value that were incorporate dint other comprehensive
earnings shall be transferred to the current profit or loss accounted by equity method.
The book value of the long-term equity investment accounted by the balance between the initial investment cost
accounted by equity method and the fair value of identifiable net assets of the invested unit on the date of
increased investment determined by the new shareholding percentages after the increase of investment, and shall
be incorporated into current non-operating revenue.
(2) Fair value measurement or equity method accounting changed to accounting by cost method
Notes to Financial Statements Page 22
Concerning the equity investment held by the Company in the invested unit that the Company does not control,
jointly control or generates significant influences accounted according to recognition of financial instruments
and measurement rules, or due to the increase of investment in long-term equity investment held in any joint
venture or jointly operated enterprise, the Company is able to perform control on the invested unit not under
common control, when individual financial statement is prepared, the total of the book value of the equity
investment held previously and the newly increased investment cost will be recognized as initial investment cost
accounted by cost method.
Concerning other comprehensive earnings recognized by adopting equity method on equity investment held
before the date of acquisition, when such investment is disposed, accounting treatment shall be carried out
according to the same basis as directly treatment of relevant assets or liabilities by the invested unit.
If the equity investment held before the date of acquisition encounters accounting treatment in accordance with
relevant stipulations set out in Enterprise Accounting Rules No. 22 - Recognition and Measurement of Financial
Instruments, total changes in fair value that was incorporated into other comprehensive earnings previously shall
be transferred into current profit or loss when cost method is used for accounting.
(3) Accounting by equity method changed to measurement by fair value
If the Company loses it joint control or significant influence on the invested unit due to such reason as disposing
part of the equity investment, the remaining equity shall be accounted according to Enterprise Accounting Rules
No. 22 - Recognition and Measurement of Financial Instruments. The balance between the fair value and the
book value on the date of losing joint control or significant influence shall be incorporated into current profit or
loss.
Other comprehensive earnings recognized because of the adaptation of equipment method for the accounting of
the original equity investment shall receive accounting treatment of the same basis as the invested unit directly
treating relevant assets or liabilities when the use of equity method for accounting is terminated.
(4) Cost method changed to equity method
If the Company has lost the control over the invested unit due to such reasons as treating part of equity
investment, when preparing individual financial statement, if the remaining equity after treatment can perform
joint control or impose significant influences on the invested unit, equity method shall be used for the accounting,
and adjustment shall be implemented as if the remaining equity has been accounted by using equity method since
the acquisition.
(5) Cost method changed to measurement by fair value
If the Company has lost the control over the invested unit due to such reasons as treating part of equity
investment, when preparing individual financial statement, if the remaining equity after treatment cannot
perform joint control or impose significant influences on the invested unit, accounting treatment shall be
changed to according to relevant stipulations set out in Enterprise Accounting Rules No. 22 - Recognition and
Measurement of Financial Instruments. The balance between the fair value and the book value on the date of
losing control shall be incorporated into current profit or loss.
4. Treatment on long-term equity investment
When treating long-term equity investment, the balance between its book value and the actually acquired price
shall be incorporated into current profit or loss. Concerning long-term equity investment accounted by equity
method, when treating such investment, the same basis used by the invested unit in directly treatment relevant
Notes to Financial Statements Page 23
assets or liabilities shall be adopted to carry out accounting treatment on the part that was incorporated into other
comprehensive earnings according to relevant percentages.
When treating the equity investment to subsidiaries, if terms, conditions and economic influences of the
transactions comply with one or several situations below, several transactions shall be taken as package deal to
carry out accounting treatment:
(1) These transactions are concluded at the same time or after mutual influences are considered.
(2) The entirety of these transactions can reach a complete business result.
(3) Occurrence of one transaction depends on at least one other transaction.
(4) On transaction, separately seen, is not economic, but when being considered with other transactions, is
economic.
If control over the previous subsidiary is lost due to treating part of equity investment or other reasons, it is not
considered as package deal. Individual financial statement and consolidated financial statement shall be
distinguished to carry out relevant accounting treatment.
(1) In individual financial statement, the balance between the book value and the actual acquisition price of the
equity to be treated shall be incorporated into current profit or loss. If the remaining equity after treatment can
implement joint control or impose significant influence on the invested unit, equity method shall be changed for
accounting, and adjustment shall be made on the remaining equity as if it was accounted by equity method at the
time of acquisition. If the remaining equity after treatment cannot implement joint control or impose significant
influence on the invested unit, accounting treatment shall be carried out according to relevant stipulations set out
in Enterprise Accounting Rules No. 22 - Recognition and Measurement of Financial Instruments. The balance
between the fair value and the book value on the date of losing control shall be recognized in current profit or
loss.
(2) In consolidated financial statement, for all the transactions before the loss of the control on the subsidy,
capital surplus (share capital premium) shall be adjusted based on the balance between the disposition price and
the net assets shares enjoyable in the subsidiary that is calculated continuously since the date of purchase or
consolidation. If the capital surplus is not sufficient to write down, retained earnings shall be adjusted. When the
control over the subsidy is lost, the remaining equity shall be measured again according to the fair value on the
date of losing the control. The balance obtained by total of consideration acquired by disposing equity and the
fair value of remaining equity minus the net assets calculated continuously since the date of purchase of the
subsidiary enjoyable as calculated according to the original shareholding percentage shall be incorporated into
the investment earnings of the term in which the control is lost, meanwhile goodwill shall be written down.
Other comprehensive earnings related with the equity investment of the previous subsidiary shall be transferred
to be current investment earnings when the control is lost.
If the transactions from dealing with the equity investment to subsidiary until the loss of control belong to
package deal, all transactions shall be taken as one transaction of disposing equity investment to the subsidiary
and losing control for accounting treatment. Relevant accounting treatment shall be carried out in individual
financial statement and consolidated financial statement:
(1) In individual financial statement, before the loss of control, the balance between the price of every disposal
and the book value of long-term equity investment corresponding to the equity disposed shall be recognized as
other comprehensive earnings, and will be transferred to losses and profits of the term in which the control is lost
when the control is lost.
Notes to Financial Statements Page 24
(2) In consolidated financial statements, the balance between the price of every disposal before the loss of
control and the net assets shares held in the subsidiary corresponding to the disposal of investment shall be
recognized as other comprehensive earnings, and will be transferred to losses and profits of the term in which the
control is lost when the control is lost.
5. Standards to judge control joint and significant influences
If the Company controls some arrangement with other participants collectively according to relevant stipulations,
and the decision on activity that generates significant influence on the return of such arrangement only exists
upon consensus of all participants that share the control right, it will be regarded as the Company controls such
arrangement jointly with other participants, and the arrangement belongs to jointly operated arrangement.
If jointly operated arrangement is achieved by single entity, according to relevant stipulations, if it is judged that
the Company has right on the net assets of such single entity, the single entity shall be taken as joint venture, and
equity method will be adopted for settlement. If according to relevant stipulations, it is judged that the Company
has no right on the net assets of such single entity, such single entity shall be taken as jointly operating. The
Company shall recognize the items that are related with the shares of the jointly operated interests, and carry out
accounting treatment according to the stipulations set out in relevant enterprise accounting standards.
Significant influence refers that the investor has the power to participate in the decision-making of financial and
operation policies of the invested unit, but cannot control or jointly control with other parties the formulation of
these policies. The Company will judge the possession of significant influence on the invested unit through one
or several situations below and comprehensively consideration of all facts and situations. (1) Has designated
deputy in the Board of Directors or similar power authority in the invested unit; (2) Participates in the
formulation of financial and operation policies of the invested unit; (3) Has important transactions with the
invested unit; (4) Has dispatched management personnel to the invested unit; (5) Provides key technical files to
the invested unit.
(XVI) Investment properties
An investment property refers to a property held for earning rent or capital value adding or both, including the
use right of the land leased, the land use right held for transfer after appreciation and the leased buildings.
Unoccupied building held for operating lease that are used for operating lease and of which the purpose will
remain unchanged in short time as specified in written resolutions made by the Board of Directors shall be also
presented as investment properties.
The cost of investment properties of the Company shall be taken as entry value. The cost of purchased
investment properties includes purchasing price, relevant taxes and other expenses that can be directly
attributable to such asset. The cost of investment properties built will be composed by all necessary expenses to
build such asset and those arising before the asset reach the estimated usable status.
The Company carries out subsequent measurement on investment properties by adopting cost mode, and accrues
depreciation or amortization on buildings and land use right according to estimated service life and net residual
value rate. Estimated service life, net residual value rate and yearly depreciation (amortization) rate are shown
below:
Yearly depreciation (amortization)
Type Estimated service life (year) Estimated net residual value rate
rate
Buildings 20-40 5% 4.75%-2.38%
Notes to Financial Statements Page 25
If the purpose of investment properties is for own use, since the date of change, the Company converts such
investment properties to fixed asset or intangible asset. If the purpose of the real estate is changed to earning rent
or capital value adding, since the date of change, the Company shall convert fixed asset or intangible asset to
investment properties. When conversion occurs, the book value before the conversion will be taken as the entry
value after conversion.
When investment properties are disposed or permanently exit from use, and are estimated that no economic
interest will be gained from its disposal, the recognition on such investment properties shall be terminated. The
income of disposal of a property, including selling, transferring, discarding or destroying the investment property
minus its book value and relevant taxes shall be recognized in current profit or loss.
(XVII) Fixed asset
1. Conditions to recognize fixed assets
Fixed assets refer to intangible assets that are held for producing commodities, providing labors, renting or
operation management with the service life over one fiscal year. Fixed asset will be recognized when satisfying
the following conditions at the same time:
(1) Economic interest related with such fixed assets might probably flow into the enterprise.
(2) Cost of such fixed asset can be reliably measured.
2. Initial measurement of fixed assets
Initial measurement on the fixed assets of the Company will be carried out according to the cost, in which cost of
fixed assets purchased include purchasing price and import tariff, etc. as well as other expenses arising in order
to make the fixed assets reach estimated usable status that can be directly attributable to such assets. Cost of
fixed asset built by the Company will be composed of necessary expenses to make the asset reach usable status.
Value of fixed asset invested by the investor stipulated in the investment contract or agreement shall be taken as
entry value, but if the price set out in the contract or agreement is not fair, it shall be accounted according to its
fair value. If the price of fixed asset purchased exceeds normal credit conditions and is paid in extension, in fact
possessing financing nature, the cost of fixed asset shall be determined based on the current value of purchasing
price. The balance between the actually paid price and the current value of purchasing price, except to be
capitalized, shall be recognized in current profit or loss in the credit period.
3. Subsequent measurement and disposal of fixed assets
(1) Depreciation of fixed assets
Depreciation of fixed asset shall be accrued during the estimated service life according to the entry value minus
the estimated net residual value. For fixed asset that impairment reserve has been provided, depreciation shall be
determined according to the book value after the deduction of impairment reserve in the coming period as well
as the years to be used. Fixed assets that have been fully depreciated and continue to be used are not depreciated.
According to nature and situation of use of fixed asset, the Company will determine the service life and
estimated net residual value of the fixed asset. At the end of the year, the Company will recheck the service life,
the estimated net residual value and the depreciation method of the fixed. If there is difference from the
previously estimated amount, relevant adjustment shall be carried out.
Estimated service life, net residual value rate and yearly depreciation rate of different type of fixed assets are
shown below:
Notes to Financial Statements Page 26
Yearly depreciation
Type Depreciation method Depreciation life (year) Residual value rate (%)
rate (%)
Buildings and Straight-line depreciation
20-40 5 4.75-2.38
constructions method
Machines and Straight-line depreciation
5-10 5 19.00-9.50
equipment method
Electronic Straight-line depreciation
5-10 5 19.00-9.50
equipment method
Transportation Straight-line depreciation
5-10 5 19.00-9.50
equipment method
Straight-line depreciation
Other equipment 5-10 5 19.00-9.50
method
(2) Subsequent expenditures of fixed assets
Subsequent expenditures related with fixed asset, if complies with the recognition conditions for fixed asset,
shall be incorporated into the cost of fixed asset; if does not comply with the recognition conditions for fixed
asset, shall be recognized in current profit or loss at the time of occurrence.
(3) Disposal of fixed asset
When a fixed asset cannot generate economic profits by disposal or by use as estimated, such fixed asset shall be
terminated in recognition. The amount received by disposal of fixed asset, such as selling, transferring,
discarding or destroying, minus its book value and relevant taxes shall be recognized in current profit or loss.
4. Recognition basis, pricing and depreciation method of fixed assets leased by financing
When fixed asset leased by the Company complies one or several standards set below, it shall be recognized as
fixed asset leased in by financing:
(1) When the leasing period is expired, the ownership of the leased asset will be transferred to the Company.
(2) The Company has the option to purchase the leased asset. It is estimated that the purchasing price concluded
will be far lower than the fair value of the leased asset at the time of exercising the option, therefore, it can be
reasonably decided from the starting date of the lease that the Company will excise such option.
(3) Even if the ownership of asset will not be transferred, the leasing period accounts for most of the service life
of the leased asset.
(4) The current value of the minimum leasing payment from the starting date of the lease is almost equal to the
fair value of the leased asset when the lease starts.
(5) The nature of the leased asset is special. If no big renovation is made, it can only be used by the Company.
The lower between the fair value of the leased asset starting from the leasing date and the current value of the
minimum leasing payment will be taken as the entry value of the fixed asset leased in by financing. The
minimum leasing payment shall be taken as the entry value of long-term payable, and its balance shall be taken
as the unrecognized financing cost. Initially direct expenses arising from the leasing negotiation and the signing
of leasing contract attributable to leased items, including commission charge, lawyer fee, traveling cost and
stamp tax shall be incorporated into the value of the leased asset. The leasing expenses not recognized will be
amortized by using actual interest rate method during the period of leasing in installments.
Notes to Financial Statements Page 27
The Company adopts depreciation policy consistent with the self-owned fixed assets to accrue depreciation of
fixed assets leased in by financing. If it can be reasonably determined that the ownership of the leased asset can
be acquired when the leasing period is expired, depreciation shall be accrued during the service life of the leased
asset. If it cannot be reasonably determined that the ownership of the leased asset can be acquired when the
leasing period is expired, depreciation shall be accrued in the shorter period between the leasing period and the
service life of the leased asset.
(XVIII) Construction in progress
1. Initial measurement of construction in progress
Construction in progress built by the Company shall be priced according to the actual cost, which will be
composed of the necessary costs to build the asset and make it reach the estimated usable status, including
material cost for the project, labor cost, relevant taxes paid, borrowing cost to be capitalized and indirect cost to
be amortized.
2. Standard and time for construction in progress to be carried over to fixed asset
All costs of construction in progress arising to make such asset reach estimated usable status shall be taken as the
entry value of the fixed asset. If the construction in progress built has reached the estimated usable status, but no
completion settlement is done, from the date of reaching the usable status, according to engineering budget,
construction cost or actual cost of the project, the construction in progress will be carried over to fixed asset
according to the estimated value, and depreciation of fixed asset shall be accrued according to the Company's
depreciation policy on fixed assets. After the completion settlement is done, the estimated value shall be adjusted
according to the actual cost, but the depreciation accrued will not be adjusted.
(XIX) Borrowing costs
1. Recognition principles of capitalization of borrowing costs
Borrowing costs incurred by the Company, if can be directly attributable to the purchase, construction or
production of asset in compliance with the capitalization conditions, will be capitalized, and incorporated into
costs of relevant assets. Other borrowing costs will be recognized as costs according to the accrual at the time of
occurrence, and recognized in current profit or loss.
Assets in compliance with the capitalization conditions refer to fixed assets, investment properties and inventory
that can reach estimated usable or sellable status after quite long time of purchasing, construction or production
activities.
Borrowing costs will be capitalized when satisfying the following conditions at the same time:
(1) Assets costs have occurred, which include the expenses arising from paying cash, transferring non-cash assets
or bearing liabilities with interest in order to purchase, build or produce assets in compliance with the
capitalization conditions.
(2) Borrowing costs have occurred.
(3) Necessary activities including purchasing, building or production to make the asset reach estimated usable or
sellable status have been started.
2. Period of capitalization of borrowing costs
The capitalization period refers to the period from when the borrowing costs are capitalized to the stop of the
capitalization. The suspended period of capitalization of borrowing costs are not included.
Notes to Financial Statements Page 28
When the assets purchased, built or produced in compliance with the capitalization conditions reach estimated
usable or sellable status, the capitalization of borrowing costs shall be stopped.
When part of the items in the assets purchased, built or produced in compliance with the capitalization are
completed respectively and can be used separately, the capitalization of borrowing costs of such part of assets
shall be stopped.
If the assets purchased, built or produced are completed in different parts, but can only be used or sold after the
entire completion, the capitalization of borrowing costs shall be stopped when such assets are entirely completed.
3. Period of suspension of capitalization
If asset in compliance with capitalization conditions encounters abnormal suspension, and the suspension
exceeds 3 months continuously during the process of purchase, construction or production, the capitalization of
borrowing costs shall be suspended. If such suspension is necessary procedure to make the asset in compliance
with capitalization conditions purchased, built or produced to reach usable or sellable status, capitalization of
borrowing costs shall be continued. The borrowing costs arising during the suspension shall be recognized in
current profit or loss until the activities of purchasing, building or production of asset are restarted, capitalization
of borrowing costs shall be continued.
4. Calculation method for amount of capitalization of borrowing costs
Interest of special loan (minus the income of interest obtained by unused loan deposited in the bank or the
investment earnings obtained by temporary investment) and its auxiliary costs shall be capitalized before the
asset in compliance with the capitalization conditions purchased, built or produced reaches usable or sellable
status.
Interest amount of general loan to be capitalized shall be calculated and determined by the weighted average of
the accumulated asset expenditures exceeding special loan multiplying the capitalization rate of general loan
occupied. Capitalization rate will be calculated and determined according to the weighted average interest rate of
general loan.
If the loan has discount or premium, amount of discount or premium to be amortized in every accounting period
shall be determined according to actual interest rate method, and amount of interest of every period shall be
adjusted.
(XX) Intangible assets and development expenses
An intangible asset refers to an identifiable non-monetary asset without physical substance which is possessed or
controlled by the Company, including purchased software and land use rights.
1. Initial measurement of intangible assets
The cost of the intangible assets purchased from outside includes purchase price money, relevant taxes and other
expenses incurred due to putting such assets to the anticipated use that can be directly attributed to such assets.
Where the price money of the purchased intangible assets is paid on a deferred basis within a term exceeding
regular credit conditions and actually of a financing nature, the cost of the intangible assets is determined on the
basis of the current value of the price money in purchase.
The entry value in the account of the fixed assets obtained from debtors for the repayment of liabilities in debt
restructuring is determined on the basis of the fair value of the fixed assets. The difference between the book
value of debt restructuring and the fair value of the fixed assets used for the repayment of liabilities is recognized
in current profit or loss.
Notes to Financial Statements Page 29
Under the premises that the non-monetary assets exchange is of commercial nature and that the fair value of the
assets received and given out in the exchange can be measured reliably, the initial investment cost of the
long-term equity investment received in non-monetary assets exchange is determined on the basis of the fair
value of the assets given out, unless there are definite evidences that the fair value of the received assets is more
reliable. For the non-monetary assets exchange that do not meet the above premises, the book value of the
received assets and relevant taxes payable is taken as the cost of the long-term equity investment.
The recorded value in the account of the intangible assets obtained by the merger of the enterprises under the
control of a same entity is determined according to the book value of the merged party. The recorded value in the
account of the intangible assets obtained by the merger of the enterprises under the control of different entities is
determined according to the fair value.
The cost of the intangible assets formed through internal R&D activities includes: the cost of materials and labor
consumed in the development of such intangible assets, registration fee, the amortization of other patent rights
and franchises used in the development process and the interests expenses that meet the conditions of
capitalization, and other direct expenses incurred due to putting such intangible assets into the anticipated use.
2. Subsequent measurement of intangible assets
When the Company acquires intangible assets, the Company analyzes and determines the service life and
classifies intangible assets into intangible assets with limited service life and intangible assets with uncertain
service life.
(1) Intangible assets with limited service life
The intangible assets with limited service life are amortized based on straight-line method in the period when the
assets bring economic benefits to the enterprise. The estimated service life and basis of intangible assets with
limited service life are as follows:
Item Estimated service life Basis
Outsourced software 5 Benefit period
Land use right 50 Benefit period
At the end of each year, the service life and amortization method of intangible assets with limited service life are
rechecked and an adjustment is made if the service life differs from the original estimated service life.
At the end of the current period, the service life and amortization method of the intangible assets are the same as
the last year.
(2) Intangible assets with unlimited service life
If the period during which an intangible asset will bring economic benefits to an enterprise is unpredictable, the
service life of such intangible asset is deemed as uncertain. Intangible assets with uncertain service life are not
amortized during the holding period and the service life is reviewed at the end of each period. If the service life
is still uncertain after review, the impairment test is performed in each accounting period.
3. Classification standards for research and development phases of R&D projects inside the Company
Research phase: a phase in which creative and planned investigation and research activities are carried out for
the purpose of obtaining and understanding new scientific or technological knowledge.
Notes to Financial Statements Page 30
Development phase: a phase in which research results or other knowledge, before being produced or used for
commercial purposes, are applied in a certain plan or design for the purpose of producing materials, equipment
and products that are new or feature substantial improvement.
The expenses for inside R&D projects in the research phase are recognized in current profit or loss when the
expenses occur.
4. Standards for meeting the conditions of capitalization by research phase
The expenditure in the development phase of the research and development project can be recognized as
intangible assets only when all the following conditions are met:
(1) The completion of such intangible assets makes it usable or its sale technically feasible.
(2) There is an intention to complete such intangible assets and use or sell it.
(3) The way that the intangible assets generate economic interests can prove that the product using such
intangible assets or the intangible assets itself have market. If the intangible assets are to be used internally, its
usefulness is proved.
(4) The Company has sufficient technical and financial resources and other resources to support the completion
of the development of such intangible assets and the capacities to use or sell such intangible assets.
(5) The expenditure attributed to the development stage of such intangible assets can be reliably measured.
The expenditure in the development phase not meeting the preceding conditions is recognized in current profit or
loss when it is incurred. The development expenditure that is recognized in profit or loss of the previous year
will not be identified as assets again in later years. The capitalized expenditure in the development phase is listed
as development expenditure in the balance sheet and is converted into intangible assets from the date when it
meets the expected purpose.
(XXI) Long-term impairment of assets
The Company determines whether any sign of possible impairment exists for long-term assets on the balance
sheet date. If the sign of impairment exists for long-term assets, the recoverable amount of each asset is
estimated. If the recoverable amount of each assets cannot be estimated, the recoverable amount of the asset
group where the asset belong is determined based on the asset group.
The recoverable amount may be determined according to the higher one of the net value of the fair value of the
assets minus the disposal expenses and the current value of the anticipated future cash flow of the assets.
If the measurement result of recoverable amount indicates that the recoverable amount of a long-term asset is
lower than its book value, the book value of the long-term asset is written down to the recoverable amount. The
write-down amount is identified as asset impairment loss and is recognized in current profit or loss and provision
for asset impairment provision is made. Once the impairment loss of assets is recognized, the loss will not be
written back in later accounting periods.
At the same time, the corresponding assets impairment provision is accrued. After the recognition of assets
impairment loss, corresponding adjustments are made in the future periods on the depreciation or amortized
expenses of the impaired assets so that the adjusted book value of such assets (with the anticipated expected
salvage value deducted) can be amortized systematically within the remaining service life.
The goodwill and intangible assets with uncertain service life, which are formed due to enterprise merger, are
tested every year on whether the sign of impairment exists.
Notes to Financial Statements Page 31
During impairment test of goodwill, the book value of goodwill can be amortized to the asset group or
combination of asset groups that is expected to acquire synergistic benefit from business combination. When
impairment test is performed for relevant asset groups or asset group combinations that include goodwill, for
example, if the sign of impairment exists for asset groups or asset group combinations relevant to goodwill, the
impairment test is first performed for the asset groups or asset group combinations that do not include goodwill
and the recoverable amount is calculated and is compared with the relevant book value to recognize the
corresponding impairment loss. Then the impairment test is first performed for the asset groups or asset group
combinations that include goodwill and the book value (including the book value of amortized goodwill) of the
relevant asset groups or asset group combinations is compared with the recoverable amount. If the recoverable
amount of relevant asset groups or asset group combinations is lower than the book value, the impairment loss of
goodwill is recognized.
(XXII) Long-term expenses to be amortized
1. Method of amortization
Long-term unamortized expenses refer to the expenses that have incurred at the Company but should be born in
current period and later periods, where the amortization period is above one year. Long-term unamortized
expenses shall be amortized based on direct method in the period of benefit.
2. Period of amortization
Subject to the period of benefit.
(XXIII) Payroll
Payroll refers to various remunerations and compensations provided by the Company for obtaining services
provided by employees or for terminating the employment relationship. Payroll includes short-term remuneration,
welfare after leave, dismissal welfare and other long-term employee's welfare.
1. Short-term payroll
Short-term remuneration refers to the payroll that needs to be paid completely within 12 months in the annual
reporting period when employees provide relevant services, excluding welfare after leave and dismissal welfare.
In the accounting period when employees provide services, the Company identities short-term remuneration as
liabilities and includes it in relevant asset costs and fees according to the benefit objects of services provided by
employees.
2. Post-employment welfare
The welfare after leave refers to the remuneration and welfare provided by the Company for obtaining services
provided by employees or for terminating the employment relationship after employees have retired, excluding
short-term remuneration and dismissal welfare. The welfare plan after dismissal of the Company is classified
into the defined contribution plan and the defined benefit plan.
The welfare defined contribution plan aims to join the social basic endowment insurance and unemployment
insurance organized and implemented by labor and social security agencies in various regions. Employees can
join the pension plan set by the Company at their own discretion. In the accounting period when employees
provide the Company with services, the amount that shall be paid and deposited shall be identified as liabilities
according to the defined contribution plan and is recognized in current profit or loss or relevant asset costs.
The post-employment defined benefit plan mainly includes the defined non-collective benefits for retirees and
living costs for family numbers of the deceased employees. Actuarial of obligations specified in the defined
Notes to Financial Statements Page 32
benefit plan shall be carried out by an independent actuary with the expected cumulative benefit unit method at
the balance sheet date. The benefit obligation arising from the defined benefit plan shall be set to the period in
which employees provide services and recognized in current profit or loss or relevant asset costs. Unless other
accounting standards require or allow employee benefit costs to be included in asset costs, the service costs and
the net interests of net liabilities or net assets of the defined benefit plan shall be recognized in current profit or
loss at occurrence. Changes arising from re-measurement of net liabilities or net assets of the defined benefit
plan shall be recognized in other comprehensive income at occurrence, and shall not be written back to profit or
loss in the subsequent accounting period.
3. Dismissal welfare
Dismissal welfare refers to the compensation the Company gives to an employee for terminating the employment
relationship with employee before the employment contract expires or for encouraging an employee to accept
downsizing. It is a liability incurred by compensating an employee for terminating employment relationship with
the employee when the Company cannot unilaterally withdraw the contract termination plan or downsizing
suggestion, or when the Company confirms the costs related to restructuring that involves payment of dismissal
welfare, whichever is earlier. Dismissal welfare is recognized in current profit or loss.
The Company provides early retirement welfare for the employees who accept early retirement. Early retirement
welfare involves salary paid to and social insurance premiums paid for the employees who are permitted by the
Company management to voluntarily leave office before state-specified retirement age. The Company pays early
retirement welfare to early retired employees from the day the arrangement takes effect to the day the employees
reach retirement age. The Company deals with early retirement welfare using the accounting method for
dismissal welfare, namely when the conditions for dismissal welfare are met, recognizing the salary and social
insurance premiums to be paid within the period from the day the employees leave office to the day the
employees reach the retirement age as liabilities and including them in current profit or loss once. Actuarial
analysis of early retirement welfare assumes that differences caused by changes and welfare standard adjustment
are recognized in current profit or loss.
4. Other long-term employees' welfare
Other long-term employees' welfare refers to all other employees' welfare except short-term remuneration,
welfare after leave and dismissal welfare.
For other long-term employees' welfare that meets conditions of the defined contribution plan, the amount that
shall be paid and deposited shall be identified as liabilities in the accounting period and is recognized in current
profit or loss or relevant asset costs; except other long-term employees' welfare in the preceding circumstance,
an independent actuary sets the welfare generated by the defined benefit plan to the period in which employees
provide services by using the method of expected accumulative welfare unit and includes it in current profit or
loss or relevant asset costs.
(XXIV) Estimated liabilities
1. Recognition standards for estimated liabilities
The obligations related to contingencies, which meet all the following conditions, are recognized by the
Company as estimated liabilities.
The obligation is a current obligation undertaken by the Company;
The fulfillment of the obligation is very likely to cause an outflow of economic interests from the Company;
Notes to Financial Statements Page 33
The amount of the obligation can be measured reliably.
2. Measurement method of estimated liabilities
Initial measurement is carried out to estimated liabilities of the Company according to the optimum estimation
amount of the required expense when relevant obligations are fulfilled.
When determining the optimum estimation amount, the Company considers in a comprehensive way the factors
related to contingencies like risks, uncertainties and time value of currency. Where there are great influences of
time value of currency, the optimum estimation amount is determined after discounting relevant future cash
flows.
The optimum estimation amount is determined according to different situations as follows:
Where there is a continuous range (or interval) of the required expense and different results in the range have
same possibility to occur, the optimum estimation amount is determined according to the intermediate value of
the range, i.e. the average of the maximal and the minimum amounts.
Where there is no continuous range (or interval) or there is a continuous range but different results have different
possibilities to occur, if contingencies involve individual proceedings, the optimum estimation amount is the
amount most likely to occur, and if contingencies involve several proceedings, the optimum estimation amount is
determined according to various possible results and the calculation of relevant probabilities.
If all expenses or part of them, which are used by the Company for paying off estimated liabilities, are
anticipated to be compensated by a third party and compensation amount is basically sure to be received, the
compensation amount is recognized separately as an asset, which should not exceed the book value of the
estimated liabilities.
(XXV) Share-based payment
1. Types of share-based payment
The Company provides equity-settled and cash-settled share-based payment.
2. Recognition of the fair value of equity instruments
For equity instruments such as the granted option, which exist in the active market, the fair value is recognized
according to their prices in the active market. For those not existing in the active market, their fair value is
recognized by using the option pricing model, which should be selected in consideration of the following factors:
a. option exercise price; b. option period; c. the current price of the underlying shares; d. the predicted
fluctuation rate of the share price, e. the estimated dividend of the share; f. risk free rate in the option period; g.
payment of shares of installment options
When determining the grant-date fair value of equity instruments, the Company shall take into account the
influence of market conditions in vesting conditions and non-vesting conditions stipulated in the share-based
payment agreement. Where a share-based payment has a non-vesting condition, the Company shall recognize
receipt of the corresponding service cost if employees or other parties satisfy all the non-market conditions (for
example, service duration) in vesting conditions.
3. Basis of recognition of the best estimate of the number of vested equity instruments
On each balance sheet date in the vesting period, the Company shall make the best available estimate of the
number of equity instruments expected to vest, and shall revise that estimate if subsequent information indicates
that the number of equity instruments expected to vest differs from previous estimates. On vesting date, the
Company shall revise the estimate to equal the number of equity instruments that ultimately vested.
Notes to Financial Statements Page 34
4. Accounting treatment method
The Company shall measure the equity-settled share-based payment at the fair value of the granted employee
equity instruments. If the equity instruments granted vest immediately, the Company shall include the grant-date
fair value of equity instruments into related cost or expense, with a corresponding increase in capital reserve. If
the equity instruments granted do not vest until the counterparty completes a specified period of service or
achieves a performance condition in the vesting period, the Company shall include the service obtained in the
current period into related cost or expense and capital reserved by reference to the grant-date fair value of equity
instruments based on the best estimate of the number of vested equity instruments on each balance sheet date
during the vesting period. The Company shall not adjust the confirmed cost or expense and total equity amount
after the vesting date.
The case-settled share-based payment shall be measured by reference to the fair value of the Company's eligible
liabilities which is calculated based on shares or other equity instruments. If the equity instruments granted vest
immediately, the Company shall include the fair value of eligible liabilities in related cost or expense on the
vesting date, with a corresponding increase in liabilities. For the cash-settled share-based payment where the
granted options are not exercised until the counterparty completes a specified period of service or achieves a
performance condition in the vesting period, the Company shall include the service obtained in the current period
into related cost or expense and liabilities by reference to the grant-date fair value of liabilities, based on the best
estimate of the number of vested equity instruments on each balance sheet date during the vesting period. The
Company shall re-measure the fair value of its liabilities on each balance sheet date and settlement date before
settlement of related liabilities, and include liability changes in current profit and loss.
If a grant of an equity instrument is canceled during the vesting period, the Company shall account for the
cancellation as an acceleration of vesting, and shall therefore include immediately the amount that would
otherwise have been confirmed for services received over the remainder of the vesting period in the current
profit and loss, and recognize capital reserve. If employees or other parties can but fail to satisfy non-vesting
conditions in the vesting period, the Company shall account for the failure as a cancellation of the grant of the
equity instrument.
(XXVI) Other financial instruments such as preferred stock and sustainable debt
Based on the rules of financial instruments, the Company classifies financial instruments or their components
into financial liabilities or equity instruments during initial recognition according to the contact terms of
financial instruments such as preferred stock and sustainable debt and economic essence they reflect rather than
legal form, in combination with definitions of financial liabilities and equity instruments.
1. When one of the following conditions is met, the issued financial instrument is classified into financial
liabilities:
(1) Contractual obligation to deliver cash or other financial assets to other parties;
(2) Contractual obligation to exchange financial assets or financial liabilities under potential adverse conditions;
(3) Non-derivative instrument contract that must or may use equity instruments of an enterprise for settlement in
the future (the enterprise delivers a variable number of equity instruments according to the contract);
(4) Derivative instrument contract that must or may use equity instruments of an enterprise for settlement in the
future (except derivative instrument contracts that use a fixed number of equity instruments to exchange a fixed
amount of cash or other financial assets).
Notes to Financial Statements Page 35
2. When the following conditions are met at the same time, the issued financial instruments are classified into
equity instruments:
(1) The financial instruments do not include the contractual obligation to deliver cash or other financial assets to
other parties or exchange financial assets or financial liabilities under potential adverse conditions;
(2) For the financial instruments that must or may use equity instruments of an enterprise for settlement in the
future, if the financial instruments are non-derivative instruments, the contractual obligation to deliver a variable
number of equity instruments for settlement is not included; if the financial instruments are derivative
instruments, the enterprise can only settle the financial instruments by exchanging a fixed number of equity
instruments with the fixed amount of cash or other financial assets.
3. Accounting treatment method
For financial instruments that belong to equity instruments, the interest expenditure or dividend distribution shall
be used as profits of the enterprise for distribution, the buy-back and write-off are treated as changes in equity,
and transaction expenses such as handling charge and commission shall be deducted from the equity.
For financial instruments that belong to financial liabilities, the interest expenditure or dividend distribution shall
be treated as borrowing costs in principle, the gain or loss generated due to buy-back or redemption are
recognized in current profit or loss, and transaction expenses such as handling charge and commission are
included in the initial amount of measurement of the issues instruments.
(XXVII) Income
1. Standards for recognition time of sales income
The realization of the income from the sale of commodities is recognized when the Company has already
transferred the main risks and consideration in the ownership right of the commodities to the purchaser, the
Company has not retained any further management right connected to the ownership right nor implement
effective control over the sold commodities, the amount of the revenue can be reliably measured, relevant
economic interests are likely to flow into the enterprise, and relevant costs incurred or to be incurred can be
measured reliably.
The Company mainly runs the leasing business in the electronics market. It identifies received rental as rental
income in the term of lease by using the method of line and the income of other business is recognized when the
risk premium is transferred according to contract provisions.
The price of a contract or agreement is collected through deferral. In the case of actual financial nature, the
amount of income from sales commodities shall be determined according to the fair value of the price of the
contract or agreement.
The Company shall recognize the income of real estate development projects when all the following
conditions are met:
(1) A real estate development project is completed;
(2) The sales contract has been signed;
(3) The house payment has been made in full;
(4) After giving the occupation notice or announcement, the Company has delivered the property or the
delivery date agreed in the contract expires.
Notes to Financial Statements Page 36
2. Basis for recognition of income from transfer of asset use right
When economic interests relevant to transaction probably flow into the enterprise and the amount of income can
be reliably measured, the amount of income from transfer of asset use right is determined in the following
circumstances:
(1) The amount of interest income is determined according to the time and actual interest rate of other people
using the monetary fund of the enterprise.
(2) The amount of the income from use fee is determined in accordance with the time and method of charges as
agreed in relevant contract or agreement.
3. Recognition basis and method for income from rendering of services
Where the results of the labor services provided on the balance sheet date can be estimated reliably, the income
from the provision of labor services is recognized with the completion percentage method. The completion
progress of a labor service transaction is determined by survey of the work completed.
When the following conditions are met at the same time, the result of rendering of services can be reliably
estimated:
(1) The amount of income can be measured reliably;
(2) Relevant economic interests are very likely to flow into the enterprise;
(3) The completion progress of transactions can be reliably determined;
(4) The costs that have been incurred or will be incurred in transactions can be reliably measured.
The total amount of the income from the provision of labor services is determined according to the price money
received or receivable of a relevant contract or agreement, unless the price money received or receivable of a
relevant contract or agreement is unfair. The labor services income of the current period is recognized on the
balance sheet date according to the resulted amount of the total amount of income from provision of labor
services times the completion percentage and deducted by the accumulative amount of the recognized income
from provision of labor services in previous accounting periods. At the same time, the labor cost of the current
period is carried forward according to the estimated total cost of the provision of labor services times the
completion percentage and deducted by the accumulative amount of the recognized labor cost in previous
accounting periods.
Where the results of the provision of labor services on the balance sheet date cannot be estimated reliably, such
results are processed respectively according to the following conditions:
(1) Where it is estimated that the labor services cost incurred can be compensated, the income from provision of
labor services is recognized according to the amount of the labor services cost incurred and the same amount is
transferred to the labor cost.
(2) Where it is estimated that the labor services cost incurred cannot be compensated, the labor services cost
incurred is recognized in current profit or loss and no income is recognized.
When the contracts or agreements between the Company and other companies involve commodity sales and
labor service and these two parts can be differentiated from each other and can be separately measured,
commodity sales and labor service are handled separately. If they cannot be differentiated from each other or
they can be differentiated from each other but cannot be separately measured, both parts will be handled as
commodity sales.
Notes to Financial Statements Page 37
4. Recognition basis and method for income from construction contracts
(1) When the results of construction contracts can be reliably estimated, relevant income from contracts and
costs of contracts are confirmed based on the method of completion percentage. The method of completion
percentage refers to the method for confirming income from contracts and costs of contracts according to the
completion progress of contracts. The completion progress of a contract is determined according to the ratio of
actual accumulative cost of the contract to estimated total costs of the contract.
If the following conditions are met at the same time, the result of a fixed construction contract can be reliably
estimated:
1) The total income from the contract can be reliably measured;
2) Economic interests relevant to the contract are very likely to flow into the enterprise;
3) The actual costs of the contract can be clearly distinguished and reliably measured;
4) The completion progress of the contract and the costs needed for completing the contract can be reliably
determined.
If the following conditions are met at the same time, the result of a cost-plus contract can be reliably estimated:
1) Economic interests relevant to the contract are very likely to flow into the enterprise;
2) The actual costs of the contract can be clearly distinguished and reliably measured;
On the balance sheet date, the amount of total contractual income multiplied by the completion progress,
deducting the accumulated confirmed income in the previous accounting period, is recognized as the current
contractual income; the amount of estimated total contract cost multiplied by the completion progress, deducting
the accumulative confirmed cost in the previous accounting period, is recognized as the current costs of contract.
The change of contract engineering, claim and bonus is included in the total income of contract based on the
amount that may be brought and can be reliably calculated.
(2) If the result of a construction contract cannot be reliably estimated, the contract is treated as follows:
1) If the contract cost can be recovered, the income from the contract is recognized according to the actual
recovered contract cost and the contract cost is recognized as the current costs of contract.
2) If the contract cost cannot be recovered, the cost is immediately recognized as the costs of contract in the
current period when the cost is incurred and the income from the contract is not recognized.
(3) If the total cost of contract probably exceeds the total income from the contract, the expected loss is
immediately recognized as costs.
5. Transfer of the assets with repurchase conditions
If the Company signs a repurchase agreement when selling products or transferring other assets, whether the
products sold meet the conditions for income recognition is judged according to the articles of the agreement. If
the repurchase is a financing transaction, the Company does not recognize sales income when delivering
products or assets. If the repurchase price is higher than the selling price, interests are accrued for the difference
during repurchase period and included in financial expenses.
(XXVIII) Government subsidies
1. Type
Notes to Financial Statements Page 38
A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the
government. Based on the subsidy objects specified in relevant government documents, the subsidies are divided
into subsidies relevant to assets and subsidies relevant to profits.
Subsidies relevant to assets refer to government subsidies acquired by the Company for the purposes of
acquisition and construction or turned to long-term assets in other ways. Subsidies relevant to profits refer to
government subsidies other than subsidies relevant to assets.
2. Recognition of government subsidies
If any evidence indicates that the Company can meet relevant conditions for financial support policies and is
expected to obtain financial support fund at the end of the period, the government subsidy shall be recognized
based on the amount receivable. In other cases, government subsidies shall be recognized at receipt.
Government subsidies that are monetary funds shall be measured based on the amount received or receivable.
Government subsidies that are non-monetary funds shall be measured based on fair value. Where the fair value
cannot be reliably calculated, the nominal amount (1 Yuan) is measured. Government subsidies that are
measured by nominal amount shall be directly recognized in current profit or loss.
3. Accounting treatment method
The government subsidies related to assets shall be recognized as deferred income in profit or loss by stages with
reasonable and systematic methods according to the service life of the built or purchased assets.
The government subsidies related to income that are used to compensate for expenses or losses in subsequent
periods are recognized as deferred profits when they are obtained; the subsidies that are used to compensate for
expenses or losses incurred are directly recognized in current profit or loss when they are obtained.
The government subsidies related to routine activities of enterprises are recognized in other income. The
government subsidies not related to routine activities of enterprises are recognized in non-operating income and
expense.
The government subsidies related to policy-based concessional loans with discounted interests are used to offset
borrowing costs. For the government subsidies related to policy-based loans at prime interest rate, the borrowing
amount received are recognized as the entry value, and the borrowing costs are calculated based on the
borrowing principal and the policy-based prime interest rate.
If recognized government subsidies have to be returned and offset against the book value of relevant assets at
initial recognition, the book value is adjusted; if relevant deferred income balance exists, the book balance of
relevant deferred income is offset and the excess part is recognized in current profit or loss; if relevant deferred
income does not exist, the government subsidies are directly recognized in current profit or loss.
(XXIX) Deferred income tax assets and liabilities
Deferred income tax assets and liabilities are calculated and recognized according to the difference (temporary
difference) between the taxable basis of the assets and liabilities and their book value. On the balance sheet date,
deferred income tax assets and liabilities are measured based on the tax rate applicable to the period when the
assets are expected to be recovered or the liabilities are expected to be paid off.
1. Basis for recognition of deferred incomes tax assets
The Company confirms the deferred income tax assets generated due to deductible temporary difference based
on the amount of taxable income that is probably obtained to deduct deductible temporary difference and can
carry over deductible loss and tax deduction. However, the deferred income tax assets generated due to initial
Notes to Financial Statements Page 39
recognition of assets or liabilities in a transaction with the following features at the same time: (1) the transaction
is not business merger; (2) the transaction does not affect the accounting profit, taxable income or deductible
loss.
For the deductible temporary difference relevant to investment of joint ventures, when the following conditions
are met at the same time, corresponding deferred income tax assets are confirmed; the temporary difference is
probably written back in the foreseeable future and taxable income used to deduct the deductible temporary
difference will probably be obtained in the future.
2. Basis for recognition of deferred income tax liabilities
The temporary difference between the tax payable but unpaid in the current period and that in previous periods is
recognized by the Company as deferred income tax liabilities, excluding:
(1) Temporary difference formed due to initial confirmation of goodwill;
(2) Transaction or matter formed due to factors rather than business merger (the transaction or matter does not
affect the accounting profit or the temporary difference formed due to taxable income or deductible loss);
(3) For the taxable temporary difference relevant to investment of subsidiaries and joint ventures, the reversal
time of the temporary difference can be controlled and may not be written back in the foreseeable future.
(XXX) Lease
If the lease terms essentially transfer all risks and gains related to the ownership of the leased asset to the lessee,
such lease is finance lease while other leases are operating lease.
1. Accounting treatment of operating lease
(1) Rented assets
The rental fee paid by the Company for rented assets is apportioned by the straight-line method in the whole
lease term including the rent-free period and included in current expenses. The initial direct expenses related to
lease transactions, paid by the Company, are included in current expenses.
In case that the lessor undertakes the lease-related expenses that shall be undertaken by the Company, the
Company shall deduct such expenses from the total rental fee and the rental fee after deduction is apportioned in
the lease term and included in current expenses.
(2) Leased assets
The rental fee received by the Company from leasing of assets is apportioned by the straight-line method in the
whole lease term including the rent-free period and included in the lease income. The initial direct expenses
related to lease transactions, paid by the Company, are included in current expenses. Those with significant
amounts are capitalized and included in current profit in the whole lease term on the same basis for recognition
of the lease income.
In case that the Company undertakes the lease-related expenses which shall be undertaken by the lessee, the
Company shall deduct the expenses from the total lease income and the lease expenses after deduction are
allocated in the lease term.
2. Accounting treatment of financing lease
(1) Assets leased under financing lease: The lower one between the fair value of rented assets and the minimum
lease payment is treated as the recording value of the rented assets, the minimum lease payment as the recording
value of long-term accounts payable, and the difference between the two as financing expenses yet to be
Notes to Financial Statements Page 40
recognized. For details of the determination basis, valuation method, and depreciation method of fixed assets
under financing lease, see "Note IV (XVII) Fixed asset".
The financing expenses yet to be recognized are apportioned by the Company by the actual interest rate method
in the lease term of the assets and included in accounting expenses.
(2) Assets rented under financing lease: The difference between the total residual value, without guarantee, of the
financing lease payment receivable and the current value is recognized by the Company on the lease-beginning
date as financing profits yet to be realized and as the lease income in future lease periods. The initial direct
expenses related to lease transactions are included in the initial measurement of financing lease payment
receivable and the amount of profits recognized in the lease term is reduced.
(XXXI) Discontinuation of business
A constituent part that meets any of the following conditions and have been disposed of or categorized as
held-for-sale and can be separately presented is recognized as a constituent part of discontinuation.
(1) The constituent part stands for an independent main business or a separate major business area.
(2) The constituent part is part of the plan intended to dispose of an independent main business or a separate
major business area.
(3) The constituent part is a subsidiary acquired for the purpose of re-sale.
For discontinuation of business, the impairment loss and write-back amount and other profit or loss from
operation or disposal are presented in the profit statement.
(XXXII) Changes in major accounting policies and accounting estimates
1. Changes in accounting policies
The following are changes in major accounting policies in the reporting period:
Content of and reason for changes in accounting policies Approval procedure
The Notice on Issuing the Revised Accounting Standards for Business Enterprises No.
16 — Government Subsidies (C. K. [2017] No. 15) issued by the Ministry of Finance on As deliberated and adopted at the 4th
May 10, 2017 shall be implemented from June 12, 2017. Government subsidies on meeting of the 7th Board of Directors and
January 1, 2017 shall be disposed of by prospective application. New government the 4th meeting of the 7th Board of
subsidies from January 1, 2017 to the implementation date of the new standard shall be Supervisors
adjusted according to the new standard.
The Notice on Issuing the Accounting Standard for Business Enterprises No. 42 — As deliberated and adopted at the 4th
Non-current Assets Held for Disposal, Disposal Group and Termination of Business meeting of the 7th Board of Directors and
(C. K. [2017] No. 13) issued by the Ministry of Finance on April 28, 2017 shall be the 4th meeting of the 7th Board of
implemented from May 28, 2017. Supervisors
Notes to changes in accounting policies:
On May 10, 2017, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No.
16 — Government Subsidies, which shall be implemented from June 12, 2017. According to the standards,
government subsidies on January 1, 2017 shall be disposed of by prospective application, and new government
subsidies from January 1, 2017 to the implementation date of the new standard shall be adjusted according to the
new standard.
According to the Accounting Standards for Business Enterprises No. 16 — Government Subsidies, the Company
has adjusted the amount of items presented in financial statements that are influenced by the provision. The
government subsidies related to routine activities of the Company incurred from January 1, 2017 to December 31,
Notes to Financial Statements Page 41
2017 are adjusted from "Non-operating income" to "Other income" RMB 6,406,623.72. Transactions incurred
from January 1, 2016 to December 31, 2016 are not subject to retrospective adjustment. 2016 financial
statements in the comparable period are not subject to retrospective adjustment.
On April 28, 2017, the Ministry of Finance issued the Accounting Standard for Business Enterprises No.
42—Non-current Assets Held for Disposal, Disposal Group and Termination of Business, which shall be
implemented from May 28, 2017. According to the standards and the Notice of the Ministry of Finance on
Revising and Issuing the Format of Financial Statements of General Enterprises (C. K. (2017) No. 30), a new
item "Income from asset disposal" is added to the profit statement and the net profit is presented by operation
sustainability. According to the Accounting Standard for Business Enterprises No. 42—Presentation of Financial
Statements, the Company has adjusted the comparative data in the comparable period.
According to the Accounting Standard for Business Enterprises No. 42—Non-current Assets Held for Disposal,
Disposal Group and Termination of Business, the Company has adjusted the amount of items presented in
financial statements that are influenced by the provision. The income from disposal of non-current assets
incurred from January 1, 2017 to December 31, 2017 is adjusted from "Non-operating income" and
"Non-operating expense" to "Income from asset disposal" RMB 0. The income from disposal of non-current
assets incurred from January 1, 2016 to December 31, 2016 is adjusted from "Non-operating income" and
"Non-operating expense" to "Income from asset disposal" RMB 116,977.79.
2. Changes in accounting estimates
No change was made to main accounting estimates in the current reporting period.
V. Taxes
(I) Main tax types and tax rates imposed on the Company
Tax category Basis Tax rate (%)
Sales of goods 17%
Real estate leasing services, real estate
sales, taxable sales and service income, 11%
intangible assets or real estate
Value-added tax
Other taxable sales services 6%
Income from real estate development
(old item) and real estate leasing (old 5%
item)
Urban maintenance and construction tax Paid-in turnover tax payable 7%
Educational surtax Paid-in turnover tax payable 3%
Local educational surtax Paid-in turnover tax payable 2%
Enterprise income tax Taxable income 15%, 25%
70% of the original value of the property
Property tax 1.2%, 12%
(or rental income) as the taxation basis
Notes to income tax rate for different tax payers:
Name of tax payer Income tax rate
Xi'an SEG Electronics Market Co., Ltd. 15%
Xi'an Hairong SEG Electronics Market Co., Ltd. 15%
(II) Tax preference policy and basis
Notes to Financial Statements Page 42
According to the confirmation letter (S. F. G. C. Y. Q. R. H. [2014] No. 134 issued by Shaanxi Provincial
Development and Reform Commission, Xi'an SEG Electronics Market Co., Ltd., a subsidiary of the Company, is
engaged in projects encouraged by the nation and complies with the corporate income tax preference policy for
development of the west regions. Therefore, the corporate income tax shall be paid at the rate of 15%.
According to the confirmation letter (S. F. G. C. Y. Q. R. H. [2015] No. 042 issued by Shaanxi Provincial
Development and Reform Commission, Xi'an Hairong SEG Electronics Market Co., Ltd., a subsidiary of the
Company, is engaged in projects encouraged by the nation and complies with the corporate income tax
preference policy for development of the west regions. Therefore, the corporate income tax shall be paid at the
rate of 15%.
Excluding the foregoing two subsidiaries, the income tax rates of other subsidiaries are 25%.
VI. Notes to main items of the consolidated financial statements
(Unless specifically noted, the following unit of the amount is RMB Yuan)
Note 1. Monetary funds
Item Closing balance Opening balance
Cash on hand 547,039.36 712,997.23
Bank deposit 947,076,128.65 1,116,832,758.78
Other monetary capital 3,859,437.91 13,977,885.18
Total 951,482,605.92 1,131,523,641.19
Details of other restricted monetary fund:
Item Closing balance Opening balance
Performance bond 3,600,000.00 3,600,000.00
Cash deposit for credit card repayment --- ---
Total 3,600,000.00 3,600,000.00
Note 2. Loans to other banks
Item Closing balance Opening balance
Loans to interbank --- 40,000,000.00
Less: impairment provision --- ---
Total --- 40,000,000.00
Note 3. Notes receivable
1. Types of notes receivable
Item Closing balance Opening balance
Bank's acceptance bill --- 100,792.00
Commercial acceptance bill --- ---
Total --- 100,792.00
2. The Company has no pledged notes receivable at the end of the period.
Notes to Financial Statements Page 43
3. The Company has no notes receivable endorsed or discounted and not due on the balance sheet date at the end
of the period.
4. The Company has no notes that were transferred to accounts receivable due to default by the biller at the end
of the period.
Note 4. Accounts receivable
1. Accounts receivable disclosed by type
Closing balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Accounts receivable with single
significant amount and single 31,273,127.90 37.13 11,546,346.13 51.79 19,726,781.77
bad debt provision
Accounts receivable with bad
debt provision accrued based on 43,293,424.67 51.40 1,086,104.88 2.51 42,207,319.79
credit risk feature combinations
Accounts receivable with no
single significant amount but
9,663,272.84 11.47 9,663,272.84 100.00 -
with single provision for bad
debts
Total 84,229,825.41 100.00 22,295,723.85 26.47 61,934,101.56
Continued:
Opening balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Accounts receivable with single
significant amount and single 3,092,011.09 4.35 3,092,011.09 100.00 ---
bad debt provision
Accounts receivable with bad
debt provision accrued based on 59,273,515.18 83.43 324,125.30 0.55 58,949,389.88
credit risk feature combinations
Accounts receivable with no
single significant amount but
8,680,424.61 12.22 8,680,424.61 100.00 ---
with single provision for bad
debts
Total 71,045,950.88 100 12,096,561.00 17.03 58,949,389.88
2. Notes to types of accounts receivable:
(1) Accounts receivable with single significant amount and single provision for bad debts at the end of the period
Name of company Closing balance
Notes to Financial Statements Page 44
Accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Shenzhen Runneng Digital Co., Ltd. 15,251,125.38 4,575,337.61 30.00 Unable to be recovered,
Shenzhen Wonder Industry Co., Ltd. 7,785,736.82 2,335,721.05 30.00 Unable to be recovered
Shenzhen Comnet Technology Co.,
5,144,254.61 1,543,276.38 30.00 Unable to be recovered
Ltd.
Unable to be recovered for aging
Jiangsu Unicom 3,092,011.09 3,092,011.09 100.00
of over 5 years
Total 31,273,127.90 11,546,346.13 36.92
(2) Accounts receivable with no single significant amount but with single provision for bad debts at the end of
the period
Closing balance
Name of company Accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Shenzhen Liyuanshun Industrial Co., Unable to be recovered for aging
1,906,865.35 1,906,865.35 100.00
Ltd. of over 5 years
Zhejiang Financial Information Co., Unable to be recovered for aging
786,000.00 786,000.00 100.00
Ltd of over 5 years
Unable to be recovered for aging
Shanghai Tianci Industrial Co., Ltd. 899,000.00 899,000.00 100.00
of over 5 years
Sichuan Huiyuan Electronics Co., Unable to be recovered for aging
480,000.00 480,000.00 100.00
Ltd. of over 5 years
Unable to be recovered for long
Other 93 companies 5,591,407.49 5,591,407.49 100.00
aging
Total 9,663,272.84 9,663,272.84 100.00 -
(3) Accounts receivable in combinations with bad debt provision accrued by the aging analysis method
Closing balance
Aging
Accounts receivable Bad debt provision Proportion of provision (%)
Less than one year 27,051,979.01 - -
1-2 years 13,138,077.85 656,903.90 5.00
2-3 years 1,914,725.81 191,472.58 10.00
Over 3 years 1,188,642.00 237,728.40 20.00
Total 43,293,424.67 1,086,104.88 2.51
2. Accrual, recovery and write-back of current bad debt provision
The accrual amount of current bad debt provision is RMB 10,213,620.35. The recovery or write-back amount of
current bad debt provision is RMB 14,457.50.
3. No accounts receivable are written off in the current period.
4. Accounts receivable with top 5 closing balance collected based on debtors
Notes to Financial Statements Page 45
Percentage in the total
Accrued bad debt
Name of company Closing balance amount of accounts
provision
receivable
Shenzhen Runneng Digital Co., Ltd. 15,251,125.3800 18.11 4,575,337.61
Xinjiang Zhongdi Communication Equipment Co.,
12,941,726.5600 15.36 647,086.33
Ltd.
Shenzhen Wonder Industry Co., Ltd. 7,785,736.8200 9.24 2,335,721.05
Shenzhen Comnet Technology Co., Ltd. 5,144,254.6100 6.11 1,543,276.38
Jiangsu Unicom 3,092,011.0900 3.67 3,092,011.09
Total 44,214,854.4600 52.49 12,193,432.46
5. There are no accounts receivable with its recognition terminated due to transfer of financial assets in the
current period.
6. There are no assets and liabilities due to transfer or increase of accounts receivable in the current period.
Note 5. Prepayment
1. Prepayment listed by aging
Closing balance Opening balance
Aging
Amount Proportion (%) Amount Proportion (%)
Less than one year 33,752,071.71 97.22 55,452,730.86 98.77
1-2 years 730,564.08 2.1 586,224.90 1.04
2-3 years 203,438.70 0.59 - -
Over 3 years 32,005.05 0.09 104,005.05 0.19
Total 34,718,079.54 100.00 56,142,960.81 100.00
2. There is no prepayment of significant amount with aging of more than one year at the end of period.
3. Prepayment with top 5 closing balance collected based on prepayment payers
Percentage in the
Period-end total amount of Reason for
Name of company Prepayment date
amount accounts non-settlement
receivable (%)
Xi'an Gaoke (Group) New West China Less than one Prepaid rental for
20,000,000.00 57.61
Industrial Development Co., Ltd year 2018
Less than one
Shenzhen Zhaocheng Group 7,018,666.00 20.22 Prepaid rental
year
Less than one
Nantong Aoxin Decoration Co., Ltd. 2,661,556.38 7.67 Prepaid decoration
year
Nanjing Xinzhujiang Trade Industrial Co., Less than one
573,590.20 1.65 Prepaid rental
Ltd. year
Less than one
Xi'an Kete Refrigeration Repair Factory 506,000.00 1.46 Prepaid labor
year
Total 30,759,812.58 88.61 - -
Notes to Financial Statements Page 46
Note 6. Interest receivable
1. Types of interest receivable
Item Closing balance Opening balance
Income from financial products - 287,698.63
Total - 287,698.63
2. There is no significant overdue interest at the end of the period.
Note 7. Dividends receivable
1. Dividends receivable
Investee Closing balance Opening balance
Suzhou SEG Electronics Market Co., Ltd. 2,000,000.00 -
Total 2,000,000.00 -
Note 8. Other accounts receivable
1. Other receivables disclosed by type
Closing balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Other accounts receivable with
single significant amount and 14,434,547.87 10.17 14,434,547.87 100.00 -
single bad debt provision
Other accounts receivable with bad
debt provision accrued based on 99,927,149.95 70.34 5,869,990.45 5.87 94,057,159.50
credit risk feature combinations
Combination 1 of aging analysis
85,577,541.47 60.24 5,869,990.45 6.86 79,707,551.02
method
Combination 2 of specific object 14,349,608.48 10.10 - - 14,349,608.48
Other accounts receivable with no
single significant amount but with 27,688,142.28 19.49 27,688,142.28 100.00 -
single provision for bad debts
Total 142,049,840.10 100.00 47,992,680.60 33.79 94,057,159.50
Continued:
Opening balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Other accounts receivable with
single significant amount and 20,131,835.38 12.38 20,131,835.38 100.00 -
single bad debt provision
Other accounts receivable with bad
120,667,690.94 74.20 3,631,613.92 3.01 117,036,077.02
debt provision accrued based on
Notes to Financial Statements Page 47
Opening balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
credit risk feature combinations
Combination 1 of aging analysis
82,158,583.35 50.52 3,631,613.92 4.42 78,526,969.43
method
Combination 2 of specific object 38,509,107.59 23.68 - - 38,509,107.59
Other accounts receivable with no
single significant amount but with 21,832,287.03 13.42 21,832,287.03 100.00 -
single provision for bad debts
Total 162,631,813.35 100.00 45,595,736.33 28.04 117,036,077.02
2. Notes to types of other accounts receivable:
(1) Other accounts receivable with single significant amount and single bad debt provision at the end of the
period
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered
Yangjiang Yuntong Grease Co., Ltd. 8,530,276.35 8,530,276.35 100.00
with aging of over 5 years
Creditor's right transferred in by Unable to be recovered
5,904,271.52 5,904,271.52 100.00
SEG Communications with aging of over 5 years
Total 14,434,547.87 14,434,547.87 100.00 -
(2) Other accounts receivable with no single significant amount but with single provision for bad debts at the end
of the period
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for aging
Shenzhen Tuopu Industrial Co., Ltd. 3,281,387.96 3,281,387.96 100.00
of over 5 years
Shenzhen Lianjing Trade Co., Ltd. 5,697,287.51 5,697,287.51 100.00
Unable to be recovered for aging
People's Court of Futian District 2,604,575.00 2,604,575.00 100.00
of over 5 years
Unable to be recovered for aging
SEG Taiying 1,811,375.77 1,811,375.77 100.00
of over 5 years
Unable to be recovered for aging
Other 117 companies 14,293,516.04 14,293,516.04 100.00
of over 5 years
Total 27,688,142.28 27,688,142.28 100.00 -
(3) Other accounts receivable in Combination 1 with bad debt provision accrued by the aging analysis method
Notes to Financial Statements Page 48
Closing balance
Aging
Other accounts receivable Bad debt provision Proportion of provision (%)
Less than one year 39,547,864.96 - -
1-2 years 7,159,289.48 357,964.48 5.00
2-3 years 22,620,514.39 2,262,051.44 10.00
Over 3 years 16,249,872.64 3,249,974.53 20.00
Total 85,577,541.47 5,869,990.45 6.86
(4) Other accounts receivable in Combination 2 rather than the aging analysis method are mainly lease deposit,
security deposit.
3. Accrual, recovery and write-back of current bad debt provision in the current period
The accrual amount of the current bad debt provision is RMB 2,791,991.59. The recovery and write-back
amount of the current bad debt provision is RMB 395,047.32.
4. No other accounts receivable are written off in the current period.
5. Classification of other receivables by nature
Item Closing balance Opening balance
Creditor's right transfer cost 32,165,804.91 32,165,804.91
Imprest 1,822,972.83 2,000,225.81
Deposit and security deposit 62,803,786.44 63,614,630.08
Transfer-in of prepaid rental from
- 17,500,000.00
Zongheng International
Others 45,257,275.92 47,351,152.55
Total 142,049,840.10 162,631,813.35
6. Other accounts receivable with top 5 closing balance collected based on debtors
Percentage in the Bad debt
Nature of total amount of other provision
Name of company Closing balance Aging
receivables accounts receivable Closing
(%) balance
Deposit and
Shenzhen Zhaocheng Group 21,056,000.00 2-3 years 14.82 2,105,600.00
security deposit
Security deposit
for postponed Less than one
Finance Bureau of Nantong 11,000,000.00 7.74 -
construction of year
parking spaces
Debt
Yangjiang Yuntong Grease
restructuring of 8,530,276.35 Over 5 years 6.01 8,530,276.35
Co., Ltd.
SEG Orient
Nantong Construction Salary deposit for
6,200,000.00 3-4 years 4.36 1,240,000.00
Engineering Administration peasant workers
Debt
Creditor's right transferred in
restructuring of 5,904,271.52 Over 5 years 4.16 5,904,271.52
by SEG Communications
SEG
Notes to Financial Statements Page 49
Percentage in the Bad debt
Nature of total amount of other provision
Name of company Closing balance Aging
receivables accounts receivable Closing
(%) balance
Communications
Total 52,690,547.87 37.09 17,780,147.87
7. There are no items involving government subsidies in the current period.
8. There are no other accounts receivable with its recognition terminated due to transfer of financial assets in the
current period.
9. There are no assets and liabilities due to transfer or increase of other accounts receivable in the current period.
Note 9. Inventory
1. Classification of inventory
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
provision provision
Raw materials - --- - 17,523.81 --- 17,523.81
Commodity
4,247,632.40 --- 4,247,632.40 4,599,633.46 --- 4,599,633.46
stock
Low-value
218,971.83 --- 218,971.83 216,734.06 --- 216,734.06
consumables
Development 2,053,914,397.6 2,053,914,397.6
689,545,789.31 --- 689,545,789.31 ---
cost 4 4
Development 2,857,087,927.1 2,857,087,927.1 1,319,784,778.9 1,319,784,778.9
--- ---
product 7 7 8 8
3,551,100,320.7 3,551,100,320.7 3,378,533,067.9 3,378,533,067.9
Total --- ---
1 1 5 5
2. Notes to capitalization amount of borrowing costs included in closing balance of inventory
Decrease in the current Capitalization
period rate of
capitalization
Opening Increase in the
Inventory item name Closing balance amount
balance current period Decrease in
Others recognized in the
sales
current period
(%)
Nantong SEG Times
22,656,572.48 22,656,572.48
Plaza
216,675,971.7 77,422,999.
SEG ECO Phase II 59,180,360.56 198,433,333.18 5.83
7 15
Huizhou SEG
Holiday Plaza Phase 6,280,042.52 181,332.70 6,098,709.82
I
Xi'an SEG Holiday
66,746,979.25 26,856,272.08 93,603,251.33 5.97
Plaza
Notes to Financial Statements Page 50
Decrease in the current Capitalization
period rate of
capitalization
Opening Increase in the
Inventory item name Closing balance amount
balance current period Decrease in
Others recognized in the
sales
current period
(%)
312,359,566.0 77,604,331.
Total 86,036,632.64 - 320,791,866.81
2 85
2. Development cost
Expected Expected Developed
Commencement Increase in the products
Project name completion investment Opening balance transferred in the
time current period
date amount current period
SEG ECO Phase December
October 2014 1.8 billion 1,401,103,921.16 533,231,259.19 1,934,335,180.35
II 2017
Xi'an SEG December
December 2014 2.1 billion 636,732,267.32 35,946,557.50 -
Holiday Plaza 2019
Huizhou SEG
Holiday Plaza --- --- --- 16,078,209.16 788,755.33 -
Phase II
Total --- --- --- 2,053,914,397.64 569,966,572.02 1,934,335,180.35
Continued:
Including:
Amount of
Accumulated
Other decrease in interest
Project name Closing balance amount of interest Source of fund
the current period capitalization in
capitalization
the current
period
SEG ECO Phase
- - - - Bank loan
II
Xi'an SEG
- 672,678,824.82 93,603,251.33 26,856,272.08 Bank loan
Holiday Plaza
Huizhou SEG
Holiday Plaza - 16,866,964.49 - -
Phase II
Total - 689,545,789.31 93,603,251.33 26,856,272.08 -
4. Development product
Including:
Decrease in Accumulated Amount of
Project Completion Opening Increase in the amount of interest
the current Closing balance interest capitalization
name time balance current period capitalization in the current
period
period
Nantong
SEG Times June 2016 597,264,847.59 152,295,046.49 749,559,894.08 22,656,572.48 -
Plaza
SEG ECO
2011 356,683,852.63 12,788,758.04 - 369,472,610.67
Phase I
SEG ECO December
- 1,934,335,180.35 565,631,378.49 1,368,703,801.86 198,433,333.18 59,180,360.56
Phase II 2017
Oriental August 2007 15,340,680.83 - 4,118,439.00 11,222,241.83
Venice Phase
Notes to Financial Statements Page 51
I
Oriental
February
Venice Phase 55,097,668.88 - 7,064,655.00 48,033,013.88
2012
II
Huizhou SEG
Holiday August 2015 295,397,729.05 196,016,009.31 181,317,373.51 310,096,364.85 6,098,709.82
Plaza Phase I
Total 1,319,784,778.98 2,295,434,994.19 758,131,846.00 2,857,087,927.17 227,188,615.48 59,180,360.56
Note 10. Other current assets
Item Closing balance Opening balance
Bank financial products 511,690,000.00 434,000,000.00
Tax to be deducted and withheld 8,035,809.29 2,114,704.16
Prepaid tax 45,352,309.11 23,856,598.74
Others 499,797.94 258,544.69
Total 565,577,916.34 460,229,847.59
Note 11. Loans and prepayment issued
Item Closing balance Opening balance
Loan principal 415,733,397.18 487,312,682.37
Advance --- ---
Less: Impairment provision for loans and
16,346,289.04 6,907,523.92
prepayment
Total 399,387,108.14 480,405,158.45
Note 10. Available-for-sale financial assets
1. Available-for-sale financial assets
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Available-for-sale debt
--- --- ---
instruments
Available-for-sale
--- --- ---
equity instruments
Measured by fair value 365,918.49 365,918.49 683,290.58 --- 683,290.58
33,810,392.8 33,795,392.8 33,810,392.8 33,795,392.8
Measured by cost 15,000.00 15,000.00
3 3 3 3
Others - --- --- ---
34,176,311.3 34,161,311.3 34,493,683.4 34,478,683.4
Total 15,000.00 15,000.00
2 2 1 1
2. Available-for-sale financial assets measured by fair value at the end of the period
Available-for-sale Available-for-sale debt
Classification Others Total
equity instruments instruments
Notes to Financial Statements Page 52
Available-for-sale Available-for-sale debt
Classification Others Total
equity instruments instruments
Cost of equity
instruments/amortized cost of 90,405.00 90,405.00
debt instruments
Accumulative changes in fair
value
275,513.49 275,513.49
included in other
comprehensive income
Less: Accrued impairment
amount
Fair value 365,918.49 365,918.49
3. Measured by cost
Shareholding Book balance
Invested organization proportion Opening Increase in the Decrease in the
Closing balance
(%) balance current period current period
Kashgar Shenzhen City Co., Ltd. 3.03 20,000,000.00 20,000,000.00
Shenzhen SEG GPS Scientific
11.38 13,515,392.83 13,515,392.83
Navigations Co., Ltd.
Nanjing Shangsha Co., Ltd 0.68 280,000.00 280,000.00
Anshan Yibai Co., Ltd --- 15,000.00 15,000.00
Total 33,810,392.83 - - 33,810,392.83
Continued:
Impairment provision Cash dividends
Invested organization Opening Increase in the Decrease in the Closing of the current
balance current period current period balance period
Kashgar Shenzhen City Co., Ltd. - - - - -
Shenzhen SEG GPS Scientific
- - - - -
Navigations Co., Ltd.
Nanjing Shangsha Co., Ltd - - - - -
Anshan Yibai Co., Ltd 15,000.00 - - 15,000.00 -
Total 15,000.00 - - 15,000.00 -
4. Loss from impairment of available-for-sale financial assets in the current reporting period
Available-for-sale Available-for-sale
Available-for-sale financial assets Others Total
equity instruments debt instruments
Accrued impairment provision at the
15,000.00 - - 15,000.00
beginning of period
Provision of the year - - - -
Including: Transfer in Other - - - -
Notes to Financial Statements Page 53
Available-for-sale Available-for-sale
Available-for-sale financial assets Others Total
equity instruments debt instruments
comprehensive income
Decrease in the year - - - -
Including: Writing back due to
recovery of fair value at the end of the - - - -
period
Accrued impairment provision at the
15,000.00 - - 15,000.00
end of the period
Note 13. Long-term equity investment
Increase/Decrease of the year
Investment profit Adjustment of
Invested organization Opening balance Additional Negative and loss other
investment investment recognized with comprehensive
the equity method income
I. Investment in subsidiaries
Dongguan SEG Industrial Co.,
6,800,000.00
Ltd. *Note 1
Huiyang SEG Electronic
2,000,000.00
Engineering Co., Ltd. *Note 1
Huiyang SEG Electronic
2,000,000.00
Engineering Co., Ltd. *Note 1
Hainan Yidi Real Estate Co., Ltd.
4,905,878.52
*Note 1
Beijing Haidian District SEG
Tianzheng Electronic Technology 4,920,000.00
Co., Ltd. *Note 1
Moscow Yidi Co., Ltd. *Note 1 1,740,000.00
Shenzhen Yidi Hotel Co., Ltd.
-
*Note 1
Shenzhen Shitong Electronics
-
Co., Ltd. *Note 1
Hainan Yidi Industrial
-
Development Co., Ltd. *Note 1
Subtotal 22,365,878.52 - - - -
II. Associates
Shanghai SEG Electronics Market
2,551,558.06 184,731.75
Co., Ltd.
-9,125,553.3
Shenzhen Huakong SEG Co., Ltd. 174,552,073.99 5,871,204.49 -126.75
0
Shenzhen International Consumer
Electronics Exhibition/Exchange 6,545,412.62 -4,515,452.16
Center
Suzhou SEG Electronics Market
1,350,000.00 -1,424,552.53
Co., Ltd.
Notes to Financial Statements Page 54
Increase/Decrease of the year
Investment profit Adjustment of
Invested organization Opening balance Additional Negative and loss other
investment investment recognized with comprehensive
the equity method income
Huizhou SEG Economic
7,200,000.00
Development Co., Ltd.
Shenzhen SEG Plaza Investment
1,000,000.00
& Development Co., Ltd.
Shenzhen Hai Lian Industrial
767,049.27
Co., Ltd.
Dongguan SEG Real Estate
Development Co., Ltd.
Huizhou Huiyang District Stars
Industrial Co., Ltd.
Haikou Yida Real Estate
Development Co., Ltd.
Shenzhen SEG Hainan
Communications Engineering
Co., Ltd.
SEG Wisdom Sports and Culture
20,008,278.04 418,432.68
Development Co., Ltd.
Shenzhen SEG Debao Investment
1.00
Co., Ltd.
Wuhan Qingshan Department
100,000.00
Store
Wuchang Department Store 180,000.00
Wuhan Liuduqiao Department
880,000.00
Store Group
Shenyang Mulan Group 50,100.00
Sichuan Polyester Co., Ltd. 50,000.00
Shen Guoyuan Asset Management
60,000.00
Consultants Co., Ltd.
Shenzhen Kangyuan Industrial
500,000.00
Development Co., Ltd.
Shenzhen Shouhang Industrial
Tourism Services Co., Ltd. 300,000.00
Shenzhen Hongtu SEG
Investment Management Co., 1,500,000.00
Ltd.
Shenzhen Zhonghai SEG
Intelligent Parking Development 17,500,000.00 -1,349,878.40
Co., Ltd.
-9,125,553.3
Subtotal 214,744,471.98 20,350,001.00 -815,514.17 -126.75
0
-9,125,553.3
Total 237,110,350.50 20,350,001.00 -815,514.17 -126.75
0
Continued:
Notes to Financial Statements Page 55
Increase/Decrease of the year Closing
balance of
Issued cash Accrued
Invested organization Other equity Closing balance impairme
dividends or impairment Others
changes nt
profits provision
provision
I. Investment in subsidiaries
Dongguan SEG Industrial Co., 6,800,0
6,800,000.00
Ltd. *Note 1 00.00
Huiyang SEG Electronic 2,000,0
2,000,000.00
Engineering Co., Ltd. *Note 1 00.00
Daya Bay SEG Electronic
2,000,0
Engineering Development 2,000,000.00
00.00
Corporation *Note 1
Hainan Yidi Industrial 4,905,8
4,905,878.52
Development Co., Ltd. *Note 1 78.52
Beijing Haidian District SEG
4,920,0
Tianzheng Electronic Technology 4,920,000.00
00.00
Co., Ltd. *Note 1
1,740,0
Moscow Yidi Co., Ltd. *Note 1 1,740,000.00
00.00
Shenzhen Yidi Hotel Co., Ltd.
- -
*Note 1
Shenzhen Shitong Electronics
- -
Co., Ltd. *Note 1
Hainan Yidi Industrial
- -
Development Co., Ltd. *Note 1
22,365,
Subtotal - - - - 22,365,878.52
878.52
II. Associates
Shanghai SEG Electronics Market
-500,000.00 2,236,289.81 ---
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. 171,297,598.43 ---
Shenzhen International Consumer
Electronics Exhibition/Exchange 2,029,960.46 ---
Center
Suzhou SEG Electronics Market
360,000.00 285,447.47
Co., Ltd.
Huizhou SEG Economic 7,200,0
7,200,000.00
Development Co., Ltd. *Note 2 00.00
Shenzhen SEG Plaza Investment
1,000,0
& Development Co., Ltd. *Note 1,000,000.00
00.00
2
Shenzhen Hai Lian Industrial 767,049
767,049.27
Co., Ltd. *Note 2 .27
Dongguan SEG Real Estate
-
Development Co., Ltd. *Note 2
Huizhou Huiyang District Stars
-
Industrial Co., Ltd. *Note 2
Notes to Financial Statements Page 56
Increase/Decrease of the year Closing
balance of
Issued cash Accrued
Invested organization Other equity Closing balance impairme
dividends or impairment Others
changes nt
profits provision
provision
Haikou Yida Real Estate
-
Development Co., Ltd. *Note 2
Shenzhen SEG Hainan
Communications Engineering -
Co., Ltd. *Note 2
SEG Wisdom Sports and Culture
Development Co., Ltd. *Note 2 -1,952,807.17 18,473,903.55
Shenzhen SEG Debao Investment
Co., Ltd. *Note 2 1.00
Wuhan Qingshan Department 100,000
Store *Note 2 100,000.00
.00
Wuchang Department Store *Note 180,000
2 180,000.00
.00
Wuhan Liuduqiao Department 880,000
Store Group *Note 2 880,000.00
.00
50,100.
Shenyang Mulan Group *Note 2 50,100.00
00
Sichuan Polyester Co., Ltd. *Note 50,000.
2 50,000.00
00
Shen Guoyuan Asset Management 60,000.
Consultants Co., Ltd. *Note 2 60,000.00
00
Shenzhen Kangyuan Industrial 500,000
Development Co., Ltd. *Note 2 500,000.00
.00
Shenzhen Shouhang Industrial
300,000
Tourism Services Co., Ltd. *Note 300,000.00
2 .00
Shenzhen Hongtu SEG
Investment Management Co., 1,500,000.00
Ltd.
Shenzhen Zhonghai SEG
Intelligent Parking Development 16,150,121.60
Co., Ltd.
11,087,
Subtotal 360,000.00 -2,452,807.17 - - 223,060,471.59
149.27
33,453,
Total 360,000.00 -2,452,807.17 - - 245,426,350.11
027.79
Note 1: Dongguan SEG Industrial Co., Ltd. and other eight subsidiaries were unable to provide statements and be merged due to
revocation of business licenses. The provision for impairment of such investment has been accrued in full.
Note 2: Huizhou SEG Economic Development Co., Ltd. and other 14 associates were unable to provide statements and conduct
accounting with the equity method due to revocation of business licenses. This part of the investment has been fully withdrawn
from provision for impairment. The provision for impairment of such investment has been accrued in full.
Note 14. Investment properties
1. Investment properties measured by costs
Item Houses and buildings Land use right Total
I. Original book value
1. Opening balance 1,443,667,334.56 5,237,512.49 1,448,904,847.05
Notes to Financial Statements Page 57
Item Houses and buildings Land use right Total
2. Increase in the current period 14,490,179.87 - 14,490,179.87
Outsourcing -
Transfer-in of inventory/fixed
14,490,179.87 14,490,179.87
assets/construction in progress
Business combination not under
-
common control
Capital invested by shareholders -
Converted difference in foreign
-
currency statements
Increase for other reasons -
3. Decrease in the current period
Disposal
Disposal of subsidiaries
Assets categorized as held for
sale
Decrease for other reasons
4. Closing balance 1,458,157,514.43 5,237,512.49 1,463,395,026.92
II. Accumulated depreciation
(amortization)
1. Opening balance 738,491,742.44 1,942,633.80 740,434,376.24
2. Increase in the current period 45,982,024.42 90,441.36 46,072,465.78
Accrual in the current period 45,982,024.42 90,441.36 46,072,465.78
Transfer-in of inventory/fixed
assets/construction in progress
Business combination not under
common control
Capital invested by shareholders
Converted difference in foreign
currency statements
Increase for other reasons
3. Decrease in the current period
Disposal -
Disposal of subsidiaries
Assets categorized as held for
sale
Decrease for other reasons
4. Closing balance 784,473,766.86 2,033,075.16 786,506,842.02
III. Impairment provision
1. Opening balance
Notes to Financial Statements Page 58
Item Houses and buildings Land use right Total
2. Increase in the current period
Accrual in the current period
Transfer-in of inventory/fixed
assets/construction in progress
Business combination not under
common control
Capital invested by shareholders
Converted difference in foreign
currency statements
Increase for other reasons
3. Decrease in the current period
Disposal
Disposal of subsidiaries
Assets categorized as held for
sale
Decrease for other reasons
4. Closing balance
IV. Book value
1. Closing book value 673,683,747.57 3,204,437.33 676,888,184.90
2. Opening book value 705,175,592.12 3,294,878.69 708,470,470.81
2. There are no investment properties measured by fair value at the end of period.
3. Details of investment properties without property certificates
Reasons for not handling property
Item Book value
certificates
The certificate holder is SEG Group. The
1F & 2F, Building 3, SEG Industrial
583,724.18 property is being transferred to
Building
SegMaker.
The certificate holder is SEG Real Estate.
Some area of 11F, Building 4, SEG
591,578.04 The property is being transferred to
Science Park
SegMaker.
Total 1,175,302.22
Note 13. Original value and accumulated depreciation of fixed assets
1. Details of fixed assets
Houses and Machinery Transportation Electronic Other
Item equipment Total
buildings equipment vehicles equipment
I. Original book
value
1. Opening balance 45,356,666.93 44,179,603.85 15,683,266.47 24,164,102.51 13,953,311.74 143,336,951.50
2. Increase in the
- 9,459,301.55 713,800.33 6,028,321.36 3,007,422.03 19,208,845.27
current period
Notes to Financial Statements Page 59
Houses and Machinery Transportation Electronic Other
Item equipment Total
buildings equipment vehicles equipment
Purchase 9,459,301.55 713,800.33 6,028,321.36 3,007,422.03 19,208,845.27
Transfer-in of
construction in -
progress
Business
combination not
-
under common
control
3. Decrease in the
- 52,042.00 962,813.13 1,111,507.31 295,002.70 2,421,365.14
current period
Disposal or
52,042.00 325,472.13 666,961.85 220,630.00 1,265,105.98
scrap
Assets
categorized as -
held for sale
Transfer to
investment -
properties
Disposal of
637,341.00 444,545.46 74,372.70 1,156,259.16
subsidiaries
4. Closing balance 45,356,666.93 53,586,863.40 15,434,253.67 29,080,916.56 16,665,731.07 160,124,431.63
II. Accumulated
depreciation
1. Opening balance 20,563,723.14 36,371,948.17 11,717,289.08 14,134,059.25 8,520,010.76 91,307,030.40
2. Increase in the
1,286,704.77 1,582,549.44 990,491.83 2,878,584.04 1,597,741.53 8,336,071.61
current period
Accrual 1,286,704.77 1,582,549.44 990,491.83 2,878,584.04 1,597,741.53 8,336,071.61
Business
combination not
-
under common
control
3. Decrease in the
- 49,556.12 788,513.75 936,481.39 149,108.05 1,923,659.31
current period
Disposal or
49,556.12 275,973.20 624,829.14 105,098.50 1,055,456.96
scrap
Assets
categorized as -
held for sale
Transfer to
investment -
properties
Disposal of
512,540.55 311,652.25 44,009.55 868,202.35
subsidiaries
4. Closing balance 21,850,427.91 37,904,941.49 11,919,267.16 16,076,161.90 9,968,644.24 97,719,442.70
III. Impairment
provision
Notes to Financial Statements Page 60
Houses and Machinery Transportation Electronic Other
Item equipment Total
buildings equipment vehicles equipment
1. Opening balance
2. Increase in the
current period
Accrual
Business
combination not
under common
control
3. Decrease in the
current period
Disposal or
scrap
Assets
categorized as
held for sale
Transfer to
investment
properties
Disposal of
subsidiaries
4. Closing balance
IV. Book value
1. Closing book
23,506,239.02 15,681,921.91 3,514,986.51 13,004,754.66 6,697,086.83 62,404,988.93
value
2. Opening book
24,792,943.79 7,807,655.68 3,965,977.39 10,030,043.26 5,433,300.98 52,029,921.10
value
2. There are no fixed assets that are temporarily idle at the end of the period.
3. There are no fixed assets acquired through financing lease.
4. There are no fixed assets acquired through financing lease out.
5. Fixed assets with no property right certificate acquired at the end of the period
Reason for property right certificate not
Item Book value
acquired
Houses and buildings 1,161,742.84 Qualification procedures not complete
Total 1,161,742.84
Note 16. Construction in progress
1. Details of Construction in progress
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Shenzhen-Shantou
9,918,306.69 --- 9,918,306.69 --- --- ---
CdTe Film
Notes to Financial Statements Page 61
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Industrial Park
Renovation of
three buildings
including SEG
53,667,550.99 --- 53,667,550.99 24,574,266.14 --- 24,574,266.14
Industrial Building
SEG Industrial
Building
SEG Maker
Education
Technology 4,175,779.03 --- 4,175,779.03 --- --- ---
Experience
Museum
Renovation of
Building 1, SEG --- --- --- 8,217,673.52 --- 8,217,673.52
Court
Decoration and
renovation of 2F,
Building 101, 1,140,000.00 --- 1,140,000.00 --- --- ---
Shangbu Industrial
Zone
Other sporadic
2,843,877.61 --- 2,843,877.61 4,300,287.85 --- 4,300,287.85
engineering
Total 71,745,514.32 --- 71,745,514.32 37,092,227.51 --- 37,092,227.51
2. Changes in major construction in progress
Transfer to
Increase in the current fixed assets in Other decrease in
Project name Opening balance Closing balance
period the current the current period
period
Shenzhen-Shantou
CdTe Film Industrial 9,918,306.69 9,918,306.69
Park
Renovation of three
buildings including
SEG Industrial 24,574,266.14 29,093,284.85 53,667,550.99
Building SEG
Industrial Building
SEG Maker Education
Technology Experience 4,175,779.03 4,175,779.03
Museum
Total 24,574,266.14 43,187,370.57 - - 67,761,636.71
Continued:
Proportion Including:
Interest
of project Accumulated Amount of
Budget capitalization
investment Progress amount of interest Source of
Project name (RMB rate in the
in the (%) interest capitalization in fund
10,000) current
budget capitalization the current
period (%)
(%) period
Shenzhen-Shantou 65,208.96 1.52 1.52 Self-owned
Notes to Financial Statements Page 62
Proportion Including:
Interest
of project Accumulated Amount of
Budget capitalization
investment Progress amount of interest Source of
Project name (RMB rate in the
in the (%) interest capitalization in fund
10,000) current
budget capitalization the current
period (%)
(%) period
CdTe Film Industrial fund
Park
Reconstruction projects
of three buildings Self-owned
6,481.31 82.80 82.80
including SEG fund
Industrial Building
SEG Maker Education
Self-owned
Technology Experience 984.00 42.44 42.44
fund
Museum
Total --- --- --- --- --- --- ---
Note 17. Intangible assets
1. Intangible assets
Item Land use right Outsourced software Total
I. Original book value
1. Opening balance 1,790,601.27 3,505,784.62 5,296,385.89
2. Increase in the current period 28,850,300.00 1,284,090.59 30,134,390.59
Purchase 28,850,300.00 1,284,090.59 30,134,390.59
Internal R&D
Business combination not under
common control
Shareholder investment
Converted difference in foreign
currency statements
Increase for other reasons
3. Decrease in the current period - 21,000.00 21,000.00
Disposal
Disposal of subsidiaries 21,000.00 21,000.00
Assets categorized as held for
sale
Decrease for other reasons
4. Closing balance 30,640,901.27 4,768,875.21 35,409,776.48
II. Accumulated amortization
1. Opening balance 284,515.11 2,330,343.38 2,614,858.49
2. Increase in the current period 468,972.58 509,912.32 978,884.90
Accrual 468,972.58 509,912.32 978,884.90
Business combination not under
common control
Converted difference in foreign
currency statements
Notes to Financial Statements Page 63
Item Land use right Outsourced software Total
Shareholder investment
Increase for other reasons
3. Decrease in the current period - 15,750.00 15,750.00
Disposal
Disposal of subsidiaries 15,750.00 15,750.00
Assets categorized as held for
sale
Decrease for other reasons
4. Closing balance 753,487.69 2,824,505.70 3,577,993.39
III. Impairment provision
1. Opening balance
2. Increase in the current period
Accrual
Business combination not under
common control
Converted difference in foreign
currency statements
Shareholder investment
Increase for other reasons
3. Decrease in the current period
Disposal of subsidiaries
Assets categorized as held for
sale
Transfer-out
Decrease for other reasons
4. Closing balance
IV. Book value
1. Closing book value 29,887,413.58 1,944,369.51 31,831,783.09
2. Opening book value 1,506,086.16 1,175,441.24 2,681,527.40
2. There are no land use right without property certificates at the end of period.
Note 16. Goodwill
1. Original book value of goodwill
Decrease in the current
Name of the invested Increase in the current period
period
organization or the item
Opening balance Increase due Closing balance
contributing to a
to business Others Disposal Others
goodwill
merger
Changsha SEG
10,328,927.82 - - - - 10,328,927.82
Development Co., Ltd.
Notes to Financial Statements Page 64
Decrease in the current
Name of the invested Increase in the current period
period
organization or the item
Opening balance Increase due Closing balance
contributing to a
to business Others Disposal Others
goodwill
merger
Total 10,328,927.82 - - - - 10,328,927.82
The goodwill impairment testing was conducted at the end of the period and there was no sign of impairment, so
no provision was accrued for impairment.
Note 17. Long-term expenses to be amortized
Amortization
Increase in the
Item Opening balance amount of Other decrease Closing balance
current period
current period
Decoration expenses 104,008,448.77 21,796,171.81 26,183,988.15 5,812,719.30 93,807,913.13
Firefighting renovation 3,699,004.36 10,002,522.11 2,786,771.46 229,179.13 10,685,575.88
Market supporting fee of
650,020.35 405,483.50 216,722.86 838,780.99
Tower B
Brand franchise expense 3,773,584.80 626,375.81 3,147,208.99
Others 652,210.68 1,287,574.58 606,238.30 1,333,546.96
Total 109,009,684.16 37,265,336.80 30,420,096.58 6,041,898.43 109,813,025.95
Note 20. Deferred income tax assets and liabilities
1. Deferred income tax assets not offset
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Asset impairment provision 103,567,011.22 25,891,752.81 79,419,498.72 19,854,874.68
Unrealized profit from
--- --- --- ---
internal transaction
Deductible losses 6,006,685.12 1,501,671.28 23,441,306.92 5,860,326.73
Payroll payable --- --- --- ---
Technology development
--- --- --- ---
expense
Accrued expenses --- --- --- ---
Estimated liabilities 1,137,019.84 284,254.96 --- ---
Government subsidies
8,883,045.36 2,220,761.34 11,183,333.32 2,795,833.33
included in deferred income
Total 119,593,761.54 29,898,440.39 114,044,138.96 28,511,034.74
2. Deferred income tax liabilities not offset
Item Closing balance Opening balance
Notes to Financial Statements Page 65
Taxable temporary Deferred income Taxable temporary Deferred income tax
difference tax liabilities difference liabilities
Asset evaluation increment for
business combination not 364,730,298.80 91,182,574.70 374,947,695.24 93,736,923.81
under common control
Changes in fair value of the
available-for-sale financial 275,513.48 68,878.37 592,885.60 148,221.40
assets
Changes in fair value of
--- --- --- ---
transactional financial assets
Designated financial assets
measured by fair value with
--- --- --- ---
changes recognized in current
profit or loss
Changes in fair value of the
--- --- --- ---
investment property
Changes in fair value of
--- --- --- ---
productive biological assets
Total 365,005,812.28 91,251,453.07 375,540,580.84 93,885,145.21
3. Details of deductible temporary difference of deferred income tax assets unrecognized in this period
Item Closing balance Opening balance
Asset impairment provision 16,535,710.06 18,648,350.32
Estimated liabilities --- 232,500.00
Deductible losses 85,555,747.61 37,349,450.30
Total 102,091,457.67 56,230,300.62
The deductible temporary differences and deductible losses are not recognized because it is uncertain to make
sufficient taxable income in the future.
4. Unrecognized deductible losses of deferred income tax assets will be due in the following years
Year Closing balance Opening balance Remarks
2017 3,626,036.94
2018 2,610,263.14 2,610,263.14
2019 391,897.95 5,961,706.24
2020 10,444,329.02 10,444,329.02
2021 14,707,114.96 14,707,114.96
2022 57,402,142.54 -
Total 85,555,747.61 37,349,450.30
Note 21. Other non-current assets
Category and contents Closing balance Opening balance
Upfront expense of the new hotel 7,459,000.09
Notes to Financial Statements Page 66
Category and contents Closing balance Opening balance
Prepayment for engineering in the
1,329,403.00 6,345,660.37
electronics market
Prepayment for equipment 91,958,227.00 ---
Total 93,287,630.00 13,804,660.46
Note 22. Short-term borrowing
1. Classification of short-term borrowings
Item Closing balance Opening balance
Borrowing on credit 350,000,000.00 100,000,000.00
Pledge loans ---
Mortgage loans 184,792,000.00 255,000,000.00
Total 534,792,000.00 355,000,000.00
2. There are no overdue outstanding short-term loans at the end of the period.
Note 23. Accounts payable
1. Details of accounts payable
Item Closing balance Opening balance
Payment for goods 7,269,536.54 524,596.07
Project fund payable 447,098,208.56 23,179,045.22
Service fees payable 13,749,465.21 4,639,616.98
Others 1,970,948.32 2,667,694.93
Total 470,088,158.63 31,010,953.20
2. There are no significant accounts payable aged over one year at the end of the period.
Note 24. Advance receipt
1. Details of prepayment
Item Closing balance Opening balance
Advance receipt of brand royalties 5,625,217.65 8,612,776.97
Advance receipt of rents 140,703,694.18 139,884,880.07
Advance receipt of payment for goods 1,357,194.37 14,193,465.32
Advance receipt of advertising payment 15,941,893.99 6,325,655.29
Advance receipt of house payment 534,119,766.38 746,908,139.14
Advance receipt of property
4,922,511.18 4,295,382.37
management expenses
Others 4,361,451.48 3,744,868.89
Total 707,031,729.23 923,965,168.05
2. Advance receipt of house payment
Project name Closing balance Opening balance Estimated date of Pre-sale
Notes to Financial Statements Page 67
completion proportion (%)
SEG ECO Phase II 501,994,437.03 732,934,800.93 December 2017 45.78
Total 501,994,437.03 732,934,800.93
3. There is no major advance receipt with aging of more than one year at the end of period.
Note 25. Payroll payable
1. List of payroll payable
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Short-term payroll 35,226,843.77 275,524,016.73 269,873,374.76 40,877,485.74
Welfare after leave – defined contribution
237,486.09 23,239,981.44 23,340,350.28 137,117.25
plan
Dismissal welfare 3,347,291.45 3,347,291.45
Other welfare due within one year
Total 35,464,329.86 302,111,289.62 296,561,016.49 41,014,602.99
2. List of short-term payroll
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Wages, bonuses, allowances and
30,315,697.41 230,215,961.79 224,782,159.39 35,749,499.81
subsidies
Employee welfare 5,840.08 15,509,493.07 15,466,975.04 48,358.11
Social insurance premiums 75,070.59 9,899,014.73 9,922,664.02 51,421.30
Including: Medical insurance premiums 72,526.40 8,776,396.78 8,798,189.98 50,733.20
Supplementary medical insurance 1,366.00 107,918.86 109,284.86 -
Work injury insurance 533.73 449,959.91 450,264.28 229.36
Maternity insurance 644.46 564,739.18 564,924.90 458.74
Housing fund 1,300,390.68 15,455,456.84 15,548,419.87 1,207,427.65
Labor union expenditures 3,529,845.01 3,736,249.88 3,480,034.74 3,786,060.15
Accumulative compensated absences in
short term
Short-term profit (bonus) sharing plan
Share-based payment in cash
Other short-term payroll - 707,840.42 673,121.70 34,718.72
Total 35,226,843.77 275,524,016.73 269,873,374.76 40,877,485.74
3. List of defined contribution plan
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Pension insurance 85,769.64 16,910,607.37 16,900,786.72 95,590.29
Notes to Financial Statements Page 68
Unemployment insurance premium 1,716.45 659,338.07 660,595.83 458.69
Supplementary pension payment 150,000.00 5,670,036.00 5,778,967.73 41,068.27
Total 237,486.09 23,239,981.44 23,340,350.28 137,117.25
Note 26. Taxes payable
Taxes and fees Closing balance Opening balance
Value-added tax 66,059,662.33 39,447,820.87
Enterprise income tax 113,634,104.16 144,349,073.48
Individual income tax 1,693,306.42 1,244,189.51
Urban maintenance and construction tax 1,488,973.45 2,300,140.46
Education surtax 1,125,114.50 1,432,983.81
Housing property tax 3,123,061.35 4,411,928.87
Stamp tax and water fund 54,304,170.12 60,645,031.72
Land use tax 258,615.62 196,966.22
Others 506,207.57 58,329.00
Total 1,284,314.91 629,080.44
243,477,530.43 254,715,544.38
Note 27. Interest payable
Item Closing balance Opening balance
Interest on long-term borrowings with
2,912,667.84 2,882,567.39
interest payments due on installments
Interest payable on short-term loans 687,210.64 475,177.74
Total 3,599,878.48 3,357,745.13
Note 28. Dividends payable
Reason for not making
Item Closing balance Opening balance
payment for over one year
Common stock dividends 3,340,969.82 15,132,970.78 ---
Total 3,340,969.82 15,132,970.78 ---
Note 29. Other payables
1. Other payables listed based on nature
Nature of receivables Closing balance Opening balance
Deposit and security deposit 223,033,972.64 198,187,056.13
Central air conditioner maintenance cost and special
22,835,388.12 12,882,368.93
maintenance fund
Receipts under custody 53,345,900.68 14,507,917.60
Pending transfer of equity 743,891,698.94 93,265,454.60
Funds from related parties 42,911,508.73 178,185,846.20
Notes to Financial Statements Page 69
Nature of receivables Closing balance Opening balance
Purchase Intent and Pending Return of Purchase Payment 104,359,691.10 140,918,722.10
Electronics market water and electricity charges and rental
100,053,706.16 160,135,358.37
payable, and others
Total 1,290,431,866.37 798,082,723.93
2. Major other payables with aging of more than one year
Reason for no repayment or
Company name Closing balance
carry-over
Shenzhen Zedefeng Trade Co., Ltd. 82,549,595.10 House payment to be returned
Zhuhai Minghao Group Co., Ltd. 68,265,454.60 Payable for equity purchase
Shenzhen Shuobeide Investment Management Co., Ltd. 21,810,096.00 Earnest money for house purchase
Guangtian Decoration Design Co., Ltd. 11,547,700.00 Deposit and cash deposit
China Huashi Enterprises Company Limited 10,000,000.00 Cash deposit
Total 194,172,845.70
Note 30. Non-current liabilities due within one year
Item Closing balance Opening balance
Long-term loans due within one year 255,000,000.00 488,000,000.00
Bonds payable due within one year
Deferred income due within one year 3,414,693.92 3,561,661.33
Total 258,414,693.92 491,561,661.33
Note 31. Long-term loan
Loan type Closing balance Opening balance
Pledge loan 200,000,000.00
Mortgage loan 754,750,000.00 830,000,000.00
Guaranteed loan
Credit loan
Total 754,750,000.00 1,030,000,000.00
Note 32. Estimated liabilities
Item Closing balance Opening balance Cause
External guarantee
Pending litigation 1,137,019.85 See Note 12 (II).
Expected liquidated damages 232,500.00 Breach of the lease contract
Total 1,137,019.85 232,500.00
Note 33. Deferred income
Opening Increase in the Decrease in the
Item Closing balance Cause
balance current period current period
Asset-related government 12,847,493.34 720,000.00 1,899,999.96 11,667,493.38 See Table 1 for details.
Notes to Financial Statements Page 70
Opening Increase in the Decrease in the
Item Closing balance Cause
balance current period current period
subsidy
Income-related government
1,000,000.00 - 400,288.00 599,712.00 See Table 1 for details.
subsidy
Unrealized income from
7,045,770.83 - 3,561,661.33 3,484,109.50
house sales
Subtotal 20,893,264.17 720,000.00 5,861,949.29 15,751,314.88
Less: Deferred income from
reclassification to current 3,561,661.33 - - 3,414,693.92
liabilities
Total 17,331,602.84 - - 12,336,620.96
1. Deferred income related to government subsidies
Amount of new subsidies in Amount of non-operating income in the
Opening balance Other changes
this period current period
nics Market 9,183,333.34 1,899,999.96
1,000,000.00
1,000,000.00 400,288.00
n and Administration Commission 904,160.00 -
ology incubation base project 1,000,000.00 -
or industrial development 400,000.00 -
ndustrial development 360,000.00 720,000.00
13,847,493.34 720,000.00 2,300,287.96 -
It is recognized in other income of RMB 2,300,287.96 in current profit and loss in the reporting period.
Note 34. Share capital
Increase (+)/decrease (-) in the current period
Opening Capitalization
Item New share Bonus Closing balance
balance of public Others Subtotal
offering share
reserve
Unrestricted stock 784,721,571.00 --- --- --- -112,500.00 -112,500.00 784,609,071.00
Restricted stock 77,439.00 450,857,239.00 --- --- 112,500.00 450,969,739.00 451,047,178.00
Including:
restricted equity --- --- --- --- --- --- ---
incentive
Restricted
77,439.00 --- --- --- 112,500.00 112,500.00 189,939.00
executive shares
Restricted shares
after secondary 450,857,239.00 450,857,239.00 450,857,239.00
public offering
Sum of shares 784,799,010.00 450,857,239.00 --- --- --- 450,857,239.00 1,235,656,249.00
Notes to changes in share capital:
Notes to Financial Statements Page 71
New shares issued this year are 450,857,239 shares issued by Shenzhen SEG Group Co., Ltd. to purchase 100%
of the equity of SegMaker, 55% of the equity of SEG Recreation, 100% of the equity of SEG Property
Development and 79.02% of the equity of SEG Real Estate.
This capital increase has been verified in the capital verification report (D. H. Y. Zi. [2017] No. 000044).
Note 35. Capital reserve
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Capital premium (capital share premium) 623,186,998.52 7,198,890.58 630,385,889.10 -
Other capital reserves 175,086,543.13 9,066,672.94 166,019,870.19
Total 798,273,541.65 7,198,890.58 639,452,562.04 166,019,870.19
Notes to capital reserve:
(1) Increase in capital reserve: As the shareholding ratio of SEG Property Management Co., Ltd., a holding
sub-subsidiary of the Company is changed due to addition of shareholders, the part attributable to the Company
RMB 6,838,890.58 is recognized in capital reserve based on the shareholding ratio. As minority shareholders of
Suzhou SEG Electronics Market Management Co., Ltd. give up dividends in the current period, the part
attributable to the Company RMB 360,000.00 is recognized in capital reserve based on the shareholding ratio.
(2) Major assets restructuring occurred in the current period. Shenzhen SEG Co., Ltd. purchased 100% of the
equity of SegMaker, 55% of the equity of SEG Recreation, 100% of the equity of SEG Property Development
and 79.02% of the equity of SEG Real Estate held by SEG Group by issuing shares and paying cashes as the
consideration. In 2017, the Company issued 450,857,239 shares to SEG Group (the cash consideration of RMB
675,626,244.34 is not paid yet) and completed combination of four target companies under common control. The
reporting entity after combination is deemed to exist in the previous period. As the capital reserve (share
premium) of RMB 630,385,889.10 is transferred out in the reporting period after combination, related items in
the comparative statements are adjusted.
The Company sold 1% of the equity of Huakong SEG Co., Ltd. through the bidding trading system of Shenzhen
Stock Exchange. The part originally recognized in capital reserve is transferred to investment income RMB
9,066,672.94.
Notes to Financial Statements Page 72
Note 36. Other comprehensive income
Amount incurred in the current period
Less: profit
Less: Changes in
and loss
Amount after Amount after net liabilities or
Opening Pretax amount transferred in net assets due to
Item Less: Income tax attributable tax attributable Closing balance
balance obtained in this from other carry-over and
tax to parent to minority re-measurement
period comprehensive
company shareholders of the defined
income in the benefit plan
current period
I. Other comprehensive incomes not to be
reclassified into profit and loss
(1) Changes in net liabilities or net assets
due to re-measurement in defined benefit
plans
(2) Shares of the investee of other
comprehensive incomes not to be
reclassified into profit and loss with the
equity method
II. Other comprehensive income to be
reclassified into profit and loss
(1) Shares of the investee of other
comprehensive incomes to be reclassified
178.21 -126.75 -126.75 51.46
into profit and loss with the equity method
if the required conditions are met
(2) Profit or loss from changes in the fair
296,057.41 -317,372.09 -79,343.02 -158,479.75 -79,549.32 137,577.66
value of available-for-sale financial assets
(3) Held-to-maturity investments
reclassified into profit or loss from the
Notes to Financial Statements Page 73
Amount incurred in the current period
Less: profit
Less: Changes in
and loss
Amount after Amount after net liabilities or
Opening Pretax amount transferred in net assets due to
Item Less: Income tax attributable tax attributable Closing balance
balance obtained in this from other carry-over and
tax to parent to minority re-measurement
period comprehensive
company shareholders of the defined
income in the benefit plan
current period
available-for-sale financial assets
(4) Effective profit or loss from hedging of
cash flows
(5) Foreign currency translation differences
(6) Income from disposal of equity
investment in subsidiaries before loss of
control in a package deal
(7) Non-investment properties transferred
to investment properties measured by fair
value
Total other comprehensive income 296,235.62 -317,498.84 - -79,343.02 -158,606.50 -79,549.32 - 137,629.12
Notes to Financial Statements Page 74
Note 38. Undistributed profits
Item Amount Accrual/Distribution Rate
Before adjustment undistributed profits at the end of the previous
145,542,484.27 -
period
After adjustment total undistributed profits (+ for increase, - for
561,586,758.26 -
decrease) at the beginning of period
After adjustment undistributed profit at the beginning of period 707,129,242.53 -
Add: Net profits attributable to the parent company owner in the
219,553,261.10 -
current period
Less: Accrual of statutory surplus reserve 16,907,433.09 10%
Accrual of free surplus reserve ---
Accrual of reserve fund ---
Accrual of enterprise development fund ---
Investment for profit return ---
Accrual of bonus and welfare fund ---
Accrual of provision for general risk ---
Ordinary share dividends payable 36,973,327.79
Ordinary share dividends converted to share capital ---
Preferred stock dividend ---
Other distributions to shareholders ---
Profits capitalized on return ---
Other profit distribution ---
Plus: Surplus reserve compensating losses ---
Changes in net liabilities or net assets due to re-measurement in
---
defined benefit plans
Internal carrying forward of owners' equity 496,097,594.24
Undistributed profits at the end of period 376,704,148.51
1. Notes to adjustment of undistributed profits in the beginning of period
(1) The undistributed profit in the beginning of period affected by business combination under common control
in the reporting period is RMB561,586,758.26.
Note 39. Operating income and operating cost
1. Operating income and operating cost
Amount incurred in the current period Amount incurred in the previous period
Item
Income Cost Income Cost
Main business 1,968,663,974.01 1,394,066,396.94 1,352,960,768.03 1,004,575,820.37
Other businesses 12,643,584.22 4,431,294.33 18,084,214.08 7,536,451.17
Total 1,981,307,558.23 1,398,497,691.27 1,371,044,982.11 1,012,112,271.54
Notes to Financial Statements Page 75
1. Main business (by sector)
Amount incurred in the current period Amount incurred in the previous period
Sector
Operating income Operating cost Operating income Operating cost
(1) Industry --- --- --- ---
(2) Commerce 150,361,821.40 146,430,367.50 299,072,947.49 293,776,511.73
(3) Real estate 883,601,001.00 594,819,985.74 248,736,375.89 130,925,844.41
(4) Leasing and others 934,701,151.61 652,816,043.70 805,151,444.65 579,873,464.23
Total 1,968,663,974.01 1,394,066,396.94 1,352,960,768.03 1,004,575,820.37
2. Operating income from top 5 customers of the Company
Percentage in the total operating income
Customer name Total operating income
of the Company
Shenzhen Nanfang Yunhe Technology
41,946,122.20 2.13
Co., Ltd.
Shenzhen Suning Yunshang Sales Co.,
41,784,580.54 2.12
Ltd.
Traffic Police Office of Shenzhen
Municipal Public Security Bureau (office 28,753,641.51 1.46
property management expense)
Jiang Hua (house purchase) 17,640,860.95 0.90
Li Yuanmei (house purchase) 16,402,241.90 0.83
Total 146,527,447.10 7.44
Note 40. Tax and surcharges
Item Amount incurred in the current period Amount incurred in the previous period
Business tax 21,990,979.52
Urban maintenance and construction tax 6,528,806.68 3,954,639.93
Education surtax 4,663,383.66 2,829,496.49
Property tax 14,834,709.42 4,086,544.87
Land use right 1,770,054.03 359,007.01
Vehicle and vessel use tax 42,912.64 1,920.00
Land value-added tax 26,768,172.50 20,595,115.72
Stamp duty 1,625,882.13 371,734.08
Others 987,108.71 233,145.42
Total 57,221,029.77 54,422,583.04
Note 41. Sales expense
Item Amount incurred in the current period Amount incurred in the previous period
Employee compensation 5,685,857.37 12,924,954.59
Depreciation and amortization expenses 6,832,208.68 1,149,352.35
Advertising expenses 10,574,005.39 20,091,783.37
Consultancy fee 14,908,792.63 3,369,264.42
Others 5,172,506.38 4,020,457.84
Notes to Financial Statements Page 76
Item Amount incurred in the current period Amount incurred in the previous period
Total 43,173,370.45 41,555,812.57
Note 42. Management expense
Item Amount incurred in the current period Amount incurred in the previous period
Employee compensation 89,672,500.12 73,660,451.84
Depreciation and amortization expenses 6,035,441.37 2,799,629.01
Tax 54,778.00 5,715,770.53
Travel expense 4,895,558.52 4,672,602.38
Intermediary expense 6,388,752.92 5,259,209.02
Major assets restructuring costs 4,525,090.35 16,806,161.42
Business entertainment expense 4,576,413.46 4,264,403.01
Office expense 7,190,169.93 4,377,700.61
Rental expense 3,468,700.75 6,009,613.28
Organization costs 337,636.46 2,434,256.28
Others 16,884,021.38 16,779,908.64
Total 144,029,063.26 142,779,706.02
Note 43. Financial cost
Category Amount incurred in the current period Amount incurred in the previous period
Interest expenses 28,775,224.99 17,563,733.69
Less: Interest income 8,427,772.41 7,811,339.27
Loss on exchange -452.95 -311,072.10
Bank charges 1,251,611.73 1,025,292.88
Total 21,598,611.36 10,466,615.20
Note 44. Loss from asset impairment
Item Amount incurred in the current period Amount incurred in the previous period
Loss from bad debt 12,596,107.12 1,701,722.69
Impairment losses on loans and
9,438,765.12 -4,006,713.77
prepayment
Loss from inventory depreciation
Loss from impairment of
available-for-sale financial assets
Total 22,034,872.24 -2,304,991.08
Note 45. Investment income
1. Details of investment income
Amount incurred Amount incurred
Item in the current in the previous
period period
Notes to Financial Statements Page 77
Amount incurred Amount incurred
Item in the current in the previous
period period
Long-term equity investment income by the equity method 296,114.99 2,121,219.00
Long-term equity investment income by the cost method -
Income from disposal of long-term equity investments 55,860,373.13 89,688,725.07
Income from holding financial assets measured by fair value with changes recognized
in current profit or loss
Income from disposal of financial assets measured by fair value with changes
recognized in current profit or loss
Income from holding of held-to-maturity investments
Investment income during the possession of available-for-sale financial assets
Income from disposal of held-to-maturity investments
Investment income from disposal of available-for-sale financial assets
Profit from re-measurement of fair value of the remaining equity after loss of control
Realized gains (losses) on the invalid cash flow hedges
Others (financial products) 15,843,427.61 17,905,697.58
Total 71,999,915.73 109,715,641.65
Note 46. Income from asset disposal
Item Amount incurred in the current period Amount incurred in the previous period
Gain or loss from disposal of
held-for-sale assets
Gain or loss from disposal of fixed assets 116,977.79
Gain or loss from disposal of
construction in progress
Gain or loss from disposal of productive
biological assets
Gain or loss from disposal of intangible
assets
Total 116,977.79
Note 47. Other income
1. Details of other income
Item Amount incurred in the current period Amount incurred in the previous period
Government subsidies 6,406,623.72
Total 6,406,623.72
2. Government subsidies recognized in other income
Amount incurred in the Amount incurred in Relevant to assets
Item
current period the previous period /Relevant to income
Support project for construction of Nantong SEG
1,899,999.96 Relevant to assets
Electronics Market
Support for loan with discounted interest of Futian 502,700.00 Relevant to income
Notes to Financial Statements Page 78
District special fund for industrial development
CPARK Show Promotion Center 400,288.00 Relevant to income
Maker service platform of special fund for industrial
600,000.00 Relevant to income
development
2017 subsidies for stable employment 50,653.35 Relevant to income
2016 incentive for corporate retail sales growth 200,000.00 Relevant to income
Animation grants of Gangzha District, Nantong 2,000,000.00 Relevant to income
Government incentives of Economic Development
100,000.00 Relevant to income
Zone ofGangzha District, Nantong
Service industry incentive funds of the Management
200,000.00 Relevant to income
Committee of Gangzha District, Nantong
Special fund for green applications (plaza power
420,000.00 Relevant to income
conservation) of Futian District State Treasury
tax exemption for Small and micro enterprises 32,982.41 Relevant to income
Total 6,406,623.72
Note 48. Government subsidies
1. Government subsidies by presented items
Amount incurred in the Amount incurred in the
Presented items of government subsidies Remarks
current period previous period
Government subsidies recognized in deferred
720,000.00 2,000,000.00 See Note 33.
income
Government subsidies recognized in other
6,406,623.72 See Note 47.
income
Government subsidies recognized in
10,000.00 9,828,264.76 See Note 49.
non-operating income
Government subsidies offsetting book value of
some assets
Government subsidies offsetting costs
Less: Returned government subsidies
Total 7,136,623.72 11,828,264.76
Note 49. Non-operating income
Amount included in
Amount incurred in the Amount incurred in the
Item current non-recurring
current period previous period
profit and loss
Profit from debt restructuring
Income from donations
Inventory profits
Compensation 79,580.00
Pending revenue 79,580.00
Gains on disposal of investment
105,091,122.97
properties
Government subsidies 10,000.00 9,828,264.76 10,000.00
Notes to Financial Statements Page 79
Liquidated damages 11,867,394.45 139,343.64 11,862,594.45
Others 1,076,790.36 2,658,039.72 1,075,329.21
Total 13,033,764.81 117,716,771.09 13,027,503.66
1. Government subsidies recognized in current profit or loss
Amount incurred in the Amount incurred in the Relevant to assets
Subsidy item
current period previous period /Relevant to income
Incentives for qualified party
organizations of the "Four Haves and Six
10,000.00 Relevant to income
Merits" project of Wujiang District, Taihu
New Town
Subsidies for online SEG projects 53,015.16 Relevant to assets
Subsidies for project funds 12,303.06 Relevant to income
Support funds for opening and
investment promotion of Nantong SEG 8,000,000.00 Relevant to income
Times Plaza animation industry base
2015 Special funds for development of
the service industry of Wujiang District
50,000.00 Relevant to income
from Finance Bureau of Wujiang District,
Suzhou
Special funds for industrial development
from Administrative Committee of the 40,000.00 Relevant to income
Economic Development Zone
2015 Reward for stable and healthy
100,000.00 Relevant to income
economic development
Headquarter operation reward of special
funds for industrial development of
1,240,100.00 Relevant to income
Enterprise Development Service Center,
Futian District, Shenzhen
Support project fund for construction of
316,666.66 Relevant to assets
Nantong SEG Electronics Market
Others 16,179.88 Relevant to income
Total 10,000.00 9,828,264.76
Note 50. Non-operating expenses
Amount included in
Amount incurred in the Amount incurred in the
Item current non-recurring
current period previous period
profit and loss
Estimated liabilities 1,137,019.85 1,137,019.85
Donation expenses 116,807.25 1,468,250.00 116,807.25
Pending expenses
Fines 77,599.22 77,599.22
Inventory losses
Loss on damages and scrapping of
1,798,673.16 493,078.84 1,787,032.16
non-current assets
Compensation for loss 3,228,573.68 3,712,493.90 3,228,573.68
Others 109,550.06 2,472,062.74 109,550.06
Total 6,468,223.22 8,145,885.48 6,456,582.22
Notes to Financial Statements Page 80
Note 51. Income tax
1. Income tax
Item Amount incurred in the current period Amount incurred in the previous period
Income tax of the current period 124,259,079.38 114,506,116.65
Deferred income tax -4,017,812.01 -6,842,324.13
Total 120,241,267.37 107,663,792.52
2. Adjustment process of accounting profit and income tax
Item Amount incurred in the current period
Total profit 428,265,958.31
Income tax calculated according to statutory or applicable tax rate 107,066,489.58
Impact of different tax rates applicable to subsidiaries -1,718,142.10
Impact of income tax before adjustment 75,085.03
Impact of non-taxable income -665,458.63
Impact of non-deductible costs, expenses and losses 512,099.56
Impact of deferred income tax assets unrecognized in the early phase of utilization on
-1,392,452.07
deductible losses
Impact of deferred income tax assets unrecognized in the current period on deductible
16,363,646.00
temporary difference or deductible losses
Income tax 120,241,267.37
Note 52. Notes on the cash flow statement
1. Other cash received concerning operating activities
Item Amount incurred in the current period Amount incurred in the previous period
Incomings and outgoings 13,990,081.56 45,173,886.07
Goods payment collected from tenants 119,762,067.15 110,394,406.71
Interest income 144,018,051.42 201,259,769.35
Non-operating income 8,886,106.46 7,811,339.27
Total 11,266,602.99 12,043,140.23
2. Other cash paid concerning operating activities
Item Amount incurred in the current period Amount incurred in the previous period
Incomings and outgoings 85,833,481.25 104,933,519.85
Goods payment paid for tenants 120,914,414.25 127,243,347.16
Cash expenses 84,970,622.61 106,521,052.40
Non-operating expenses 3,242,327.73 14,317,341.45
Total 46,665,838.41 38,443,021.65
3. Other cash received concerning investing activities
Item Amount incurred in the current period Amount incurred in the previous period
Notes to Financial Statements Page 81
Item Amount incurred in the current period Amount incurred in the previous period
Asset-related government subsidy 720,000.00 2,000,000.00
Total 720,000.00 2,000,000.00
4. Other cash received concerning financing activities
Item Amount incurred in the current period Amount incurred in the previous period
Cash received from dividends of odd lots
Cash received from disposal of fractional 7,812.30
share
Deposit returned 1,340,000.00
Total 1,347,812.30
5. Other cash paid related to financing activities
Item Amount incurred in the current period Amount incurred in the previous period
Interbank financing of related parties 132,484,663.00 100,000,000.00
Payment for cash deposit - 3,600,000.00
Payment for loan interest of related
5,762,522.16 6,814,009.06
parties
Payment for issuance of short-term
596,875.00 890,500.00
financing bonds
Total 138,844,060.16 111,304,509.06
Note 53. Supplementary information on the cash flow statement
1. Supplementary information on the cash flow statement
Amount of the Amount of the
Item
current period previous period
1. Reconciliation of net income to cash flow from operating activities 308,024,690.94 309,279,217.85
Net profit 22,034,872.24 -2,304,991.08
Plus: Asset impairment provision 54,408,537.39 42,439,907.42
Depreciation of fixed assets, oil & gas assets and consumable biological assets 978,884.90 420,659.68
Amortization of intangible assets 30,420,096.58 18,628,393.94
Amortization of long-term expenses to be apportioned --- -104,974,145.18
Loss on disposal of fixed assets, intangible assets, and other long-term assets (enter "-"
1,798,673.16 493,078.84
for profit)
Loss on discard of fixed asset (enter "-" for profit) ---
Loss on change in fair value (enter "-" for profit) 28,775,224.99 17,563,733.69
Financial expenses (enter "–" for profit) -71,999,915.73 -109,715,641.65
Income from investment (enter "–" for profit) -1,387,405.65 -5,733,398.23
Decrease in deferred tax assets (enter "–" for increase) -2,633,692.14 -1,124,248.36
Increase in deferred tax liabilities (enter "–" for decrease) -172,567,252.76 -318,037,244.98
Notes to Financial Statements Page 82
Amount of the Amount of the
Item
current period previous period
Inventory decrease (enter "–" for increase) 69,211,470.62 73,230,563.63
Decrease in accounts receivable related to operating activities (enter "–" for increase) 240,322,364.67 523,369,655.21
Increase in accounts payable related to operating activities (enter "–" for decrease) ---
Others 507,386,549.21 443,535,540.78
Net cash flow from operating activities --- ---
2. Major investing and financing activities that involve no cash payments and receipts --- ---
Conversion of debt into capital --- ---
Convertible bonds due within one year --- ---
Fixed assets acquired by financing lease --- ---
3. Change in cash and cash equivalents: 947,882,605.92 1,127,923,641.19
Closing balance of cash 1,127,923,641.19 631,463,030.13
Less: Opening balance of cash --- ---
Add: Closing balance of cash equivalents --- ---
Less: Opening balance of cash equivalents -180,041,035.27 496,460,611.06
Net increase in cash and cash equivalents 308,024,690.94 309,279,217.85
2. Net cash received from disposal of subsidiaries in the current period
Amount of the current
Item
period
Cash or cash equivalent received from disposal of subsidiaries in the current period 3,542,000.00
Including:
Wuxi SEG Electronics Market Co., Ltd. 3,542,000.00
Suzhou SEG Electronics Market Management Co., Ltd -
Subtract: Cash and cash equivalent held by the Company at the time of loss of control 2,207,135.76
Including:
Wuxi SEG Electronics Market Co., Ltd. 337,094.44
Suzhou SEG Electronics Market Management Co., Ltd 1,870,041.32
Add: Cash and cash equivalent received in the current period from disposal of subsidiaries in the
-
previous period
Including:
Wuxi SEG Electronics Market Co., Ltd.
Suzhou SEG Electronics Market Management Co., Ltd
Net cash received from disposal of subsidiaries 1,334,864.24
3. Combination of cash and cash equivalents
Item Closing balance Opening balance
1. Cash 947,882,605.92 1,127,923,641.19
Including: Cash on hand 546,339.36 712,997.23
Notes to Financial Statements Page 83
Item Closing balance Opening balance
Bank deposits available for payment at any time 947,076,828.65 1,116,832,758.78
Other monetary capital available for payment at any time 259,437.91 10,377,885.18
Accounts in the central bank available for payment
Deposits from interbank
Loans from interbank
2. Cash equivalents
Including: Bond investments due within 3 months
3. Closing balance of cash and cash equivalents 947,882,605.92 1,127,923,641.19
Including: Cash and cash equivalents with the use by the parent company and
subsidiaries
Note 54. Assets with restrictions on ownership or the use right
Item Balance Reason for restriction
Monetary funds 3,600,000.00 Deposit for the L/G
Investment properties 181,139,592.60 Collaterals for bank loans
Fixed assets 16,277,077.98 Collaterals for bank loans
Development products 311,863,031.52 Collaterals for bank loans
Total 512,879,702.10
Note 55. Foreign currency monetary items
1. Foreign currency monetary items
Closing balance of foreign Closing balance of converted
Item Discount exchange rate
currency RMB
Monetary funds
Including: US$
Including: HK$ 10,558.70 0.83591 8,826.12
VII. Change in consolidation scope
1. Business combination under common control
(1) Business combination under common control in the current period
Equity
Income of the Net profit of the
ration
merged party merged party Income of the Net profit of the
obtained
from the from the merged party in merged party in Rem
Name of merged party in a Merger date
beginning of the beginning of the the comparison the comparison arks
business
period of merger period of merger period period
combina
to the merger date to the merger date
tion (%)
January 19, 11,285,307.42 4,837,778.32 59,062,997.59 13,151,951.38
Shenzhen SegMaker Co., Ltd. 100.00
2017
Notes to Financial Statements Page 84
Equity
Income of the Net profit of the
ration
merged party merged party Income of the Net profit of the
obtained
from the from the merged party in merged party in Rem
Name of merged party in a Merger date
beginning of the beginning of the the comparison the comparison arks
business
period of merger period of merger period period
combina
to the merger date to the merger date
tion (%)
SEG Recreation Enterprise January 19, 4,240,969.11 2,352,279.66 51,729,379.01 21,120,751.57
55.00
Development Co., Ltd. 2017
SEG Property Development January 19, 4,771,400.40 775,882.70 59,155,521.15 12,494,141.04
100.00
Co., Ltd. 2017
Shenzhen SEG Real Estate January 19, 37,274,858.23 2,667,030.04 528,712,807.89 122,802,044.24 Note
79.02
Investment Co., Ltd. 2017 *
Note*: The income and net profit of Shenzhen SEG Real Estate Investment Co., Ltd. is the consolidated
data of Shenzhen SEG Real Estate Investment Co., Ltd. and its subsidiaries.
(2) Cost of combination
Unit: RMB 10,000
SEG Recreation
SEG Property Shenzhen SEG Real
Shenzhen SegMaker Enterprise
Cost of combination Development Co., Estate Investment Co.,
Co., Ltd. Development Co.,
Ltd. Ltd.
Ltd.
Cash 34,031.65 4,064.45 1,771.69 27,694.83
Book value of non-cash assets --- --- --- ---
Book value of debt issued or
--- --- --- ---
incurred
Nominal value of equity securities
22,709.92 2,712.28 1,182.28 18,481.25
issued
Contingent consideration --- --- --- ---
Total 56,741.57 6,776.73 2,953.97 46,176.08
(3) Book value of assets and liabilities of the merged party on the merger date
SEG Recreation Enterprise Development Co.,
Shenzhen SegMaker Co., Ltd.
Ltd.
Item
End of the previous End of the previous
Merger date Merger date
period period
Net assets 238,750,258.57 233,912,480.25 61,864,319.04 59,512,039.38
Less: Minority shareholders'
--- --- 27,838,943.57 26,780,417.72
equity
Net assets acquired 238,750,258.57 233,912,480.25 34,025,375.47 32,731,621.66
(Continued)
Item SEG Property Development Co., Ltd. Shenzhen SEG Real Estate Investment Co., Ltd.
Notes to Financial Statements Page 85
End of the previous End of the previous
Merger date Merger date
period period
Net assets 61,749,318.18 60,973,435.48 778,492,271.93 775,825,241.89
Less: Minority shareholders'
--- --- 235,938,594.23 236,510,029.00
equity
Net assets acquired 61,749,318.18 60,973,435.48 542,553,677.70 539,315,212.89
2. Disposal of subsidiaries
(1) Single disposal of investment in subsidiaries and loss of control
Difference
between the
disposal price and
shares of the net
Equity
Equity assets of the
Equity disposal Determination basis for
Subsidiary name disposal Time of loss of control subsidiary in the
disposal price proportion time of loss of control
method consolidated
(%)
financial statement
corresponding to
investment
disposal
Transfer of Transfer of the
Suzhou SEG Electronics
- - management November 2017 management right in -
Market Co., Ltd.
rights November 2017
Transfer of the
Wuxi SEG Electronics Equity
3,542,000.00 51.00 October 2017 management right in 890,649.56
Market Co., Ltd. transfer
October 2017
Continued:
Amount of other
Proportion Determination comprehensive
of the method and main income related to
Book value of the Fair value of the Gain or loss from
residual assumption for the the equity
residual equity at residual equity at the residual equity
Subsidiary name equity at the fair value of the investment of the
the date of loss of the date of loss of re-measured based
date of loss residual equity at original subsidiary
control control on the fair value
of control the date of loss of transferred into
(%) control investment profit or
loss
Suzhou SEG Electronics
45.00 598,370.83 --- --- ---
Market Co., Ltd.
Wuxi SEG Electronics Market
--- --- --- --- --- ---
Co., Ltd.
3. Change in the consolidation scope for other reasons
(1) Newly-established subsidiary in the current period
Registered capital Paid-in capital (RMB
Company name Equity proportion
(RMB 10,000) 10,000)
Shenzhen-Shantou Cooperation Zone SEG
16,500.00 10,800.00 100
Longyan Energy Technology Co., Ltd.
SEG Lianzhong Internet Technology Co., Ltd. 2,480.00 2,480.00 55
Shenzhen SEG Zhongtong Technology Co., Ltd. 2,000.00 200.00 49
VIII. Equity in other entities
(I) Equity in subsidiaries
1. Composition of the group
Shareholding
Main Place of Business Method of
Subsidiary name proportion (%)
business address registration Nature of business acquisition
Direct Indirect
Notes to Financial Statements Page 86
Main Place of Business Shareholding Method of
Subsidiary name
business address registration Nature of business proportion (%) acquisition
Investment
Xi'an SEG Electronics Electronics market lease
Xi'an Xi'an 65 --- and
Market Co., Ltd. management
establishment
Shenzhen SEG Investment
Electronics market lease
Electronics Market Shenzhen Shenzhen 70 --- and
management
establishment
Management Co., Ltd.
Shenzhen Mellow Hotel management, Investment
Orange Business Hotel Shenzhen Shenzhen consultancy and property --- 66.58 and
establishment
Management Co., Ltd management
Petty loan business
(pooling public deposits Investment
Shenzhen SEG Credit
Shenzhen Shenzhen is prohibited) within the 38 24 and
Co., Ltd. establishment
administrative region of
Shenzhen.
Market facilities leasing;
Shenzhen SEG Investment
property management;
Electronics Market Nanjing Nanjing 100 --- and
electronic product sales;
Management Co., Ltd. establishment
advertising, etc.
Xi'an Hairong SEG Property leasing, sales of Investment
Electronics Market Xi'an Xi'an electronic products and 51 --- and
establishment
Co., Ltd. advertising
Wujiang SEG Investment
Electronics market lease
Electronics Market Wujiang Wujiang 51 --- and
management
establishment
Co., Ltd.
Shunde SEG Investment
Electronics market lease
Electronics Market Foshan Foshan 100 --- and
management
establishment
Management Co., Ltd.
Nanning SEG Investment
Electronics market lease
Electronics Market Nanning Nanning 100 --- and
management
establishment
Management Co., Ltd.
Nantong SEG Times Investment
Plaza Development Nantong Nantong Real estate development 100 --- and
establishment
Co., Ltd.
Business
Shenzhen SEG combination
Property lease and
Baohua Enterprise Shenzhen Shenzhen 66.58 --- under
management common
Development Co., Ltd.
control
Business
Shenzhen SEG combination
Investment in industrial
Industrial Investment Shenzhen Shenzhen 100 --- under
and commercial business common
Co., Ltd.
control
Business
combination
Changsha SEG
Changsha Changsha Property lease 46 --- not under
Development Co., Ltd. common
control
Notes to Financial Statements Page 87
Main Place of Business Shareholding Method of
Subsidiary name
business address registration Nature of business proportion (%) acquisition
Yantai SEG Times Investment
Plaza Development Yantai Yantai Real estate development 90 --- and
establishment
Co., Ltd.
Nantong SEG Commercial operation Investment
Commercial Operation Nantong Nantong management, property 100 --- and
establishment
Management Co., Ltd. management
Suzhou SEG Digital Investment
Property leasing, sales of
Plaza Management Su Zhou Su Zhou 100 --- and
electronic products establishment
Co., Ltd.
Xi'an Fengdong New
Investment
Town SEG Times
Xi'an Xi'an Real estate development 100 --- and
Plaza Properties Co., establishment
Ltd.
Suzhou SEG Investment
Sales of electronic
Intelligent Technology Su Zhou Su Zhou 100 --- and
products
Co., Ltd. establishment
Shenzhen SEG R&D and manufacturing
Investment
Longyan New Energy of CdTe solar cell
Shenzhen Shenzhen 50 --- and
Application and modules, photovoltaic
establishment
Development Co., Ltd. projects
Investment in
Shenzhen SEG Investment
management, investment
Investment Shenzhen Shenzhen 100 --- and
in industrial projects,
Management Co., Ltd. establishment
fund management
Technical development
Shenzhen SEG of new energy, R&D and Investment
Longyan Energy Shenzhen Shenzhen manufacturing of CdTe 50 --- and
Technology Co., Ltd. solar cell modules, establishment
photovoltaic projects
Shenzhen-Shantou CdTe solar cell module
Investment
Cooperation Zone Shenzhen-Shantou Shenzhen-Shantou product R&D and
--- 100 and
SEG Longyan Energy Cooperation Zone Cooperation Zone manufacturing; PV
establishment
Technology Co., Ltd. project
SEG Lianzhong Investment
Internet and related
Internet Technology Shenzhen Shenzhen 55 --- and
services
Co., Ltd. establishment
Shenzhen SEG Investment
Zhongtong Shenzhen Shenzhen Software and IT services 49 --- and
Technology Co., Ltd. establishment
Business
Electronics market lease
combination
Shenzhen SegMaker management; property
Shenzhen Shenzhen 100 --- under
Co., Ltd. leasing; hotel
common
management
control
Business
SEG Recreation Electronics market lease combination
Enterprise Shenzhen Shenzhen management; property 55 --- under
Development Co., Ltd. leasing common
control
Business
SEG Property combination
Shenzhen Shenzhen Property management 100 ---
Development Co., Ltd. under
common
Notes to Financial Statements Page 88
Main Place of Business Shareholding Method of
Subsidiary name
business address registration Nature of business proportion (%) acquisition
control
Business
Shenzhen SEG Real Property leasing; combination
Estate Investment Co., Shenzhen Shenzhen property management; 79.02 --- under
Ltd. real estate development common
control
Business
Huizhou Stars Real combination
Real estate development
Estate Development Huizhou Huizhou --- 88 under
and leasing
Co., Ltd. common
control
Business
combination
SEG Property
Shenzhen Shenzhen Property management --- 45 under
Management Co., Ltd.
common
control
Business
Shenzhen SEG New
combination
Urban Construction
Shenzhen Shenzhen Real estate development --- 72.05 under
Development Co.,
common
Ltd.
control
Business
Shenzhen SEG New Commercial operations combination
Urban Business Shenzhen Shenzhen management; property --- 100 under
Operation Co., Ltd. management common
control
Business
Beijing SEG Property combination
Development Co., Beijing Beijing Real estate development --- 50 under
Ltd. common
control
Business
combination
Xi'an Konghong
Xi'an Xi'an Real estate development --- 55 under
Property Co., Ltd.
common
control
Business
Shenzhen Hongge combination
Cultural Development Shenzhen Shenzhen Event planning --- 100 under
Co., Ltd. common
control
(1) Cause for difference between the proportion of shareholding and the proportion of voting rights
For Changsha SEG Development Co., Ltd. (originally named Changsha Emerging Development Co., Ltd.), the
current capital stock structure is as follows: The company holds 46% of shares and is the largest shareholder. In
addition, according to the Memorandum of Cooperation Concerning the Stock Equity Project of Joint Investment
and Acquisition of Changsha Emerging Development Co., Ltd. signed by and between the Company and Hong
Kong Jinhong Group on October 8, 2008, Hong Kong Jinhong Group agreed to give up the 5% of voting power,
which would be exercised by the Company, and the voting power ratio of the company is 51%. Half of the
directors, the Chairman of the Board, the General Manager, the Chief Financial Officer and the management
team of Changsha SEG Development Co., Ltd are all dispatched by the Company, therefore, the Company has
obtained the control of Changsha SEG Development Co., Ltd.
(2) Basis for control of the invested entity even with half of voting rights or less
Notes to Financial Statements Page 89
Half of the directors, the Chairman of the Board, the General Manager, and the management team of Shenzhen
SEG Longyan New Energy Application and Development Co., Ltd. are dispatched by the Company. The
Company substantially controlled the operation and management of Shenzhen SEG Longyan New Energy
Application and Development Co., Ltd. and thus has control over Shenzhen SEG Longyan New Energy
Application and Development Co., Ltd.
Half of the directors, the Chairman of the Board, the General Manager, and the management team of Shenzhen
SEG Longyan Energy Technology Co., Ltd. are dispatched by the Company. The Company substantially
controlled the operation and management of Shenzhen SEG Longyan Energy Technology Co., Ltd. and thus has
control over Shenzhen SEG Longyan Energy Technology Co., Ltd.
Half of the directors of the Board, the Chairman of the Board, the general manager, and the operation team of
Shenzhen SEG Zhongtong Technology Co., Ltd. are appointed by the Company. The Company actually
administers the operation and management of Shenzhen SEG Zhongtong Technology Co., Ltd., that is, the
Company controls Shenzhen SEG Zhongtong Technology Co., Ltd.
Half of the directors of the Board, the Chairman of the Board, the general manager, the finance manager, and the
operation team of Beijing SEG Property Development Co., Ltd. are appointed by the Company. The Company
actually administers the operation and management of Beijing SEG Property Development Co., Ltd., that is, the
Company controls Beijing SEG Property Development Co., Ltd.
The shareholder of Shenzhen SEG Property Management Co., Ltd. (SEG Property Management Co., Ltd.) is
Shenzhen Huguang Investment Co., Ltd. (Huguang Investment, holding a 15% stock), and it is an employee
stock ownership platform of SEG Property Management Co., Ltd. The corporate charter of SEG Property
Management Co., Ltd. agrees on that when the shareholder committee and the Board need to make decisions on
the corporate operations and development in accordance with the relevant laws, regulations, and corporate
charter, Shenzhen SEG Real Estate Investment Co., Ltd. (SEG Real Estate) and Huguang Investment are persons
acting in concert, and shall take consistent actions. Consistent actions mean that under the premise of not
damaging the corporate interests or the shareholders' benefits, the shareholder committee and the Board shall
agree with each other when exercising their rights to propose and vote on major corporate operation and
development issues. The voting rights proportion of SEG Real Estate and its person acting in concert, Huguang
Investment, reaches 60%. The board of SEG Property Management Co., Ltd. includes five members, among
whom two directors are appointed by SEG Real Estate and one by Huguang Investment. The Chairman of the
Board is appointed by SEG Real Estate. In all, the Company controls SEG Property Management Co., Ltd.
2. Important non-wholly-owned subsidiaries
Equity Minority
Current gains of Current dividends
proportion of shareholders'
Subsidiary name losses of minority paid to minority Remarks
minority equity at the end
shareholders shareholders
shareholders of the period
Shenzhen SEG Credit Co., Ltd. 46.00 347,544.46 - 87,847,643.88
Changsha SEG Development Co.,
54.00 2,891,201.21 - 40,562,914.59
Ltd.
Shenzhen SEG Baohua Enterprise
33.42 10,077,007.13 8,751,855.82 38,852,479.01
Development Co., Ltd.
SEG Recreation Enterprise
45.00 10,992,788.17 21,600,000.00 16,173,205.89
Development Co., Ltd.
Notes to Financial Statements Page 90
Shenzhen SEG Real Estate
20.98 93,987,945.61 14,190,000.00 392,824,112.53
Investment Co., Ltd.
Total 118,296,486.58 44,541,855.82 576,260,355.90
3. Main financial information on important non-wholly-owned subsidiaries
Main financial information of these subsidiaries is the amount before offset but adjusted according to the fair
value on the consolidation date and unified accounting policies:
Closing balance
Subsidiary
Non-current Current Non-current
name Current assets Total assets Total liabilities
assets liabilities liabilities
Shenzhen
402,697,281.7
SEG Credit 13,849,320.90 416,546,602.66 225,573,463.80 - 225,573,463.80
6
Co., Ltd.
Changsha
SEG
35,975,785.28 60,960,746.17 96,936,531.45 21,820,022.95 - 21,820,022.95
Development
Co., Ltd.
Shenzhen
SEG Baohua
Enterprise 108,544,679.10 55,638,626.24 164,183,305.34 47,859,253.40 68,878.37 47,928,131.77
Development
Co., Ltd.
SEG
Recreation
Enterprise 61,871,675.68 34,289,100.35 96,160,776.03 60,220,318.50 - 60,220,318.50
Developme
nt Co., Ltd.
Shenzhen
SEG Real
Estate 3,559,889,623.3 159,754,370.1 3,719,643,993.4 1,906,782,506.3 832,359,283.5 2,739,141,789.9
Investment 3 4 7 8 9 7
Co., Ltd.
3,780,131,084.2 713,340,124.6 4,493,471,208.9 2,262,255,565.0 832,428,161.9 3,094,683,726.9
Total
9 6 5 3 6 9
Continued:
Opening balance
Subsidiary
Non-current Non-current
name Current assets Total assets Current liabilities Total liabilities
assets liabilities
Shenzhen
480,810,002.1
SEG Credit 46,318,409.29 527,128,411.41 336,910,803.99 --- 336,910,803.99
2
Co., Ltd.
Changsha
SEG
25,093,857.23 65,239,972.01 90,333,829.24 20,571,397.06 --- 20,571,397.06
Developmen
t Co., Ltd.
Notes to Financial Statements Page 91
Shenzhen
SEG Baohua
Enterprise 101,240,832.43 59,162,353.63 160,403,186.06 47,726,906.59 148,221.40 47,875,127.99
Developmen
t Co., Ltd.
SEG
Recreation
Enterprise 84,090,064.54 18,564,209.15 102,654,273.69 43,142,234.31 0.00 43,142,234.31
Developme
nt Co., Ltd.
Shenzhen
SEG Real
Estate 3,708,887,665.7 150,796,100.3 3,859,683,766.1 1,971,156,623.5 1,112,701,900.7 3,083,858,524.2
Investment 3 8 1 0 2 2
Co., Ltd.
3,965,630,829.2 774,572,637.2 4,740,203,466.5 2,419,507,965.4 1,112,850,122.1 3,532,358,087.5
Total
2 9 1 5 2 7
Continued:
Amount incurred in the current period Amount incurred in the previous period
Subsidiary Net cash flow Net cash flow
Operating
name Operating income Net profit from operating Net profit from operating
income
activities activities
Shenzhen
SEG Credit 49,137,832.39 755,531.44 137,485,596.21 78,351,087.18 31,709,669.74 38,865,913.70
Co., Ltd.
Changsha
SEG
23,401,682.40 5,354,076.32 10,837,961.41 24,597,175.67 6,004,911.59 10,536,670.49
Development
Co., Ltd.
Shenzhen
SEG Baohua
Enterprise 96,869,873.70 30,152,624.56 31,810,521.44 80,289,375.74 26,881,089.95 14,373,704.46
Development
Co., Ltd.
SEG
Recreation
Enterprise 53,247,077.93 24,428,418.15 28,072,475.78 51,729,379.01 21,120,751.57 20,017,516.94
Development
Co., Ltd.
Shenzhen
SEG Real
Estate 1,222,751,774.10 188,968,963.11 357,965,280.05 528,712,807.89 122,802,044.24 462,422,495.14
Investment
Co., Ltd.
Total 1,445,408,240.52 249,659,613.58 566,171,834.89 763,679,825.49 208,518,467.09 546,216,300.73
(II) Equity in joint venture arrangements or joint ventures
Notes to Financial Statements Page 92
1. Important joint ventures and associates
Main Place of Business Shareholding proportion
Accounting
Name of joint venture or associate business registrati Nature of (%)
treatment method
address on business Direct Indirect
Manufactu
Shenzhen Huakong SEG Co., Ltd. Shenzhen Shenzhen 18.01 --- Equity method
ring
Shanghai SEG Electronics Market Service
Shanghai Shanghai 35 --- Equity method
Co., Ltd. industry
Shenzhen International Consumer
Wholesale
Electronic Exhibition/Exchange Shenzhen Shenzhen 30 --- Equity method
Center Co., Ltd. industry
Suzhou SEG Electronics Market Co., Service
Suzhou Suzhou 45 --- Equity method
Ltd. industry
2. Main financial information on important associates
Closing balance/amount incurred in the current period
Shenzhen
International
Item Shanghai SEG Suzhou SEG
Shenzhen Huakong Consumer
Electronics Market Electronics Market
SEG Co., Ltd. Electronics Co., Ltd.
Co., Ltd.
Exhibition/Exchange
Center
Current assets 1,117,755,056.91 15,270,591.94 13,864,082.85 18,279,140.01
Non-current assets 1,685,943,266.81 129,706.04 149,472.09 3,959,940.27
Total assets 2,803,698,323.72 15,400,297.98 --- ---
Current liabilities 1,617,589,932.20 5,579,622.67 7,247,020.08 20,909,367.32
Non-current liabilities 93,503,520.50 --- --- ---
Total liabilities 1,711,093,452.70 5,579,622.67 --- ---
Minority shareholders' equity 435,772,323.65 --- --- ---
Shareholders' equity attributable to the
656,832,547.37 9,820,675.31 6,766,534.86 1,329,712.96
parent company
Net asset shares calculated based on
118,295,541.78 3,437,236.36 2,029,960.46 598,370.83
shareholding ratio
Adjustment items 53,002,056.65 -1,200,946.55 --- ---
-Goodwill --- --- --- ---
-Unrealized profit from internal
--- --- --- ---
transaction
-Others 53,002,056.65 -1,200,946.55 --- ---
Book value of equity investment in
171,297,598.43 2,236,289.81 2,029,960.46 598,370.83
associates
Fair value of equity investment with
915,455,647.30 --- --- ---
public offer
Notes to Financial Statements Page 93
Closing balance/amount incurred in the current period
Shenzhen
International
Item Shanghai SEG Suzhou SEG
Shenzhen Huakong Consumer
Electronics Market Electronics Market
SEG Co., Ltd. Electronics Co., Ltd.
Co., Ltd.
Exhibition/Exchange
Center
Operating income 412,929,685.18 7,209,054.03 - 23,307,308.98
Net profit 32,644,084.17 527,804.99 -15,051,507.20 -3,991,359.40
Net profit after termination of operation --- --- --- ---
Other comprehensive income -703.88 --- --- ---
Total comprehensive income 32,643,380.29 527,804.99 -15,051,507.20 -3,991,359.40
Dividends received from associates in the
--- 500,000.00 --- 1,105,000.00
current period
Continued:
Opening balance/amount incurred in the previous period
Shenzhen International
Item Shanghai SEG Suzhou SEG
Shenzhen Huakong Consumer Electronics
Electronics Market Electronics Market
SEG Co., Ltd. Exhibition/Exchange Co., Ltd.
Co., Ltd.
Center
Current assets 766,903,441.43 17,721,103.96 22,840,830.74 31,241,373.41
Non-current assets 546,820,625.68 182,099.19 166,109.34 5,477,250.32
Total assets 1,313,724,067.11 17,903,203.15 23,006,940.08
Current liabilities 509,176,585.61 8,075,870.33 1,188,898.02 25,297,551.37
Non-current liabilities 3,640,118.77 --- --- -
Total liabilities 512,816,704.38 8,075,870.33 1,188,898.02
Minority shareholders' equity 176,677,423.85 --- ---
Shareholders' equity attributable to the
624,229,938.88 9,827,332.82 21,818,042.06 11,421,072.36
parent company
Net asset shares calculated based on
118,609,930.69 3,439,566.49 6,545,412.62 5,139,482.56
shareholding ratio
Adjustment items 55,942,143.30 -888,008.43 ---
Goodwill --- --- ---
-Unrealized profit from internal
--- --- ---
transaction
-Others 55,942,143.30 -888,008.43 ---
Book value of equity investment in
174,552,073.99 2,551,558.06 6,545,412.62 5,139,482.56
associates
Fair value of equity investment with
1,591,435,838.72 --- ---
public offer
Operating income 297,563,205.88 7,333,583.64 4,675,561.08 41,978,978.54
Notes to Financial Statements Page 94
Opening balance/amount incurred in the previous period
Shenzhen International
Item Shanghai SEG Suzhou SEG
Shenzhen Huakong Consumer Electronics
Electronics Market Electronics Market
SEG Co., Ltd. Exhibition/Exchange Co., Ltd.
Co., Ltd.
Center
Net profit 8,723,287.17 491,843.57 -8,181,957.94 5,980,331.82
Net profit after termination of operation - - -
Other comprehensive income 937.89 - -
Total comprehensive income 8,724,225.06 491,843.57 -8,181,957.94 5,980,331.82
Dividends received from associates in the
- 1,000,000.00 - 900,000.00
current period
IX. Risk disclosure related to financial instruments
The operating activities of the Company may be exposed to a variety of financial risks: credit risks, liquidity
risks, and market risks (mainly currency risks and interest rate risks). The overall risk management plan of the
Company is designed to reduce the potential adverse impact of the unpredictability of the financial market on the
financial performance of the Company.
(I) Credit risk
Credit risks of the Company mainly arise from monetary funds, notes receivable, accounts receivable, and other
receivables. The management has formulated appropriate credit policies and continuously monitored credit risk
exposure.
Monetary funds held by the Company are mainly deposited in state-owned banks and other large and
medium-sized commercial banks, as the management believes that these commercial banks with good reputation
and financial standing are subject to major credit risks or major losses arising from breach of contract by the
counterparty.
For notes receivable, accounts receivable, and other receivables, the Company has formulated relevant policies
to control credit risk exposure. The Company evaluates the credit qualification of customers and sets the
corresponding credit period based on the financial standing of customers, possibility of guarantee from the third
party, credit record, and other factors such as the present market condition. The Company will regularly monitor
customers' credit records. For customers with bad credit records, the Company will send a payment reminder,
shorten the credit period, or cancel the credit period to ensure that the overall credit risk of the Company is
controllable.
As of December 31, 2017, the accounts receivable balances of the top five customers of the Company account
for 52.49% of the total accounts receivable of the Company.
The maximum credit risk that the Company is exposed to is the carrying amount of each financial asset
(including derivative financial instruments) in the balance sheet statement. The Company has not provided any
guarantee that will expose the Company to credit risks other than the financial guarantee set out in Note 12.
(II) Liquidity risk
Liquidity risk is the risk that the Company is unable to obtain sufficient funds in a timely manner to meet the
Notes to Financial Statements Page 95
business development needs or to pay due debts and other payment obligations.
The Company has continuously monitored its short-term and long-term capital needs to maintain sufficient cash
reserves. The Company has also continuously monitored compliance with the terms of the Loan Agreement, and
obtained commitments on provision of sufficient reserve funds from major financial institutions to meet
short-term and long-term capital needs.
As of December 31, 2017, the undiscounted cash flows of financial assets and financial liabilities based on the
due date are shown in the following table:
Closing balance
Item 2-5 Over 5
Net book value Original book value Within 1 year 1-2 years
years years
Monetary fund 951,482,605.92 951,482,605.92 951,482,605.92 --- --- ---
Notes
- - - --- --- ---
receivable
Accounts
61,934,101.56 84,229,825.41 84,229,825.41 --- --- ---
receivable
Other
94,057,159.50 142,049,840.10 142,049,840.10 --- --- ---
receivables
Subtotal of
1,107,473,866.98 1,177,762,271.43 1,177,762,271.43 --- --- ---
financial assets
Short-term
534,792,000.00 534,792,000.00 534,792,000.00 --- --- ---
borrowings
Accounts
470,088,158.63 470,088,158.63 470,088,158.63 --- --- ---
payable
Interest payable 3,357,745.13 3,357,745.13 3,357,745.13 --- --- ---
Dividends
15,132,970.78 15,132,970.78 15,132,970.78 --- --- ---
payable
Other payables 1,290,431,866.37 1,290,431,866.37 1,290,431,866.37 --- --- ---
Long-term loan 1,009,750,000.00 1,009,750,000.00 255,000,000.00 754,750,000.00 --- ---
Subtotal of
financial 3,323,552,740.91 3,323,552,740.91 2,568,802,740.91 754,750,000.00 --- ---
liabilities
Continued:
Opening balance
Item 2-5 Over 5
Net book value Original book value Within 1 year 1-2 years
years years
Monetary fund 1,131,523,641.19 1,131,523,641.19 1,131,523,641.19 --- --- ---
Notes
100,792.00 100,792.00 100,792.00 --- --- ---
receivable
Accounts
58,949,389.88 71,045,950.88 71,045,950.88 --- --- ---
receivable
Other
117,036,077.02 162,631,813.35 162,631,813.35 --- --- ---
receivables
Subtotal of
1,307,609,900.09 1,365,302,197.42 1,365,302,197.42 --- --- ---
financial assets
Short-term
355,000,000.00 355,000,000.00 355,000,000.00 --- --- ---
borrowings
Accounts
31,010,953.20 31,010,953.20 31,010,953.20 --- --- ---
payable
Notes to Financial Statements Page 96
Opening balance
Item 2-5 Over 5
Net book value Original book value Within 1 year 1-2 years
years years
Interest payable 3,599,878.48 3,599,878.48 3,599,878.48 --- --- ---
Dividends
3,340,969.82 3,340,969.82 3,340,969.82 --- --- ---
payable
Other payables 798,082,723.93 798,082,723.93 798,082,723.93 --- --- ---
Long-term loan 1,518,000,000.00 1,518,000,000.00 488,000,000.00 1,030,000,000.00 --- ---
Subtotal of
financial 2,709,034,525.43 2,709,034,525.43 1,679,034,525.43 1,030,000,000.00 --- ---
liabilities
(III) Market risk
1. Currency risk
Main operation of the Company takes place in China and its main businesses are settled in RMB. As of
December 31, 2017, the Company held foreign currency 10,558.70 HKD (equivalent to RMB 8,826.12) only and
no foreign currency financial liabilities. Therefore, the overall currency risk is controllable.
2. Interest rate risk
The interest rate risk of the Company mainly arises from bank borrowings. Financial liabilities at a floating rate
may expose the Company to the cash flow interest rate risk while financial liabilities at a fixed rate may expose
the Company to the fair value interest rate risk. The Company determines the relative proportion of fixed rate
contracts to floating rate contracts based on the prevailing market environment.
The financial department of the Company has continuously monitored the interest rate of the Company. The
increase in the interest rate will result in increase in the cost of new interest-bearing debts and interest expenses
on interest-bearing debts not yet paid by the Company at a floating rate and have a material adverse impact on
the Company's financial performance. The management will make adjustments in a timely manner based on the
latest market condition, which can be interest rate swap arrangements to reduce interest rate risks.
X. Fair value
(I) Financial instruments measured by fair value
The Company listed the book value of financial asset instruments measured by fair value on December 31, 2017
based on three levels of fair value. The fair value is classified into three levels according to the lowest level that
each important input value used in measurement of fair value is attributed to. Definitions of three levels:
Level 1: Unadjusted quotes of same assets or liabilities available on the date of measurement in the active
market.
Level 2: Directly or indirectly observable input values of relevant assets or liabilities other than input values at
level 1.
Input values at level 2 include: (1) quotes of similar assets or liabilities in the active market; (2) quotes of same
or similar assets or liabilities in the non-active market; (3) other observable input values other than quotes,
including observable interest rate and yield rate curves, implied volatility and credit spread in the interval of
normal quotes; (4) input values proved by the market.
Level 3: Unobservable input values of relevant assets or liabilities.
Notes to Financial Statements Page 97
(II) Measurement of fair value at the end of the period
Persistent fair value measurement
Fair value at the end of the period
Item
Level 1 Level 2 Level 3 Total
Total available-for-sale
365,918.49 365,918.49
financial assets
Bond instrument
investment
Equity instrument
365,918.49 365,918.49
investment
Other investment
XI. Related parties and connected transactions
(I) Information on subsidiaries of the Company:
Registered Shareholding Voting right
Place of
Name of parent company Nature of business Capital proportion over the proportion over the
registration
(RMB 10,000) Company (%) Company (%)
Comprehensive
Shenzhen SEG Group Co., Ltd. Shenzhen 138,112.16 55.70 55.70
business
1. The final controlling party of the Company is Shenzhen State-owned Assets Supervision and Administration
Commission.
(II) For details of subsidiaries of the Company, see Note 8 (1) equity in subsidiaries
(III) Information on the joint ventures and associates of the Company
For details of important associates or joint ventures of the Company, see Note 8 (2) equity in joint venture
arrangement or associates.
(IV) Information on other related parties
Name of other related parties Relationship between other related parties and the Company
Shenzhen SEG Group Service Co., Ltd Subsidiary of the controlling shareholder
Shenzhen SEG Computers Co., Ltd Subsidiary of the controlling shareholder
Shenzhen SEG Hi-tech Industrial Co., Ltd. Subsidiary of the controlling shareholder
Shenzhen SEG Business Operation Co., Ltd. Branch of the controlling shareholder
Shenzhen Si Semiconductors Co., Ltd. Subsidiary of the controlling shareholder
Shenzhen SEG Plaza Investment & Development Co., Ltd. Subsidiary of the controlling shareholder
Shenzhen Talent Training Center Branch of a subsidiary of the controlling shareholder
Company held by a manager of a subsidiary of the controlling
Huizhou SEG Property Service Co., Ltd.
shareholder
Guangdong Kaiying Enterprise Management Co., Ltd. Shareholder of a subsidiary of a holding subsidiary
Minghao Group Former shareholder of a subsidiary of a holding subsidiary
Chen Huijie Chairman of the Company
Notes to Financial Statements Page 98
Name of other related parties Relationship between other related parties and the Company
Zhang Liang Director of the Company
Zhang Guangliu Director of the Company
Yu Qian Director of the Company
Xu Laping Director of the Company
Liu Zhijun Director, general manager and finance chief of the Company
Li Luoli Independent director of the Company
Song Pingping Independent director of the Company
Fan Zhiqing Independent director of the Company
Zhang Yujie Chairman of the Board of Supervisors of the Company
Wang Guancheng Supervisor of the Company
Liu Fusong Supervisor of the Company
Ru Guiqin Employee supervisor of the Company
Zhang Haifan Employee supervisor of the Company
Peng Aiyun Vice general manager and secretary of the Board of Directors
Wang Li Former chairman of the Company
(V) Connected transaction
1. The transactions among the subsidiaries that have controlling relationship with the Company and have been
included in the consolidation scope as well as the transactions between the subsidiaries and the parent company
have been offset.
2. Connected transaction for purchase of goods and receipt of labor services
Content of connected Amount incurred in the Amount incurred in the
Related party
transaction current period previous period
Shenzhen SEG Group Co., Ltd. House purchase 1,948,700.00
Total 1,948,700.00
3. Connected transaction for sales of goods and supply of labor services
Content of connected Amount incurred in the Amount incurred in the
Related party
transaction current period previous period
Supply of property
management services and
Shenzhen SEG Group Co., Ltd. 887,101.50 885,353.20
collection of charges for
water and electricity
Shenzhen SEG Group Co., Ltd. House sales 127,515,337.24
Supply of property
Commercial Operations Branch of management services and
1,610,236.80
Shenzhen SEG Group Co., Ltd. collection of charges for
water and electricity
Supply of property
Shenzhen Talent Training Center 315,017.75 127,388.30
management services
Supply of property
SEG High Technology 183,147.17 183,147.17
management services
Total 1,385,266.42 130,321,462.71
4. Information on related-party trusteeship
Notes to Financial Statements Page 99
(1) Information on commissioned management of the Company
Pricing basis for
Trust profit
Type of income from
recognized in the
Name of trustor Name of trustee entrusted Starting date Ending date entrusted
current reporting
assets management/con
period
tracting
Undergroun
SEG Property
Shenzhen SEG d parking lot Trusteeship
Development 2000.5.31 2020.12.31 143,444.42
Group Co., Ltd. of SEG Agreement
Co., Ltd.
Plaza
Total 143,444.42
(2) Commissioning management of the Company
There is no commissioning management in the reporting period.
5. Related-party contracting
There is no related-party contracting in the reporting period.
6. Information on leases between the Company and related parties
(1) The Company as the lessor:
Rental recognized in this Rental recognized in previous
Name of lessee Type of leased assets
period period
Shenzhen SEG Talent
Training Center 11F, Building 4, Science Park 1,136,111.40
Shenzhen SEG Group Co.,
61F & 62F, SEG Plaza 1,573,782.86 -
Ltd.
Total 1,573,782.86 1,136,111.40
(2) The Company as the lessee:
Rental recognized in this Rental recognized in previous
Name of lessee Type of leased assets
period period
Shenzhen SEG Group Co., Warehouse on 8F of SEG
- 653,883.84
Ltd. Plaza, covering 809.26 m2
Commercial Operations
Branch of Shenzhen SEG 8F, Recreation Building 223,448.07
Group Co., Ltd.
The No. 2 Warehouse with an
Shenzhen SEG Group Co.,
area of 66.7 square meters on 1,902,000.00 1,426,500.00
Ltd.
the B1 floor of Sega Plaza
902, 1F, SEG Recreation
Building; 8F, SEG Industrial
Building, covering 647.73 m2;
West Zone, Building 2, 8F,
SEG Industrial Building,
Shenzhen SEG Group Co., covering 904.15 m2; 3F,
Building 101, Shangbu 7,837,332.00
Ltd.
Industrial Zone; Room 506,
Building 303, Pengji Shangbu
Bachelor Apartment, covering
1,095.06 m2; 606-612,
Building 102, SEG
Technology Industrial Park,
Notes to Financial Statements Page 100
Rental recognized in this Rental recognized in previous
Name of lessee Type of leased assets
period period
Shenzhen SEG Group Co., Warehouse on 8F of SEG
- 653,883.84
Ltd. Plaza, covering 809.26 m2
covering 317.45 m2; 6-1001,
Lantian Mansion, covering
175.50 m2; 103, Building 13,
Soingpingshan, covering
76.50 m2; 306, Jiuxu Mansion,
covering 59.00 m2; 4F
(including the connecting
corridor), Tower A & Tower
B, 101 Zhenxing Road,
covering 1,941.94 m2; 2303,
Futian Mansion, covering
98.36 m2; 1011, 10F, Building
26, No. 14, Pingyang Road,
Taiyuan, covering 273.72 m2;
Room 101, Building B19,
Yihe Shanzhuang, Shenkeng
Village, Liuyue, Henggang
Town, Longguang District,
covering 524.09 m2; 820-835,
8F, Building 3, Optical Fiber
Building, covering 605.51 m2;
Room 209, Building 9,
Lianhua Yicun, covering
253.64 m2; 502, Haikou
Kongzhong Huayuan,
covering 307.73 m2; 5, 2F,
Tower B, covering 9,672.12
m2.
Total 9,739,332.00 2,432,467.65
7. Related-party guarantee
There is no related-party guarantee in the reporting period.
8. Related-party borrowings and loans
(1) Borrowings from related parties
Related party Borrowings Start date End date Note
The principal balance of borrowings at the
beginning of 2017 is RMB 132,484.663.00. As
Shenzhen SEG
180,000,000.00 2016.5.13 2017.5.12 of December 31, 2017, the borrowings have been
Group Co., Ltd.
paid off, and the accrued interest is
RMB5,762,522.16
Total 180,000,000.00
(2) Loans to related parties
There are no loans to related parties in the reporting period.
9. Asset transfer and debt restructuring of related parties
Transferring party Connected transaction
Shenzhen SEG Group Co., Ltd. transferred 100% of the equity of SegMaker,
55% of the equity of SEG Recreation, 100% of the equity of SEG Property
Shenzhen SEG Group Co., Ltd.
Development and 79.02% of the equity of SEG Real Estate to the Company.
The underlying assets were valued at RMB 5,157,147,200.00 on the base date of
Notes to Financial Statements Page 101
assets evaluation (March 31, 2016). A total of 450,857,239 shares have been
issued to Seger Group through a private offering of shares. As of December 31,
2017, the cash purchase price of the shares was 675,626,244.34 yuan.
10. Remuneration of key managers
Amount incurred in the current period Amount incurred in the previous period
Item
(RMB 10,000) (RMB 10,000)
Remuneration of key managers 327.88 314.72
11. Other connected transactions
On April 30, 2016, Shenzhen SegMaker Co., Ltd., Shenzhen SEG Real Estate Investment Co., Ltd., Shenzhen
SEG Recreation Enterprise Development Co., Ltd. and Shenzhen Haocheng Industrial Co., Ltd. ("the principal")
and Shenzhen SEG Group Co., Ltd. entered into the Agreement of Entrusted Investment in the Renovation
Project of SEG Industrial Building and Other Two Buildings. According to the agreement, the principal shall
contribute capital and commission SEG Group to renovate SEG Industrial Building and other two buildings. In
2017, SegMaker, SEG Real Estate and SEG Recreation paid the project fund of RMB 15,026,547.85 in total to
SEG Group.
12. Accounts receivable from and payable to related parties
(1) Accounts receivable from related parties
Closing balance Opening balance
Project name Related party Bad debt Bad debt
Book balance Book balance
provision provision
Other accounts
receivable
Shenzhen SEG Group Co.,
3,618,412.09 --- 19,152.93 ---
Ltd.
Commercial Operations
Branch of Shenzhen SEG - --- 52,040.36 ---
Group Co., Ltd.
Shenzhen SEG Computer
9,950.00 --- 9,950.00 ---
Co., Ltd.
Shenzhen SEG Group Co.,
3,618,412.09 --- 19,152.93 ---
Ltd.
Accounts
receivable
Shenzhen SEG Group Co.,
1,652,472.00 --- ---
Ltd.
(2) Accounts payable to related parties
Project name Related party Closing balance Opening balance
Dividends
payable
Shenzhen SEG Group Co., Ltd. 287,100.00 12,088,800.00
Shenzhen SEG Computer Co., Ltd. 662,310.00 662,310.00
Shenzhen SEG Plaza Investment &
93,080.59 93,080.59
Development Co., Ltd.
Notes to Financial Statements Page 102
Project name Related party Closing balance Opening balance
Other payables
Shenzhen SEG Group Co., Ltd. 718,303,321.37 177,951,414.50
Shenzhen SEG High Technology
203,438.70 203,438.70
Investment Co., Ltd.
Shenzhen Si Semiconductors Co., Ltd. 30,993.00 30,993.00
Accounts
payable
Shenzhen SEG Group Co., Ltd. 17,778,527.15 -
XII. Commitments and contingency
(I) Major commitments
1. Concluded lease contract being performed or to be performed and minimum rental to be paid the next year
Shenzhen SEG Xi'an Hairong SEG Shenzhen SEG Nanjing
Xi'an SEG Electronics
Remaining lease term Electronics Market Electronics Market Electronics Market
Market Co., Ltd.
Management Co., Ltd. Co., Ltd. Management Co., Ltd.
Within one year
13,625,000.00 5,368,364.28 - -
(including one year)
Above one year but
within two years 13,875,000.00 5,529,415.17 - -
(including two years)
Above two years but
within three years 14,125,000.00 4,239,675.63 - -
(including three years)
Over 3 years 7,125,000.00 - - -
Total 48,750,000.00 15,137,455.08 Note *1 Note *2
(Continued)
Suzhou SEG Shunde SEG Suzhou SEG Digital
Wujiang SEG Electronics
Remaining lease term Intelligent Electronics Market Plaza Management Co.,
Market Co., Ltd.
Technology Co., Ltd. Management Co., Ltd. Ltd.
Within one year
--- 4,000,000.00 --- 12,585,711.40
(including one year)
Above one year but
within two years --- --- --- 13,001,905.56
(including two years)
Above two years but
within three years --- --- --- 13,584,577.38
(including three years)
Over 3 years --- --- --- 38,756,000.18
Total Note *3 4,000,000.00 Note *4 77,928,194.52
(Continued)
Notes to Financial Statements Page 103
Huizhou Stars Real Estate Beijing SEG Property
Remaining lease term Shenzhen SEG Co., Ltd.
Development Co., Ltd. Development Co., Ltd.
Within one year (including
9,288,140.04 3,914,826.30 -
one year)
Above one year but within
two years (including two 4,634,224.08 4,156,325.33 363,400.00
years)
Above two years but within
three years (including three - 4,269,024.87 2,180,400.00
years)
Over 3 years - 11,087,432.13 3,997,400.00
Total 13,922,364.12 23,427,608.62 6,541,200.00
Note *1: According to the cooperation agreement signed by and between both parties, Xi'an Hairong SEG
Electronics Market Co., Ltd. pays the rental at 70% of profits of the electronics market. Therefore, the amount of
rental in the future is uncertain.
Note *2: The rental of Shenzhen SEG Electronics Market Management Co., Ltd. is adjusted according to the CPI.
Therefore, the amount of rental in the future is uncertain.
Note *3: According to the cooperation agreement signed by and between both parties, Wujiang SEG Electronics
Market Co., Ltd. pays the rental at 70% of pretax profits of the electronics market. Therefore, the amount of
rental in the future is uncertain.
Note *4: According to the cooperation agreement signed by and between both parties, the rental payable by
Shunde SEG Electronics Market Management Co., Ltd. shall be negotiated per year and implemented according
to the supplementary agreement signed in the current year. Therefore, the amount of rental in the future is
uncertain.
2. Other major financial commitment
(1) Asset mortgage
As of the end of the current reporting period, the Company mortgaged its own property for bank loans. Details of
the mortgaged property and at the end of the current reporting period are as follows:
Net value of
Owner of property Name of property property at the end Remarks
of the period
Shenzhen SEG Co., Ltd. 4F, SEG Plaza 42,436,948.47 Mortgage for bank loans
Some floors of
Shenzhen SEG Co., Ltd. Contemporary 50,543,203.67 Mortgage for bank loans
Window
Shenzhen SEG Co., Ltd. 31F, Qunxing Plaza 8,984,817.19 Mortgage for bank loans
Caihong Mansion;
Shenzhen SEG Co., Ltd. 6,432,454.33 Mortgage for bank loans
18F, Baohua
Notes to Financial Statements Page 104
Shenzhen SEG Real Estate Stars Plaza, SEG
Investment Co., Ltd.
Industrial Zone,
SEG Court, Xinge
Building, Xinge
89,019,246.92 Mortgage for bank loans
Residential
Community, Yidi
Comprehensive
Market, etc.
Huizhou Stars Real Estate Some houses of
311,863,031.52 Mortgage for bank loans
Development Co., Ltd. SEG Holiday Plaza
Total 509,279,702.10
(2) Asset pledge
According to the trust loan contract made by and between our sub-subsidiary Shenzhen SEG New Urban
Construction Development Co., Ltd. (hereinafter referred to as "SEG New Urban") and Bohai International Trust
Co., Ltd. (hereinafter referred to as "Bohai International Trust"), Bohai International Trust shall grant a loan of
RMB 500,000,000.00 to SEG New Urban. According to the Right Pledge Contract made by and between our
subsidiary, Shenzhen SEG Real Estate Investment Co., Ltd. (hereinafter referred to as "SEG Real Estate") and
Bohai International Trust, the pledged right is the 52.0461% equity of SEG New Urban held by SEG Real Estate.
(3) Investment
On November 25, 2015, SEG Real Estate, Beijing Zhonghe Agricultural Investment Fund Management Co., Ltd.,
and Beijing Smart Agricultural Valley Investment Co., Ltd. concluded an agreement on increasing capital for
Shenzhen SEG Real Estate Investment & Development Co., Ltd. (hereinafter referred to as "SEG Development")
and developing the Pingshan Tiantou Community renovation project. According to the agreement, SEG Real
Estate shall contribute RMB 66,670,000.00 cash to SEG Development and hold 40% equity of SEG
Development after the contribution. Within 13 months after the agreement takes effect, SEG Real Estate has the
right to decide whether to make an actual contribution to SEG Development. If SEG Real Estate fails to make an
actual contribution, SEG Real Estate shall be deemed to waive its rights as a shareholder rather than breach the
agreement. As of December 31, 2017, the Pingshan Tiantou Community renovation project has not been
approved and SEG Real Estate has not contributed to SEG Development.
(4) External guarantee
1) On May 5, 2015, the subsidiary of SEG Real Estate, Huizhou Stars Real Estate Development Co., Ltd.
(hereinafter referred to as "Huizhou Stars") and Huizhou Branch of China Construction Bank (hereinafter
referred to as "Construction Bank") concluded the Maximum Residential Housing (Commercial Housing) Loan
Guarantee Contract. According to the contract, Huizhou Stars shall offer phased joint liability guarantees to all
debtors establishing a mortgage debtor-creditor relationship with Construction Bank by purchasing commercial
houses of the "SEG Holiday Plaza" project at No. 20, Huizhou Avenue between January 23, 2015 and January
23, 2018 until the real estate proprietorship certificates and encumbrance mortgage registration certificates are
handled and submitted to Construction Bank. Huizhou Stars shall retain 5% deposits, no more than RMB
3,000,000.
2) On May 6, 2016, the subsidiary of SEG Real Estate, SEG New Urban and Futian Sub-branch of Shenzhen
Branch of Bank of Communications (hereinafter referred to as "Bank of Communications") concluded the
Agreement on Residential Housing Mortgage Loan Cooperation. According to the Agreement, SEG New Urban
shall offer joint liability guarantees to all debtors establishing a mortgage debtor-creditor relationship with Bank
Notes to Financial Statements Page 105
of Communications by purchasing residential houses of the "SEG New Urban Plaza" project of SEG New Urban
at Sanlian Community, Buji Street, Longgang District, Shenzhen until the real estate proprietorship certificates
and encumbrance mortgage registration certificates are handled and submitted to Bank of Communications. SEG
New Urban does not need to save deposits in Bank of Communications. The term of cooperation is ten years.
The actual amount of guarantees as of December 31, 2017 was RMB 192,165, 000
3) On May 6, 2016, the subsidiary of SEG Real Estate, SEG New Urban and Shenzhen Diwang Sub-branch of
Agricultural Bank of China (hereinafter referred to as "Agricultural Bank of China") concluded the Agreement
on New House Mortgage Loan Bank-Enterprise Cooperation. According to the Agreement, SEG New Urban
shall offer joint liability guarantees to all debtors establishing a residential housing debtor-creditor relationship
with Agricultural Bank of China by purchasing commercial houses of the "SEG New Urban Plaza" project of
SEG New Urban at Sanlian Community, Buji Street, Longgang District, Shenzhen until the mortgage
registration are handled for the purchased houses and right certificates are submitted to Agricultural Bank of
China. The term of cooperation is one years. When the term expires, this Agreement can remain in force as
agreed by both parties. No actual amount secured under the contract as at 31 December 2017
4) On July 4, 2016, the subsidiary of SEG Real Estate, SEG New Urban and Buji Sub-branch of Shenzhen Rural
Commercial Bank (hereinafter referred to as "Rural Commercial Bank") concluded the Agreement on Building
Mortgage Credit Granting. According the Agreement, Rural Commercial Bank shall grant office building and
apartment mortgage credits of no more than RMB 200 million without mortgage deposits to the "SEG New
Urban Plaza Phase II" project (to be checked against the permit for pre-sale) at Sanlian Community, Buji Street,
Longgang District, Shenzhen from July 7, 2016 to July 7, 2019. SEG New Urban shall offer joint liability
guarantees until the mortgage registration are handled for the purchased houses and real estate proprietorship
certificates are submitted to Rural Commercial Bank. The actual amount of guarantees as of December 31, 2017
was RMB15,820,000.
5) On May 6, 2016, the subsidiary of SEG Real Estate, SEG New Urban and Shenzhen Futian Sub-branch of
Shenzhen Branch of China Merchants Bank (hereinafter referred to as "China Merchants Bank") concluded the
Agreement on Building Mortgage Loan Cooperation. According to the Agreement, SEG New Urban may advise
purchasers to apply for loans to China Merchants Bank to purchase houses of the "SEG New Urban Plaza Phase
II" project at No. 18, Bulong Road, Buji Sub-district, Longgang District, Shenzhen. The maximum loan amount
is 55% of the house price. The loan term shall be no more than ten years. The interest rate shall be subject to the
rules of the People's Bank of China. SEG New Urban shall offer unconditional and irrevocable joint liability
guarantees for the loans granted by China Merchants Bank to purchasers from the day China Merchants Bank
and purchasers conclude loan contracts until the mortgage registration are handled for the purchased houses and
real estate proprietorship certificates or real estate encumbrance certificates are submitted to China Merchants
Bank. The actual amount of guarantees as of December 31, 2017 was RMB118,020,000.
6) On May 6, 2016, SEG New Urban, a subsidiary of SEG Real Estate, and Shenzhen Shangbu Sub-branch of
Bank of China (hereinafter referred to as "Bank of China") concluded the Agreement on Building Mortgage
Loan Cooperation. According to the Agreement, Bank of China shall grant mortgage credits of no more than
RMB 300 million to the "SEG New Urban Plaza" project, and the amount of each mortgage loan granted to
purchasers shall not exceed 55% of the house price. The loan term shall be no more than ten years. SEG New
Urban shall issue a Guarantee Contract to Bank of China for each loan applicant. The guarantee period shall last
Notes to Financial Statements Page 106
from the day the Contract takes effect until the mortgage registration are handled for the purchased houses and
real estate proprietorship certificates or real estate encumbrance certificates are submitted to Bank of China. The
Contract shall be valid for three years. The actual amount of guarantees as of December 31, 2017 was RMB
156,090,000.
7) SEG New Urban, a subsidiary of SEG Real Estate, and China Construction Bank Shenzhen Branch
(hereinafter referred to as CCB Shenzhen Branch) concluded the Guaranty Contract of Maximum Personal
Housing (Commercial Housing) Loan on February 7, 2017. As agreed in the Contract, SEG New Urban shall
offer the phased joint liability guaranty to all debtors establishing a debtor-creditor relationship with CCB
Shenzhen Branch for purchasing personal housing (commercial housing) under the "SEG New Urban Plaza"
project at Sanlian Community, Buji Sub-district, Longgang District, Shenzhen. No upper limit shall be set on the
amount of guaranty, and the guarantee period shall start from the day CCB Shenzhen Branch sign the loan
contract with a debtor to the day the real estate (pre-sold) mortgage under the loan contract takes effect and
supporting documents are checked and accepted by CCB Shenzhen Branch. Shenzhen SEG New Urban
Construction Development Co., Ltd. is not obliged to transfer a deposit to CCB Shenzhen Branch. The
cooperation period is five years. The actual amount of guarantees as of December 31, 2017 was RMB 9,300,000.
8) SEG New Urban, a subsidiary of SEG Real Estate, and China CITIC Bank Shenzhen Branch (hereinafter
referred to as CITIC Shenzhen Branch) concluded the Contract of Maximum Guaranty on June 30, 2017. As
agreed in the Contract, SEG New Urban shall offer the maximum guaranty to the debtor-creditor contracts made
by and between CITIC Shenzhen Branch and Shenzhen Zhaocheng Group (hereinafter referred to as Zhaocheng
Group, a customer purchasing the development project of SEG New Urban) between June 30, 2017 and June 13,
2018. The amount of guaranteed claims is limited to principal RMB 21,000 plus interest and default interest. The
guarantee period shall be two years from the day the debt performance under the main contract expires or shall
end from the day SEG New Urban transfers ownership of the property purchased by the customer into its
name.SEG New Urban, a subsidiary of SEG Real Estate, and China CITIC Bank Shenzhen Branchconcluded the
Contract of Maximum Mortgage on July 6, 2017. As agreed in the Contract, SEG New Urban shall offer the
maximum mortgage guaranty to the debtor-creditor contracts made by and between CITIC Shenzhen Branch and
Shenzhen Zhaocheng Group (hereinafter referred to as Zhaocheng Group, a customer purchasing the
development project of SEG New Urban) between June 30, 2017 and June 13, 2018. The amount of guaranteed
claims is limited to principal RMB 26,000 plus interest and default interest. Collateral is property on Floors 2 to
5 of Building 1, SEG New Urban Plaza. The actual amount of guarantees as of December 31, 2017 was RMB
210,000,000.
(II) Contingency on the balance sheet date
1. Contingency arising from pending litigation or arbitration and its financial impact
Amount
of
Plaintiff Defendant Case subject Basic information about the case Progress of the case
(RMB
10,000)
Notes to Financial Statements Page 107
1.According to the
judgment of the first
instance on April 10, 2017,
the defendant shall pay the
occupancy expense at RMB
44,388.39 per year to the
plaintiff from September 1,
Case number: 2016 G. 0102 M. C. No. 4611
2016 to the date when the
Nanning Haiqi Nanning Haiqi alleged that Nanning SEG
Nanning SEG defendant Nanning SEG
Real Estate Electronics occupied its shop front located at No. 6, A Zone,
Dispute 1F, Property Development Plaza, 158 East returns the store and the
Market
Development over the Renmin Road, Nanning and petitioned the court attorney fee of RMB
Management Co., 11.70
lease to order Nanning SEG to pay the occupancy
Co., Ltd. Ltd. ("Nanning 8,000.00.
contract expense of RMB 37,800, liquidated damages of
SEG"), Shenzhen
("Nanning RMB 71,300, and attorney fee of RMB 8,000, 2.The estimated liability of
SEG Co., Ltd.
and that the Company should bear the joint RMB 52,388.39 is accrued.
Haiqi")
liability.
3. On March 2, 2018, the
second instance ordered the
defendant to pay a default
loss of 8,00,000.00 and a
lawyer's fee of 263,000.00
yuan. The company applied
for retrial.
1. According to the
judgment of the first
instance on June 30, 2017,
the defendant shall
compensate for losses on
Case number: 2016 G. 0102 M. C. No. 4612
the leased premise of RMB
Nanning Haiqi alleged that Nanning SEG failed
394,964.80 and the
Nanning SEG to return the house in accordance with the Civil
Judgment (2015) X. M. Y. C. Zi. No. 1393 made attorney fee of RMB
Nanning Haiqi Electronics Dispute
Real Estate Market over the by the People's Court of Xingning District, 23,000.00. The estimated
104.19 Nanning and the Lease Contract for Nanning
Development Management Co., lease liability is accrued.
Co., Ltd. Ltd., Shenzhen contract SEG Electronics Market and petitioned the court
to order Nanning SEG to pay for rental and 2. The original judgment is
SEG Co., Ltd.
decoration losses of RMB 996,900 and the sustained in the second
attorney fee of RMB 45,000, and that the
instance on December 15,
Company should bear the joint liability.
2017.
3. The projected liabilities
are stated at $417,964.80 in
accordance with the order
of first instance.
1. According to the
judgment of the first
instance on April 10, 2017,
Case number: 2016 G. 0102 M. C. No. 3653
Nanning Haiqi, Nanning SEG and the Company the defendant shall pay the
entered into the Lease Contract for Nanning SEG losses on breach of RMB
Electronics Market, and the rental and decoration 666,666.66. The estimated
Nanning SEG fee as RMB 2,000,000 was paid to Nanning
liability is accrued.
Nanning Haiqi Electronics Dispute Haiqi as agreed in the Contract. As the lease
Real Estate Market over the contract was terminated according to the Civil 2. According to the
1,026.30
Development Management Co., lease Judgment (2015) X. M. Y. C. Zi. No. 1393 made judgment of the second
Co., Ltd. Ltd., Shenzhen contract by the People 's Court of Xingning District,
SEG Co., Ltd. instance on March 2, 2018,
Nanning Haiqi petitioned the court to order
Nanning SEG to pay for its decoration loss of the defendant shall pay the
RMB 2,000,000, liquidated damages of RMB losses on breach of RMB
8,000,000, attorney fee of RMB 263,000, and 8,000,000.00 and the
that the Company should bear the joint liability.
attorney fee of RMB
263,000.00，The company
applied for a retrial..
Notes to Financial Statements Page 108
According to the judgment
Case number: 2016 G. 0102 M. C. No. 3654 of the first instance on
Nanning Nanning Yuanpeng, Nanning SEG and the April 10, 2017, the
Nanning SEG
Yuanpeng Dispute Company entered into the Property Management Property Management
Electronics
Property over the Service Contract. Nanning Yuanpeng alleged that
Market Service Contract between
Service Co., property 246.98 Nanning SEG delayed payment of the property
Management Co., the parties shall be
Ltd. service fee as scheduled, and petitioned the court to order
Ltd., Shenzhen
("Nanning contract Nanning SEG to pay the property fee of RMB terminated and other claims
SEG Co., Ltd.
Yuanpeng") 1,316,200, overdue penalty of RMB 1,070,100, of the plaintiff were
and attorney fee of RMB 83,500.
dismissed. The plaintiff
instituted an appeal.
According to the judgment
of the first instance on
August 29, 2017, the
Case number: 2016 G. 0102 M. C. No. 672 defendant shall pay the
China As CCB Taoyuan Sub-branch breached the Lease rents and occupancy
Nanning SEG Construction Contract for Nanning SEG Electronics Market,
Dispute expense of RMB
Electronics Bank Nanning refused to pay the rent, and unreasonably
over the
Market Taoyuan 88.64 occupied the shop front, Nanning SEG petitioned 375,022.46, the property
lease
Management Sub-branch the court to order CCB Taoyuan Sub-branch to management expense of
contract
Co., Ltd. ("CCB Taoyuan vacate and return the shop front and pay the rent
Sub-branch") and property management fee in arrears and RMB 15,930.97, and the
liquidated damages of RMB 886,400. residual value of decoration
in the remaining lease
period of RMB 47,800.00
to the plaintiff.
1.According to the
judgment of the first
instance on December 25,
2017, the defendant shall
Case number: (2017) Y. 0304 M. C. No. 5092 make the payment for
Shenzhen
Dispute As Shenzhen Wonder Industry Co., Ltd. delayed goods of RMB
SEG Shenzhen
over the the payment for goods, SEG Industrial 7,714,270.54 and the
Industrial Wonder Industry
purchase petitioned the court to order the former to make liquidated damages of
Investment Co., Ltd., Liu 839.41
and the payment for goods of RMB 7,899,800 as of RMB 135,203.50 as of
Co., Ltd. Guiyun and Liu
sales January 2017 and the overdue fine of RMB August 31, 2016. The
("SEG Yu
contract 514,300 and to hold Liu Guiyun and Liu Yu plaintiff was the prevailing
Industrial")
jointly liable. party.
2.The company applied for
property preservation, the
court has frozen the other
party's property.
Shenzhen Yixin 1.According to the
Zhongtian judgment of the first
Technology Co., instance on December 21,
Ltd., Zhe 2017, the defendant shall
Shaojun, Zhao Case number: (2017) Y. 0304 M. C. No. 5088 make the payment for
Dispute
Shenzhen Xiaoyan, As Shenzhen Yixin Zhongtian Technology Co., goods of RMB
over the
SEG Xinjiang Jiazhao Ltd. delayed the payment for goods, SEG 13,241,726.25 and the
purchase
Industrial Hengye 1,480.57 Industrial petitioned the court to order the liquidated damages of
and
Investment Electronic former to make payment for goods of RMB RMB 135,348.51 as of July
sales
Co., Ltd. Technology Co., 13,241,700 as of January 2017 and overdue fine 31, 2016. The plaintiff was
contract
Ltd., Xinjiang of RMB 1,564,000. the prevailing party.
Zhongdi 2.The company applied for
Communication property preservation, the
Equipment Co., court has frozen the other
Ltd. party's property.
Notes to Financial Statements Page 109
Shenzhen
Comnet
Technology Co.,
Case number: (2017) Y. 0304 M. C. No. 7976
Ltd., Xiao Dispute 1.The case has been in
Shenzhen As Shenzhen Comnet Technology Co., Ltd. session on April 20, 2018
Qingshan, Zhou over the
SEG delayed the payment for goods, SEG Industrial but not heard.
Ronghua, Anhua purchase
Industrial 515.54 petitioned the court to order the former to make 2.Company has applies for
Meishan Small and property preservation and
Investment payment for goods of RMB 5,144,200 as of the
Loan Co., Ltd., sales the cout has frozen the
Co., Ltd. end of February 2017 and overdue fine of RMB property of the other party
and Shenzhen contract
11,200.
Baiyide
Technology Co.,
Ltd.
Shenzhen
Runneng Digital
Co., Ltd., Xiao Case number: (2017) Y. 0304 M. C. No. 7977
Dispute 1.The case has been in
Shenzhen Qingshan, Zhou As Shenzhen Runneng Digital Technology Co.,
over the session on April 20, 2018
SEG Ronghua, Anhua Ltd. delayed the payment for goods, SEG but not heard.
purchase
Industrial Meishan Small 1,534.50 Industrial petitioned the court to order the 2.Company has applies for
and property preservation and
Investment Loan Co., Ltd., former to make payment for goods of RMB
sales the cout has frozen the
Co., Ltd. and Shenzhen 15,251,100 as of the end of February 2017 and property of the other party
contract
Baiyide overdue fine of RMB 93,900.
Technology Co.,
Ltd.
2. Issued letter of guarantee (L/G) and letter of credit (L/C)
L/G No. Beneficiary Bank L/G amount Unused amount Due date
Bank of
Shenzhen Tongchan China
GC1783916000848 3,510,192.00 3,510,192.00 2018.4.22
Group Co., Ltd Shenzhen
Branch
Except the preceding contingency, the Company has no significant commitments that shall be disclosed but have
not been disclosed as of December 31, 2017.
XIII. Events after the balance sheet date
(I) Major non-adjustment items
1. Issuance of stocks and securities
On March 30, 2018, the Proposal of Shenzhen SEG Co., Ltd. for Public Offering of Corporate Bonds was
deliberated and adopted at the first extraordinary general meeting of Shenzhen SEG Co., Ltd. of 2018. RMB
600-800 million bonds will be issued through public offering at one time or in installments after approval by the
CSRC. Such bonds shall have a maturity of no more than five years (included), including products of a single
maturity and hybrid products of multiple maturities.
As of the financial report date, bond issuance is underway.
2. Major investment
On January 19, 2018, the Proposal for Shenzhen SEG Longyan Energy Technology Co., Ltd.'s Investment and
Establishment of Hangzhou SEG Longyan Energy Technology Co., Ltd. was deliberated and adopted at the 28th
interim meeting of the 7th Board of Directors of Shenzhen SEG Co., Ltd. Shenzhen SEG Longyan Energy
Technology Co., Ltd. ("SEG Longyan") jointly invested and established by the Company, SEG Longyan Energy
Technology (Hangzhou) Co., Ltd. ("Longyan Energy"), and Shenzhen Energy Nanjing Holding Co.,
Notes to Financial Statements Page 110
Ltd.intended to build the first production line by renting No. 2 Plant of Longyan Energy through negotiation with
Longyan Energy. SEG Longyan invested and established a wholly-owned subsidiary in Hangzhou named
Hangzhou SEG Longyan Energy Technology Co., Ltd. (subject to business registration) which will be
responsible for investing and operating the first production line.
3. Business combination or disposal of major subsidiaries
(1) Transfer of 62% of the equity of Shenzhen SEG Credit Co., Ltd. (SEG Credit) held by the Company and
holding subsidiaries
On March 30, 2018, the Proposal for Transfer of 62% of the Equity of Shenzhen SEG Credit Co., Ltd. Held by
the Company and Holding Subsidiaries was deliberated and adopted at the first extraordinary general meeting of
Shenzhen SEG Co., Ltd. of 2018. The equity transferred included 38% of the equity of SEG Credit held by the
Company, 16% of the equity of SEG Credit held by Shenzhen SEG Industrial Investment Co., Ltd., and 8% of
the equity of SEG Credit held by SEG Property Development Co., Ltd. The counterparty was Shenzhen SEG
Group Co., Ltd., the controlling shareholder of the Company. This transaction was a connected transaction. On
April 19, 2018, the business change registration for equity transfer was completed.
(2) Cancellation of Yantai SEG Times Plaza Development Co., Ltd.
On March 30, 2018, the Proposal for Cancellation of Yantai SEG Times Plaza Development Co., Ltd. was
deliberated and adopted at the first extraordinary general meeting of Shenzhen SEG Co., Ltd. of 2018.
Yantai SEG Times Plaza Development Co., Ltd. ("Yantai SEG") was incorporated by the Company on April
2014. The Company participated in public bid for the land of SEG Times Plaza in the name of Yantai SEG but
failed to bid for the land. The Company contributed RMB 45 million as the deposit for auction on April 2014
and recovered it on May 2014 for failure. Not planning to carry out real estate development or relevant business
in Yantai in short time, the Company intends to cancel Yantai SEG Times Plaza Development Co., Ltd.
(II) Profit distribution
On April 20, 2018, the Board of Directors of the Company deliberated and adopted the proposal for 2017 profit
distribution. The Company plans to distribute cash dividend of RMB 0.55 (tax included) for every 10 shares to
all shareholders based on 1,235,656,249 share capital. The total cash dividend of RMB 67,961,093.70 will be
distributed. The Company plans not to transfer capital reserves into share capital and not to distribute bonus
shares in 2017.
The foregoing profit distribution proposal is to be deliberated and adopted by the general meeting.
Other than the foregoing events after the balance sheet date, the Company has no major events after the balance
sheet date to be disclosed but undisclosed as of the approved date of publication of the financial report.
XIV. Notes to other important matters
(I) Purchase of financial products with idle funds
At the 2nd general meeting on July 21, 2014, the Company approved the Proposal on Purchase of Financial
Products Using Idle Funds of the Company, which allows the company and its subsidiaries to invest and manage
wealth by using idle funds of not more than RMB 1 billion Yuan and the capital can be rolled over within the
forgoing limit. The shareholder's meeting passed a resolution that general manager of the Company shall make
decisions for specific projects and the management shall carry out such decisions. The investment period is from
the date of resolution to June 30, 2016 (subject to the time of purchasing financial products).
Notes to Financial Statements Page 111
At the 2nd extraordinary general meeting (2016) on September 3, 2016, the Company approved the Proposal on
Purchase of Financial Products Using Idle Funds of the Company, and extended the investment term to June 30,
2019 (calculated from the time when financial products are purchased).
As of December 31, 2017, the balance of financial products purchased by the Company and its subsidiaries is as
follows:
Unit: RMB 10,000
Shenzhen SEG
Wujiang SEG Nantong SEG Xi'an Hairong SEG
Shenzhen SEG Co., Baohua Enterprise
Company name Electronics Market Commercial Operation Electronics Market Co.,
Ltd. Development Co., Management Co., Ltd.
Co., Ltd. Ltd.
Ltd.
Amount 10,000.00 1,200.00 8,500.00 900.00 1,750.00
Continued:
Xi'an SEG Changsha SEG Shenzhen SEG SEG Recreation
Shenzhen SEG
Company name Electronics Market Development Co., Longyan Energy Enterprise
Co., Ltd. Credit Co., Ltd. Ltd. Technology Co., Ltd. Development Co., Ltd.
Amount 800.00 600.00 3,180.00 1,600.00 5,700.00
Continued:
Shenzhen SEG Real
SEG Property
Company name Shenzhen SegMaker Co., Ltd. Estate Investment Co., Total
Development Co., Ltd. Ltd.
Amount 8,000.00 8,839.00 100.00 51,169.00
XV. Notes to main items in the financial statements of the parent company
Note 1. Accounts receivable
1. Accounts receivable disclosed by type
Closing balance
Book balance Bad debt provision
Type
Proportion of Book value
Amount Proportion (%) Amount
provision (%)
Accounts receivable with single
significant amount and single 7,163,876.44 71.82 7,163,876.44 100.00 -
bad debt provision
Accounts receivable with bad
debt provision accrued based on 1,105,493.93 11.08 - - 1,105,493.93
credit risk feature combinations
Accounts receivable with no
single significant amount but
1,705,306.44 17.1 1,705,306.44 100.00 -
with single provision for bad
debts
Total 9,974,676.81 100.00 8,869,182.88 88.92 1,105,493.93
Continued:
Type Opening balance
Notes to Financial Statements Page 112
Book balance Bad debt provision
Proportion of Book value
Amount Proportion (%) Amount
provision (%)
Accounts receivable with single
significant amount and single 7,163,876.44 77.07 7,163,876.44 100.00 ---
bad debt provision
Accounts receivable with bad
debt provision accrued based on 426,069.15 4.58 --- --- 426,069.15
credit risk feature combinations
Accounts receivable with no
single significant amount but
1,705,306.44 18.35 1,705,306.44 100.00 ---
with single provision for bad
debts
Total 9,295,252.03 100.00 8,869,182.88 95.42 426,069.15
Notes to types of accounts receivable:
(1) Accounts receivable with single significant amount and single bad debt provision
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for
Jiangsu Unicom 3,092,011.09 3,092,011.09 100.00
aging of over 5 years
Shenzhen Liyuanshun Industrial Co., Unable to be recovered for
1,906,865.35 1,906,865.35 100.00
Ltd. aging of over 5 years
Unable to be recovered for
Shanghai Tianci Industrial Co., Ltd. 899,000.00 899,000.00 100.00
aging of over 5 years
Unable to be recovered for
Zhejiang Financial Information 786,000.00 786,000.00 100.00
aging of over 5 years
Sichuan Huiyuan Electronics Co., Unable to be recovered for
480,000.00 480,000.00 100.00
Ltd. aging of over 5 years
Total 7,163,876.44 7,163,876.44 100.00
(2) Accounts receivable with no single significant amount but single bad debt provision
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Shenzhen Wal-Mart Zhujiang Unable to be recovered for
198,348.57 198,348.57 100.00
Department Store aging of over 5 years
Shenzhen Properties Department Unable to be recovered for
162,985.00 162,985.00 100.00
Store Co., Ltd. aging of over 5 years
Unable to be recovered for
Jiang Weibin 126,925.35 126,925.35 100.00
aging of over 5 years
Shenzhen Jinhuasheng Electronics 85,000.00 85,000.00 100.00 Unable to be recovered for
Notes to Financial Statements Page 113
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Co., Ltd. aging of over 5 years
Unable to be recovered for
Other 43 companies 1,132,047.52 1,132,047.52 100.00
aging of over 5 years
Total 1,705,306.44 1,705,306.44 100.00
(3) Accounts receivable in Combinations, for which bad debt provision is accrued by the aging analysis method:
Closing balance
Aging
Other accounts receivable Bad debt provision Proportion of provision (%)
Less than one year 1,105,493.93 - -
1-2 years - -
2-3 years - -
Over 3 years - -
Total 1,105,493.93 - -
2. Accrual, recovery and write-back of current bad debt provision
The accrual amount of the current bad debt provision is RMB 0.00.
The recovery or write-back amount of the current bad debt provision is RMB 0.00.
3. No other accounts receivable are written back in the current period.
4. Accounts receivable with top 5 closing balance collected based on debtors.
Percentage in the total amount
Name of company Closing balance Accrued bad debt provision
of accounts receivable
Jiangsu Unicom 3,092,011.0900 31.00 3,092,011.0900
Shenzhen Liyuanshun
1,906,865.3500 19.12 1,906,865.3500
Industrial Co., Ltd.
Shanghai Tianci Industrial
899,000.0000 9.01 899,000.0000
Co., Ltd.
Zhejiang Financial
786,000.0000 7.88 786,000.0000
Information Co., Ltd
Sichuan HuiYuan Electronics
480,000.0000 4.81 480,000.0000
Co., Ltd.
Total 7,163,876.4400 71.82 7,163,876.4400
5. There are no accounts receivable derecognized due to transfer of financial assets in the reporting period.
6. There are no assets or liabilities arising from transfer of and continuous involvement in accounts receivable
in the reporting period.
Note 2. Other accounts receivable
1. Other receivables disclosed by type
Notes to Financial Statements Page 114
Closing balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Other accounts receivable with
single significant amount and single 8,530,276.35 0.81 8,530,276.35 100.00 -
bad debt provision
Other accounts receivable with bad
debt provision accrued based on 1,027,198,567.69 97.57 35,203.58 --- 1,027,163,364.11
credit risk feature combinations
Other accounts receivable with no
single significant amount but with 17,070,353.09 1.62 17,070,353.09 100.00 -
single provision for bad debts
Total 1,052,799,197.13 100.00 25,635,833.02 2.44 1,027,163,364.11
Continued:
Opening balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Other accounts receivable with
single significant amount and single 14,227,563.86 1.90 14,227,563.86 100.00 ---
bad debt provision
Other accounts receivable with bad
debt provision accrued based on 724,666,448.71 96.58 7,478.53 --- 724,658,970.18
credit risk feature combinations
Other accounts receivable with no
single significant amount but with 11,373,065.58 1.52 11,373,065.58 100.00 ---
single provision for bad debts
Total 750,267,078.15 100.00 25,608,107.97 3.41 724,658,970.18
Notes to types of other accounts receivable:
(1) Other accounts receivable with single significant amount and single bad debt provision
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for
Yangjiang Yuntong Grease Co., Ltd. 8,530,276.35 8,530,276.35 100.00
aging of over 5 years
Total 8,530,276.35 8,530,276.35 100.00
(2) Other accounts receivable with no single significant amount but single bad debt provision
Name of company Closing balance
Notes to Financial Statements Page 115
Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for
Shenzhen Tuopu Industrial Co., Ltd. 3,281,387.96 3,281,387.96 100.00
aging of over 5 years
Unable to be recovered for
Shenzhen Lianjing Trade Co., Ltd. 5,697,287.51 5,697,287.51 100.00
aging of over 5 years
Unable to be recovered for
Yunsen Trade Co., Ltd. 1,668,343.74 1,668,343.74 100.00
aging of over 5 years
Shenzhen Shoujia Industrial Unable to be recovered for
1,611,184.04 1,611,184.04 100.00
Development Co., Ltd. aging of over 5 years
Unable to be recovered for
Other 19 companies 4,812,149.84 4,812,149.84 100.00
aging of over 5 years
Total 17,070,353.09 17,070,353.09 100.00
(3) Other accounts receivable in combinations, for which bad debt provision is accrued by the aging analysis
method:
Closing balance
Aging
Other accounts receivable Bad debt provision Proportion of provision (%)
Less than one year 996,743.96 - -
1-2 years 415,904.76 20,795.24 5.00
2-3 years 126,319.44 12,631.94 10.00
Over 3 years 8,882.00 1,776.40 20.00
Total 1,547,850.16 35,203.58 2.27
(4) Other accounts receivable in Combinations rather than the aging analysis method include deposit, security
deposit, and account with related parties in the context of the merger.
2. Accrual, recovery and write-back of current bad debt provision
The amount of the current bad debt provision accrued is RMB 27,725.05.
3. No other accounts receivable are written off in the current period.
4. Classification of other receivables by nature
Item Closing balance Opening balance
Receivables of related parties 1,020,269,292.61 720,586,858.45
Creditor's right transfer cost 25,600,629.44 25,600,629.44
Imprest 679,557.34 929,258.20
Deposit and security deposit 5,381,424.92 1,338,309.78
Others 868,292.82 1,812,022.28
Total 1,052,799,197.13 750,267,078.15
5. Other receivables with top 5 closing balance collected based on arrears party
Notes to Financial Statements Page 116
Percentage in the
Bad debt
Nature of total amount of
Name of company Closing balance Aging provision
receivables other accounts
Closing balance
receivable
Nantong SEG Times Plaza Loans and 767,168,975.470
Over 5 years 72.87 -
Development Co., Ltd. interests 0
Headquarters of Shenzhen SEG
Loans and 200,348,333.330 Within one
Real Estate Investment Co., 19.03 -
interests 0 year
Ltd.
Shenzhen SEG Industrial Loans and
42,048,490.0000 Over 5 years 3.99 -
Investment Co., Ltd. interests
Suzhou SEG Digital Plaza
Loan principal 10,000,000.0000 2-3 years 0.95 -
Management Co., Ltd.
Yangjiang Yuntong Grease Co., Debt transfer
8,530,276.3500 Over 5 years 0.81 8,530,276.3500
Ltd. payment
1,028,096,075.15
Total 97.65 8,530,276.3500
00
6. There are no accounts receivable related to government subsidies in the current period.
7. There are no other receivables derecognized due to transfer of financial assets in the current period.
8. There are no assets or liabilities arising from transfer of and continuous involvement in other receivables in
the current period.
Note 3. Long-term equity investment
Closing balance Opening balance
Nature of
Bad debt Bad debt
receivables Book balance Book value Book balance Book value
provision provision
Investment in 1,243,774,056.16 1,243,774,056.16 269,935,426.24 --- 269,935,426.24
subsidiaries
Investment in
associates and 175,849,296.17 175,849,296.17 183,649,044.67 --- 183,649,044.67
joint ventures
Total 1,419,623,352.33 1,419,623,352.33 453,584,470.91 --- 453,584,470.91
1. Investment in subsidiaries
Accrued
impairmen Closing
Initial Decrease in
Invested Opening Increase in the t provision balance of
investment cost the current Closing balance
organization balance current period in the impairmen
Cost period
current t provision
period
Shenzhen
SEG Baohua
20,512,499.04 20,512,499.04 --- --- 20,512,499.04 --- ---
Enterprise
Development
Notes to Financial Statements Page 117
Accrued
impairmen Closing
Initial Decrease in
Invested Opening Increase in the t provision balance of
investment cost the current Closing balance
organization balance current period in the impairmen
Cost period
current t provision
period
Co., Ltd.
Shenzhen
SEG
Industrial 29,181,027.20 29,181,027.20 --- --- 29,181,027.20 --- ---
Investment
Co., Ltd.
Changsha
SEG
69,000,000.00 69,000,000.00 --- --- 69,000,000.00 --- ---
Development
Co., Ltd.
Shenzhen
SEG
Electronics
2,100,000.00 2,100,000.00 --- --- 2,100,000.00 --- ---
Market
Management
Co., Ltd.
Suzhou SEG
Electronics 1,350,000.0
1,350,000.00 1,350,000.00 --- - --- ---
Market Co., 0
Ltd.
Xi'an SEG
Electronics
1,950,000.00 1,950,000.00 --- --- 1,950,000.00 --- ---
Market Co.,
Ltd.
Shenzhen
SEG Credit 54,000,000.00 59,251,900.00 --- --- 59,251,900.00 --- ---
Co., Ltd.
Shenzhen
SEG Nanjing
Electronics
20,000,000.00 20,000,000.00 --- --- 20,000,000.00 --- ---
Market
Management
Co., Ltd.
Xi'an
Hairong
SEG
1,530,000.00 1,530,000.00 --- --- 1,530,000.00 --- ---
Electronics
Market Co.,
Ltd.
Wujiang 1,530,000.00 1,530,000.00 --- --- 1,530,000.00 --- ---
Notes to Financial Statements Page 118
Accrued
impairmen Closing
Initial Decrease in
Invested Opening Increase in the t provision balance of
investment cost the current Closing balance
organization balance current period in the impairmen
Cost period
current t provision
period
SEG
Electronics
Market Co.,
Ltd.
Wuxi SEG
Electronics 1,530,000.0
1,530,000.00 1,530,000.00 --- - --- ---
Market Co., 0
Ltd
Shunde SEG
Electronics
Market 6,000,000.00 6,000,000.00 --- --- 6,000,000.00 --- ---
Management
Co., Ltd.
Nanning
SEG
Electronics
8,000,000.00 8,000,000.00 --- --- 8,000,000.00 --- ---
Market
Management
Co., Ltd.
Nantong
SEG Times
Plaza 30,000,000.00 30,000,000.00 --- --- 30,000,000.00 --- ---
Development
Co., Ltd.
Suzhou SEG
Digital Plaza
8,000,000.00 8,000,000.00 --- --- 8,000,000.00 --- ---
Management
Co., Ltd.
Xi'an
Fengdong
New Town
SEG Times 30,000,000.00 --- --- --- --- --- ---
Plaza
Properties
Co., Ltd.
Suzhou SEG
Intelligent
10,000,000.00 10,000,000.00 --- --- 10,000,000.00 --- ---
Technology
Co., Ltd.
Shenzhen 82,500,000.00 82,500,000.00 82,500,000.00
Notes to Financial Statements Page 119
Accrued
impairmen Closing
Initial Decrease in
Invested Opening Increase in the t provision balance of
investment cost the current Closing balance
organization balance current period in the impairmen
Cost period
current t provision
period
SEG
Longyan
Energy
Technology
Co., Ltd.
SEG
Recreation
Enterprise 34,025,375.47 34,025,375.47 34,025,375.47
Development
Co., Ltd.
SEG
Lianzhong
Internet 13,640,000.00 13,640,000.00 13,640,000.00
Technology
Co., Ltd.
Shenzhen
SEG
Zhongtong 980,000.00 980,000.00 980,000.00
Technology
Co., Ltd.
Shenzhen
SEG
Investment 1,500,000.00 1,500,000.00 1,500,000.00
Management
Co., Ltd.
SEG
Property
61,749,318.18 61,749,318.18 61,749,318.18
Development
Co., Ltd.
Shenzhen
238,750,258.5
SegMaker 238,750,258.57 238,750,258.57
7
Co., Ltd.
Shenzhen
SEG Real
542,553,677.7
Estate 542,553,677.70 542,553,677.70
0
Investment
Co., Ltd.
Shenzhen
SEG 1,020,000.00 1,020,000.00 1,020,000.00
Yicheng
Notes to Financial Statements Page 120
Accrued
impairmen Closing
Initial Decrease in
Invested Opening Increase in the t provision balance of
investment cost the current Closing balance
organization balance current period in the impairmen
Cost period
current t provision
period
Science and
Technology
Co., Ltd.
1,271,402,156.1 269,935,426.2 976,718,629.9 2,880,000.0 1,243,774,056.1
Total
6 4 2 0 6
2. Investment in associates and joint ventures
Increase/Decrease of the year
Investment
Adjustment of
profit and loss
Invested organization Opening balance Additional Negative other
confirmed
investment investment comprehensive
under the equity
income
method
I. Associates
Shanghai SEG Electronics Market
2,551,558.06 184,731.75
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. 174,552,073.99 -9,125,553.30 5,871,204.49 -126.75
Shenzhen International Consumer
Electronics Exhibition/Exchange 6,545,412.62 -4,515,452.16
Center
Suzhou SEG Electronics Market
1,350,000.00 -1,424,552.53
Co., Ltd.
Total 183,649,044.67 1,350,000.00 -9,125,553.30 115,931.55 -126.75
Continued:
Increase/Decrease of the year
Closing
Declared cash
Other Accrued balance of
Invested organization dividends or Closing balance
changes in impairment Others impairment
profits
equity provision provision
distribution
I. Associates
Shanghai SEG Electronics
-500,000.00 2,236,289.81
Market Co., Ltd.
Shenzhen Huakong SEG Co.,
171,297,598.43
Ltd.
Shenzhen International
Consumer Electronics 2,029,960.46
Exhibition/Exchange Center
Suzhou SEG Electronics Market 360,000.00 285,447.47
Notes to Financial Statements Page 121
Increase/Decrease of the year
Closing
Declared cash
Other Accrued balance of
Invested organization dividends or Closing balance
changes in impairment Others impairment
profits
equity provision provision
distribution
Co., Ltd.
Total 360,000.00 -500,000.00 - - 175,849,296.17 -
Note 4. Operating revenue and operating cost
1. Operating income and operating cost
Amount incurred in the current period Amount incurred in the previous period
Item
Income Cost Income Cost
Main business 85,112,846.04 75,540,023.72 100,960,545.53 74,670,318.50
Other businesses --- ---
Total 85,112,846.04 75,540,023.72 100,960,545.53 74,670,318.50
Note 5. Investment income
Amount incurred in the Amount incurred in the
Item
current period previous period
Long-term equity investment income by the cost method 126,141,028.41 33,647,355.51
Long-term equity investment income by the equity method 115,931.55 -387,059.05
Income from disposal of long-term equity investments 56,981,723.57 76,252,009.03
Income from holding financial assets measured by fair value with changes
---
recognized in current profit or loss
Income from disposal of financial assets measured by fair value with changes
---
recognized in current profit or loss
Income from holding of held-to-maturity investments ---
Investment income during the possession of available-for-sale financial assets ---
Income from disposal of held-to-maturity investments ---
Income from disposal of available-for-sale financial assets ---
Profit from re-measurement of fair value of the remaining equity after loss of
---
control
Realized gains (losses) on the invalid cash flow hedges ---
Others 26,754,761.47 31,725,185.43
Total 209,993,445.00 141,237,490.92
XVII. Supplementary material
(I) Details of non-recurring profit and loss
Item Amount Notes
Profit and loss from disposal of non-current assets 54,066,201.12
Tax refund, reduction or exemption upon approval exceeding authorized -
Notes to Financial Statements Page 122
Item Amount Notes
limits or without formal documents
Government subsidies recognized in current profit or loss (except those
closely related to corporate business and enjoyed according to national 6,416,623.72
standards or certain quota)
Fund appropriation charges for non-financial entities recognized in current
2,376,532.33
profit or loss
Gains from the margin between the investment cost of the Company for
acquisition of subsidiaries, joint ventures and joint operation enterprises and
-
the recognizable fair value of net assets of invested units at the time of
acquisition
Loss from transfer of non-monetary assets -
Profit or loss from entrusting investment or managing assets 15,843,427.61
Provision for assets impairment withheld for Force Majeure -
Profit or loss from debt restructuring -
Expenditures for corporate restructuring, such as expenses for relocation of
-
employees and for integration
Profit or loss from unfairly priced transactions in which the transaction value
-
exceeds the fair value
Net current profit and loss of a subsidiary due to the business combination
10,632,970.71
under common control from the beginning of period to the date of merger
Profit or loss from contingency items irrelevant with regular operation of the
-
Company
Profit or loss from changes in fair value by holding of transaction financial
assets and liabilities, except effective hedging business related to regular
operation of the Company, and investment income from disposal of -
transaction financial assets and liabilities as well as available-for-sale
financial assets
Transferred-back impairment provision for accounts receivable, for which
-
separate impairment tests are carried out
Profit and loss for external entrusted loans -
Profit or loss from changes in fair value of investment properties, whose
-
subsequent measurement is carried out based on the fair value mode
Influence on current profit and loss by one-off adjustment according to tax
-
and accounting laws and regulations
Trustee fee from entrusted operation 143,444.42
Other non-operating income and expenses except the above-mentioned items 8,349,713.60
Other profit and loss fitting the definition of non-recurring profit and loss -
Less: Influenced amount of income tax 24,815,042.12
Amount of influence of minority shareholders' equity (after tax) 2,138,166.61
Total 70,875,704.78
Notes to Financial Statements Page 123
(II) ROE and EPS
Weighted average return on Earnings per share
Profit in current reporting period
equity (ROE) (%) Basic EPS Diluted EPS
Net profit attributable to common shareholders
11.96 0.1777 0.1777
of the Company
Net profit attributable to common shareholders
of the Company after deduction of 8.10 0.1241 0.1241
non-recurring losses and gains
Notes to Financial Statements Page 124
Chapter 12 Documents Available for Reference
(1) Financial Statements with signatures and seals of the legal person, the responsible person of accounting work
and the responsible person of the accounting institution;
(2) Original of the audit report with signatures and seals of the accounting firm and CPAs;
(3) Originals of all the files and the manuscripts of public notices of the Company disclosed on the newspapers
specified by the CSRC in the reporting period.
Shenzhen SEG Co., Ltd.
Board of Directors
April 20, 2018
Notes to Financial Statements Page 125
