SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
SHENZHEN ZHONGHENG HUAFA CO., LTD.
SEMI-ANNUAL REPORT 2014
August 2014
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of SHENZHEN ZHONGHENG HUAFA CO., LTD. (hereinafter
referred to as the Company) hereby confirm that there are no any fictitious
statements, misleading statements, or important omissions carried in this report,
and shall take all responsibilities, individual and/or joint, for the reality,
accuracy and completion of the whole contents.
All directors are attended the Board Meeting for report deliberation.
The Company has no plans of cash dividend distributed, no bonus shares and
has no share converted from capital reserve either.
Li Zhongqiu, principal of the Company, Cao Li, person in charger of accounting
works and Wu Aijie, person in charge of accounting organ (accounting principal)
hereby confirm that the Financial Report of Semi-Annual Report 2014 is
authentic, accurate and complete.
Concerning the forward-looking statements with future planning involved in the
semi-annual report, they do not constitute a substantial commitment for
investors. Majority investors are advised to exercise caution of investment risks.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Content
Semi-Annual Report 2014 ................................................................................................................. 1
Section I Important Notice, Contents and Paraphrase .................................................................. 2
Section II Company Profile ............................................................................................................... 5
Section III Accounting data and summary of finnaical indexes .................................................... 7
Section IV Report of the Board of Directors ................................................................................... 9
Section V Important Events ............................................................................................................ 14
Section VI Changes in shares and particular about shareholders............................................... 19
Section VII Preferred Stock………………………………………………..…………………...…22
Section VIII Directors, Supervisors and Senior Executives ....................................................... 23
Section IX Financial Report ............................................................................................................ 24
Section X Documents Available for Reference ......................................................................... ..106
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Paraphrase
Items Refers to Definition
Company, Shen Huafa Refers to SHENZHEN ZHONGHENG HUAFA CO., LTD.
Hengfa Technology company Refers to Wuhan Hengfa Technology Co., Ltd.
Huafa Property Company Refers to Shenzhen Zhongheng Huafa Property Co., Ltd
Huafa Lease Company Refers to Shenzhen Huafa Property Lease Management Co., Ltd
Huafa Trade Co., Ltd. Refers to Wuhan Zhongheng Huafa Trade Co., Ltd.
Wuhan Zhongheng Group Refers to Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd.
HK Yutian Company Refers to Hong Kong Yutian International Investment Co., Ltd.
Hengsheng Photoelectricity Company Refers to Wuhan Hengsheng Photoelectricity Industry Co., Ltd.
Hengsheng Yutian Company Refers to Wuhan Hengsheng Yutian Industrial Co., Ltd.
Yutian Henghua Company Refers to Shenzhen Yutian Henghua Co., Ltd.
Huafa Hengtian Company Refers to Shenzhen Huafa Hengtian Co., Ltd.
Huafa Hengtai Company Refers to Shenzhen Huafa Hengtai Co., Ltd.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Section II Company profile
I. Company Profile
Short form for share SHEN HUAFA-A, SHEN HUAFA- B Code for share 000020, 200020
Listing stock exchange Shenzhen Stock Exchange
Chinese name of the Company 深圳中恒华发股份有限公司
Abbr. of Chinese name of the
深华发
Company(if applicable)
English name of the
SHENZHEN ZHONGHENG HUAFA CO., LTD.
Company(if applicable)
Legal Representative Li Zhongqiu
II. Contact person and ways
Secretary of the Board Rep. of securities affairs
Name Weng Xiaojue Niu Yuxiang
6/F, East Tower, Huafa (N) Road, Futian 6/F, East Tower, Huafa (N) Road, Futian District,
Contact adds.
District, Shenzhen Shenzhen
Tel. (0755) 83352206 (0755) 61389198
Fax. (0755) 61389001 (0755) 61389001
E-mail hwafainvestor@126.com.cn hwafainvestor@126.com.cn
III. Others
1. Way of contact
Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or
not
□ Applicable √ Not applicable
Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period,
found more details in Annual Report 2013.
2. Information disclosure and preparation place
Whether information disclosure and preparation place changed in reporting period or not
□ Applicable √ Not applicable
The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation
place for semi-annual report have no change in reporting period, found more details in Annual Report 2013.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
3. Registration changes of the Company
Whether registration has changed in reporting period or not
□ Applicable √ Not applicable
Date/place for registration of the Company, registration number for enterprise legal license, number of taxation registration and
organization code have no change in reporting period, found more details in Annual Report 2013.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Section III. Accounting data and summary of financial indexes
I. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting
error correction or not
□Yes √ No
Increase/decrease in this
Current period Same period of last year
report y-o-y
Operating revenue (RMB) 366,621,826.36 302,732,823.42 21.10%
Net profit attributable to shareholders of
1,455,936.93 1,967,980.43 -26.02%
the listed company(RMB)
Net profit attributable to shareholders of
the listed company after deducting 1,039,567.88 2,817,846.22 -63.11%
non-recurring gains and losses(RMB)
Net cash flow arising from operating
-188,587,686.53 -28,557,957.20 -560.37%
activities(RMB)
Basic earnings per share (RMB/Share) 0.0051 0.0070 -27.14%
Diluted earnings per share (RMB/Share) 0.0051 0.0070 -27.14%
Weighted average ROE (%) 0.53% 0.7% 0.17 percentage points down
Increase/decrease in this
End of current period End of last period report-end over that of last
period-end
Total assets (RMB) 1,187,640,332.71 731,348,499.86 62.39%
Net assets attributable to shareholder of
275,119,586.40 273,663,649.47 0.53%
listed company(RMB)
II. Items and amounts of extraordinary profit (gains)/loss
√Applicable □Not applicable
In RMB
Item Amount Note
Gains/losses from the disposal of non-current asset (including the
64,047.39
write-off that accrued for impairment of assets)
Other non-operating income and expenditure except for the
491,111.34
aforementioned items
Less: Impact on income tax 138,789.68
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Total 416,369.05 --
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Section IV. Report of the Board of Directors
I. Introduction
For the 1st half year of 2014, the global economy recovered in growth. Chinese economy stepped to the period of
platform transition and area of deep reformation. The downward pressure on economy intensified. Though faced
with macro policies of deadline-holding and stability-maintaining, it is still expectable to keep a reasonable
growth for the economy. Traditional home-appliance industry is tending to shift to new business model and
stepping marketing to intelligent home-appliance. Hence, consumption is upgrading and demand is stable.
Correspondingly, our business of processing to affiliated products of home-appliances, obtained slight
improvement in stability. Due to reducing price to enhance sales volume as well as cost increment, gross margin
of 3 business sections declined at different levels. The overall performance kept a basic level compared with the
same period of last year. Leasing own properties maintained a stale operation. For the 1st half year of 2014, the
Company realized operating income of RMB 366.62 million, up by 21.1% against last year; net profit of RMB
1.46 million, down by 26.02% against last year.
Industry production: molding section obtained operating income of RMB 145.51 million in reporting period, up
by 28.32% against last year. Based on important/crucial clients relationship management, they adjusted orders
strategy at an appropriate level. Hence they minimized quantity of orders with narrow gross margin and added
business with higer gross margin. Also they strenghthed fine and detailed management, strictly control site
production. They endured challenge of particularness and repeated check from well-known clients, with quality
products, retained the good reputation. Styrofoam section realized oerating income of RMB 41.55 million in
reporting period, up 12.07% against last year. Faced with going-up prices of material and fuels, more cost to
huamn resurce, going-down sales price and intensified market competition, the section made use of unique
technology and differential competitiveness to resolve problem raised by client. Hence they won a good reputation
and the initiative among market competion. The vedio section relaized operatig incoem of RMB 140.67 million in
reporting period, up by 5.34% against last year. Taking priority of fundamental production, the section put more
energy to design and development of new products. They took trial on optimizing cost of monitors, sets types
adjustment and upgrading structure.
Property Lease: the leasing contract for 1st floor to 3rd floor of Huafa Building, which is own property of the
Company, had been terminated in the 3rd season of 2012. It needs redecoration and merchant. While the railway
station of the line 7 nearby ―Huaqiang North‖ shopping mall is being constructed, the unfavorable environment
caused slow tender progress. In reporting period, the Company continued positive negotiation with appropriate
merchants. Hence we speeded up the progress and obtained improvement. Now most areas have been leased out.
Shops are running business one by one. Though most idle areas have been settled with merchants in, not all the
problems have been solved. For 1st half year of 2014, the property leasing section realized operating income of
RMB 18.39 million, up by 12.30% against last year.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
II. Main business analysis
Y-o-y changes of main financial data
In RMB
Current period Same period of last year Y-o-y increase/decrease Reasons for changes
Operation revenue 366,621,826.36 302,732,823.42 21.10%
Operation cost 326,921,602.88 263,513,507.38 24.06%
Sales expenses 5,564,699.14 4,557,574.73 22.10%
Administrative expenses 19,519,931.83 21,074,358.43 -7.38%
Financial cost 10,209,515.26 9,523,053.98 7.21%
Reversed previous
Income tax expense 640,767.95 369,738.80 73.30% deferred income tax
expenses
Sales return decreased in
Net cash flow arising the Period and money
-188,587,686.53 -28,557,957.20 -560.37%
from operation activities paid in advance for
goods increased
Net cash flow arising
Boiler expenses newly
from investment -2,820,541.76 -1,476,896.06 -90.98%
included in the period
activities
New bank loans
Net cash flow arising increased due to the
424,887,205.90 40,161,342.42 957.95%
from financing activities operation development
needs
Net increase of cash and New bank loans
233,520,462.11 7,635,602.30 2,958.31%
cash equivalent increased in the period
Major changes on profit composition or profit resources in reporting period
□ Applicable √ Not applicable
No major changes on profit composition or profit resources occurred in reporting period
The future development and planning extended to reporting period that published in disclosure documents as prospectus, private
placing memorandum and recapitalize statement
□ Applicable √ Not applicable
No future development and planning extended to reporting period that published in disclosure documents as prospectus, private
placing memorandum and recapitalize statement
Review on the previous business plan and its progress during reporting period
Null
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
III. Constitution of main business
In RMB
Increase or
Increase or
decrease of Increase or decrease
decrease of
Operating operating cost of gross profit ratio
Operating cost Gross profit ratio operating revenue
revenue over same over same period of
over same period
period of last last year
of last year
year
According to industries
1.92 percentage
Monitors 140,670,450.02 138,062,144.77 1.85% 5.34% 7.45%
points up
Plastic injection 1.42 percentage
145,506,562.10 131,348,336.50 9.73% 28.32% 30.37%
hardware points up
3.04 percentage
Foam pieces 41,549,843.23 36,581,795.46 11.96% 12.07% 16.08%
points up
Steel 16,714,846.30 16,664,364.08 0.30%
According to products
1.92 percentage
Monitors 140,670,450.02 138,062,144.77 1.85% 5.34% 7.45%
points up
Plastic injection 1.42 percentage
145,506,562.10 131,348,336.50 9.73% 28.32% 30.37%
hardware points up
3.04 percentage
Foam pieces 41,549,843.23 36,581,795.46 11.96% 12.07% 16.08%
points up
Steel 16,714,846.30 16,664,364.08 0.30%
According to region
2.96 percentage
Hong Kong 121,292,733.85 120,304,763.74 0.81% -9.17% -6.37%
points up
2.78 percentage
Central China 223,148,967.80 202,351,877.07 9.32% 48.30% 52.99%
points up
IV. Core competitive-ness analysis
1. All industrial lands of the Company located in Shenzhen were taken into the first batch of plan under 2010 Shenzhen urban
upgrade unit planning formulation plan. In future, development and operation of self-owned land resources would become the
income source of the Company on a long-term and stable basis and new profit growth point.
2. The Company has three plants in Wuhan economic technology park with an area of nearly 80,000 square meters where various
famous enterprises are located in this area. Benefiting from radiation radius requirements for processing matching services, the
Company enjoys superior and stable customer resources and has formed a good long-term cooperative relationship; in particular, its
injection molding business and polystyrene businesses have been operated for many years with steady management group and
abundant production experiences, which makes the Company enjoying high recognition and annual production capacity and scale in
the forefront of Central China.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
V. Investment analysis
1. Main subsidiaries and joint-stock companies analysis
√ Applicable □ Not applicable
Main subsidiaries and joint-stock companies
In RMB
Industry Main products or Registered Operation Operation
Name Type Total assets Net assets Net profit
involved service capital revenue profit
R&D,
Hengfa production, sales
Production
Technology Subsidiary of products and 181,643,111.00 711,709,129.26 203,319,130.06 329,391,930.56 2,564,815.99 2,348,844.65
sales
company import and export
business etc.
Sales of
Huafa Photoelectricity
Trade Co., Subsidiary Sales products, 100,000.00 100,324,687.15 -883,689.72 16,714,846.30 34,325.25 34,324.09
Ltd. Imp&Exp
business of goods
Property leasing
Huafa
Property and management
Property Subsidiary 1,000,000.00 480,927.13 -834,913.66 824,513.80 11,728.10 11,578.10
management of self-owned
Company
property
Property leasing
Huafa
Property and management
Lease Subsidiary 1,000,000.00 1,900,692.20 -5,026,990.71 0.00 0.00 0.00
management of self-owned
Company
property
Property leasing
Yutian
Property and management
Henghua Subsidiary 1,000,000.00 999,940.00 999,940.00 0.00 -60.00 -60.00
management of self-owned
Company
property
Property leasing
Huafa
Property and management
Hengtian Subsidiary 1,000,000.00 999,940.00 999,940.00 0.00 -60.00 -60.00
management of self-owned
Company
property
Property leasing
Huafa
Property and management
Hengtai Subsidiary 1,000,000.00 999,940.00 999,940.00 0.00 -60.00 -60.00
management of self-owned
Company
property
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
VI. Prediction of business performance from January – September 2014
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
VII. Explanation from the Board and Supervisory Committee for “Qualified Opinion” from
the CPA of this year’s
□ Applicable √ Not applicable
VIII. Explanation on “Qualified Opinion” of previous year from the Board
□ Applicable √ Not applicable
IX. Implementation of profit distribution in reporting period
Implementation or adjustment of profit distribution plan in reporting period, cash dividend plan and shares converted from capital
reserve in particular
□ Applicable √ Not applicable
Previous year’s profit distribution plan was no profit distribution and shares converted from capital reserve either
X. Profit distribution and capitalization of capital reserves in the Period
□ Applicable √ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the semi-annual year
XI. In the report period, reception of research, communication and interview
√ Applicable □ Not applicable
Contents discussed and
Time Place Way Type Reception
material provided
Communicating operation
Telephone
Headquarter of situation of the Company,
2014.1.1~2014.6.30 communication / Individuals Individual investor
the Company assets status and process of
inquiry in writing
city update projects
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Section V. Important Events
I. Corporate governance
The actual condition of the corporate governance shows no difference with the Company Law and relevant
requirement from CSRC.
II. Significant related transaction
1. Related transaction related to daily operation
√ Applicable □ Not applicable
Amount
Ration in
Contents of Accounts-s
Parties of Type of Pricing Price of amount of Available market
Related of related ettlement of Date of Index of
related related principle of related similar prices of similar
relationship related trade (10 related disclosure disclosure
trade trade related trade trade related transactions
trade thousand trade
trade
Yuan)
The average market price
refers to the price of same
specifications which is
searched from through the
Confirmed with 1%
world famous professional http://www.cni
Under the of current market
Hengsheng Purchasing market survey company nfo.com.cn/fin
control of the average price in Telegraphic
Photoelectricity Purchase LCD 2,272 6.96% website 2014-04-22 alpage/2014-0
same final principle, and refer transfer
Company monitors http://www.witsview.com 4-22/6388875
controlling party to both their
recognized authority in the 0.PDF
bargaining power
industry and LCD
professional market survey
company website
http://www.witsview.com.
Purchasing
Under the
LCD
HK Yutian control of the Synchronized with Telegraphic
Purchase overall 8,419 25.81% 2014-04-22 Same as above
Company same final the market transfer
monitor
controlling party
machine set
Under the Sales LCD
According to the
HK Yutian control of the overall Telegraphic
Sales customer sales order 12,129 33.08% 2014-04-22 Same as above
Company same final monitor transfer
price sure
controlling party machine set
Hengsheng Under the Sales of
Reference to the Telegraphic
Photoelectricity control of the Sales LCD TVs 12.38 0.03% - -
market price transfer
Company same final and
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
controlling party computers
22,832.3
Total -- -- -- -- -- -- --
8
Details of returned large sales N/A
In the reporting period, Hengfa Technology Company purchased LCD from Hengsheng Photoelectricity
Predict on total amount of daily related trade
Company with RMB 22,720,000 approximately, 31.04% of the annual amount predicted at the beginning
on the way in this period according to
of the year; purchased LCD from HK Yutian Company with RMB 84,190,000, approximately, 27.61% of
classification, as well as actual
the annual amount predicted at the beginning of the year; sold LCD whole machine to HK Yutian
implementation in reporting period (if
Company with RMB 121,290,000 approximately, 36.16% of the annual amount predicted at the
applicable)
beginning of the year.
2. Related transaction incurred by purchase or sales of assets
□ Applicable √ Not applicable
No related transaction incurred by purchase or sales of assets in Period
3. Related transaction from jointly investment outside
□ Applicable √ Not applicable
No related transaction from jointly investment outside occurred in Period
4. Credits and liability of related party
√ Applicable □ Not applicable
Whether have non-operation related liabilities and credits relations or not
□Yes√ No
The Company had no non-operation related liabilities or credits relations
5. Other significant related transactions
□ Applicable √ Not applicable
The Company had no other significant related transactions in the reporting period
III. Significant contracts and its implementation
1. Guarantees
√ Applicable □ Not applicable
In 10 thousand Yuan
Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries)
Related Actual date of Complete
Name of the Company Actual guarantee Guarantee for
implementati
Announcement Guarantee limit happening (Date of Guarantee type Guarantee term
guaranteed limit related party
on or not
disclosure date signing agreement)
Guarantee of the Company for the subsidiaries
Related Actual date of Complete
Name of the Company Actual guarantee Guarantee for
implementatio
Announcement Guarantee limit happening (Date of Guarantee type Guarantee term
guaranteed limit related party
n or not
disclosure date signing agreement)
Hengfa Technology Joint liability
2014-04-22 50,000 10,537 1 year No No
Company guarantee
Total amount of approving guarantee for 50,000 Total amount of actual occurred guarantee 12,800
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
subsidiaries in report period (B1) for subsidiaries in report period (B2)
Total balance of actual guarantee for
Total amount of approved guarantee for
50,000 subsidiaries at the end of reporting period 10,537
subsidiaries at the end of reporting period (B3)
(B4)
Total amount of guarantee of the Company( total of two abovementioned guarantee)
Total amount of approving guarantee in report Total amount of actual occurred guarantee
50,000 12,800
period (A1+B1) in report period (A2+B2)
Total amount of approved guarantee at the end Total balance of actual guarantee at the
50,000 10,537
of report period (A3+B3) end of report period (A4+B4)
The proportion of the total amount of actually guarantee in the net assets of the
38.30%
Company (that is A4+ B4)
Including:
Amount of guarantee for shareholders, actual controller and its related parties(C) 0
The debts guarantee amount provided for the guaranteed parties whose assets-liability
0
ratio exceed 70% directly or indirectly(D)
Proportion of total amount of guarantee in net assets of the Company exceed 50%(E) 0
Total amount of the aforesaid three guarantees(C+D+E) 0
Explanations on possibly bearing joint and several liquidating responsibilities for undue
N/A
guarantees (if applicable)
Explanations on external guarantee against regulated procedures (if applicable) N/A
Explanation on details of guarantee by complex method
Nil
(1) Guarantee outside against the regulation
□ Applicable √ Not applicable
No guarantee outside against the regulation in Period
2. Other material contracts
□ Applicable √ Not applicable
The Company had no other material contracts in the reporting period.
3. Other material transactions
□ Applicable √ Not applicable
The Company had no other material transactions in the reporting period.
IX. Commitments made by the Company or shareholders holding above 5% shares of the
Company in reporting period or occurred in the previous reporting period but continued to
reporting period
√ Applicable □ Not applicable
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Commitment Dated for Commitment
Commitments Contents Implementation
party commitment term
Share Merger Reform N/A N/A
Within 1 year
after transferred
of this equity
acquisition: 1.
Injected relevant
capital of plastic 12 April 2007 to
Wuhan
Commitments in report of acquisition or injection 11 April 2008;
Zhongheng 2007-03-29 Implementing
equity change business into the 13 May 2014 to
Group
Company; 12 May 2015
2.70% equity of
the Hengsheng
Photoelectricity
will inject into
the Company.
Commitments in assets reorganization N/A N/A
Commitments in initial public offering or N/A N/A
refinancing
Other commitments to minority N/A N/A
shareholders of the Company
Completed on time or not No
1. On 5 June 2008, approving by the 3rd Extraordinary Meeting of Board of Directors
2008, the Company purchased relevant assets of plastic injection products from
Wuhan Zhongheng Group by cash of RMB 27 million, the commitment have been
implemented;
2. In the first 10 days of May, 2008, the Company officially started off the significant
asset restructures work of purchasing the 70% equities of Hengsheng Photoelectricity.;
engaged financial consultant and law consultant to carry out earnest investigation on
the restructure assets that may be involved, and negotiated with relevant departments
Detail reasons for un-complement and which were in charge of this. However, due to that relevant condition was not mature;
further plan (if applicable) there still remain obstacles in material asset restructure.
In April 2014, considering unpleasant operation of Hengsheng Photoelectricity, as well
avoid causing loss to listed companies due to forced commitment fulfillment, holding
shareholder Wuhan Zhongheng Group raised proposal of changing the commitment
from perspective of maintaining long-term interests of listed company, which was
changed to: within 1 year since the General Shareholders’ Meeting approved, Wuhan
Zhongheng Group sold its underneath street shops located in property of the 1st phase
of Yutian Happy Sea in cash. The revised commitment has been approved in
Shareholders’ General Meeting of 2013 held on 13th May 2014.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
V. Engagement and non-reappointment of CPA
Whether the semi-annual report was audited or not
□ Yes √ No
VI. Penalty and rectification
□ Applicable √ Not applicable
The Company had no penalty or rectification in the reporting period.
VII. Risk disclosure of delisting with laws and rules violated
□ Applicable √ Not applicable
The Company has no delisting risks with laws and rules violated in Period
VIII. Explanation on other significant events
(I)The Company signed Asset Exchange Contract with Wuhan Zhongheng Group on 29 April 2009 (details were referred to in the
announcement dated 30 April 2009), and the contract was executed well (details were set out in the 2010 annual report). Pursuant to
the contract, since part of the assets of the Company (namely two parcel of industrial lands located at Huafa road, Gongming town,
Guangming new district, Shenzhen (the property certificate No. were SFDZ No.7226760 and SFDZ No.7226763, No. of parcels were
A627-005 and A627-007, and the aggregate area was 48,200 sq.m)) were the lands listed in the first batch of plan for 2010 Shenzhen
urbanization unit planning preparation plan. For promotion of such urbanization project and joint cooperation, the Company has not
completed the transfer procedures in respect of the aforesaid land.
(II) Controlling shareholder of the Company – Wuhan Zhongheng Group, derived established the ―Wuhan Zhongheng New
Technology Industrial Group Co., Ltd.‖ and ―Wuhan Zhongheng Huaxin Industrial Co., Ltd.‖ in September 2013 for further resource
integration and industry layout adjustment: ―Wuhan Zhongheng New Technology Industrial Group Co., Ltd.‖ is the surviving
corporation after derived, maintains original name of Wuhan Zhongheng Group and owns assets and equity with the real estate
concerned under the name of former Wuhan Zhongheng Group; ―Wuhan Zhongheng Huaxin Industrial Co., Ltd.‖ (Huaxin
Industrial) is a newly company derived, owes assets and equity without real estate concerned under the name of former Wuhan
Zhongheng Group. After splitting, the two enterprises have the same shareholder structures as 99 percent equity held by Mr. Li
Zhongqiu and 1 percent equity owned by Wuhan Henghui Investment Consulting Co., Ltd.
After completion of splitting, Huaxin Industrial inherit 41.14 percent equity of the Company that held by former Wuhan Zhongheng
Group, and the ―Reply on Approval of Wuhan Zhongheng Huaxin Industrial Co., Ltd. Notified the Purchase Report and Exempted
the Mandatory Tender Offer to Shenzhen Zhongheng Huafa Co., Ltd. issued by CSRC‖ (Zheng Jian Xu Ke [2013] No.1503) was
received dated 27 November 2013. Up to end of the Period, ownership transfer procedures for the aforesaid shares are not completed.
Wuhan Zhongheng Group no longer owns shares of the Company after ownership of stock transfer, controlling shareholder of the
Company change to Huaxin Industrial with actual controller stay the same as well as total share capital of the Company; the
controlling shareholder splitting has no substantive impact on the Company.
18
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Section VI. Changes in Shares and Particulars about Shareholders
I. Number of shares and shares held
In Share
Total preference shareholders
Total common shareholders at with voting rights recovered at
24,909 0
period-end end of reporting period (if
applicable) (see Note 8)
Particulars about shares held above 5% by shareholders or top ten shareholders
Changes Number of share
Number of Amount of Amount of pledged/frozen
Nature of Proportion of in
Shareholders shares held at the restricted the restricted
shareholder shares held reporting State of
period-end shares held shares held Amount
period share
Domestic Pledged 116,489,894
Wuhan Zhongheng
non-state-owned 41.14% 116,489,894 N/A 116,489,894 0
Group Frozen 0
legal person
SEG (HONG KONG) Overseas legal Pledged/fro
5.85% 16,569,560 N/A 0 16,569,560 0
CO., LTD. person zen
GOOD HOPE Pledged/fro
Overseas legal
CORNER 4.91% 13,900,000 N/A 0 13,900,000 zen 0
person
INVESTMENTS LTD.
Domestic nature Pledged/fro
BINGHUA LIU 0.31% 876,213 0 876,213 0
person zen
Domestic nature Pledged/fro
Xie Deqing 0.28% 780,100 0 780,100 0
person zen
Domestic nature Pledged/fro
Shi Feng 0.25% 714,273 0 714,273 0
person zen
Domestic nature Pledged/fro
Wang Jianguang 0.23% 651,849 0 651,849 0
person zen
Domestic nature Pledged/fro
Li Jianfeng 0.23% 637,600 0 637,600 0
person zen
Domestic nature Pledged/fro
Zhu Ming 0.22% 611,348 0 611,348 0
person zen
Domestic nature Pledged/fro
Jia Wenjun 0.20% 557,232 0 557,232 0
person zen
Strategy investors or general corporate
N/A
becomes top 10 shareholders due to rights
19
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
issued (if applicable)
Among the top ten shareholders, Wuhan Zhongheng New Science & Technology Industrial
Group Co., Ltd. neither bears associated relationship with other shareholders, nor belongs to the
Explanation on associated relationship consistent actor that are prescribed in Measures for the Administration of Disclosure of
Shareholder Equity Changes of Listed Companies. The Company neither knew whether there
among the aforesaid shareholders exists associated relationship among the other tradable shareholders, nor they belong to
consistent actors that are prescribed in Measures for the Administration of Disclosure of
Shareholder Equity Changes of Listed Companies.
Particular about top ten shareholders with un-restrict shares held
Type of shares
Shareholders’ name Amount of listed shares held at period-end
Type Amount
Domestically listed
SEG (HONG KONG) CO., LTD. 16,569,560 16,569,560
foreign shares
GOOD HOPE CORNER INVESTMENTS Domestically listed
13,900,000 13,900,000
LTD foreign shares
Domestically listed
BINGHUA LIU 876,213 876,213
foreign shares
Domestically listed
Xie Deqing 780,100 780,100
foreign shares
Shi Feng 714,273 RMB common share 714,273
Domestically listed
Wang Jianguang 651,849 651,849
foreign shares
Domestically listed
Li Jianfeng 637,600 637,600
foreign shares
Domestically listed
Zhu Ming 611,348 611,348
foreign shares
Jia Wenjun 557,232 RMB common share 557,232
Wu Jingmin 491,786 RMB common share 491,786
Among the top ten unrestricted shareholders, the Company neither knew whether there
exists associated relationship among the other tradable shareholders, nor they belong to
Expiation on associated relationship or
consistent actors that are prescribed in Measures for the Administration of Disclosure of
consistent actors within the top 10 un-restrict
Shareholder Equity Changes of Listed Companies. Among the top ten shareholders, Wuhan
shareholders and between top 10 un-restrict
Zhongheng Group neither bears associated relationship with other shareholders, nor
shareholders and top 10 shareholders
belongs to the consistent actor that are prescribed in Measures for the Administration of
Disclosure of Shareholder Equity Changes of Listed Companies.
Ended as the reporting period, in top ten shareholders, 714,273 shares of the Company
Explanation on shareholders involving margin were hold by Shifeng through the guarantee securities account of client credit trading under
business (if applicable)(see note 4) the name of China Merchants Securities Co., Ltd., representing 100 percent of the
Company’s stock held by himself
20
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Whether has a buy-back agreement dealing in reporting period
□Yes √No
The shareholders o f the Company had no buy-back agreement dealing in reporting period.
II. Changes of controlling shareholders or actual controller
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
Changes of controlling shareholders had no change in reporting period.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
Changes of actual controller in reporting period had no change in reporting period.
III. Share holding increasing plan proposed or implemented in reporting period from
shareholder of the Company and its concerted action person
□ Applicable √Not applicable
As far as the Company know, there are no share holding increasing plan proposed or implemented in Period from shareholder of the
Company and its concerted action person
21
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Section VII. Preferred Stock
I. Issuance and listing of preferred stock in Period
□ Applicable √ Not applicable
II. Number of shareholders with preferred stock held and shareholdings
□ Applicable √ Not applicable
III. Repurchase and conversion of preferred stock
1. Preferred stock repurchased
□ Applicable √ Not applicable
2. Preferred stock converted
□ Applicable √ Not applicable
IV. Preferred stock with voting rights recovered and executed
□ Applicable √ Not applicable
V. Accounting policy taken for preferred stock and reasons
□ Applicable √ Not applicable
22
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2014
Section VIII. Directors, Supervisors and Senior Executives
I. Changes of shares held by directors, supervisors and senior executives
□ Applicable √ Not applicable
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report
2013.
II. Resignation and dismissal of directors, supervisors and senior executives
√ Applicable □ Not applicable
Name Title Type Date Reason
Independent End-of-term Term of office is about to expire for 6 years, apply to
Li Dingan 2014-05-13
director leave resigned independent director
Independent End-of-term Term of office is about to expire for 6 years, apply to
Zhang Yi 2014-05-13
director leave resigned independent director
Independent
Zhang Zhaoguo Be elected 2014-05-13 Be elected as independent director of the Company
director
Independent
Qiu Daliang Be elected 2014-05-13 Be elected as independent director of the Company
director
23
Full Text of Semi-annual Report of 2014 of Shenzhen Zhongheng Huafa Co., Ltd
Section IX. Financial Report
I. Audit reports
Whether the semi-annual report was audited or not
□ Yes √ No
The financial report of this semi-annual report was unaudited
II. Financial statements
Units in Notes of Financial Statements is RMB
1. Consolidated balance sheet
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 288,085,880.50 54,251,456.20
Settlement funds
Lending funds
Tradable financial assets
Notes receivable 62,149,080.06 154,375,936.49
Accounts receivable 370,534,892.45 162,278,705.83
Prepayments 134,263,486.22 13,483,243.19
Premium receivable
Reinsurance accounts receivable
Reinsurance contract reserve receivable
Interest receivable
Dividend receivable
Other account receivable 8,151,582.83 9,623,767.78
Buying back the sale of financial assets
Inventory 39,569,120.69 47,119,303.85
Non-current assets due within one year
Other current assets
Total current assets 902,754,042.75 441,132,413.34
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Non-current assets:
Issuance of loans and advances
Financial assets available for Sale
Held-to-maturity investment
Long-term receivables
Long term equity investment
Investment real estate 31,902,042.28 32,529,420.82
Fixed asset 190,900,570.00 195,542,067.03
Project in progress 4,090,567.21 2,323,356.00
Project materials
Liquidation of fixed asset
Productive biological asset
Oil and gas asset
Intangible asset 48,613,832.60 49,360,979.93
Development expenditure
Goodwill
Long-term deferred expenditure 1,188,108.26 1,773,524.86
Deferred income tax asset 8,191,169.61 8,686,737.88
Other non-current asset
Total non-current asset 284,886,289.96 290,216,086.52
Total Assets 1,187,640,332.71 731,348,499.86
Current Liabilities:
Short-term borrowing 170,394,502.49 162,140,601.13
Borrowing from the central bank
Deposits and interbank deposit
Borrowed capital
Transaction financial liabilities
Notes payable 42,926,747.44 34,646,052.79
Accounts payable 47,209,639.91 52,206,342.81
Account received in advance 1,651,857.66 1,572,324.29
Financial assets sold for repurchase
Fees and commissions payable
Salary payable 3,829,573.37 4,760,822.51
Taxes payable 14,932,208.31 14,943,081.06
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Interest payable
Dividend payable
Other payables 28,971,805.32 22,392,413.99
Reinsurance payables
Reserves for insurance contracts
Agency securities trading
Agency securities underwriting
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 309,916,334.50 292,661,638.58
Non-current liabilities
Long-term loans 600,000,000.00 162,418,800.00
Bonds payable
Long-term payables
Special payables
Accrued liabilities 2,604,411.81 2,604,411.81
Deferred income tax liability
Other non-current liability
Total non-current liability 602,604,411.81 165,023,211.81
Total liability 912,520,746.31 457,684,850.39
Owners’ equity (or Shareholder’s equity):
Paid-in capital(share capital) 283,161,227.00 283,161,227.00
Capital surplus 109,496,837.33 109,496,837.33
Less: treasury stock
Special reserve
Surplus reserve 77,391,593.25 77,391,593.25
Reserve for general risks
Retained profit -194,930,071.18 -196,386,008.11
Converted difference in foreign currency Statements
Total owner’s equity attributable to parent company 275,119,586.40 273,663,649.47
Interest of minority shareholders
Total owners’ equity (or shareholders equity) 275,119,586.40 273,663,649.47
Total liabilities and owners’ equity (or shareholders equity) 1,187,640,332.71 731,348,499.86
Legal Representative: Li Zhongqiu
Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
26
Full Text of Semi-annual Report of 2014 of Shenzhen Zhongheng Huafa Co., Ltd
2. Balance Sheet of Parent Company
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Item Closing balance Opening balance
Current assets:
Monetary fund 223,238,213.51 18,575,925.94
Tradable financial assets
Notes receivable
Accounts receivable 1,699,750.46 38,718,332.28
Prepayments 500,000.00 1,004,976.83
Interest receivable
Dividend receivable
Other account receivable 378,317,866.58 100,394,931.80
Inventory 14,806.50 14,806.50
Non-current assets due within one year
Other current assets
Total current assets 603,770,637.05 158,708,973.35
Non-current assets:
Financial assets available for Sale
Held-to-maturity investment
Long-term receivables
Long term equity investment 187,708,900.00 186,708,900.00
Investment real estate 31,902,042.28 32,529,420.82
Fixed assets 102,295,284.64 104,096,997.92
Project in progress 2,693,356.00 2,323,356.00
Project materials
Liquidation of fixed assets
Productive biological asset
Oil and gas asset
Intangible assets 5,350,910.73 5,423,383.56
Development expenditure
Goodwill
Long-term deferred expenditure 1,123,666.67 1,698,633.25
Deferred income tax asset 8,527,442.54 8,485,262.26
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Other non-current assets
Total non-current assets 339,601,602.86 341,265,953.81
Total assets 943,372,239.91 499,974,927.16
Current liabilities:
Short-term borrowing 37,708,000.00 36,180,000.00
Transaction financial liabilities
Notes payable
Accounts payable 9,740,367.33 10,745,344.16
Account received in advance 1,050,045.10 126,522.29
Salary payable 655,258.44 655,258.44
Taxes payable 10,600,796.84 10,616,750.61
Interest payable
Dividend payable
Others payables 17,123,912.88 11,799,762.43
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 76,878,380.59 70,123,637.93
Non- current liabilities:
Long-term loans 600,000,000.00 162,418,800.00
Bonds payable
Long-term payables
Special payables
Accrued liabilities 2,604,411.81 2,604,411.81
Deferred income tax liability
Other non-current liability
Total non-current liability 602,604,411.81 165,023,211.81
Total liabilities 679,482,792.40 235,146,849.74
Owners’ equity (or Shareholder’s equity):
Paid-in capital(share capital) 283,161,227.00 283,161,227.00
Capital surplus 109,496,837.33 109,496,837.33
Less: treasury stock
Special reserve
Surplus reserve 77,391,593.25 77,391,593.25
Reserve for general risks
28
Full Text of Semi-annual Report of 2014 of Shenzhen Zhongheng Huafa Co., Ltd
Retained profit -206,160,210.07 -205,221,580.16
Converted difference in foreign currency
Total owners’ equity (or shareholders equity) 263,889,447.51 264,828,077.42
Total liabilities and owners’ equity (or shareholders equity) 943,372,239.91 499,974,927.16
Legal Representative: Li Zhongqiu
Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
3. Consolidated Income Statements
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Item Current Amount Amount of the Previous Period
I. Total operation revenue 366,621,826.36 302,732,823.42
Including: Operating revenue 366,621,826.36 302,732,823.42
Interest income
Earned premium
Fee and commission income
II Total Operating cost 365,080,280.21 299,072,961.97
Including: Operating costs 326,921,602.88 263,513,507.38
Interest costs
Fee and commission costs
Cash surrender
Net compensation expenses
Net extraction reserves for insurance contracts
Policy dividend payout
Reinsurance expense
Business tax and surcharge 3,005,524.09 1,273,512.07
Sales expenses 5,564,699.14 4,557,574.73
Administrative expenses 19,519,931.83 21,074,358.43
Financial expenses 10,209,515.26 9,523,053.98
Asset impairment losses -140,992.99 -869,044.62
Add: gains from changes of fair value (Loss is listed with ―-‖)
Investment gain (Loss is listed with ―-‖)
Including: Investment gains on affiliated Company and joint venture
Exchange gains (Loss is listed with ―-‖)
III. Operating profits (Loss is listed with ―-‖) 1,541,546.15 3,659,861.45
29
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Add: Non-operating income 652,682.97 718,320.79
Less: Non-operating expenditure 97,524.24 2,040,463.01
Including: Disposal loss on non-current liability 97,351.51 135,953.01
IV Total profits (Total loss is listed with ―-‖) 2,096,704.88 2,337,719.23
Less: Income tax expenses 640,767.95 369,738.80
V. Net profit (Net loss is listed with ―-‖) 1,455,936.93 1,967,980.43
Including: Net profit generated by combined party before merged
Net profit attribute to owners of parent company 1,455,936.93 1,967,980.43
Minority interest
VI. Earnings per share(EPS) -- --
(i) Basic Earnings per share(EPS) 0.0051 0.0070
(ii) Diluted Earnings per share(EPS) 0.0051 0.0070
VII. Other consolidated income
VIII. Total consolidated income 1,455,936.93 1,967,980.43
Total consolidated income attributable to owners of parent company 1,455,936.93 1,967,980.43
Total consolidated income attributable to minority shareholders
Legal Representative: Li Zhongqiu
Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
4. Profit Statement of parent company
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Items Current Amount Amount of the Previous Period
I. Operation revenue 19,690,535.70 18,088,918.23
Less: Operating costs 3,355,943.00 2,725,748.13
Business tax and surcharge 1,326,375.12 1,239,814.83
Sales expenses 139,350.72
Administrative expenses 10,625,182.87 10,055,927.41
Financial expenses 5,283,456.79 2,782,510.22
Asset impairment losses 168,721.11 -869,044.62
Add: gains from changes of fair value(Loss is listed with ―-‖)
Investment gain(Loss is listed with ―-‖)
Including: Investment gains on affiliated Company and joint venture
III. Operating profits (Loss is listed with ―-‖) -1,069,143.19 2,014,611.54
Add: Non-operating income 88,333.00 20,094.30
Less: Non-operating expenditure 1,889,105.71
30
Full Text of Semi-annual Report of 2014 of Shenzhen Zhongheng Huafa Co., Ltd
Including: Disposal loss on non-current liability
III. Total profit (Loss is listed with ―-‖) -980,810.19 145,600.13
Less: Income tax expenses -42,180.28 -255,015.27
IV. Net profit (net loss is listed with ―-‖) -938,629.91 400,615.40
V. Earnings per share(EPS): -- --
(i) Basic Earnings per share(EPS) -0.0033 0.0014
(ii) Diluted Earnings per share(EPS) -0.0033 0.0014
VI. Other consolidated income
VII. Total consolidated income -938,629.91 400,615.40
Legal Representative: Li Zhongqiu
Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
5. Consolidated Cash Flow Statement
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Items Current Amount Amount of the Previous Period
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services 197,910,143.89 276,036,573.06
Net increase of customer deposit and interbank deposit
Net increase of loan from central bank
Net increase of capital borrowed from other financial institution
Cash received from original insurance contract fee
Net cash received from reinsurance business
Net increase of insured savings and investment
Net increase of disposal of transaction financial asset
Cash received from interest, commission charge and commission
Net increase of capital borrowed
Net increase of returned business capital
Write-back of tax received 3,999.97
Other cash received concerning operating activities 12,763,483.79 10,881,179.42
Subtotal of cash inflow arising from operating activities 210,673,627.68 286,921,752.45
Cash paid for purchasing commodities and receiving labor service 351,029,497.12 271,478,416.68
Net increase of customer loans and advances
Net increase of deposits in central bank and interbank
Cash paid for original insurance contract compensation
Cash paid for interest, commission charge and commission
31
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Cash paid for bonus of guarantee slip
Cash paid to/for staff and workers 29,924,620.37 25,565,420.41
Taxes paid 5,286,876.42 5,855,226.92
Other cash paid concerning operating activities 13,020,320.30 12,580,645.64
Subtotal of cash outflow arising from operating activities 399,261,314.21 315,479,709.65
Net cash flows arising from operating activities -188,587,686.53 -28,557,957.20
II. Cash flows arising from investing activities:
Cash received from recovering investment
Cash received from investment income
Net cash received from disposal of fixed, intangible and other long-term assets 50,000.00
Net cash received from disposal of subsidiaries and other units
Other cash received concerning investing activities
Subtotal of cash inflow from investing activities 50,000.00
Cash paid for purchasing fixed, intangible and other long-term assets 2,870,541.76 1,476,896.06
Cash paid for investment
Net increase of mortgaged loans
Net cash paid for obtaining subsidiaries and other units
Other cash paid concerning investing activities
Subtotal of cash outflow from investing activities 2,870,541.76 1,476,896.06
Net cash flows arising from investing activities -2,820,541.76 -1,476,896.06
III. Cash flows arising from financing activities
Cash received from absorbing investment
Including: Cash received from absorbing minority shareholders’ investment by
subsidiaries
Cash received from loans 799,000,437.23 166,842,751.16
Cash received from issuing bonds
Other cash received concerning financing activities
Subtotal of cash inflow from financing activities 799,000,437.23 166,842,751.16
Cash paid for settling debts 364,293,982.29 116,810,646.02
Cash paid for dividend and profit distributing or interest paying 9,819,249.04 9,870,762.72
Including: Dividend and profit of minority shareholder paid by subsidiaries
Other cash paid concerning financing activities
Subtotal of cash outflow from financing activities 374,113,231.33 126,681,408.74
Net cash flows arising from financing activities 424,887,205.90 40,161,342.42
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IV. Influence on cash and cash equivalents due to fluctuation in exchange rate 41,484.50 -2,490,886.86
V. Net increase of cash and cash equivalents 233,520,462.11 7,635,602.30
Add: Balance of cash and cash equivalents at the period -begin 50,704,319.86 112,834,841.39
VI. Balance of cash and cash equivalents at the period -end 284,224,781.97 120,470,443.69
Legal Representative: Li Zhongqiu
Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
6. Cash Flow Statement of parent company
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Item Current Amount Amount of the Previous Period
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services 18,611,154.73 16,811,461.89
Write-back of tax received
Other cash received concerning operating activities 50,396,603.18 14,384,915.17
Subtotal of cash inflow arising from operating activities 69,007,757.91 31,196,377.06
Cash paid for purchasing commodities and receiving labor service 1,177,778.17
Cash paid to/for staff and workers 2,542,177.05 2,740,597.93
Taxes paid 2,250,010.47 3,011,607.86
Other cash paid concerning operating activities 289,661,908.46 44,744,466.91
Subtotal of cash outflow arising from operating activities 294,454,095.98 51,674,450.87
Net cash flows arising from operating activities -225,446,338.07 -20,478,073.81
II. Cash flows arising from investing activities:
Cash received from recovering investment
Cash received from investment income
Net cash received from disposal of fixed, intangible and other long-term assets
Net cash received from disposal of subsidiaries and other units
Other cash received concerning investing activities
Subtotal of cash inflow from investing activities
Cash paid for purchasing fixed, intangible and other long-term assets 882,600.00 557,629.50
Cash paid for investment 1,000,000.00
Net cash paid for obtaining subsidiaries and other units
Other cash paid concerning investing activities
Subtotal of cash outflow from investing activities 1,882,600.00 557,629.50
Net cash flows arising from investing activities -1,882,600.00 -557,629.50
III. Cash flows arising from financing activities
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Cash received from absorbing investment
Cash received from loans 627,000,000.00 26,000,000.00
Cash received from issuing bonds
Other cash received concerning financing activities
Subtotal of cash inflow from financing activities 627,000,000.00 26,000,000.00
Cash paid for settling debts 187,890,800.00 1,485,000.00
Cash paid for dividend and profit distributing or interest paying 7,130,341.85 6,276,583.74
Other cash paid concerning financing activities
Subtotal of cash outflow from financing activities 195,021,141.85 7,761,583.74
Net cash flows arising from financing activities 431,978,858.15 18,238,416.26
IV. Influence on cash and cash equivalents due to fluctuation in exchange rate 12,367.49 -50,969.10
V. Net increase of cash and cash equivalents 204,662,287.57 -2,848,256.15
Add: Balance of cash and cash equivalents at the period -begin 18,575,925.94 10,555,114.25
VI. Balance of cash and cash equivalents at the period -end 223,238,213.51 7,706,858.10
Legal Representative: Li Zhongqiu
Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
7. Consolidated Statement on Changes of Owners' Equity
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
Current Amount
In RMB
Current Amount
Owners' equity attributable to the parent company
Reserve Interest of
Item Total owners’
Paid-in Less:
Special for minority
capital(share Capital surplus treasury Surplus reserve Retained profit Other equity
reserve general shareholders
capital) stock
risks
I. Balance at the end of last
283,161,227.00 109,496,837.33 77,391,593.25 -196,386,008.11 273,663,649.47
year
Add: Changes of
accounting policy
Error correction of
previous period
Others
II. Balance at the beginning
283,161,227.00 109,496,837.33 77,391,593.25 -196,386,008.11 273,663,649.47
of this year
III. Increase/ Decrease in this
1,455,936.93 1,455,936.93
year (Decrease is listed
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with'"-")
(i) Net profit 1,455,936.93 1,455,936.93
(ii) Other consolidated
income
Subtotal of (i)and (ii) 1,455,936.93 1,455,936.93
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
(IV)Profit distribution
1. Withdrawal of surplus
reserves
2. Withdrawal of general risk
provisions
3. Distribution for owners
(shareholders)
4. Others
(V) Carrying forward
internal owners' equity
1. Capital reserves conversed
to capital (share capital)
2. Surplus reserves conversed
to capital (share capital)
3. Remedying loss with
surplus reserve
4. Others
(VI) Special reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the
283,161,227.00 109,496,837.33 77,391,593.25 -194,930,071.18 275,119,586.40
report period
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Amount in last year
In RMB
Amount in last year
Owners’ equity attributable to the parent company
Reserve Interest of
Items Paid-in Less: Total owners’
Special for minority
capital(share Capital surplus treasury Surplus reserve Retained profit Other equity
reserve general shareholders
capital) stock
risks
I. Balance at the end of last
283,161,227.00 109,496,837.33 77,391,593.25 -189,868,606.67 280,181,050.91
year
Add: retroactive
adjustment arising from
enterprise consolidation under
the same control
Add: Changes of
accounting policy
Error correction of
previous period
Other
II. Balance at the beginning of
283,161,227.00 109,496,837.33 77,391,593.25 -189,868,606.67 280,181,050.91
this year
III. Increase/ Decrease in this
year (Decrease is listed -6,517,401.44 -6,517,401.44
with’‖-‖)
(i) Net profit -6,517,401.44 -6,517,401.44
(II) Other consolidated income
Subtotal of (i)and (ii) -6,517,401.44 -6,517,401.44
(III) Owners’ devoted and
decreased capital
1. Owners’ devoted capital
2. Amount calculated into
owners’ equity paid in shares
3. Others
(IV)Profit distribution
1. Withdrawal of surplus
reserves
2. Withdrawal of general risk
provisions
3. Distribution for owners
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(shareholders)
4. Others
(V) Carrying forward internal
owners’ equity
1. Capital reserves conversed
to capital (share capital)
2. Surplus reserves conversed
to capital (share capital)
3. Remedying loss with
surplus reserve
4. Others
( VI) Special reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the
283,161,227.00 109,496,837.33 77,391,593.25 -196,386,008.11 273,663,649.47
report period
Legal Representative: Li Zhongqiu
Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
8. Statement on Changes of Owners' Equity of Parent Company
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
Current Amount
In RMB
Current Amount
Reserve
Less:
Items Paid-in capital(share Special for Total owners’
Capital surplus treasury Surplus reserve Retained profit
capital) reserve general equity
stock
risks
I. Balance at the end of last year 283,161,227.00 109,496,837.33 77,391,593.25 -205,221,580.16 264,828,077.42
Add: Changes of accounting policy
Error correction of previous
period
Other
II. Balance at the beginning of this year 283,161,227.00 109,496,837.33 77,391,593.25 -205,221,580.16 264,828,077.42
III. Increase/ Decrease in this year
-938,629.91 -938,629.91
(Decrease is listed with’‖-‖)
(i) Net profit -938,629.91 -938,629.91
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(II) Other consolidated income
Subtotal of (i)and (ii) -938,629.91 -938,629.91
(III) Owners’ devoted and decreased
capital
1. Owners’ devoted capital
2. Amount calculated into owners’
equity paid in shares
3. Others
(IV)Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provisions
3. Distribution for owners
(shareholders)
4. Others
(V) Carrying forward internal owners’
equity
1. Capital reserves conversed to capital
(share capital)
2. Surplus reserves conversed to capital
(share capital)
3. Remedying loss with surplus
reserve
4. Others
(VI) Special reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the report
283,161,227.00 109,496,837.33 77,391,593.25 -206,160,210.07 263,889,447.51
period
Amount in last year
In RMB
Amount in last year
Less: Reserve
Item Paid-in capital Special Total owners’
Capital surplus treasury Surplus reserve for general Retained profit
(share capital) reserve equity
stock risks
I. Balance at the end of last year 283,161,227.00 109,496,837.33 77,391,593.25 -201,760,130.30 268,289,527.28
Add: Changes of accounting policy
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Error correction of previous period
Other
II. Balance at the beginning of this year 283,161,227.00 109,496,837.33 77,391,593.25 -201,760,130.30 268,289,527.28
III. Increase/ Decrease in this year
-3,461,449.86 -3,461,449.86
(Decrease is listed with’‖-‖)
(i) Net profit -3,461,449.86 -3,461,449.86
(II) Other consolidated income
Subtotal of (i)and (ii) -3,461,449.86 -3,461,449.86
(III) Owners’ devoted and decreased
capital
1. Owners’ devoted capital
2. Amount calculated into owners’
equity paid in shares
3. Others
(IV)Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)
4. Others
(V) Carrying forward internal owners’
equity
1. Capital reserves conversed to capital
(share capital)
2. Surplus reserves conversed to capital
(share capital)
3. Remedying loss with surplus
reserve
4. Others
(VI) Special reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the report
283,161,227.00 109,496,837.33 77,391,593.25 -205,221,580.16 264,828,077.42
period
Legal Representative: Li Zhongqiu
Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
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III．Basic information of the Company
Shenzhen Zhongheng Hwafa Co, Ltd. (hereinafter referred to as the Company, or, in case any of its subsidiary companies is
implied, the Group; its former name was "Shenzhen Huafa Electronics Co., Ltd..) was established on Dec. 8, 1981; it is a Sino-joint
venture jointly established by Shenzhen SEG Group Co., Ltd., China Zhenhua Electronics Co., Ltd. and H.K. Luks Industrial Co.,
Ltd. In 1991, the Company was reorganized into a limited liability company, its corporate business license No. being
440301501120670; in the same year, it issued 53130000 shares of common stock, each share with a face value of 1 Yuan, the shares
including 29630000 A Shares and 23500000 B Shares. In 1992, the A shares and B shares got listed on the Shenzhen Securities
Exchange; 53130000 shares were tradable shares, and 159203000 shares were non-tradable shares.
In November 1996, H.K. Luks Industrial Co., Ltd. transferred as agreed 12% of the shares in the Company, or 25,500,000 shares,
to the SEG (H.K.) Co., Ltd. That transfer was ratified by Shenzhen Securities Administration Office, and, on Mar. 5, 1997, was
registered with Shenzhen Securities Clearing Co. Ltd. After the transfer, the H.K. Luks Industrial Co., Ltd.'s shares in the Company
was reduced to 25,796,663 shares, accounting for 12.16% of the shares of the Company, and the SEG (H.K.) Co., Ltd. holds
25,500,000 shares, or 12%, of the Company's shares.
In December 1997, the Company conducted shares allotment program, issuing extra 63,699,895 shares to all shareholders by the
ratio of 10:3 against the total 212,332,989 shares before the allotment, among which, 30,777,997 shares were alloted to domestic
corporate shareholders and 3,600,000 shares were subscribed, with the remaining 27,177,997 shares assigned to public shareholders
on paid basis, 15,388,998 shares were allotted to foreign corporate shareholders and 1,800,000 shares were subscribed with
13,588,998 shares abandoned, and also 9,777,900 shares allotted to public shareholders and 7,755,000 shares to domestic-listed
foreign shareholders.
In January 1998, the Company carried out the capital reserve-to-capital program for year 1996, i.e. based on the total
212,332,989 shares ended 1996, 2 shares will be increased to per 10 shares for all shareholders, and based on the total 240,701,488
shares ended 1997 after allocation, 1.764 shares will be increased to each 10 shares for all shareholders.
On January 05, 2001, upon ratification, the increased shares of the Company, totaling 6,394,438 shares, went public in Shenzhen
Stock Exchange.
On May 29, 2001, upon the approval of CSRC, the non-listed foreign capital totaling 62,462,914 shares of the Company were
transferred as listed circulating stock, marking the circulation of entire foreign capital.
On Nov. 30 and Dec. 7 of 2001, H.K. Luks Industrial Co., Ltd. reduced its B Shares in the Company by 14,158,000 shares and
14,159,000 shares respectively. By Dec. 17, 2001, the SEG (H.K.) Co., Ltd. reduced a total of 14,487,400 foreign shares in the
Company, or 5.12% of the Company's total shares.
On June 06, 2005, the Company bulletined that original shareholder SEG and China Zhenhua Group assigned the state-owned
corporate capital they held in the Company totaling 124,920,000 shares to Wuhan Zhongheng New Tech Industry Group Co., Ltd.
(Wuhan Zhongheng for short), which was ratified by the State-owned Assets Committee, the State Ministry of Commerce and CSRC
with relevant assignment procedures completed on April 11, 2007.
On November13, 2006, the Board of Shareholders of the Company passed the Equity Division Reform Program of Shenzhen
Huafa Electronics Co., Ltd. In line the program, Zhongheng Group carried out assets reorganization to the Company, including
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Full Text of Semi-annual Report of 2014 of Shenzhen Zhongheng Huafa Co., Ltd
bestowing assets and integrating industries covered by the Company, also paying 1.5 shares as consideration for per 10 shares to all
A-share shareholders enrolled as at the equity registration day for the program, totaling 8,435,934 shares which may be tradable since
the first business day after the implementation of the program. On May 17, 2007, the Company had completed the equity division
reform program, and the consideration shares had been at market to circulate on May 18, 2007. The Company also had completed the
equity division reform program with ceding procedures for bestowed assets completed in 2007.
As of June 30, 2014, the aggregate shares of the Company are 28,316,000 shares, among which, restricted shares total to
116,489,894 shares, accounting for 41.14% of total shares, and unrestricted shares total to 166,671,333 shares, accounting for
58.86% of total shares. Among the unrestricted shares, there are 64,675,497 A shares and 101,995,836 B shares, accounting for
22.84% and 36.02% of total shares respectively.
The business scope: manufacturing & operating each kind of color TV, LCD monitor, LCD screen (subject to branch offices),
hi-fi equipment, digital watch, TV game player and computer as well as auxiliary circuit boards, precise injection moulding ware,
light packing materials (manufacturing & operating in Wuhan), hardware (including molds), electroplate and solder stick, real estate
development and operation (ref. S.F.D.C.No. 7226760), property management. Establishing affiliate companies in Wuhan and Jilin,
branch offices in each capital city (excluding Lhasa) and cities directly under jurisdiction of the Central Government.
Main business is processing and selling of precision injection parts; processing and selling of liquid crystal display; processing,
selling of light packaging materials and property leasing business.The Company is registered at Block 411, Huafabei Road, Futian
District, Shenzhen Cty; legal representative is Li Zhongqiu.
Controlling shareholder of the company is Wuhan Zhongheng Group, and the shareholders meeting is its agency of power,
which executes the decision right on material matter such as operation guildlines, funding, investment and profit distribution. Board
of directors shall answer for shareholders meeting, which implements operation and decision right of the company according to laws;
Managers take charge for organizing and executing the decisions made in shareholders meeting and board of directors meeting, as
well as presiding the production and operation management work of the company. The functional management departments include
Enterprise Planning Department, Financial Department, Comprehensive Management Department, Business Center, Video Business
Department, Circuit Panel Business Department, Plastic Injection Business Department, Auditing Department, Office of Board of
Directors etc., and subsidiaries mainly include Shenzhen Huafa Property Lease Management Co., Ltd. (hereinafter referred to as
Huafa Lease Company), Shenzhen Zhongheng Huafa Property Management Co., Ltd. (hereinafter referred to as Huafa Property
Company), and Wuhan Hengfa Scientific and Technology Co., Ltd. (hereinafter referred to as Hengfa Technology Company), Wuhan
Zhongheng Huafa Trade Co.,Ltd.(hereinafter referred to as Huafa Trade Company) , Shenzhen Huafa Hengtian Co., Ltd. (hereinafter
referred to Huafa Hengtian Company), Shenzhen Yutian Henghua Co., Ltd. (hereinafter referred to as Yutian Henghua Company),
Shenzhen Huafa Hengtai Co., Ltd. (hereinafter referred to as Huafa Hengtai Company), etc.
IV. Main accounting policies, accounting estimates and previous errors
1. Basis of Preparation of Financial Statements
The Group's financial statements were prepared on the basis of the actual transactions or businesses occurred in its continuous
operation according to the Enterprise Accounting Principle promulgated by the Ministry of Finance and according to the "important
accounting policies and accounting evaluation and financial statement preparation methods".
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2. Statement regarding Following Business Accounting Standards
The Financial Statement prepared by the Group complies with the requirements of Business Accounting Standards, and reflect
such information regarding enterprise financial situation, operation result and cash flows, etc. on the factual and complete basis.
3. Accounting Period
The accounting period of the Group is from each 01 January to 31 December in the Gregorian calendar.
4. Standard Currency
RMB is adopted as standard currency by the Group.
5．Accounting processes of business mergers under the same control and those not under the same control
（1）Business mergers under the same control
In a business combination under the same control, the assets and liabilities that the combining party obtains in a business
combination shall be measured on the basis of their carrying amount in the combined party on the combining date. The additional
paid-in capital shall be adjusted according to the balance between the carrying amount of the net assets obtained by the combining
party and the carrying amount of the consideration paid by it; if the additional paid-in capital is not sufficient to be offset, the retained
earnings shall be adjusted.
（2）Business mergers not under the same control
In a business combination not under the same control, the combination costs shall be the fair values, on the acquisition date, of
the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on the
acquiree. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net
assets it obtains from the acquiree as good will; if the combination costs are less than the fair value of the identifiable net assets it
obtains from the acquiree, it shall record the balance into the profits and losses of the current period after reexamination.
6. Preparation of Consolidated Financial Statement
（1）Preparation of Consolidated Financial Statement
The Group has prepared for the Consolidated Financial Statement in line with the Business Accounting Standards No.33-
Consolidated Financial Statement and its relevant regulations, with all key internal trades and transactions within the scope of
consolidation offset. Among the shareholders equity of subsidiaries, the part that does not belong to the parent company shall be
presented under shareholders equity as minority interest in the consolidated financial statement.
Where the accounting policy or accounting period adopted by subsidiaries and the Company is inconsistent, it shall make
necessary adjustment on subsidiaries’ financial statements according to the accounting policy or accounting period adopted by the
Company when prepare consolidated financial statement.
As to the subsidiary acquired through business combination not under the same control, when prepare consolidated financial
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statement, it shall make adjustment on individual financial statement based on the fair value of the net assets recognized on the
purchasing day; As to the subsidiary acquired through business combination under the same control, it will be regarded existing since
the begin of the year of the current period of combination, and its assets, liabilities, operating results and cash flows will be included
into the consolidated financial statement based on its original carrying value since the begin of the year of the current period of
combination.
7. Determination criteria of cash and cash equivalents
The cash referred to in the Cash Flow Statement of the Group means stocked cash and deposit available for payment at any
time. The cash equivalents therein refer to investment due within 3 months since purchasing day, strong fluidity, small risk in value
variation and easy to converted into cash of predictable sum.
8. Conversion in foreign currency transactions and Conversion of foreign currency statements
（1）Conversion in foreign currency transactions
Foreign currency amount of the group’s foreign currency business is converted into Renminbi amount in accordance with
market exchange rate published by the People’s Bank of China at the beginning of the current month. At the reporting day of Balance
Sheet, the monetary assets in foreign currencies are translated at the instant exchange rate of the reporting day of Balance sheet. As to
the exchange loss and profit occurred, except for that of special loan for the purchase or production of assets which meet the
conditions of capitalization, which shall be treated according to the principles of capitalization, others shall be accrued into loss and
profit in current term. Those non-monetary assets measured by fair value are translated into RMB at the instant exchange rate of the
recognizing day of fair value, with translation different occurred accrued into loss and profit in current term as change of fair value.
Those non-monetary foreign assets measured by history cost, shall still be translated at the instant exchange rate of the day when
business occurred, and shall not change the amount of RMB.
（2）Conversion of foreign-currency financial statement
Assets and debt items in foreign-currency balance shall be converted with spot rate on the date of balance sheet; ownership
items except “undistributed profit” shall be converted according to spot rate; income and fee item in profit statement shall be
converted according to market exchange rate issued by People’s Bank of China at the beginning of the month when transaction is
made. Converted differences incurred in conversion of foreign-currency statement shall be independently listed under owner benefit
item. Foreign-currency cash flow adopts in conversion market exchange rate issued by People’s Bank of China at the beginning of
the month when cash flow is incurred. Change amount due to influence from change of exchange rate to cash shall be listed
independently in cash flow sheet.
9. Financial instruments
（1）Classification of financial instruments
Based on investment purpose and economic substance, the group classifies its financial assets into 4 major classes: financial
assets measured at fair value with changes included into current profits and losses, held to maturity investments, loans and
receivables, and financial assets available for sale.
Financial assets measured at fair value with changes included into current profits and losses refer to the financial assets held for
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the main purpose of selling in short term, which is listed as held for trading financial assets in Balance Sheet.
Held to maturity investments refer to non-derivative financial assets with fixed maturity, fixed recoverable amount or that can
be confirmed, or that the management has clear intention and capacity to hold to maturity.
Loans and receivables refer to non-derivative financial assets having no quote in active market, fixed recoverable amount or
that can be confirmed.
Financial assets available for sale including non-derivative financial assets defined to be available for sale upon initial
confirmation and financial assets having been classified as other assets.
（2）Confirmation basis and measurement methods of financial instruments
Financial assets will be confirmed as per fair value in Balance Sheet when the group becoming one party of the financial
instrument contract. Relevant trading fees occurred at the time of obtaining financial assets measured at fair value with changes
included into current profits and losses will be included in current profits and losses, while those of other financial assets will be
included into initially confirmed amount.
Financial assets measured at fair value with changes included into current profits and losses and financial assets available for
sale will be measured subsequently at fair value. Loans and receivables, as well as held to maturity investments will be listed as
amortized cost calculated by effective interest method.
Changes in the fair value of financial assets measured at fair value with changes included into current profits and losses will be
included into profits and losses on the changes in fair value; interests or cash dividends gained during asset-holding period will be
confirmed as investment income; at time of disposal, the balance between its fair value and initial recorded amount will be confirmed
as investment gains and losses, and the profits and losses on changes in fair value will be adjusted at the same time.
Except for the exchange gains and losses generated via impairment losses and foreign currency financial assets, changes in the
fair value of financial assets available for sale will be directly included into shareholders' equity, and till the time of confirming that
financial asset finally, the accumulated amount of changes in fair value directly included into equity will be transferred to current
profits and losses. Interest of available-for- sale debt instruments in its holding period will be calculated by effective interest method,
and, together with the cash dividends related to the available-for- sale debt instruments declared to issue by investee unit will be
included into current profits and losses.
（3）Confirmation basis and measurement methods for transfer of financial assets
Financial assets meeting one of the following conditions shall be confirmed for termination: ①Contractual rights of charging
the cash flow of that financial asset are terminated; ② The financial asset has been transferred, and the group has transferred all
risks and returns on the ownership of that financial asset to the other party; ③The financial asset has been transferred, and the group
has given up its control over that financial asset although it neither transfers nor retains almost all risks and returns on the ownership
of that financial asset.
In case the enterprise neither transfers nor retains almost all risks and returns on the ownership of or hasn’t given up its control
over that financial asset, relevant financial asset shall be confirmed as per the degree of financial assets it transferred as it further
involves, and relevant liabilities shall also be confirmed correspondingly. The degree of financial assets it transferred as it further
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involves refers to the risk level facing by enterprise due to changes in the value of financial assets.
For overall transfer of financial assets meeting termination confirming conditions, the balance between the book value of
transferred financial assets and the total accumulative amount of consideration received due to transfer and changes in fair value of
other consolidated income previously included will be included in current profits and losses.
For partial transfer of financial assets meeting termination confirming conditions, the book value of transferred financial assets
will be apportioned as per relative fair value respectively between the part confirming termination and the part unconfirmed; and the
balance among the total accumulative amount of consideration received due to transfer and previously included changes in fair value
of other consolidated income being apportioned to the part confirming termination, as well as the foresaid apportioned book value
shall be included in current profits and losses.
（4）Termination confirming conditions of financial assets
Financial liabilities of the group are classified into financial liabilities measured at fair value with changes included into
current profits and losses and other financial liabilities upon initial confirmation.
Financial liabilities measured at fair value with changes included into current profits and losses include trading financial
liabilities and those defined as financial liabilities measured at fair value with changes included into current profits and losses upon
initial confirmation, which will be measured subsequently at fair value, and the profits and losses formed due to changes in fair value
as well as the dividends and interest expenses related to that financial liability shall be included in current profits and losses.
Other financial liabilities will be measured subsequently as per amortized cost calculated by effective interest method.
In case the current obligation of financial liabilities is entirely or partially dissolved, the dissolved part of that financial liability
or obligation shall be confirmed for termination. Balance between the book value of the part confirmed termination and the
consideration paid shall be included into current profits and losses.
（5）Confirmation method of the fair value of financial assets and financial liabilities
For financial instruments existing in active mark, the quote prices in that active market will be used for confirming its fair
value. In active market, financial assets already held or financial liabilities to be born by the group will take the current offering price
as fair vale of corresponding assets or liabilities; financial assets to be bought or financial liabilities already born by the group will
take the current asking price as fair vale of corresponding assets or liabilities. For financial assets or financial liabilities without
current offering and asking prices, if there are no important changes to the recent economic environment after trading day, the market
price of the latest transaction shall be adjusted referring to the current price or interest rate of similar financial assets or financial
liabilities, so as to confirm the fair value of that financial assets or financial liabilities. For those the group has enough evidence to
proof that the market price of the latest transaction is not fair value, the market price of the latest transaction shall be appropriately
adjusted so as to confirm the fain value of that financial assets or financial liabilities.
For financial instruments not existing in active mark, the fair value shall be confirmed by valuation techniques which including
taking reference of the used price in the latest marketing transaction of each party that being familiar with and willing to trade, taking
reference of the current fair value of other financial assets with the same substance, discounted cash flow method, and Option Pricing
Model and so on.
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（6）Impairment test method and impairment provision accrual method of financial assets (excluding
receivables)
Except for financial assets measured at fair value with changes included into current profits and losses, the group checks the
book value of other financial assets upon the date of balance sheet; if there are objective evidences proofing that a financial asset is
impaired, withdraw impairment provision.
In impairment incurred to financial assets measured at amortized cost, impairment provision shall be withdrawn as per the
balance between the current value of estimated future cash flow (excluding future credit losses that have not yet occurred) and the
book value. If there are objective evidences proofing that the value of that financial assets has been recovered, and it is related to the
affairs occurred after confirming that losses, the originally confirmed impairment losses shall be returned and included into current
profits and losses.
In the fair value of financial assets available for sale is greatly or non-temporarily declining, the accumulative losses previously
included into shareholder’s equity and formed due to decline of fair value shall be transferred and included into impairment losses.
For available-for- sale debt instruments with impairment losses already confirmed, if the fair value rises after expiration and it is
objectively related to the affairs occurred after confirming the original impairment losses, the previously confirmed impairment
losses shall be transferred and included into impairment losses. For available-for- sale debt instruments with impairment losses
already confirmed, the fair value rises after expiration shall be directly included into shareholder’s equity.
Various recognition standards of impairment of various available-for-sale financial assets
（7）For undue held -to-maturity investments reclassified as financial assets available for sale, intention of
holding or evidence for changes in abilities shall be defined
a. The duration of holding the financial asset is uncertain；
b. The financial asset will be sold upon occurrence of changes in market interest rates, changes in liquidity needs, changes in
alternative investment opportunities and other investment yield, changes in financing sources and conditions, changes in foreign
currency exchange risk and so on;
c Issuer of the financial asset can pay off at the amount obviously lower than its amortized cost;
d. No financial resources that can be used to continuously provide financial support for that financial asset investment so as to
ensure holding to maturity of the financial asset;
e. Restriction of laws and administrative regulations makes it difficult for enterprise to hold the financial asset to maturity;
f. Other conditions indicate that the enterprise has no intention or ability to hold the financial asset with fixed duration to
maturity.
10. Recognition criteria and accrual method of bad debt reserves for account receivables
The Group takes the following conditions as recognition standards of bad debt loss of accounts receivable: The debtor is
revoked, bankrupt, solvent, seriously lack of cash flow, unable to repay the debts within predictable period due to shutdown resulted
from serious natural disasters; the debtor delays the performing of the debt repaying obligation for over 5 years; other unambiguous
evidence indicates that the debts cannot be recovered or the debts are unlikely to recover.
Allowance method is adopted for accounting of possible bad debt loss. Impairment test will be carried out at the end of the
period separately or in a combined way. Bad-debt provision will be accrued and included in current profit or loss. As for accounts
receivable indicated by unambiguous evidence that are indeed unrecoverable, they will be viewed as bad debt loss with the approval
of the Group according to the stipulated procedure and then used to charge against bad-debt provision already drawn.
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（1）Bad debt reserves for account receivables with major individual amount
Judgment criteria or amount standard of material specific amount or Non-connected party amount with specific amount exceeding
amount criteria 500 thousand yuan is viewed as material accounts receivable
Provision bad debt preparation in accordance with the
Provision method with material specific amount and provision of
difference of present value of future cash flow below the
specific bad debt preparation
book value
（2）Accounts receivable with bad debt preparation provisioned in accordance with portfolio
Provision method with
Combination name provisioning bad debt in The evidence of confirming portfolio
accordance with portfolio
Aging portfolio Aging analysis method Classify portfolio with aging of accounts receivable as credit risk character
Bad debt reserve accrued by aging analysis method in the combination
√ Applicable □ Inapplicable
Accrual proportion of account
Account ageing Accrual proportion of other receivables (%)
receivables (%)
≤ 1 year 0.00% 0.00%
1-2 year (s) 5.00% 5.00%
2-3 year (s) 10.00% 10.00%
Over 3 years 30.00% 30.00%
Bad debt reserve accrued by balance percentage method in the combination
□ Applicable √ Inapplicable
Bad debt reserve accrued by other method in the combination
□ Applicable √ Inapplicable
（3）Accounts receivable that were not significant but have been provisioned bad debt preparation
separately
Reason of specific bad debt preparation Accounts receivable with non-material specific amount and being not able to reflect
provision its risk character by provisioning bad debt preparation in accordance with portfolio
Bad debt preparation will be provisioned in accordance with the difference of present
Provision method of bad debt preparation
value of its future cash flow below its book value.
11. Inventories
（1）Classification of inventory
Inventories of the Group includes raw materials, product in progress, goods in stock, turnover material, Self-made semi-finished
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product and consigned processing material, etc..。
（2）Valuation method of delivered inventory
Valuation method: first-in first-out method
Purchasing is priced at the actual cost; procurement or delivery of inventory shall be made by adopting first-in-first-out method
to confirm the actual cost. Low-value consuming goods and packing materials are amortized by one-off write-off method.
（3）Determination basis of net realizable value of inventory and accrual method of inventory falling price
reserve
The provisions for inventories depreciation shall be drawn against the predicted uncollectible cost caused by inventories
damage, part or entire out-of-fashion or selling price lower than cost. The provisions depreciation of finished products and large bulk
of raw materials shall be drawn against the excess part between the cost of single inventory item and its net realizable value. The
provisions depreciation of the other raw and auxiliary materials with various kinds and low unit price shall be drawn as per category.
For such stocked goods directly for sales as products in stocks, products in progress and materials for sales, their net realizable
value shall be recognized after deducting the estimated sales expenses and relevant taxes from estimated sales price of such
inventories. For stocked materials for production use, their net realizable value shall be recognized after deducting estimated cost
occurring at completion, sales expenses and relevant tax from estimated sales price of products to be manufactured.
（4）Inventory system
Inventory system: perpetual inventory system
（5）Amortization method of low value consumables and packages
Low-value consuming products
Amortization method: one-off amortization method
Packages
Amortization method: one-off amortization method
12. Long-term Equity Investment
（1）Determination of investment cost
Long-term equity investment mainly includes the equity investment held by the Group that may produce control, joint control or
significant influence over invested entity, and the equity investment that does not have control, joint control or significant influence
on the invested entry, and has no offer in active market and its fair value cannot be reliably measured. If the long-term equity
investment is acquired via business merger under the same control, it shall, on the day of merger, regard the share of the carrying
amount of the owner's equity of the merged enterprise as the cost of the long-term equity investment. As for the long-term equity
investment acquired via business merger under different control, the merger cost shall be, shall be the fair values, on the merger
(acquiring) date, of the assets given, the liabilities incurred or assumed, and the equity securities issued by the acquirer, in exchange
for the control of the merged (acquired) enterprise, which will be, on the merger (acquiring) date, further regarded as the initial
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investment cost of long-term equity investment. Apart from the aforesaid long-term equity investment acquired through business
merger, those long-term equity investment, if acquiring through paying cash, shall consider its purchasing price actually paid as the
investment cost, if acquired by issuing equity securities, shall consider the fair value of issuing equity securities as the investment
cost; if invested by investors, shall consider the value agreed in the investment contract or agreement as the investment cost; if
acquiring from debt reorganization or non-monetary assets exchange, shall confirm the investment cost according to the regulation of
relevant accounting rule.
（2）Subsequent measurement and profit and loss recognition
The investment of the Group to its subsidiaries shall be calculated through cost method and shall be adjusted through equity
method in the Financial Statement; the investment to its associated companies shall be calculated through equity method; For the
long-term equity investment without any control, joint control or serious influence for which there is no offer in the active market and
of which the fair value cannot be reliably measured, the Group adopts cost method to calculate it; For the long-term equity
investment without any control, joint control or serious influence for which there is offer in the active market and of which the fair
value can be reliably measured, the Group shall calculate it under the entry of ―Financial Assets for Sales‖ When adopting a cost
method to calculate, long-term shareholding investment will be calculated cost in accordance with its initial investment cost, and the
cost of long-term shareholding investment will be adjusted at the time of adding or recovering investment. When adopting an equity
method, current period investment profit/loss shall be the share of net profit/loss realized in the current year of the invested
organization that shall be enjoyed or burdened. When confirming the share of net profit/loss of the invested organization that shall be
enjoyed, based on a foundation of the fair value of various identifiable assets of the invested organization at the time of obtaining
investment, according to accounting policies and accounting period of the group, the portion belonging to the investing company
shall be calculated in accordance with the company’s accounting policies after offsetting internal transaction profit/loss incurred
with collective-owned enterprises and joint-owned enterprises, and the invested organization’s net profit will be confirmed after
adjustment. For shareholding investment in collective-owned enterprises and joint-owned enterprises already held before the first
execution date, if there is shareholding investment debit difference in relation to this investment, the shareholding investment debit
difference shall be deducted in accordance with straight-line amortization of the remaining period to confirm investment profit/loss.
The group no longer possesses joint control or significant influence over the invested organization due to reasons such as reducing
investment, and for which there is no price quotation in the active market and the fair value can not be reliably measured, the group
will change to a cost method to calculate; for long-term shareholding investment that the group can implement control over the
invested organization due to reasons such as increasing investment, the group will also change to a cost method to calculate; for
long-term investment that the group can implement joint control or significant influence over the invested organization but can not
implement control due to reasons such as increasing investment, or the group no longer possesses control over the invested
organization but can implement joint control or significant influence over the invested organization due to reasons such as disposing
investment, the group will change to an equity method to calculate. For long-term shareholding investment disposal, the difference
between its book value and the actual obtained amount value shall be recorded into current period investment profit. For long-term
shareholding investment calculated with an equity method, if it is recorded into owners’ equity due to other changes of owners equity
except for the net profit/loss of the invested organization, the group will transfer the original portion which has been recorded into
owners’ equity into current period investment profit at the time of disposing this investment.
（3）Determination basis of common control and significant influence on the invested unit
Common control means the shared control on certain economic activity according to contract provisions. Determination basis
of common control mainly includes any partner can’t separately control the production operations of a joint enterprise, decision
making involving basic business operations of joint enterprise is subject to the consensus of all partners, etc. Significant influence
means a partner has the right to participate in the decision making on the financial and business policies of the invested unit, but is
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unentitled to control or control the formulation of such policies together with other parties. Determination basis of significant
influence mainly includes the group directly or via a subsidiary indirectly owns the invested unit’s voting power share of not less than
20% but below 50%, nevertheless, if any clear evidence shows the disqualification for participating in the decision making on the
production operations of the invested unit, such share can’t form significant influence.
(4) Impairment test method and impairment reserve accrual method
The Group has, on each reporting day of Balance Sheet, checked the long-term equity investment, fixed assets, project in
progress and intangible assets, etc.. In case of any of the following circumstances, possible impairment has occurred to assets. We
will conduct impairment test at each year end over good will and those intangible assets without fixed beneficiary term. If difficult to
test the recoverable amount of a single asset item, the test may be applied to the asset group or combined asset group containing such
asset. After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference
shall be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after
being recognized. The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the
disposal expenses, and the current value of the expected future cash flow of the asset, whichever is higher.
The following circumstances may constitute a sign of possible asset impairment:
a. The current market price of an asset declines drastically, and the price drop is obviously higher than the expected drop over
time or due to the normal use;
b. The economic, technological or legal environment in which the enterprise conducts its business operations, or the market
where an asset is situated has or will have any significant change in the current period or in the near future, and thus has or will have
an adverse impact on the enterprise;
c. The market interest rate or any other market investment return rate has risen in the current period, and the enterprise'
calculation of capitalization rate of the current value of the expected future cash flow of the asset is affected and thus leads to a big
fall in the recoverable amount of asset;
d. Any evidence shows that an asset has become obsolete or it has been damaged substantially;
e. An asset has been or will be left unused, or the use of an asset has been or will be terminated, or an asset has been or will be
disposed of ahead of schedule;
f. Any evidence in the internal report of the enterprise shows that the economic performances of an asset has been or will be
lower than the expected performances, for example, the net cash flow created by an asset or business profit (or loss) realized (incurred)
an asset is lower (higher) than the excepted amount, etc.;
g. Other evidence that indicates that an asset impairment has probably occurred.
13. Property of Investment
Property of investment of the Group includes the right to use any land which has already been rented; the right to use any land
which is held and prepared for transfer after appreciation; the right to use any houses & building which has already been rented.
Property of investment is priced as per its cost. The cost of purchased property of investment includes purchasing payment,
relevant taxes and other expenditures which may be directly ascribed to such assets. The cost of building such property of investment
is composed of all necessary expenditures occurred prior to that such property has reached the projected service status.
The Company adopts cost mode to follow measurement of property of investment, for which, depreciation or amortization
composite life method applied will be drawn aiming to the building and land-use right against the predictable service life and net
salvage value. The following shows the net salvage value and annual depreciation (amortization) rate:
Type Depreciation Term (Year) Expected Salvage Rate Annual Depreciation Rate
(%) (%)
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Land-use Right 50 10.00% 1.80%
Houses & Buildings 5—50 10.00% 1.80%—18.00%
In case the property of investment is taken for self-use, such property shall be recorded as fixed assets or intangible assets since
the date of taking. If the self-use property is taken for rent or capital appreciating, such fixed assets or intangible assets shall be
recorded as property of investment since the date of taking. For such recording, the book value before it shall be taken as the
recording value after that.
If the property of investment is disposed of, or if it withdraws permanently from use and if no economic benefit will be
obtained from the disposal, the recognition of it as property of investment shall be terminated. Such revenues of disposal of the
property of investment as sales, transfer, discard, or being damaged or destroyed, after deducting the book value of such property as
well as the relevant taxes, shall be accrued into the current profits and losses.
14. Fixed Assets
（1）Recognition conditions of fixed assets
Fixed assets of the Group refer to the tangible assets that simultaneously possess the following features. They are held for the
sake of producing commodities, rendering labor service, renting or business management; their useful life is in excess of one fiscal
year; and unit value has exceeded 2,000 Yuan.
（2）Recognition basis and valuation method of financial lease fixed assets
Financing lease refers to a type of lease that has substantially transferred all risks and rewards related to assets ownership which
may be finally transferred or not. If one or several of the following standards is fulfilled, it shall be recognized as financing lease:
a. The ownership of the leased assets is transferred to the lessee upon expiry of term of lease.
b. The lessee has a option for purchase of leased assets and the purchase price established is expected to be much lower than the
fair value of leased assets upon exercising of option. Therefore, it can be reasonably determined that the lessee will exercise this
option upon lease inception.
c. The term of lease takes up a majority part of the service life of the leased assets even if the ownership of the assets is not
transferred.
d. The present value of minimum lease payment of the lessee upon the lease inception is almost equal to the fair value of leased
assets upon the lease inception; the present value of minimum lease receipt of the lessor upon the lease inception is almost equal to
the fair value of leased assets upon the lease inception
e. The nature of leased assets is special and only the lessees can use such assets unless significant reconstruction is made.
The entry value of the fixed assets leased by financing lease shall be determined as the lower one between fair value of leased
assets upon lease inception and present value of minimum lease payment.
（3）Depreciation methods of various fixed assets
Fixed assets include houses and buildings, machines, molds, equipment, transportation equipment, instruments and equipment,
tools and equipment, and office equipment.
The Group shall draw previsions for all fixed assets except for those having fully drawn provisions and under normal service as
well as the land recorded separately. It adopts computing life method to draw depreciation and is included in the cost of the relevant
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assets or in the expenses in current term in accordance with the purposes of the fixed assets.
Type Depreciation Term (Year) Rate of salvage value (%) Annual Depreciation Rate (%)
Houses & buildings 20-50 Years 10%
Machinery equipment 10 Years 10% 9%
Transport equipment 5 Years 10% 18%
Apparatus equipment 5 Years 10% 18%
Tooling equipment 5 Years 10% 18%
Office equipment 5 Years 10% 18%
Mould equipment 3 Years 10% 30%
（4）Impairment test method and impairment reserve accrual method of fixed assets
The Group has, on each reporting day of Balance Sheet, checked the long-term equity investment, fixed assets, project in
progress and intangible assets, etc... In case of any of the following circumstances, possible impairment has occurred to assets. We
will conduct impairment test at each year end over good will and those intangible assets without fixed beneficiary term. If difficult to
test the recoverable amount of a single asset item, the test may be applied to the asset group or combined asset group containing such
asset.
After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference shall
be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after
being recognized. The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the
disposal expenses, and the current value of the expected future cash flow of the asset, whichever is higher.
The following circumstances may constitute a sign of possible asset impairment:
(1) The current market price of an asset declines drastically, and the price drop is obviously higher than the expected drop over
time or due to the normal use;
(2) The economic, technological or legal environment in which the enterprise conducts its business operations, or the market
where an asset is situated has or will have any significant change in the current period or in the near future, and thus has or will have
an adverse impact on the enterprise;
(3) The market interest rate or any other market investment return rate has risen in the current period, and the enterprise'
calculation of capitalization rate of the current value of the expected future cash flow of the asset is affected and thus leads to a big
fall in the recoverable amount of asset;
(4) Any evidence shows that an asset has become obsolete or it has been damaged substantially;
(5) An asset has been or will be left unused, or the use of an asset has been or will be terminated, or an asset has been or will be
disposed of ahead of schedule;
(6) Any evidence in the internal report of the enterprise shows that the economic performances of an asset has been or will be
lower than the expected performances, for example, the net cash flow created by an asset or business profit (or loss) realized (incurred)
an asset is lower (higher) than the excepted amount, etc.;
(7) Other evidence that indicates that an asset impairment has probably occurred.
（5）Other explanations
The Group will, at the end of each year, have a check on the useful life, estimated net residue value, and the depreciation method
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of the fixed assets, and if there is any change, it will be treated as the change of accounting estimation.
Where the fixed asset is in a state of disposal or unable to generate any economic benefits through use or disposal as expected,
the recognition of it as a fixed asset shall be terminated. When an enterprise sells, transfers or discards any fixed asset, or when any
fixed asset of an enterprise is damaged or destroyed, the Company shall deduct the book value and relevant taxes from the disposal
income through disposal, transfer, discard or being damaged or destroyed, and then include the remaining in the current profits and
losses.
15. Project in Process
（1）Type of construction in progress
Project in process shall be measured at the actual cost. The self-operating project shall be measured in line with direct materials,
direct salary and direct construction expenses, etc.; The out-contracted project shall be measured in line with project price payable,
etc.; Equipment installation project shall determine its cost as per the occurring disbursements as equipment value, installation charge
and project trial running, etc. The cost of project in progress also includes borrowing costs to be capitalized and exchange loss and
profit.
（2）Criteria and time point for transfer of construction in progress into fixed asset
Since the day when project in process reaching the expected service status, carry over the estimated value of the project to fixed
assets in line with project budget, construction cost or actual cost, etc. with depreciation drawn since the preceding month. After the
completion procedures have been completed, an adjustment shall be made to the difference of original fixed assets value.
（3）Impairment test method and impairment reserve accrual method of construction in progress
The Group has, on each reporting day of Balance Sheet, checked the long-term equity investment, fixed assets, project in
progress and intangible assets, etc.. In case of any of the following circumstances, possible impairment has occurred to assets. We
will conduct impairment test at each year end over good will and those intangible assets without fixed beneficiary term. If difficult to
test the recoverable amount of a single asset item, the test may be applied to the asset group or combined asset group containing such
asset.
After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference
shall be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after
being recognized. The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the
disposal expenses, and the current value of the expected future cash flow of the asset, whichever is higher.
The following circumstances may constitute a sign of possible asset impairment:
a. The current market price of an asset declines drastically, and the price drop is obviously higher than the expected drop over
time or due to the normal use;
b. The economic, technological or legal environment in which the enterprise conducts its business operations, or the market
where an asset is situated has or will have any significant change in the current period or in the near future, and thus has or will have
an adverse impact on the enterprise;
c. The market interest rate or any other market investment return rate has risen in the current period, and the enterprise'
calculation of capitalization rate of the current value of the expected future cash flow of the asset is affected and thus leads to a big
fall in the recoverable amount of asset;
d. Any evidence shows that an asset has become obsolete or it has been damaged substantially;
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e. An asset has been or will be left unused, or the use of an asset has been or will be terminated, or an asset has been or will be
disposed of ahead of schedule;
f. Any evidence in the internal report of the enterprise shows that the economic performances of an asset has been or will be lower
than the expected performances, for example, the net cash flow created by an asset or business profit (or loss) realized (incurred) an
asset is lower (higher) than the excepted amount, etc.;
g. Other evidence that indicates that an asset impairment has probably occurred.
16. Borrowing Costs
（1）Recognition principle of capitalization of borrowing cost
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary
expenses, and exchange balance on foreign currency borrowings. The borrowing costs incurred to an enterprise that can be directly
attributable to the acquisition and construction or production of assets eligible for capitalization, shall be capitalized after the asset
disbursements have already incurred, the borrowing costs have already incurred, and the acquisition and construction or production
activities which are necessary to prepare the asset for its intended use or sale have already started; When the qualified asset under
acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be
ceased. The remaining borrowing costs shall be recognized as expenses.
（2）Capitalization period of borrowing cost
Asset qualified for the capitalization conditions refers to the fixed assets, property of investment and inventory which must
spend long term (usually above 1 year) to purchase, build or produce before reaching expected service or sales status.
（3）Capitalization suspension period
Where the acquisition or construction of assets that meet the capitalization conditions is interrupted abnormally for more than 3
consecutive months, such borrowing costs shall be suspended capitalizing till the acquisition or construction of the asset restarts.
（4）Calculation method of capitalized amount of borrowing cost
As for specifically borrowed loans, the to-be-capitalized amount of interests shall be determined in light of the actual cost
incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a
deposit in the bank or as a temporary investment. As for the general borrowing; for ordinary borrowings, the capitalized amount is
determined by multiplying the capitalization rate of ordinary borrowings by the weighted average of the accumulative asset
expenditure in excess of the special borrowings.
17. Intangible Assets
（1）Valuation method of intangible assets
The major intangible assets of the Group include land-use right, patented technologies and non-patented technologies, etc., and
shall be measured according to the actual cost when acquired. The acquired intangible assets shall be recorded as per actual price and
relevant other disbursements. The intangible assets invested by investors shall be priced as per the value agreed in investment
contract or agreement, with the exception of those of unfair value as is stipulated in such contract or agreement.
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（2）Estimate of service life of intangible assets with a limited service life
The land-use right shall be averagely amortized based on its useful years since the beginning date of use; the patented
technologies, non-patented technologies and other intangible assets will be averagely amortized by installments depending the
shortest one among predicted service years, benefiting years set out in the contract and legal effective years. The amortized amount
shall be accrued into relevant assets cost and current loss and profit as per their beneficiary objects. The estimated life of and
amortization method for the intangible assets with limited life is to be reviewed at the end of every financial year. In case of any
change, it will be handled as accounting estimate change.
（3）Judgment basis of intangible assets with an uncertain service life
It shall also check the service life of intangible assets with uncertain service life during each accounting period, where there are
evidences to prove the intangible assets have limited service life, it shall be estimated of its service life, and be amortized within such
estimated life.
（4）Accrual of impairment reserve for intangible assets
The Group has, on each reporting day of Balance Sheet, checked the long-term equity investment, fixed assets, project in
progress and intangible assets, etc.. In case of any of the following circumstances, possible impairment has occurred to assets. We
will conduct impairment test at each year end over good will and those intangible assets without fixed beneficiary term. If difficult to
test the recoverable amount of a single asset item, the test may be applied to the asset group or combined asset group containing such
asset.
After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference
shall be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after
being recognized. The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the
disposal expenses, and the current value of the expected future cash flow of the asset, whichever is higher.
The following circumstances may constitute a sign of possible asset impairment:
a. The current market price of an asset declines drastically, and the price drop is obviously higher than the expected drop over
time or due to the normal use;
b. The economic, technological or legal environment in which the enterprise conducts its business operations, or the market
where an asset is situated has or will have any significant change in the current period or in the near future, and thus has or will have
an adverse impact on the enterprise;
c. The market interest rate or any other market investment return rate has risen in the current period, and the enterprise'
calculation of capitalization rate of the current value of the expected future cash flow of the asset is affected and thus leads to a big
fall in the recoverable amount of asset;
d. Any evidence shows that an asset has become obsolete or it has been damaged substantially;
e. An asset has been or will be left unused, or the use of an asset has been or will be terminated, or an asset has been or will be
disposed of ahead of schedule;
f. Any evidence in the internal report of the enterprise shows that the economic performances of an asset has been or will be
lower than the expected performances, for example, the net cash flow created by an asset or business profit (or loss) realized (incurred)
an asset is lower (higher) than the excepted amount, etc.;
g. Other evidence that indicates that an asset impairment has probably occurred.
（5）Criteria for division of R&D stages of internal R&D projects
Research refers to ingenious and planed investigation conducted with the purpose of acquiring and understanding new scientific
or technological knowledge.
Development refers to application of research findings or other knowledge in a certain plan or design before commercial
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production or use to produce new or substantially improved materials, device, products, etc..
The expenses occurred in the development process and meet the following conditions are determined as intangible assets:
a. In respect of the technology, it is feasible to finish the intangible asset for use or sale;
b. It is intended to finish and use or sell the intangible asset;
c. There is a potential market for the products manufactured by applying this intangible asset or that there is a potential market
for the intangible asset itself;
d. With the support of sufficient technologies, financial resources and other resources, it is able to finish the development of the
intangible asset, and it is able to use or sell the intangible asset;
e. The disbursements attributable to the development of the intangible asset can be reliably measured.
（6）Accounting of expenditures for internal R&D projects
The expenditures for its internal research and development projects of the Company shall be classified into research
expenditures and development expenditures depending on the project property and the degree of uncertainty of the intangible assets
finally brought out. The expenses occurred in research process is determined as profit or loss of the period;
The development disbursement not meeting the above conditions will be accrued into current loss and profit at occurring. The
development disbursement accrued into loss and profit in previous term will not be recognized as assets as term thereafter. The
development disbursement capitalized will be presented as ―Development Disbursement‖ in the Balance Sheet and then be brought
forward to intangible assets since such project has reached the expected service status.
18. Long-term Deferred Expenses
The group’s long term deferred expense refers to expenses such as decoration expense of houses and constructions and
decoration expense of rented office sites with amortization period of above one year(excluding one year) that should be undertaken in
the current period and various periods later, such expenses shall be amortized averagely during the beneficial period. Where the
long-term deferred expenses will not benefit the later accounting period, the remaining amount to-be-amortized shall be recorded into
the loss or profits of current period.
19. Predictable Liabilities
（1）Recognition criteria of estimated liabilities
In case all the obligations in relation to such contingent items as external guaranty, suspensive lawsuit or arbitration, product
quality guarantee, staff cutback plan, loss contract, restructuring obligation and fixed assets discarding obligation, etc. comply with
the following conditions simultaneously, the Group will recognize them as liabilities. Such obligations are constant burdened by the
Group; the execution of such obligations will possibly result in the outflowing of economic benefit from the Group; the amount of
such obligations can be reliably measured.
（2）Measuring method of estimated liabilities
The predictable liabilities shall be initially measured as per the best estimated amount to be paid for executing relevant instant
obligations in combination with such factors as risk, uncertainty and time value of money regarding contingent issues. If the time
value of money exerts serious effect, the best estimated amount shall be determined through discounting relevant cash outflows in the
future. On the date of Balance Sheet, the Company shall double check the book value of predictable liabilities and make adjustment
to it so as to reflect the best estimated amount at present.
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20. Share-based payment and equity instrument
（1）Type of share-based payment
The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments.
（2）Determination method of fair value of equity instrument
Equity Instruments refer to the contract which may proves holding all remain equity of the Company after deducting all
liabilities. During business combination, the transactional expenses for issuing the equity instrument by combining party offset the
premium revenue of equity instruments, if it is not enough to offset, reduce the reserve profits. Other equity instruments, the
consideration received at issuing will increase shareholder’s equity after deducting transactional expenses. The consideration and
transactional expenses paid for purchasing back the equity instruments will decrease shareholder’s equity. It will not recognize profits
and losses when issuing, purchasing back, selling or writing off the equity instruments.
The distribution (excluding dividend) to the party who owns the equity instrument by the Company shall decrease shareholder’s
equity. The Company does not recognize the change of fair value of equity instruments.
（3）Recognition basis of optimal estimate of vested equity instrument
On every balance sheet date in the waiting period, optimal estimate is made according to the latest acquired change of number of
vested employees and other subsequent information, and then number of estimated vested equity instruments is corrected accordingly.
（4）Accounting processes related to implementation, modification and termination of share-based
payment plan
a. Implementation of share-based payment
Where share-based payment adopting equity settlement changes for employee’s service, its measurement accords with the fair
value of equity instrument granted to the employee. Where share-based payment adopting equity settlement is immediately vested
after granting to change for employee’s service, it is recorded in related cost or expense according to the fair value of equity
instrument on the grant date, and capital surplus is increased accordingly. Where share-based payment adopting equity settlement
can’t be vested to change for employee’s service until service in waiting period is finished or specified performance condition is met,
on every balance sheet date in the waiting period, on the basis of the optimal estimate of number of vested equity instruments, the
service acquired in current period is recorded in related cost or expense and capital surplus according to the fair value on the grant
date of equity instrument. On a balance sheet date, where subsequent information shows the number of vested equity instruments is
different from previous estimate, adjustment is made, and such number is adjusted to the number of actually vested equity
instruments on the vesting date. For share-based payment taking specified service period as vesting condition, its waiting period is
from grant date to vesting date; for share-based payment taking specified performance as vesting condition, the length of waiting
period is estimated according to the most possible performance result on the grant date. After the vesting date, the enterprise doesn’t
adjust recognized total amount of related cost or expense or owner’s equity any more.
Where share-based payment adopting equity settlement changes for the service of other parties, the accounting process shall be
pertinent to the circumstances as follows:
Where the fair value of other party’s service can be reliably measured, such service is recorded in related cost or expense
according to its fair value on the acquisition date of service, and owner’s equity is increased accordingly. Where the fair value of
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other party’s service can’t be reliably measured, but that of equity instrument can be reliably measured, such service is recorded in
related cost or expense according to the fair value of equity instrument on the acquisition date of service, and owner’s equity is
increased accordingly. On the exercise date, the enterprise calculates and determines the amount that shall be transferred to paid-in
capital or capital stock according to the number of actually exercised equity instruments, and transfers it to paid-in capital or capital
stock.
Share-based payment adopting cash settlement
The measurement accords with the fair value of liabilities borne by the enterprise and determined through the calculation based
on share or other equity instruments. Where share-based payment adopting cash settlement is immediately vested after granting, it’s
recorded in related cost or expense as per the fair value of liabilities borne by the enterprise on the grant date, and liabilities are
increased accordingly. Where share-based payment adopting cash settlement can’t be vested until service in waiting period is
finished or specified performance condition is met, on every balance sheet date in the waiting period, the service acquired in current
period is recorded in cost or expense and relevant liability according to the amount of fair value of liabilities borne by the enterprise
and based on the optimal estimate of vesting condition. On a balance sheet date, where subsequent information shows the fair value
of liabilities borne by the enterprise is different form previous estimate, adjustment is made, and such adjustment is to the actually
vested level on the vesting date. The enterprise remeasures the fair value of liabilities and record its change in current profit and loss
on every balance sheet date before related liability settlement and the settlement date.
b. Modification of share-based payment
Where modification increases the fair value of granted equity instrument, acquired service is increased accordingly. Where
modification occurs in the waiting period, the recognition of fair value of service acquired from modification date to the vesting date
after modification includes both the service amount determined on the basis of fair value of original equity instrument on its grant
date in the remaining of original waiting period and the increment of fair value of equity instrument. Where modification occurs after
the vesting date, the increase of fair value of equity instrument is recognized immediately. If share-based payment agreement requires
that an employee can acquire modified equity instrument only if longer time service is finished, increase of fair value of equity
instrument is recognized in the whole waiting period. Where modification increases the number of granted equity instruments, the
fair value of increased equity instrument is recognized as increment of acquired service accordingly. If modification occurs in the
waiting period, the recognition of fair value of service acquired from modification date to the vesting date of increased equity
instrument includes both the service amount determined on the basis of fair value of original equity instrument on its grant date in the
remaining of original waiting period and the increment of fair value of equity instrument. If vesting condition is modified in a way
favorable for employees, e.g. shortening of waiting period, modification or cancellation of performance condition (rather than market
condition), when vesting condition is processed, post-modification vesting condition is considered. Where modification decreases the
fair value of granted equity instrument, the amount of acquired service is recognized still on the basis of the fair value of equity
instrument on its grant date, regardless of decrement of fair value of equity instrument. Where modification decreases the number of
granted equity instruments, the decrement is viewed as cancellation of relevant granted equity instruments. Where vesting condition
is modified in a way unfavorable for employees, e.g. extension of waiting period, increase or modification of performance condition
(rather than market condition), post-modification vesting condition isn’t taken into account when processing vesting condition.
c. Termination of share-based payment
Cancellation or settlement is viewed as accelerated vesting, and the amount that should be recognized in the remaining of
original waiting period is immediately recognized. All payments to an employee at the time of cancellation or settlement shall be
viewed as equity repurchase, the excess of repurchase cost above the equity instrument’s fair value on the repurchase date is recorded
in current expenses. Where new equity instrument is granted to an employee, and it’s recognized that the new equity instrument
replaces for the cancelled one on the grant date of the new one, the enterprise processes the granted substitute equity instrument in a
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way the same as that for processing the modification of original equity instrument provision and condition. Where the enterprise
purchases an employee’s vested equity instrument, owner’s equity is debited, and the excess of repurchase cost above the equity
instrument’s fair value on the repurchase date is recorded in current expenses.
21．Income
（1）Judgment criteria for recognition time of sales income
When the Group has transferred the significant risks and rewards of ownership of the goods to the buyer; the Group retains
neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; The
relevant amount of revenue can be measured in a reliable way; The relevant economic benefits may flow into the enterprise; The
relevant costs incurred or to be incurred can be measured in a reliable way, it may recognize the realization of revenue.
（2）Recognition basis of income from transfer of right to use asset
The revenue from abalienating of right to use assets may be recognized on the condition that the relevant economic benefits are
likely to flow into the Company and the amount of revenues can be measured in a reliable way.
（3）Recognition basis of service income
When total revenue and total cost from labor service can be measured in a reliable way; the relevant economic benefits are
likely to flow into the enterprise; the schedule of completion under the transaction can be confirmed in a reliable way; it may
recognize the realization of revenue from labor service.
（4）Determination basis and method of degree of completion of contract for the recognition of service
income and construction contract income by completion percentage method
On the date of Balance Sheet, where the result of a transaction concerning the providing of labor service can be measured in a
reliably way, it shall recognize relevant revenue according to the schedule of completion; Percentage of completion is the percentage
of incurred costs in the total costs; where the result of a transaction concerning the providing of labor service cannot be measured in a
reliably way and the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor services
shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost of labor services shall be
carried forward at the same amount; where the result of a transaction concerning the providing of labor service cannot be measured in
a reliably way and the cost of labor services incurred is not expected to compensate, the cost incurred should be included in the
current profits and losses, and no revenue from the providing of labor services may be recognized.
22. Government Grant
（1）Type
The government grant may be recognized on the condition that the Group complies with the conditions for the government grant
and that the Group can receive the government grant. If a government grant is a monetary asset, it shall be measured on the basis of
the amount received, or that receivable if such grant is appropriated as fixed quota standard. If a government grant is a non-monetary
asset, it shall be measured at its fair value, or at its nominal amount (1 Yuan) if its fair value cannot be obtained reliably.
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（2）Accounting Policies
A government grant pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the
relevant assets, and included in the current profits and losses. The government grant pertinent to incomes, if used for compensating
the related future expenses or losses of the Company, shall be recognized as deferred income and shall included in the current profits
and losses during the period when the relevant expenses are recognized; or if used for compensating the related expenses or losses
incurred to the Company, shall be directly included in the current profits and losses.
23. Deferred Income Tax Assets & Deferred Income Tax Liabilities
（1）Recognition basis of deferred income tax assets
The group’s deferred income tax assets are recognized through the calculation of the balance between the tax base of assets and
liabilities and their book value (deductible temporary difference) Deductible loss and tax deduction that can write off taxable income
in future fiscal year according to provisions of tax law are viewed as temporary difference and recognized as relevant deferred
income tax assets. On a balance sheet date, deferred income tax assets are measured according to the tax rate applicable to the
expected recovery of the assets. The Company shall recognize the deferred income tax assets arising from a deductible temporary
difference to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the
deductible temporary difference. For the determined deferred income tax assets, if it is unlikely to obtain sufficient taxable income to
offset against the benefit of the deferred income tax asset, the carrying amount of the deferred income tax assets shall be written
down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will be
available.
（2）Recognition basis of deferred income tax liabilities
The group’s deferred income tax liabilities are recognized through the calculation of the balance between the tax base of assets
and liabilities and their book value (taxable temporary difference). Deferred income tax liabilities are measured according to
applicable tax rate of the expected payoff period of such liability on the balance sheet date.
24. Operating lease and financial lease
（1）Accounting process of operating lease
Operating lease refers to a lease other than a financing lease. Where the Group is lessee, the rents shall be recorded in the
relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the lease term.
Where the Group is lessor, the rents shall be recorded in the profits and losses of the current period by using the straight-line method
over each period of the lease term.
（2）Accounting process of financial lease
Financing lease refers to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset.
On the lease beginning date, the Group as lessee shall record the lower one of the fair value of the leased asset and the present value
of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the
minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the
recorded amount of the leased asset and the long-term account payable as unrecognized financing charges.
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V. Taxes
1. Main tax types and rates
Tax type Tax basis Tax rate
VAT Sales amount of commodities for the home market 17%
Business Tax Turnover of taxable service 5%
Urban Maintenance & Construction Tax Circulating tax payable 7%
Enterprise Income Tax Corporate taxable income 25%
Income tax rate executed by every branch company or factory
a. Enterprise Income Tax
For the Company and its subsidiary Huafa Lease Company, former applicable enterprise income tax rate was 15%. According
to the regulation of Enterprise Income Tax Law of the People's Republic of China put in force from January 1, 2008, the enterprise
income tax rate will gradually transit to 25% from 2008 to 2012, and that in this year is 25%
The applicable corporate income tax rate of subsidiaries of the Company, i.e. Huafa Property Company, Huafa Technology
Company, Huafa Trading Company, Huafa Hengtian Company, Yutian Henghua Company, and Huafa Hengtai Company, is 25%.
b. VAT
VAT is applied to the sales of goods of the Group, among which, the input VAT rate of domestically-sold goods is 17%.
The input VAT paid for purchasing raw materials, etc. may offset against output VAT at the rate of 17%, among which, the
input VAT paid for import may be refunded upon application.
VAT payable refers to the balance after deduction between the output VAT and input VAT at current term.
c. Business Tax
The applicable tax rate of business tax of the Company is 5%.
d. Urban Construction Tax & Educational Surcharge
Tax calculation basis of the company’s urban construction tax and surtax for education expense shall be based on payable
turnover tax, applicable tax rate is 7% and 3% respectively.
e. Property Tax
The Company applies 70% of original value of properties as tax basis with the rate of 1.2%.
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VI. Business Merger and Consolidated Financial Stateent
1. Conditions of subsidiary
Subsidiaries mainly include Shenzhen Huafa Property Lease Management Co., Ltd. (hereinafter referred to as "Huafa Lease
Company"), Shenzhen Zhongheng Huafa Property Management Co., Ltd. (hereinafter referred to as "Huafa Property Company"), and
Wuhan Hengfa Scientific and Technology Co., Ltd. (hereinafter referred to as "Hengfa Technology Company"), Wuhan Zhongheng
Huafa Trade Co.,Ltd.(hereinafter referred to as ―Huafa Trade Company‖) , Shenzhen Huafa Hengtian Co., Ltd. (hereinafter referred
to Huafa Hengtian Company), Shenzhen Yutian Henghua Co., Ltd. (hereinafter referred to as Yutian Henghua Company), Shenzhen
Huafa Hengtai Co., Ltd. (hereinafter referred to as Huafa Hengtai Company), etc.
（1）Subsidiaries acquired by means of foundation, investment, etc.
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Unit: RMB
Materially
Amount of minority The balance produced by subtracting the parent
Actual constitutes the
Share Proportion of interests for setting company's equities from the loss of the period
Full name of Registered Registered investment balance of other Statements are Minority
Type of subsidiary Business Nature Business Scope proportion voting rights off minority shared by the minority shareholders of the
subsidiary Address Capital amount at the items of the net consolidated or not Interests
（%） （%） shareholders profits company in excess of the theirs in equities of the
end of period investment in
or losses subsidiary at the beginning of the subsidiary
subsidiary
Huafa Lease Company of Property Lease and management of
Shenzhen 1000000.00 600,000.00 60% 60% Yes
Company limited liabilities Management self-owned property
Huafa Property Company of Property Lease and management of
Shenzhen 1000000.00 1,000,000.00 100% 100% Yes
Company limited liabilities Management self-owned property
Hengfa R&D, production and selling
Company of Production and
Technology Wuhan 18,1643100 and import and export 181,643,100.00 100% 100% Yes
limited liabilities Sale
Company business of product
Selling, goods import and
Huafa Trade Company of
Wuhan Sale 100000.00 export business of 100,000.00 100% 100% Yes
Company limited liabilities
optoelectronic products
Yutian
Company of Property
Henghua Shenzhen 100,000.00 Property Management 1,000,000.00 100.00% 100.00% Yes
limited liabilities Management
Company
Selling, goods import and
Huafa Hengtian Company of Property
Shenzhen 1,000,000.00 export business of 1,000,000.00 100.00% 100.00% Yes
Company limited liabilities Management
optoelectronic products
Huafa Hengtai Company of Property Lease and management of
Shenzhen 1,000,000.00 1,000,000.00 100.00% 100.00% Yes
Company limited liabilities Management self-owned property
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2. Introduction to the change of merger scope
Introduction to the scope change of the merger statement
√ Applicable □ Not applicable
Compared with previous year, 1 new combined unit is increased in current year (period). The reason is
A wholly-owned subsidiary is newly established in current period.
Compared with previous year, 0 new combined unit is reduced in current year (period). The reason is
3. Subject concluded into merger scope during report period and subject that will be not concluded
into merger scope any more during report period
Subsidiaries and subjects with special purpose concluded into merger scope newly this term become operating entity that forms
control right through entrusted operation or lessee way.
Unit: RMB
Name Ending net asset Net profit in this term
Huafa Hengtian Company 999,940.00 -60.00
VII. Note to Major Items in the Consolidated Financial Statement
1. Monetary Fund
Unit: RMB
Amount at the end of period Amount at the beginning of period
Items In foreign Exchange In foreign Exchange
In RMB In RMB
currency Rate currency Rate
Cash -- -- 958,392.16 -- -- 492,314.95
RMB -- -- 910,718.18 -- -- 422,312.83
HKD 48,999.18 0.8 38,896.04 77,966.13 0.79 61,326.60
USD 1,426.77 6.2 8,777.94 1,422.45 6.1 8,675.52
Bank Deposit -- -- 283,266,389.81 -- -- 50,212,004.91
RMB -- -- 266,191,824.08 -- -- 26,233,133.17
HKD 114,611.34 0.8 90,979.63 114,309.76 0.79 89,913.77
USD 2,760,314.07 6.2 16,983,586.10 3,918,213.84 6.1 23,888,957.97
Other Monetary Fund -- -- 3,861,098.53 -- -- 3,547,136.34
RMB -- -- 3,860,867.93 -- -- 1,818,436.68
USD 37.48 6.2 230.60 283,537.48 6.1 1,728,699.66
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Total -- -- 288,085,880.50 -- -- 54,251,456.20
2. Notes Receivable
（1）Classification of bills receivable
Unit: RMB
Type Amount at the end of period Amount at the beginning of period
Bank Acceptance Bill 62,149,080.06 154,352,869.68
Commercial Acceptance Bill 23,066.81
Total 62,149,080.06 154,375,936.49
（2）Bills receivable already pledged at the end of period
Unit: RMB
Issuer Issuing Date Due Date Amount Note
Qingdao Hai’er Spare Parts
Jan. 14, 2014 Jul. 14, 2014 3,271,000.48
Procurement Co., Ltd.
Qingdao Hai’er Spare Parts
Mar. 17, 2014 Sep. 17, 2014 6,020,000.00
Procurement Co., Ltd.
Qingdao Hai’er Spare Parts
Apr. 16, 2014 Oct. 16, 2014 7,782,132.28
Procurement Co., Ltd.
TCL Air-conditioner
Apr. 23, 2014 Oct. 23, 2014 3,000,000.00
(Wuhan) Co., Ltd.
Qingdao Hai’er Spare Parts
Jun. 16, 2014 Dec. 16, 2014 5,865,153.51
Procurement Co., Ltd.
Total -- -- 25,938,286.27 --
3. Notes Receivable
（1）Disclosure of accounts receivable according to type
Unit: RMB
Amount at the end of period Amount at the beginning of period
Provision for Bad
Type Book balance Book balance Provision for Bad Debts
Debts
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Accounts receivable with
significant specific amount 7,649,789.11 2.00% 6,340,168.08 82.88% 7,649,789.11 4.40% 6,227,694.47 81.41%
that were provisioned bad
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debt preparation separately
Other receivables with accrual of bad debt reserve according to combination
Aging portfolio 369,392,469.75 96.64% 167,198.33 0.05% 160,967,562.02 92.60% 110,950.83 0.07%
Subtotal of combination 369,392,469.75 96.64% 167,198.33 0.05% 160,967,562.02 92.60% 110,950.83 0.07%
Accounts receivable that
were not significant but have
5,210,953.41 1.36% 5,210,953.41 100.00% 5,210,953.41 3.00% 5,210,953.41 100.00%
been provisioned bad debt
preparation separately
Total 382,253,212.27 -- 11,718,319.82 -- 173,828,304.54 -- 11,549,598.71 --
Description of types of other receivables
Other receivables with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Provision for Bad Percent
Content of accounts receivable Book balance Reason of provision
Debts Drawn
Shenzhen Boteman Bowling Club Co., Ltd. 2,555,374.75 2,555,374.75 100.00% Can not be taken back
TCL Wangpai Electric Appliance (Huizhou) Co., Ltd. 1,325,431.75 1,325,431.75 100.00% Can not be taken back
Skyworth Multimedia(Shenzhen) Co.,Ltd. 672,769.28 672,769.28 100.00% Can not be taken back
Qingdao Hai’er Spare Parts Procurement Co., Ltd. 1,225,326.15 1,225,326.15 100.00% Can not be taken back
Failure to recover on time because
H. K. Haowei Industry Co., Ltd. 1,870,887.18 561,266.15 30.00%
of customer’s fund shortage
Total 7,649,789.11 6,340,168.08 -- --
Accounts receivable with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable □ Inapplicable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account ageing Book balance Provision for Bad Book balance Provision for Bad
Amount Proportion Debts Amount Proportion Debts
Within 1 year
Among it:: -- -- -- -- -- --
Subtotal within 1
368,835,141.99 0.00 160,410,234.26
year
1-2 year (s) 224,990.00 5.00% 11,249.50
2-3 year (s) 557,327.76 30.00% 167,198.33 332,337.76 30.00% 99,701.33
Total 369,392,469.75 -- 167,198.33 160,967,562.02 -- 110,950.83
Accounts receivable with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
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Accounts receivable with accrual of bad debt reserve by other method in the combination
□ Applicable √ Inapplicable
Accounts receivable without major individual amount but with separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of accounts receivable Book balance Provision for Bad Debts Percent Drawn Reason of provision
Shenzhen Huixin Video Science and
381,168.96 381,168.96 100.00% Can not be taken back
Technology Co.,Ltd.
Shenzhen Wandial Number Science and
351,813.70 351,813.70 100.00% Can not be taken back
Technology Co.,Ltd.
Shenzhen Dalong Electric Co.,Ltd. 344,700.00 344,700.00 100.00% Can not be taken back
Shenzhen Qunpin Electric Co.,Ltd. 304,542.95 304,542.95 100.00% Can not be taken back
China Galaxy Electric(Hong Kong)
288,261.17 288,261.17 100.00% Can not be taken back
Co.,Ltd.
Dongguan Weite Electric Co.,Ltd. 274,399.80 274,399.80 100.00% Can not be taken back
Hong Kong New Century Electric Co.,Ltd. 207,409.40 207,409.40 100.00% Can not be taken back
Shenyang Beitai Electric Co.,Ltd. 203,304.02 203,304.02 100.00% Can not be taken back
Bejing Xinfanweiye Science and
193,000.00 193,000.00 100.00% Can not be taken back
Technology Co.,Ltd.
TCL Electric(Hong kong) Co.,Ltd. 145,087.14 145,087.14 100.00% Can not be taken back
Huizhou TCL New and Special Electronics
142,707.14 142,707.14 100.00% Can not be taken back
Co., Ltd.
Shenzhen Skyworth-RGB Electric Co.,Ltd. 133,485.83 133,485.83 100.00% Can not be taken back
Shenzhen Xinfa Electronics Co., Ltd. 119,094.78 119,094.78 100.00% Can not be taken back
Others 2,121,978.52 2,121,978.52 100.00% Can not be taken back
Total 5,210,953.41 5,210,953.41 -- --
（2）Conditions of top 5 units in the amount of other receivables
Unit: RMB
Relation with this
Unit name Amount Years Proportion in other receivables
company
Hong Kong Tianyu International The same ultimate
227,771,482.59 Within 1 year 59.57%
Investment Co.,Ltd. controlling party
Qingdao Hai’er Spare Parts
Nonaffiliated parties 63,079,537.47 Within 1 year 16.50%
Procurement Co., Ltd.
Fangchenggang Zhongyi Heavy
Nonaffiliated parties 19,549,410.19 Within 1 year 5.11%
Industry Co., Ltd.
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Qingdao Haidayuan Purchase Service
Nonaffiliated parties 11,272,485.87 Within 1 year 2.95%
Co., Ltd.
TCL Air-conditioner (Wuhan) Co., Ltd. Nonaffiliated parties 6,793,338.82 Within 1 year 1.78%
Total -- 328,466,254.94 -- 85.91%
（3）About the accounts receivable from the related parties
Unit: RMB
As a percentage in accounts
Unit name Relation with this company Amount
receivable
Hong Kong Tianyu International
The same ultimate controlling party 227,771,482.59 59.57%
Investment Co.,Ltd.
Total -- 227,771,482.59 59.57%
4. Other Receivables
（1）Disclosure of other receivables according to type
Unit: RMB
Amount at the end of period Amount at the beginning of period
Provision for Bad
Type Book balance Book balance Provision for Bad Debts
Debts
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Accounts receivable with
significant specific
amount that were 5,662,187.38 30.47% 5,662,187.38 100.00% 5,662,187.38 28.23% 5,662,187.38 100.00%
provisioned bad debt
preparation separately
Other receivables with accrual of bad debt reserve according to combination
Aging portfolio 8,918,265.02 47.99% 766,682.19 8.60% 10,081,917.80 50.27% 458,150.02 4.54%
Subtotal of combination 8,918,265.02 47.99% 766,682.19 8.60% 10,081,917.80 50.27% 458,150.02 4.54%
Accounts receivable that
were not significant but
have been provisioned 4,004,746.63 21.55% 4,004,746.63 100.00% 4,313,278.80 21.50% 4,313,278.80 100.00%
bad debt preparation
separately
Total 18,585,199.03 -- 10,433,616.20 -- 20,057,383.98 -- 10,433,616.20 --
Description of types of other receivables
Other receivables with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
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Unit: RMB
Content of other receivables Book balance Bad debts Percent Drawn Cause
Hebei Botou Court 520,021.00 520,021.00 100.00% Can not be taken back
Traffic incident indemnity 555,785.81 555,785.81 100.00% Can not be taken back
Shenzhen Boteman Bowling Club Co., Ltd. 4,021,734.22 4,021,734.22 100.00% Can not be taken back
Zhao Baomin 564,646.35 564,646.35 100.00% Can not be taken back
Total 5,662,187.38 5,662,187.38 -- --
Other receivables with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable □ Inapplicable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account ageing Book balance Provision for Bad Book balance Provision for Bad
Amount Proportion Debts Amount Proportion Debts
Within 1 year
Among it：
Subtotal within 1 year 5,549,838.26 7,751,585.53
1-2 year (s) 869,344.22 5.00% 43,467.21 963,798.62 5.00% 48,189.93
2-3 year (s) 132,548.90 10.00% 13,254.89
Over 3years 2,366,533.64 30.00% 709,960.09 1,366,533.65 30.00% 409,960.09
Total 8,918,265.02 -- 766,682.19 10,081,917.80 -- 458,150.02
Other receivables with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
Other receivables with accrual of bad debt reserve by other method in the combination
□ Applicable √ Inapplicable
Other receivables without major individual amount but with separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of other receivables Book balance Provision for Bad Debts Percent Drawn Reason of provision
Shenzhen Lotus Island Restaurant Co.,Ltd 236,293.80 236,293.80 100.00% Can not be taken back
Weili Electric Corporation Co.,Ltd,
112,335.62 112,335.62 100.00% Can not be taken back
Zhangzhou City, Fujian Province
Employee canteen ect. 1,036,916.46 1,036,916.46 100.00% Can not be taken back
Individual loan and expenditure 469,161.93 469,161.93 100.00% Can not be taken back
Trade Union 297,402.55 297,402.55 100.00% Can not be taken back
Chuangjing workshop 192,794.00 192,794.00 100.00% Can not be taken back
Others 1,659,842.27 1,659,842.27 100.00% Can not be taken back
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Total 4,004,746.63 4,004,746.63 -- --
（2）Conditions of top 5 units in the amount of other receivables
Unit: RMB
Relation with this
Unit name Amount Years Proportion in other receivables
company
Shenzhen Boteman Bowling
Nonaffiliated parties 4,021,734.22 Over 3years 21.64%
Club Co., Ltd.
Hengfa Complex Building Nonaffiliated parties 1,770,157.50 Within 1 year 9.52%
Hubei Electric Power Company
Nonaffiliated parties 895,588.92 Within 1 year 4.82%
Wuhan Power Supply Company
Gree Electric Appliance
Nonaffiliated parties 330,000.00 Within 1 year 1.78%
(Wuhan) Co., Ltd
Zhao Baomin Nonaffiliated parties 564,646.35 Over 3years 3.04%
Total -- 7,582,126.99 -- 40.80%
5. Advance payment
（1）List of advance payments according to aging
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account ageing
Amount Proportion Amount Proportion
Within 1 year 134,263,486.22 100.00% 13,346,708.54 99.00%
1-2 year (s) 136,534.65 1.00%
Total 134,263,486.22 -- 13,483,243.19 --
（2）Conditions of top 5 units in the amount of advance payments
Unit: RMB
Relation with this
Unit name Amount Account ageing Reason of non-settlement
company
Lenggang Wuhan Trade &
Nonaffiliated parties 49,535,640.03 Within 1 year Not to settlement period
Industry Co., Ltd.
Wuhan Hengsheng
Common final controller 47,932,487.84 Within 1 year Not to settlement period
Photoelectric Industry Co., Ltd.
Wuhan Dashunchao Materials
Nonaffiliated parties 17,893,000.00 Within 1 year Not to settlement period
Trading Co., Ltd.
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Guangxi Blue Bay International
Nonaffiliated parties 7,409,891.00 Within 1 year Not to settlement period
Trade Co., Ltd.
Wuhan Vimsome Iron and Steel
Nonaffiliated parties 5,373,764.23 Within 1 year Not to settlement period
Trade Co., Ltd.
Total -- 128,144,783.10 -- --
6. Inventories
（1）Type of Inventories
Unit: RMB
Amount at the end of period Amount at the beginning of period
Items Depreciation Depreciation
Book balance Book Value Book balance Book Value
Provisions Provisions
Raw Materials 27,719,037.10 4,583,517.25 23,135,519.85 29,655,107.32 4,893,231.35 24,761,875.97
Finishing Product 217,174.18 217,174.18 27,982.75 27,982.75
Stocked Goods 14,791,475.36 3,222,621.17 11,568,854.19 19,282,804.52 3,222,621.17 16,060,183.35
Low priced and easily
1,017,720.57 363,236.79 654,483.78 914,440.54 363,236.79 551,203.75
worn articles
Self-made
4,183,520.54 250,244.88 3,933,275.66 2,287,490.60 250,244.88 2,037,245.72
semi-finished product
Processed Materials
59,813.03 59,813.03 3,680,812.31 3,680,812.31
upon entrustment
Total 47,988,740.78 8,419,620.09 39,569,120.69 55,848,638.04 8,729,334.19 47,119,303.85
（2）Provision for Depreciation of Inventories
Unit: RMB
Book balance at the Current accrual Current decrement Book balance at the
Inventory type
beginning of period amount Carryover Resale end of period
Raw Materials 4,893,231.35 309,714.10 4,583,517.25
Stocked Goods 3,222,621.17 3,222,621.17
Low priced and easily
363,236.79 363,236.79
worn articles
Self-made
250,244.88 250,244.88
semi-finished product
合 计 8,729,334.19 309,714.10 8,419,620.09
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（3）Inventory Falling Price Reserves
Reason of reversal of inventory Ratio of amount reverse in
Basis for accrual of inventory
Item falling price reserves in current current period in the ending
falling price reserves
period balance of the inventory
Some raw materials with
Lower one between book value accrual of falling price reserves
Raw Materials 1.12%
and net realizable value already processed in current
period
Lower one between book value
Stocked Goods
and net realizable value
Lower one between book value
Finishing Product
and net realizable value
Lower one between book value
Turnover materials
and net realizable value
Lower one between book value
Consumable biological assets
and net realizable value
Low priced and easily worn Lower one between book value
articles and net realizable value
Self-made semi-finished Lower one between book value
product and net realizable value
7. Property of Investment
（1）Real property as an investment measured by cost
Unit: RMB
Book balance at the Book balance at the end of
Items Increment This Year Decrement This Year
beginning of period period
I. Total original book value 107,661,686.94 0.00 0.00 107,661,686.94
1. Houses & Buildings 107,661,686.94 107,661,686.94
II. Sum of accumulated
depreciation and 75,132,266.12 627,378.54 0.00 75,759,644.66
accumulated amortization
1.Houses & Buildings 75,132,266.12 627,378.54 75,759,644.66
III. Total net book value of
32,529,420.82 -627,378.54 0.00 31,902,042.28
investment real estate
1.Houses & Buildings 32,529,420.82 -627,378.54 0.00 31,902,042.28
2. Land-use Right 0.00 0.00 0.00
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V. Total book value of
32,529,420.82 -627,378.54 0.00 31,902,042.28
investment real estate
1.Houses & Buildings 32,529,420.82 -627,378.54 0.00 31,902,042.28
2. Land-use Right 0.00 0.00 0.00
Unit: RMB
Current period
Current depreciation and amortization amount 627,378.54
Current accrual amount of impairment provision of investment real estate 0.00
8. Fixed Assets
（1）Condition of Fixed Assets
Unit: RMB
Book balance at the Book balance at
Items Current increment Current decrement
beginning of period the end of period
I. Total original book value: 350,913,340.60 3,172,651.94 1,393,831.09 352,692,161.45
Among it：Houses & Buildings 218,177,134.33 218,177,134.33
Machinery Equipment 85,808,429.03 1,872,298.04 1,333,931.99 86,346,795.08
Means of conveyance 4,718,484.59 510,000.00 5,228,484.59
Tooling Equipment 10,200,502.85 244,665.68 38,224.80 10,406,943.73
Office Equipment 6,402,627.02 15,394.76 21,674.30 6,396,347.48
Mould Equipment 11,729,493.84 527,672.10 12,257,165.94
Apparatus Equipment 13,876,668.94 2,621.36 13,879,290.30
Book balance at the Current Current ending
-- Current accrual Current decrement
beginning of period increment balance
II. Total accumulated depreciation 152,485,739.35 7,503,196.36 1,082,878.48 158,906,057.23
Among it：Houses & Buildings 61,872,274.85 2,909,481.71 64,781,756.56
Machinery Equipment 53,695,012.53 3,225,697.84 1,029,245.98 55,891,464.39
Means of conveyance 3,400,834.30 172,905.45 3,573,739.75
Tooling Equipment 6,523,785.79 158,235.11 34,402.40 6,647,618.50
Office Equipment 5,620,512.11 79,648.32 19,230.10 5,680,930.33
Mould Equipment 9,363,297.03 874,127.91 10,237,424.94
Apparatus Equipment 12,010,022.74 83,100.02 12,093,122.76
Book balance at the Current ending
-- --
beginning of period balance
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III. Total net book value of fixed
198,427,601.25 -- 193,786,104.22
assets
Among it：Houses & Buildings 156,304,859.48 -- 153,395,377.77
Machinery Equipment 32,113,416.50 -- 30,455,330.69
Means of conveyance 1,317,650.29 -- 1,654,744.84
Tooling Equipment 3,676,717.06 -- 3,759,325.23
Office Equipment 782,114.91 -- 715,417.15
Mould Equipment 2,366,196.81 -- 2,019,741.00
Apparatus Equipment 1,866,646.20 -- 1,786,167.54
IV. Total provisions for
2,885,534.22 -- 2,885,534.22
impairment
Machinery Equipment 1,499,613.30 -- 1,499,613.30
Means of conveyance 104,388.91 -- 104,388.91
Tooling Equipment 120,847.02 -- 120,847.02
Office Equipment 72,480.11 -- 72,480.11
Mould Equipment -- 0.00
Apparatus Equipment 1,088,204.88 -- 1,088,204.88
V. Total book value of fixed assets 195,542,067.03 -- 190,900,570.00
Among it：Houses & Buildings 156,304,859.48 -- 153,395,377.77
Machinery Equipment 30,613,803.20 -- 28,955,717.39
Means of conveyance 1,213,261.38 -- 1,550,355.93
Tooling Equipment 3,555,870.04 -- 3,638,478.21
Office Equipment 709,634.80 -- 642,937.04
Mould Equipment 2,366,196.81 -- 2,019,741.00
Apparatus Equipment 778,441.32 -- 697,962.66
The depreciation allowance of the current period is RMB 7,503,196.36; the original price of fixed assets transferred from
construction in process in the current period is RMB0.00.
（2）Condition of temporarily idle fixed asset
Unit: RMB
Original value of Accumulated Impairment
Items Net book value Note
book value Depreciation Provision
Machinery
10,012,680.57 8,293,352.39 1,233,761.45 485,566.73
Equipment
Means of 41,548.00 37,393.20 4,154.80 0.00
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conveyance
Tooling Equipment 1,213,732.59 1,076,384.94 64,619.55 72,728.10
Office Equipment 378,102.00 303,202.57 46,730.39 28,169.04
Mould Equipment 8,350,729.36 7,515,656.43 835,072.93
Apparatus
10,519,305.06 9,394,337.24 741,885.93 383,081.89
Equipment
（3）Fixed assets borrowed through financing lease
Unit: RMB
Type End-of-period book value
Houses & buildings 95,848,856.38
Machinery Equipment 574,284.31
（4）Condition of fixed assets without certificate of title
Reasons for non-issuance of certificate of Expected time for issuance of certificate of
Items
title title
Houses & buildings Relevant procedures are being handled. 2014
9. Project in Progress
（1）Condition of construction in process
Unit: RMB
Amount at the end of period Amount at the beginning of period
Items Impairment Impairment
Book balance Book Value Book balance Book Value
Provision Provision
Huafa building renovation project 654,356.00 654,356.00 654,356.00 654,356.00
Gongming Electronics Town
2,039,000.00 2,039,000.00 1,669,000.00 1,669,000.00
renovation project
Boiler installation works of foam
1,397,211.21 1,397,211.21
factory
Total 4,090,567.21 0.00 4,090,567.21 2,323,356.00 0.00 2,323,356.00
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（2）Changes in important projects in process
Unit: RMB
Proportion
Including: accumulated Proportion of
Transfer of project Accumulated
Project Budget Beginning-of-period Current Other Job capitalization of capitalization of Source of Amount at the
to fixed investment capitalization
name amounts amounts increment reduction schedule interest in the current interest in the capital end of period
assets in the of interest
period current period
budget
Huafa building renovation
654,356.00 Own funds 654,356.00
project
Gongming Electronics
1,669,000.00 370,000.00 Own funds 2,039,000.00
Town renovation project
Boiler installation works
0.00 1,397,211.21 Own funds 1,397,211.21
of foam factory
Total 2,323,356.00 1,767,211.21 -- -- -- -- 4,090,567.21
10. Intangible Assets
（1）Condition of intangible assets
Unit: RMB
Book balance at the Book balance at the end
Items Current increment Current decrement
beginning of period of period
I. Total original book value: 55,849,705.33 0.00 0.00 55,849,705.33
Land-use Right 55,187,826.36 55,187,826.36
Software cost 661,878.97 661,878.97
II. Total accumulated
6,488,725.40 747,147.33 0.00 7,235,872.73
amortization
Land-use Right 6,236,209.05 722,204.37 6,958,413.42
Software cost 252,516.35 24,942.96 277,459.31
III. Total net book value of
49,360,979.93 -747,147.33 0.00 48,613,832.60
intangible assets
Land-use Right 48,951,617.31 -722,204.37 0.00 48,229,412.94
Software cost 409,362.62 -24,942.96 0.00 384,419.66
Land-use Right
Software cost
Total book value of
49,360,979.93 -747,147.33 48,613,832.60
intangible assets
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Land-use Right 48,951,617.31 -722,204.37 0.00 48,229,412.94
Software cost 409,362.62 -24,942.96 0.00 384,419.66
The amortization amount of the current period is RMB747,147.33.
11．Long-term deferred charges
Unit: RMB
Amount at the The amortization
Current Other reduction Amount at the Cause for other
Items beginning of amount of the
increment amounts end of period decrease
period current period
Transfer of
Golf membership fee 511,133.25 35,333.37 159,133.19 316,666.69
membership
Renovation
1,262,391.61 390,950.04 871,441.57
expenditures
Total 1,773,524.86 426,283.41 159,133.19 1,188,108.26 --
12．Deferred Income Tax Assets & Deferred Income Tax Liabilities
（1）Deferred income tax assets and deferred income tax liabilities not to be presented with the net amount
after offsetting
Recognized deferred income tax assets and deferred income tax liabilities
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Deferred income tax assets：
Provisions for impairment of assets 7,540,066.66 7,575,314.91
Deductible loss 460,320.02
Estimated liabilities 651,102.95 651,102.95
Subtotal 8,191,169.61 8,686,737.88
Deferred income tax liabilities:
Deferred tax assets that have not been confirmed
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Deductible loss 38,408,137.25 37,473,229.25
Provision for bad debt impairment of Huafa Lease
3,153,172.51 3,153,172.51
Company
Provision for Fixed Assets Impairment of Huafa
143,951.20 143,951.20
Trade Company
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Total 41,705,260.96 40,770,352.96
The deductible loss of the unrecognized deferred income tax assets will become due in the following years.
Unit: RMB
Year Amount at the end of period Amount at the beginning of period Note
2014 210,527.72 210,527.72
2015 290,960.95 290,960.95
2016 556,637.59 556,637.59
2017 33,350,633.02 33,350,633.02
2018 3,999,377.97 3,064,469.97
Total 38,408,137.25 37,473,229.25 --
Schedule of taxable differences and deductible differences
Unit: RMB
Amount of temporary difference
Items
Amount at the end of period Amount at the beginning of period
Difference project that tax shall be paid.
Subtotal 0.00 0.00
Deductible difference project
Deductible loss 0.00 1,841,280.09
Provision drawn for assets impairment 30,159,966.62 30,300,959.61
Estimated liabilities 2,604,411.81 2,604,411.81
Subtotal 32,764,378.43 34,746,651.51
（2）Deferred income tax assets and deferred income tax liabilities to be presented with the net amount
after offsetting
Items making up the offset deferred income tax assets and deferred income tax liabilities
Unit: RMB
Deductible or taxable Deductible or taxable
Deferred income tax Deferred income tax
temporary temporary
assets and liabilities assets and liabilities
differences after differences after
Items after offset at the end after offset at the
offset at the end of offset at the
of the reporting beginning of the
the reporting period beginning of the
period reporting period
reporting period
Deferred income tax assets 8,191,169.61 8,686,737.88
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13. Schedule of provisions for impairment of assets
Unit: RMB
Book balance at the Current decrement Book balance at
Items Current increment
beginning of period Carryover Resale the end of period
I. Provision for Bad Debts 21,983,214.91 168,721.11 22,151,936.02
II. Provision for Depreciation
8,729,334.19 309,714.10 8,419,620.09
of Inventories
VII. Provision for Fixed
2,885,534.22 2,885,534.22
Assets Impairment
IX. Provision for impairment
0.00 0.00
of construction in progress
Total 33,598,083.32 168,721.11 309,714.10 0.00 33,457,090.33
14. Short-term Borrowings
（1）Classification of Short-term Borrowings
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Pledged loan 53,773,346.90 49,493,738.74
Mortgage Loan 78,913,155.59 67,348,857.39
Credit loan 37,708,000.00 45,298,005.00
Total 170,394,502.49 162,140,601.13
15. Notes Payable
Unit: RMB
Type Amount at the end of period Amount at the beginning of period
Bank acceptance bill 42,926,747.44 34,646,052.79
Total 42,926,747.44 34,646,052.79
Amounts to be matured at the next accounting period will be RMB 42,926,747.44.
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16. Accounts Payable
（1）Condition of accounts payable
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Within 1 year 46,297,264.97 42,060,913.97
Over 1year 912,374.94 10,145,428.84
Total 47,209,639.91 52,206,342.81
17. Advance receipts
（1）Conditions of advance receipts
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Within 1 year 1,651,857.66 1,491,467.29
Over 1year 80,857.00
Total 1,651,857.66 1,572,324.29
18. Salary Payable to Employees
Unit: RMB
Book balance at the Book balance at the end
Items Current increment Current decrement
beginning of period of period
I. Salary, bonus,
4,028,594.41 22,616,537.54 23,410,354.62 3,234,777.33
allowance & subsidies
II. Staff Welfare
2,707,905.24 2,707,905.24 0.00
Treatment Fund
III. Social Insurance
17,948.16 2,226,674.30 2,226,674.30 17,948.16
Premium
Among it: Medical
23,041.98 258,977.72 258,977.72 23,041.98
insurance premium
Basic retirement
-5,093.82 762,734.34 762,734.34 -5,093.82
insurance premium
Unemployment
139,882.88 139,882.88 0.00
Insurance Premium
Industrial Injury
763,911.18 763,911.18 0.00
Insurance Premium
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Birth Insurance Premium 301,168.18 301,168.18 0.00
IV. Public Housing Fund 24,310.00 417,574.04 491,229.44 -49,345.40
V. Welfare of retirement 0.00
VI. Others 689,969.94 22,893.40 86,670.06 626,193.28
Total 4,760,822.51 27,991,584.52 28,922,833.66 3,829,573.37
Those amounts in arrears among the payrolls payable is RMB 0.00.
Union funds and employee education expenses is RMB 626,193.28, amounts of non-monetary benefits is RMB 0.00 , and
compensations for terminating the labor relation is RMB 0.00.
Arrangements such as expected payment time and amounts of the payrolls payable
The inventory falling price reserves are issued every month according to the actual conditions.
19．Taxes Payable
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
VAT 4,217,877.45 4,546,472.19
Consumption Tax 0.00
Business Tax 1,183,644.71 1,185,572.87
Enterprise Income Tax 8,459,650.14 8,314,523.29
Personal Income Tax 52,074.12 43,155.25
Urban Maintenance & Construction Tax 44,864.26 23,767.75
Property Tax 415,491.05 610,591.84
Land use tax 196,205.10 195,937.53
Educational Surcharge 10,219.05 16,053.95
Others 352,182.43 7,006.39
Total 14,932,208.31 14,943,081.06
20．Other accounts Payables
（1）Conditions of other accounts payable
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Within 1 year 22,348,554.84 9,721,208.00
Over 1year 6,623,250.48 12,671,205.99
Total 28,971,805.32 22,392,413.99
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（2）Amounts to be paid to those shareholding units holding more than 5% (including 5%) of the voting
shares among the other accounts payable during the reporting period
Unit: RMB
Unit name Amount at the end of period Amount at the beginning of period
Zhongheng Group 0.00 3,654.74
Total 0.00 3,654.74
21．Estimated liabilities
Unit: RMB
Amount at the beginning Amount at the end of
Items Increment this year Decrement this year
of period period
Pending legal action 2,604,411.81 2,604,411.81
Total 2,604,411.81 2,604,411.81
Description of estimated liabilities
See Item IX ―Contingency‖ of Notes to Financial Statements for details.
22．Long-term borrowings
（1）Classification of long-term borrowings
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Pledged loan 600,000,000.00
Mortgage Loan 162,418,800.00
Total 600,000,000.00 162,418,800.00
（2）Top five long-term borrowings
Unit: RMB
Amount at the beginning of
Amount at the end of period
period
Borrower Starting date Ending date Currency Interest rate
In foreign Amount of In foreign Amount of
currency foreign currency currency foreign currency
China Construction
Mar.12, 2009 Mar. 11, 2016 RMB 6.55% 72,418,800.00
Bank Shangbu branch
China Construction
Apr.3, 2009 Mar. 11, 2016 RMB 6.55% 90,000,000.00
Bank Shangbu branch
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China CITIC Bank
Jun. 9, 2014 Jun. 8, 2026 RMB 8.19% 140,000,000.00
Shenzhen Branch
China CITIC Bank
Jun. 16, 2014 Jun. 15, 2026 RMB 8.19% 460,000,000.00
Shenzhen Branch
Total -- -- -- -- -- 600,000,000.00 -- 162,418,800.00
Description of long-term borrowings; for long-term borrowings formed by extension of overdue loans, the condition of extension,
principal, interest, expected repayment schedule, etc. shall also be stated;
The Company signed Fixed Assets Loan Contract (No.: (2014) S.Y.H..Z. No. 0017) with China CITIC Bank Corporation
Limited Shenzhen Branch on May 28, 2014. The loan amount agreed in the contract is RMB 600 million Yuan with a loan term of 12
years. RMB 600 million Yuan was drawn as of the date of approval and issuance of this financial report. The actual drawing dates
were June 9, 2014 (RMB 140 million Yuan) and June 16, 2014 (RMB 460 million Yuan). During the loan term, the borrowing
interest rate from the first year to the third year is 25% up-floated based on loan benchmark interest rate of same grade issued by
People’s Bank of China in the same period upon the actual drawing date of loan, while that from the fourth year to the twelfth year is
30%% up-floated based on loan benchmark interest rate of same grade issued by People’s Bank of China in the same period upon the
actual drawing date of loan. It is agreed in the contract that the property from floor 1 to floor 6 of Huafa Building (property certificate
numbers: S.F.D.Z. No. 3000503696, S.F.D.Z. No. 3000522977, S.F.D.Z. No. 3000522975, S.F.D.Z. No. 3000522976, S.F.D.Z. No.
3000503720 and S.F.D.Z. No. 3000511945) is used as mortgage.
23. Capital Stock
Unit: RMB
Amount at the Increase and decrease of change in the current period (+, -)
Amount at the
beginning of Sharetransferofpublic
Issuingnewshares Donatehare Others Subtotal end of period
period accumulation fund
Total shares 283,161,227.00 283,161,227.00
24. Capital Reserves
Unit: RMB
Amount Amount
Items Current increment Current decrement
at the beginning of period at the end of period
Capital premium (Shares Premium) 96,501,903.02 96,501,903.02
Other Capital Reserves 12,994,934.31 12,994,934.31
Total 109,496,837.33 109,496,837.33
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25. Surplus Reserves
Unit: RMB
Amount at the beginning Amount at the end of
Items Increment this year Decrement this year
of period period
Statutory Surplus Reserves 21,322,617.25 21,322,617.25
Any Surplus Reserves 56,068,976.00 56,068,976.00
Total 77,391,593.25 77,391,593.25
26. Undistributed profits
Unit: RMB
Items Amount Proportion retained or distributed
Undistributed profit by the end of last year before adjusting -196,386,008.11 --
Beginning-of-year undistributed profits after adjusting -196,386,008.11 --
Add: net profit belonging to the owner of the parent company of the current period 1,455,936.93 --
End-of-period undistributed profits -194,930,071.18 --
Schedule of beginning-of-year undistributed profits:
1) Influence over the beginning-of-year undistributed profits 0 (RMB) due to retroactive adjustment of Accounting Standards for
Business Enterprises and relevant new provisions;
2) Influence over the beginning-of-year undistributed profits 0 (RMB) due to change in the accounting policy;
3) Influence over the beginning-of-year undistributed profits 0 (RMB) due to change in significant accounting errors;
4) Influence over the beginning-of-year undistributed profits 0 (RMB) due to change of consolidated range caused by business
merger of the same control;
5) Influence over the beginning-of-year undistributed profits 0 (RMB) due to other adjustments.
Description of undistributed profits; for those companies initially and publicly issuing the securities, if the accumulation profits
before issuance are jointly owned by the new and old shareholders based on the resolution of general meeting of shareholders, this
shall be clearly stated; if the accumulation profits before issuance are to be distributed before issuance and owned by the old
shareholders based on the resolution of general meeting of shareholders, the Company shall clearly disclose the audited profits
owned by the old shareholders in the dividends payable.
27. Business Revenues & Business Cost
（1）Business Revenues & Business Cost
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Revenues from Major Business 344,441,701.65 284,004,581.24
Revenues from Other Business 22,180,124.71 18,728,242.18
Business revenues 326,921,602.88 263,513,507.38
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（2）Main Businesses(By industries)
Unit: RMB
Accruals of the current period Accruals of the previous period
Industry names
Business revenues Business cost Business revenues Business cost
Display 140,670,450.02 138,062,144.77 133,537,646.59 128,492,605.17
Injection moulded pieces 145,506,562.10 131,348,336.50 113,391,058.85 100,752,264.75
Foamed pieces 41,549,843.23 36,581,795.46 37,075,875.80 31,514,478.13
Steel 16,714,846.30 16,664,364.08
Total 344,441,701.65 322,656,640.81 284,004,581.24 260,759,348.05
（3）Main Businesses(By products)
Unit: RMB
Accruals of the current period Accruals of the previous period
Product name
Business revenues Business cost Business revenues Business cost
Display 140,670,450.02 138,062,144.77 133,537,646.59 128,492,605.17
Injection moulded pieces 145,506,562.10 131,348,336.50 113,391,058.85 100,752,264.75
Foamed pieces 41,549,843.23 36,581,795.46 37,075,875.80 31,514,478.13
Steel 16,714,846.30 16,664,364.08
Total 344,441,701.65 322,656,640.81 284,004,581.24 260,759,348.05
（4）Main Businesses(By regions)
Unit: RMB
Accruals of the current period Accruals of the previous period
Region name
Business revenues Business cost Business revenues Business cost
Hong Kong 121,292,733.85 120,304,763.74 133,537,646.59 128,492,605.17
Central China 223,148,967.80 202,351,877.07 150,466,934.65 132,266,742.88
Total 344,441,701.65 322,656,640.81 284,004,581.24 260,759,348.05
（5）Business revenues of the top five clients of the Company
Unit: RMB
Revenues from Major Proportion among the total Business revenues of the
Name of customer
Business company
Yutian International 121,292,733.85 33.08%
Qingdao Hai’er Spare Parts Procurement 116,568,466.32 31.80%
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Co., Ltd.
Gree Electric Appliance (Wuhan) Co., Ltd 41,905,943.82 11.43%
TCL Air-conditioner (Wuhan) Co., Ltd. 15,418,298.42 4.21%
Shenzhen Hefengtai Photoelectric Display
9,442,021.79 2.58%
Co., Ltd.
Total 304,627,464.20 83.10%
28. Business Tax & Surcharges
Unit: RMB
Items Accruals of the current period Accruals of the previous period Calculation and payment criteria
Business Tax 919,344.05 831,077.84 5%
Urban Maintenance & Construction Tax 880,800.95 59,429.19 7%
Educational Surcharge 377,486.11 24,514.42 3%
Property Tax 221,129.28 221,129.28 1.20%
Land use tax 119,997.05 119,997.05
Local education development fees 251,715.96 15,785.72 2%
Others 235,050.69 1,578.57
Total 3,005,524.09 1,273,512.07 --
29. Selling expense
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Transportation expenses 1,640,972.15 1,316,383.46
Payroll 2,366,623.38 2,172,728.83
Commodity inspection expenses 25,888.25 136,796.25
Customs affairs fee 42,010.48 116,758.97
Commodity wastage 135,866.33 179,834.93
Others 1,353,338.55 635,072.29
Total 5,564,699.14 4,557,574.73
30．Management expense
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Payroll 3,414,921.41 4,318,164.71
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Depreciation costs 2,222,108.41 2,904,543.90
Social Insurance Premium 2,860,536.72 3,162,084.85
Social contact fees 1,056,157.06 1,120,131.60
Tax and surcharges 1,057,982.57 1,939,037.30
Staff Welfare Treatment Fund 1,382,314.05 794,739.73
Business trip costs 812,526.04 744,453.52
Amortization of intangible assets 747,147.33 731,673.84
Transportation fees 578,267.87 728,160.71
Consulting fees 1,525,594.57 450,087.44
Safety protection fee 798,185.86 698,491.28
Repair costs 540,639.15 756,716.03
Auditing costs 763,171.95 826,562.25
Office costs 374,404.37 385,633.38
Communication fees 155,905.69 163,143.76
Amortization of low-value, perishable
313,042.21 197,904.86
goods
Securities information disclosure fees 181,550.56 128,000.00
Legal action costs 6,520.89 65,810.60
Others 728,955.12 959,018.67
Total 19,519,931.83 21,074,358.43
31. Financial Expenses
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Interest Expenditures 11,565,916.38 7,740,367.06
Less: interest return 158,372.81
Add: exchange loss -1,276,739.86 1,738,993.25
Add: other expenditures 78,711.55 43,693.67
Total 10,209,515.26 9,523,053.98
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32．Assets Impairment Loss
Unit: RMB
Items Accruals of the current period Accruals of the previous period
I. Provision for Bad Debts 168,721.11 -869,044.62
II. Provision for Depreciation of Inventories -309,714.10
Total -140,992.99 -869,044.62
33．Non-business Revenues
（1）Condition of non-Business revenues
Unit: RMB
Accruals of the current Accruals of the previous Amount recorded in current
Items
period period nonrecurring profit and loss
Gains of Disposal of non-current assets 161,398.90 140,940.18 161,398.90
Among it: income from fixed assets disposition 161,398.90 140,940.18 161,398.90
Accept donation. 74,500.00 102,293.06 74,500.00
Governmental award 0.00 450,000.00
Payment that can not be paid 327,211.07 327,211.07
Penalty fine income 88,333.00 18,836.00 88,333.00
Penalty income 1,240.00 6,251.55 1,240.00
Others 0.00
Total 652,682.97 718,320.79 652,682.97
（2）Governmental subsidy counted into current income and loss
Unit: RMB
Whether belong to
Subsidy item Accrual in this term Accrual of last term Relevant to asset/income non-recurrent income
and loss
Special funds for enterprise
technology innovation and 0.00 50,000.00 Relevant to income Yes
development
Special funds to support
0.00 200,000.00 Relevant to income Yes
servo system transformation
Others 0.00 200,000.00 Relevant to income Yes
Total 0.00 450,000.00 -- --
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34. Non-business Expenditures
Unit: RMB
Amount recorded in
Accruals Accruals
Items current nonrecurring
of the current period of the previous period
profit and loss
Loss of Disposal of Non-current Assets 97,351.51 135,953.01 97,351.51
Among it: Loss from fixed-assets disposition 97,351.51 135,953.01 97,351.51
Litigation indemnity 0.00 1,889,105.71
Others 172.73 15,404.29 172.73
Total 97,524.24 2,040,463.01 97,524.24
35. Expenses of Income Tax
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Current income taxes computed in accordance with the tax law
145,199.68 624,754.07
and related regulations.
Adjustment of deferred income taxes 495,568.27 -255,015.27
Total 640,767.95 369,738.80
36. Calculation Process of Basic Earning per Share and Diluted Earning per Share
Items No. Amount of current year Amount of last year
1 1,455,936.93 1,967,980.43
Net profit ascribed to mother company
2 416,369.05 -849,865.79
Incidental loss & profit ascribed to mother company
3=1-2 1,039,567.88 2,817,846.22
Net profit ascribed to shareholder of mother company after
deducting incidental loss & profit
4 283,161,227.00 283,161,227.00
Total shares at term beginning
5
Shares increased through capital reserve-to-shares or
dividends distribution (I)
6
Shares increased through issuing new shares or
debt-to-stock (II)
7
Number of months since next month after shares increasing
(II) till term end of reporting period
8
Shares decreased due to counter purchased or share
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shrinking
9
Number of months since next month after shares
Decreasing till term end of reporting period
Share number decrease for shares deduction 10
11 6 6
Number of months during reporting period
Averagely weighted common shares issued 12=4+5+6×7÷11-8×9÷11-10 283,161,227.00 283,161,227.00
13=1÷12 0.0051 0.0070
Basic earning per share (I)
14=3÷12 0.0037 0.0100
Basic earning per share (II)
15
Diluted potential common stock interest switch expenses
which are recognized as expenses
16
Replacement expenses
17
Income tax rate
Subscription warrant, option Weighted average of the 18
common stocks produced by exercise and convertible
debenture
19=[1+(15-16)×(1-17)]÷(12
Diluted earning per share (I) 0.0051 0.0070
+18)
19=[3+(15-16)×(1-17)]÷(12
Diluted earning per share (II) 0.0037 0.0100
+18)
37. Annotations to cash flow statement
（1）Other Cash Received Related to Operation Activities
Unit: RMB
Items Amount
Other received cashes related to investment activities 12,763,483.79
Total 12,763,483.79
（2）Other Paid Related to Operation Activities
Unit: RMB
Items Amount
Other Paid Related to Operation Activities 13,020,320.30
Total 13,020,320.30
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38. Supplementary information of cash flow statement
（1）Supplementary information of cash flow statement
Unit: RMB
Supplementary information Current amount Previous amount
1. Convert net profit to cash flow from operating activities: -- --
Net Profit 1,455,936.93 1,967,980.43
Add: provision drawn for assets impairment -140,992.99 -869,044.62
Depreciation of fixed assets, depletion of oil and gas, depreciation
7,047,696.42 8,014,558.68
of production materials or equipment
Amortization of Intangible Assets 747,147.33 354,940.81
Amortization of Long-term Expenses to be Apportioned 585,416.60 172,850.06
Loss from Disposal of Fixed Assets, Intangible Assets & Other
-50,000.00 -18,790.60
Long-term Assets (Proceeds indicated by ―-‖)
Financial Expenses (Proceeds indicated by ―-‖) 12,009,100.55 9,522,859.70
Decrement of Deferred Income Tax Assets (Addition indicated by
495,568.27 -255,015.27
―-‖)
Decrement of Inventories (Addition indicated by ―-‖) -7,538,818.68 -31,782,543.94
Decrement of Operative Receivables (Addition indicated by ―-‖) -151,010,599.10 -8,578,463.49
Increment of Operative Payables (Decrease indicated by ―-‖) -52,188,141.86 -7,087,288.96
Net Cash Flow Provided by Operating Activities -188,587,686.53 -28,557,957.20
2. Important investment and fund raising activities involving no
-- --
cash：
3. Net Variation of Cash and Cash Equivalent： -- --
Year-end balance of cash 284,224,781.97 120,470,443.69
Less: year-beginning balance of cash 50,704,319.86 112,834,841.39
Net increase of cash and cash equivalent 233,520,462.11 7,635,602.30
（2）Composition of cash and cash equivalents
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
I. Cash 284,224,781.97 50,704,319.86
III. Balance of Cash & Cash Equivalents at Term End III.
284,224,781.97 50,704,319.86
Balance of Cash & Cash Equivalents at Term End
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VIII. Connected parties and connected transactions
1. Condition of parent company of the Enterprise
Percentage of
Shareholding voting rights
Ultimate
Name of Legal proportion of held by the
Company Registered Business Registered controlling Code of
parent Affiliation representat the parent parent
type place scope capital party of the Organization
company ive company over company
Enterprise
the Enterprise over the
Enterprise
Company
Zhongheng Controlling Li Production Li
of limited Wuhan 138,000,000 41.14% 41.14% 711954601
Group shareholder Zhongqiu and sale Zhongqiu
liabilities
2. Condition of subsidiaries of the Enterprise
Share Vote as a
Names of Type of Company Registered Legal Business Registered Code of
proportion percentage
Subsidiary subsidiaries type place representative scope capital Organization
(%) (%)
Huafa
Holding Company of Property
Lease Shenzhen Liu Zuodong 1,000,000.00 60% 60% 70843859-3
subsidiary limited management
Company
Huafa
Holding Company of Property
Property Shenzhen Li Zhongqiu 1,000,000.00 100% 100% 68378841-4
subsidiary limited management
Company
Hengfa
Holding Company of Production
Technology Wuhan Li Zhongqiu 181,643,111.00 100% 100% 67911516-1
subsidiary limited and sale
Company
Huafa Trade Holding Company of
Wuhan Liu Huixiong Sale 100,000.00 100% 100% 56233214-6
Company subsidiary limited
Yutian
Holding Company of Property
Henghua Shenzhen Li Zhongqiu 1,000,000.00 100% 100% 08078761-5
subsidiary limited management
Company
Huafa
Holding Company of Property
Hengtian Shenzhen Li Zhongqiu 1,000,000.00 100% 100% 08077019-4
subsidiary limited management
Company
Huafa
Holding Company of Property
Hengtai Shenzhen Li Zhongqiu 1,000,000.00 100.00% 100.00% 08858556-7
subsidiary limited management
Company
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3. Condition of the other affiliates of the Enterprise
Name of other affiliates Relation with this company Code of Organization
Wuhan Hengsheng Yutian Industry Co., Ltd. (hereinafter referred Under the control of the same final
73108664-5
to as Hengsheng Yutian) controlling party
Wuhan Hengsheng Optoelectronic Industry Co., Ltd. (hereinafter Under the control of the same final
59454567-2
referred to as Hengsheng Optoelectronic) controlling party
Shenzhen Zhongheng Huafa Technology Co., Ltd. (hereinafter Under the control of the same final
68536237-X
referred to as Huafa Technology) controlling party
Under the control of the same final
Wuhan Xindongfang Real Estate Development Co., Ltd. 74476047-5
controlling party
Under the control of the same final
Wuhan Zhongheng Property Management Co.,Ltd. 75180426-1
controlling party
Under the control of the same final
Wuhan Guanggu Display System Co., Ltd. 75510305-9
controlling party
Under the control of the same final
Yutian Property(Wuhan) Co.,Ltd 66348637-1
controlling party
Under the control of the same final
Wuhan Yutian Industrial Land Co., Ltd. 05571411-5
controlling party
Under the control of the same final
Wuhan Yutian Donfang Land Co., Ltd. 05571415-8
controlling party
Under the control of the same final
Wuhan Xiahua Zhongheng Electronic Co., Ltd. 27186154-X
controlling party
Under the control of the same final
Wuhan Zhongheng Yutian Trade Co., Ltd. 56559237-3
controlling party
Under the control of the same final
Wuhan Yutian Hongguang Real Estate Co., Ltd. 56234774-3
controlling party
Under the control of the same final
Shengzhen Zhongheng Huayu Investment Holdings Limited 58918224-8
controlling party
Under the control of the same final
Hong Kong Yutian International Investment Co.,Ltd
controlling party
Under the control of the same final
Yutian Capital Limited
controlling party
Under the control of the same final
Yutian International Co., Ltd.
controlling party
Under the control of the same final
Hong Kong Zhongheng Yutian Co., Ltd.
controlling party
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4. Associated Transactions
（1）Fact statement of procurement of goods and acceptance of labor
Unit: RMB
Accruals of the current period Accruals of the previous period
Pricing method
and
Ratio of the Ratio of the
decision-making
Affiliated party Affiliated transaction amount of the amount of
process of Amount Amount
same the same
affiliated
transactions transactions
transaction
The price for raw
material from
Procurement of LCD Yutian
Yutian International 84,194,940.24 25.81% 101,309,262.65 36.15%
screen International is the
same to that of the
market;
Procure raw
material from
Hengsheng
Optoelectronic,
determine the price
according to about
Hengsheng Procurement of LCD
1% lower than 22,721,458.51 6.96% 5,440,928.29 2.06%
Optoelectronic screen
average transaction
price of the market
principally and
refer to the
bargaining power
of both parties.
Fact statement of sales of goods and provisions of labor
Unit: RMB
Accruals of the current period Accruals of the previous period
Pricing method and Ratio of the Ratio of the
Affiliated
Affiliated party decision-making process amount of the amount of the
transaction Amount Amount
of affiliated transaction same same
transactions transactions
The price for selling
Sales of LCD LCD screen to Yitian
Yutian International 121,292,733.90 33.08% 124,180,555.69 43.72%
screen International shall be
determined based on the
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sales order price of the
client.
Hengsheng Sales of LCD
The price of the market 123,773.00 0.03% 22,254.90 0.01%
Optoelectronic screen
（2）Associated lease situation
Lease situation table of the Company
Unit: RMB
Rental income
Name of the Type of leased Beginning date of Expiration date of Pricing basis for
Name of the lessee recognized in the
lessor asset lease lease lease
report period
The Company Huafa Technology Buildings Jul. 1, 2014 Dec. 31, 2014 Market price 1,472,769.00
（3）Associated guarantee situation
Unit: RMB
Whether guarantee
Starting date of Expiry date of
Guarantor Guaranteed person Amount of guarantee has been fully
guarantee guarantee
performed or not
Hengfa Technology
Li Zhongqiu, Our company 80,000,000.00 Jun.17, 2013 Jun.17, 2014 None
Company
5．Receivables and payable of related party
Receivables of listed company from related party
Unit: RMB
Ending Initial
Project name Associated party
Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Notes Receivable Yutian International 227,771,482.59 58,271,302.17
Advance payment Yutian International 17,304,786.77 8,310,763.53
Notes Receivable Hengsheng Optoelectronic 84,450.00
Advance payment Hengsheng Optoelectronic 47,932,487.84
Payables of listed company to related party
Unit: RMB
Project name Associated party Ending amount Initial amount
Other accounts Payables Zhongheng Group 0.00 3,654.74
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IX. Contingent Affairs
1. Pending action or contingent liabilities formed by arbitration and its financial impact
（1）Contract disputes between the Company and Shaanxi Linghua Electronic Co., Ltd.
The contract dispute case filed by Shaanxi Linghua Electronic Co., Ltd. (2007SDDMC 2441): Shaanxi Linghua made a claim
for damages to the printed circuit board with potential quality problems that were sold to it during the period May 30, 2006 to May 9,
2007. The amount at issue is RMB 3,100,773.20. The company received summons from Futian District People’s Court on Jan. 14,
2008. The first hearing was opened for cross examination of evidence on March 6, 2008. The case was not completed by the balance
sheet date.
The company lodged a counter claim for the overdue freight fee and the interest accrued to Shaanxi Linghuaon November 12,
2007. The amount at issue is RMB 1,054,290.19. The first court session is on March 6, 2008 and the cross examination of evidence
was completed.
On Jul. 25, 2009, Shenzhen Futian People's Law Court settled the above cases (No. 2007 SHEN FU FA MIN ER CHU ZI NO.
2441), ruling that, the Company pay 1,797,975.48 Yuan of compensation to Shaanxi Linghua within 10 days of the settlement, and
that Shaanxi Linghua pay to the Company the balance of payment for goods (1,797,975.48 Yuan) within 10 days of the settlement as
well as interests associated thereto.
For that legal settlement, the Company brought an appeal to the Shenzhen intermediate People's Court on Aug. 31, 2009. The
Shenzhen Intermediate People's Court settlement appeal on Mar. 22, 2010 (rule No. (2009) SHEN ZHONG FA MIN ER ZHONG ZI
NO. 2227), ruling that the original settlement has no convincing evidences and that case shall be re-settled by the Shenzhen Futian
People's Law Court. Canceling the civil judgment No. Shen Fu Zi Min Er Chu 2441 (2007) made by the People's Court of Futian
District Shenzhen City, and remand to the People's Court of Futian District Shenzhen City for retrial.
On May 5, 2013, Futian District People’s Court of Shenzhen City has made judgment regarding abovementioned case
(S.F.F.M.E.C.Z.No.9 in 2010): the company shall, within 10 days after the judgment becomes effective, pay RMB2,386,995.81 to
Shaanxi Linghua as damages and Shaanxi Linghua shall, within 10 days after the judgment becomes effective , pay RMB869,458.96
as the residual payment for the goods to the company and compensate the interest loss.
The Company shall lodge the suit on July 7, 2013 to Shenzhen Municipal Intermediate People’s Court regarding the judgment.
According to the existing judgment, the company has withdrawn RMB2, 360,203.26 as the litigation cost of the case and determines
as expected liabilities.
As of the approval and submission date of this financial report, this case has not been completed legal proceedings.
（2）Labor disputes that have been confirmed estimated liability in previous years but have not been executed till now.
According to the Notice on Judgment Enforcement (2008 SFFZZ NO. 522-529) issued by the Shenzhen People’s Court of
Guangdong Province concerning the 14 persons’(including Cai Yaoqiang and others) labor dispute case, the SLZC [2007] NO.
1069-1077, 1079, 1081, 1085-1087 arbitration awards have started to take legal effect. And according to the Corporate Basic
Information and Credit Report, the Company has the unperformed labor dispute object of 38,386.00 Yuan in total, which has been
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confirmed as the estimated liability by the Company.
The former employees Yang Guangze of the Company filed a claim for their unpaid salary, allowance, overtime, public reserve
fund, festival allowance, etc. And according to the judgment of People’s Court, the Company has confirmed the claimed damages of
23,851.00 Yuan as its estimated liability.
X. Notes of main items of parent company’s financial statements
1. Notes Receivable
（1）Notes Receivable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Type Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Accounts receivable with
significant specific
amount that were 5,094,414.36 48.59% 3,784,793.33 74.29% 5,094,414.36 10.76% 3,672,319.72 72.09%
provisioned bad debt
preparation separately
Other receivables with accrual of bad debt reserve according to combination
Aging portfolio 557,327.76 5.32% 167,198.33 30.00% 37,407,188.47 79.03% 110,950.83 0.30%
Subtotal of combination 557,327.76 5.32% 167,198.33 30.00% 37,407,188.47 79.03% 110,950.83 0.30%
Accounts receivable that
were not significant but
have been provisioned bad 4,832,157.56 46.09% 4,832,157.56 100.00% 4,832,157.56 10.21% 4,832,157.56 100.00%
debt preparation
separately
Total 10,483,899.68 -- 8,784,149.22 -- 47,333,760.39 -- 8,615,428.11 --
Description of type of accounts receivable
Other receivables with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Provision for Bad
Content of accounts receivable Book balance Percent Drawn Reason of provision
Debts
TCL Wangpai Electric Appliance
1,325,431.75 1,325,431.75 100.00% Can not be taken back
(Huizhou) Co., Ltd.
Skyworth Multimedia(Shenzhen)
672,769.28 672,769.28 100.00% Can not be taken back
Co.,Ltd.
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Qingdao Hai’er Spare Parts Procurement
1,225,326.15 1,225,326.15 100.00% Can not be taken back
Co., Ltd.
Failure to recover on time because
H. K. Haowei Industry Co., Ltd. 1,870,887.18 561,266.15 30.00%
of customer’s fund shortage
Total 5,094,414.36 3,784,793.33 -- --
In the combination, aging analysis method is used to accrue the receivables of bad debt reserves
√ Applicable □ Inapplicable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account
Book balance Provision for Book balance Provision for
ageing
Amount Proportion Bad Debts Amount Proportion Bad Debts
Within 1 year
Among it: -- -- -- -- -- --
Subtotal
224,990.00 5.00% 11,249.50
within 1 year
1-2 year (s) 455,510.84
2-3 year (s) 557,327.76 30.00% 167,198.33 36,726,687.63 0.27% 99,701.33
Over 3years 557,327.76 -- 167,198.33 37,407,188.47 -- 110,950.83
Total 378,771,293.88 -- 453,427.30 100,848,359.10 -- 453,427.30
Accounts receivable with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
Accounts receivable with accrual of bad debt reserve by other method in the combination
□ Applicable √ Inapplicable
Accounts receivable without major individual amount but with separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of accounts receivable Book balance Provision for Bad Debts Percent Drawn Reason of provision
Shenzhen Huixin Video Science and
381,168.96 381,168.96 100.00% Can not be taken back
Technology Co.,Ltd.
Shenzhen Wandial Number Science and
351,813.70 351,813.70 100.00% Can not be taken back
Technology Co.,Ltd.
Shenzhen Dalong Electric Co.,Ltd. 344,700.00 344,700.00 100.00% Can not be taken back
Shenzhen Qunpin Electric Co.,Ltd. 304,542.95 304,542.95 100.00% Can not be taken back
China Galaxy Electric(Hong Kong) Co.,Ltd. 288,261.17 288,261.17 100.00% Can not be taken back
Dongguan Weite Electric Co.,Ltd. 274,399.80 274,399.80 100.00% Can not be taken back
Hong Kong New Century Electric Co.,Ltd. 207,409.40 207,409.40 100.00% Can not be taken back
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Shenyang Beitai Electric Co.,Ltd. 203,304.02 203,304.02 100.00% Can not be taken back
Bejing Xinfanweiye Science and
193,000.00 193,000.00 100.00% Can not be taken back
Technology Co.,Ltd.
TCL Electric(Hong kong) Co.,Ltd. 145,087.14 145,087.14 100.00% Can not be taken back
Huizhou TCL New and Special Electronics
142,707.14 142,707.14 100.00% Can not be taken back
Co., Ltd.
Shenzhen Skyworth-RGB Electric Co.,Ltd. 133,485.83 133,485.83 100.00% Can not be taken back
Shenzhen Xinfa Electronics Co., Ltd. 119,094.78 119,094.78 100.00% Can not be taken back
Others 1,743,182.67 1,743,182.67 100.00% Can not be taken back
Total 4,832,157.56 4,832,157.56 -- --
（2）Conditions of top 5 units among the amounts of accounts receivable
Unit: RMB
Relation with this As a percentage in
Unit name Amount Years
company accounts receivable (%)
H. K. Haowei Industry Co., Ltd. Nonaffiliated parties 1,870,887.18 Over 3 years 17.85%
TCL Wangpai Electric Appliance
Nonaffiliated parties 1,325,431.75 Over 3 years 12.64%
(Huizhou) Co., Ltd.
Skyworth Multimedia(Shenzhen)
Nonaffiliated parties 672,769.28 Over 3 years 6.42%
Co.,Ltd.
Shenzhen Huixin Video Science
Nonaffiliated parties 381,168.96 Over 3 years 3.64%
and Technology Co.,Ltd.
Shenzhen Dalong Electric
Nonaffiliated parties 344,700.00 Over 4 years 3.29%
Co.,Ltd.
Total -- 4,594,957.17 -- 43.84%
2．Other Receivables
（1）Other Receivables
Unit: RMB
Amount at the end of period Amount at the beginning of period
Type Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Amount Proportion Amount Proportion Amount Proportion Amount Proportion
Accounts receivable with
significant specific
10,221,046.53 2.60% 10,221,046.53 100.00% 10,221,046.53 8.88% 10,221,046.53 100.00%
amount that were
provisioned bad debt
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preparation separately
Other receivables with accrual of bad debt reserve according to combination
Aging portfolio 378,771,293.88 96.38% 453,427.30 0.12% 100,848,359.10 87.64% 453,427.30 0.45%
Subtotal of combination 378,771,293.88 96.38% 453,427.30 0.12% 100,848,359.10 87.64% 453,427.30 0.45%
Accounts receivable that
were not significant but
have been provisioned 4,004,746.63 1.02% 4,004,746.63 100.00% 4,004,746.63 3.48% 4,004,746.63 100.00%
bad debt preparation
separately
Total 392,997,087.04 -- 14,679,220.46 -- 115,074,152.26 -- 14,679,220.46 --
Description of types of other receivables
Other receivables with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of other receivables Book balance Bad debts Percent Drawn Cause
Hebei Botou Court 520,021.00 520,021.00 100.00% Can not be taken back
Traffic incident indemnity 555,785.81 555,785.81 100.00% Can not be taken back
Huafa Lease Company 4,558,859.15 4,558,859.15 100.00% Can not be taken back
Shenzhen Boteman Bowling
4,021,734.22 4,021,734.22 100.00% Can not be taken back
Club Co., Ltd.
Zhao Baomin 564,646.35 564,646.35 100.00% Can not be taken back
Total 10,221,046.53 10,221,046.53 -- --
Other receivables with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable □ Inapplicable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account ageing Book balance Provision for Bad Book balance Provision for Bad
Amount Proportion Debts Amount Proportion Debts
Within 1 year
Among it: -- -- -- -- -- --
Subtotal within
376,535,416.02 41,110,109.07
1 year
1-2 year (s) 869,344.22 5.00% 43,467.21 869,344.22 5.00% 43,467.21
2-3 year (s) 1,366,533.64 30.00% 409,960.09 58,868,905.81 0.70% 409,960.09
Over 3years 378,771,293.88 -- 453,427.30 100,848,359.10 -- 453,427.30
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Other receivables with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
Other receivables with accrual of bad debt reserve by other method in the combination
□ Applicable √ Inapplicable
Other receivables without major individual amount but with separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of other
Book balance Provision for Bad Debts Percent Drawn Reason of provision
receivables
Shenzhen Lotus Island
236,293.80 236,293.80 100.00% Can not be taken back
Restaurant Co.,Ltd
Weili Electric
Corporation Co.,Ltd,
112,335.62 112,335.62 100.00% Can not be taken back
Zhangzhou City, Fujian
Province
Employee canteen ect. 1,036,916.46 1,036,916.46 100.00% Can not be taken back
Individual loan and
469,161.93 469,161.93 100.00% Can not be taken back
expenditure
Trade Union 297,402.55 297,402.55 100.00% Can not be taken back
Chuangjing workshop 192,794.00 192,794.00 100.00% Can not be taken back
Others 1,659,842.27 1,659,842.27 100.00% Can not be taken back
Total 4,004,746.63 4,004,746.63 -- --
（2）Conditions of top 5 units in the amount of other receivables
Unit: RMB
Relation with this Proportion in other
Unit name Amount Years
company receivables
Within 1 year and over 3
Hengfa Technology Subsidiary 275,766,995.68 70.17%
years
Huafa Trade Subsidiary 100,000,000.00 Within 1 year 25.45%
Huafa Lease Company Subsidiary 4,558,859.15 Over 3years 1.16%
Shenzhen Boteman
Nonaffiliated parties 4,021,734.22 Over 3years 1.02%
Bowling Club Co., Ltd.
Zhao Baomin Nonaffiliated parties 564,646.35 Over 3years 0.14%
Total -- 384,912,235.40 -- 97.94%
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（3）Other receivables from affiliated parties
Unit: RMB
Unit name Relation with this company Amount Proportion in other receivables
Hengfa Technology Subsidiary 275,766,995.68 70.17%
Huafa Trade Subsidiary 100,000,000.00 25.45%
Huafa Lease Company Subsidiary 4,558,859.15 1.16%
Total -- 380,325,854.83 96.78%
3. Long-term Equity Investment
Unit: RMB
Description about inconsistency
Proportion of Provision for
Change- Proportion of between proportion of Cash bonus of
voting right in Depreciation impairment
Invested unit Accounting method Investment costs Beginning balance increase or Ending balance shareholding in the shareholding in the invested unit the current
the invested reserves loss in the
decrease invested unit and proportion of voting right in period
unit current period
the invested unit
Huafa Lease Company Cost method 600,000.00 600,000.00 600,000.00 60.00% 60.00% 600,000.00
Huafa Property
Cost method 1,000,000.00 1,000,000.00 1,000,000.00 100.00% 100.00%
Company
Hengfa Technology
Cost method 183,608,900.00 183,608,900.00 183,608,900.00 100.00% 100.00%
Company
Huafa Trade Company Cost method 100,000.00 100,000.00 100,000.00 100.00% 100.00%
Yutian Henghua
Cost method 1,000,000.00 1,000,000.00 1,000,000.00 100.00% 100.00%
Company
Huafa Hengtian
Cost method 1,000,000.00 1,000,000.00 1,000,000.00 100.00% 100.00%
Company
Huafa Hengtai
Cost method 1,000,000.00 1,000,000.00 1,000,000.00 100.00% 100.00%
Company
Total -- 188,308,900.00 187,308,900.00 1,000,000.00 188,308,900.00 -- -- -- 600,000.00
4. Business Revenues & Business Cost
（1）Business Revenues
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Revenues from Other Business 19,690,535.70 18,088,918.23
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Total 19,690,535.70 18,088,918.23
Business cost 3,355,943.00 2,725,748.13
（2）Operating income of the top 5 clients of the Company
Unit: RMB
Proportion among the
Name of customer Total amount of operating income total Business revenues
of the company
Zhenxing Branch of China Merchants Bank 3,798,516.00 19.29%
Jifang Investment 2,413,471.00 12.26%
Dai Boqiang 4F Hotel 1,564,244.00 7.94%
Shenzhen Zhongheng Huafa Science and Technology Co., Ltd. 1,472,769.00 7.48%
West, Block 1, Building 410, Dijie Entertainment 1,317,147.00 6.69%
Total 10,566,147.00 53.66%
5. Supplementary information of cash flow statement
Unit: RMB
Supplementary Materials Current amount Previous amount
1. Convert net profit to cash flow from operating activities: -- --
Net Profit -938,629.91 400,615.40
Add: provision drawn for assets impairment 168,721.11 -869,044.62
Depreciation of fixed assets, depletion of oil and gas, depreciation of production
2,941,691.82 4,238,517.65
materials or equipment
Amortization of Intangible Assets 72,472.83 72,472.86
Amortization of Long-term Expenses to be Apportioned 574,966.58 162,400.04
Financial Expenses (Proceeds indicated by ―-‖) 7,083,638.04 2,782,510.22
Decrement of Deferred Income Tax Assets (Addition indicated by ―-‖) -42,180.28 -299,964.66
Decrement of Operative Receivables (Addition indicated by ―-‖) -246,431,571.27 -27,326,491.31
Increment of Operative Payables (Decrease indicated by ―-‖) 11,124,553.01 360,910.61
Net Cash Flow Provided by Operating Activities -225,446,338.07 -20,478,073.81
2. Important investment and fund raising activities involving no cash -- --
3. Net Variation of Cash and Cash Equivalent -- --
Year-end balance of cash 223,238,213.51 7,706,858.10
Less: year-beginning balance of cash 18,575,925.94 10,555,114.25
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Net increase of cash and cash equivalent 204,662,287.57 -2,848,256.15
XI. Supplementary Materials
1. Current Irregular Profits and Losses Schedule
Unit: RMB
Item Amount Description
Gains and losses on disposal of non-current assets (including
64,047.39
elimination withdrawn assets impairment provision)
Non-operating income and cost except for the above items 491,111.34
Less: impact amount of income tax 138,789.68
Total 416,369.05 --
Governmental subsidy counted into concurrent income and loss is recurrent income and loss and the determination reason shall be
disclosed item by item.
□ Applicable √ Not Applicable
2. Return on Net Assets and Earnings Per Share
Unit: RMB
Averagely-weighted return Earning per Share
Profit during Reporting Period
on net asset Earning per Share Earning per Share
Net profit ascribed to shareholder of mother
0.53% 0.0051 0.0051
company
Net profit belonging to parent company
0.38% 0.0037 0.0037
shareholders after excluding non-recurring items
3. Introduction to the abnormal conditions and reason of main items of accounting statement of the
company
(1) Items in the consolidated balance sheet at the end of current period which change relatively significantly
compared with those in the year beginning are presented as follows:
Item Ending balance Opening balance Amount of Note
variation
Monetary Fund Bank loan increased due to the
288,085,880.50 54,251,456.20 431.02% operation and development demand of
the Company
Notes Receivable Transfer of endorsement i in current
62,149,080.06 154,375,936.49 -59.74%
period.
Notes Receivable 370,534,892.45 162,278,705.83 128.33% Revenue increase in current period.
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Advance payment Trade prepayment is increased in this
134,263,486.22 13,483,243.19 895.78%
report period
Project in Progress Boiler installation works are increased
4,090,567.21 2,323,356.00 76.06%
in current period.
Long-term deferred Transfer of Golf membership occurs in
1,188,108.26 1,773,524.86 -33.01%
charges current period.
Long-term Bank loan increased due to the
borrowings 600,000,000.00 162,418,800.00 269.42% operation and development demand of
the Company
(2) Items in the consolidated income statement of current period which change relatively significantly compared
with those in previous period are presented as follows:
Item Amount of Amount of Amount of Note
current period previous period variation
Business Tax & Export rebates haven’t occurred in
3,005,524.09 1,273,512.07 136.00%
Surcharges current period.
Assets Impairment Loss Reversal of bad debt occurred in
-140,992.99 -869,044.62 -83.78%
previous period.
Non-business Accrual expected liability lawsuits in
97,524.24 2,040,463.01 -95.22%
Expenditures previous period
Expenses of Income Tax Reversal of deferred income taxes in
640,767.94 369,738.80 73.30%
previous period in current period.
(3) Items in the consolidated cash flow statement of current period which change relatively significantly
compared with those in previous period are presented as follows:
Item Amount of Amount of Amount of Remark
current period previous period variation
Refund of tax and levies Export rebates haven’t occurred in
3,999.97 -100.00%
current period.
Net amount of cash flow generated The sales payment collection is
by operating activities -188,587,686.53 -28,557,957.20 -560.37% reduced and the prepaid price for
goods is increased in current period.
Cash paid to purchase fixed assets,
Boiler expenditure is increased in
intangible assets and other 2,870,541.76 1,476,896.06 94.36%
current period.
long-term assets
Cash received from borrowings Bank loan increased due to the
799,000,437.23 166,842,751.16 378.89% operation and development demand
of the Company
Cash paid for repayment of debts A part of increased loan is used to
364,293,982.29 116,810,646.02 211.87%
return due loan in current period..
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Section X. Documents available for Reference
I. Text of semi-annual report carrying signature of the Chairman;
II. Text of financial report carrying signature and seal of person in charge of the Company, person in charge of accounting works and
person in charge of accounting institution;
III. All files disclosed on China Securities Journal, Securities Times and Hong Kong Commercial Daily appointed by CSRC;
IV. Article of Association;
V. Other relevant files
[Note]: This Report is prepared respectively both in Chinese and English. Should be there any difference in interpretation of these
two versions, the Chinese version shall prevail.
Board of Directors of
SHENZHEN ZHONGHENG HUAFA CO., LTD.
21 August 2014
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