SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
SHENZHEN ZHONGHENG HUAFA CO., LTD.
SEMI-ANNUAL REPORT 2015
August 2015
1
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
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 2015 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 2015
Content
Semi-Annual Report 2015 ................................................................................................................. 1
Section I Important Notice, Contents and Paraphrase .................................................................. 1
Section II Company Profile ............................................................................................................. 3
Section III Accounting data and summary of finnaical indexes .................................................... 4
Section IV Report of the Board of Directors ................................................................................... 6
Section V Important Events ............................................................................................................ 16
Section VI Changes in shares and particular about shareholders............................................... 25
Section VII Preferred Stock……………………………………………………………………….29
Section VIII Directors, Supervisors and Senior Executives ....................................................... 30
Section IX Financial Report ............................................................................................................ 32
Section X Documents Available for Reference ........................................................................... 122
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Paraphrase
Items Refers to Definition
Company, Shen Huafa Refers to SHENZHEN ZHONGHENG HUAFA CO., LTD.
Hengfa Technology 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 Company 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.
Wuhan New Oriental Refers to Wuhan New Oriental Real Estate Development Co., Ltd.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
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 Zhong Ke Niu Yuxiang
6/F, East Tower, Huafa (N) Road, Futian 6/F, East Tower, Huafa (N) Road, Futian
Contact adds.
District, Shenzhen District, 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 2014.
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 2014.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
3. Registration changes of the Company
Whether registration has changed in reporting period or not
□ Applicable √ Not applicable
Date/place for registration of the Company, registration number for enterprise legal license, number of taxation registration and
organization code have no change in reporting period, found more details in Annual Report 2014.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
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) 248,734,629.86 366,621,826.36 -32.15%
Net profit attributable to shareholders of
14,177,311.03 1,455,936.93 873.76%
the listed company(RMB)
Net profit attributable to shareholders of
the listed company after deducting -8,240,712.21 1,039,567.88 -892.71%
non-recurring gains and losses(RMB)
Net cash flow arising from operating
17,028,593.73 -188,587,686.53 109.03%
activities(RMB)
Basic earnings per share (RMB/Share) 0.0501 0.0051 882.35%
Diluted earnings per share (RMB/Share) 0.0501 0.0051 882.35%
Weighted average ROE 4.92% 0.53% 4.39 percentage points up
Increase/decrease in this
End of current period End of last period report-end over that of last
period-end
Total assets (RMB) 1,172,778,771.75 1,162,740,984.93 0.86%
Net assets attributable to shareholder of
295,528,580.77 281,351,269.74 5.04%
listed company(RMB)
II. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
The Company has no difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) in reporting period
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
The Company has no difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and
Chinese GAAP (Generally Accepted Accounting Principles) in reporting period
III. Items and amounts of extraordinary profit (gains)/loss
√ Applicable □ Not applicable
In RMB
Item Amount Note
Profit and loss of assets delegation on others’ investment or
29,499,999.98
management
Other non-operating income and expenditure except for the
493,874.69
aforementioned items
Other gains/losses qualify the definition of non-recurring gains
643.49
and losses
Less: Impact on income tax 7,576,494.92
Total 22,418,023.24 --
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 2015
Section IV. Report of the Board of Directors
I. Introduction
For the first half year of 2015, the macro economy of China went through new normal operation in general, with
trending and periodic decline. Domestic demands for appliances products were weak with increasing competition.
As an industrial manufacturer providing ancillary products and services for home appliance industry, the
Company made adequate measures to challenge the new economic condition and market pressure from this
industry. In particular, it continued to optimize product structure, strengthen internal management and asset
management, save energies and cut down consumption and maintain well performance. Meanwhile, the Company
actively explored new channels for its transformation and upgrade, so as to ensure sustainable growth of its future
results. During the reporting period, the Company realized operating profit of RMB12,974,600, with an increase
of 741.66%; realized net profit of RMB14,177,300, with an increase of 873.76%.
In respect of industry production: the plastic injection segment continued to further develop market potential,
consolidate and improve existing customer resources during the reporting period. it increased market share of
Haier air conditioners and undertook new series of products. Meanwhile, it increased share of orders for TCL
products to continue remain the leading position in regional market. The polystyrene segment vigorously carried
out reasonable recommendations to decrease costs, improve efficiency, strengthen costs management, enhance
refined management, inspire working enthusiasm and staff passion to participate in corporate management,
despite of increasing price of raw materials, increase of human resource costs, decrease of selling price and
increasingly furious market competition. As for the video communication segment, subject to guarantee for basic
production, it further increased injection in research and development resulting in relatively great progress in this
aspect. In particular, the segment presented various products with different size, which totally changed the
traditional design model, especially realized integration of LCM and general sets of super thin and narrow, which
fully reflected the innovative features and cost advantages in respect of its products and improved the gross profit
margin as well.
In respect of property leasing: the first to three floors of our own property Huafa Building recorded slow progress
in lease invitation due to the negative business environment arising from construction of subway line No.7 in
Huaqiangbei business district. During the reporting period, the Company adjusted commercial strategies
accordingly, trying to introduce the major businesses suitable to the surrounding electronic business and living
facilities so as to form healthy interactive promotion with other businesses.
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 248,734,629.86 366,621,826.36 -32.15% Decrease of the sales
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
orders
Operation cost 207,463,525.37 326,921,602.88 -36.54% Sales declined
Sales expenses 5,131,770.58 5,564,699.14 -7.78%
Administrative expenses 18,594,919.77 19,519,931.83 -4.74%
Interest of the long-term
Financial cost 30,393,198.67 10,209,515.26 197.69%
loans increased
Deferred income tax
Income tax expense -708,871.91 640,767.95 -210.63%
expenses decreased
Intercourse funds
Net cash flow arising
17,028,593.73 -188,587,686.53 109.03% received from units
from operation activities
increased
Net cash flow arising
Income from the
from investment 10,529,763.03 -2,820,541.76 473.32%
financial products
activities
Net cash flow arising Interest of long-term
-28,950,224.51 424,887,205.90 -106.81%
from financing activities loans paid increased
Net increase of cash and Interest of loans paid
-1,362,306.90 233,520,462.11 -100.58%
cash equivalent increased
Major changes on profit composition or profit resources in reporting period
□ Applicable √ Not applicable
No major changes on profit composition or profit resources occurred in reporting period
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
Implementing well-organised as originally planned
III. Constitution of main business
In RMB
Increase or
Increase or
decrease of Increase or decrease of
decrease of
Operating Gross profit operating gross profit ratio over
Operating cost operating cost
revenue ratio revenue over same period of last
over same period
same period of year
of last year
last year
According to industries
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
3.43 percentage points
Monitors 74,499,745.27 70,560,597.57 5.29% -47.04% -48.89%
up
Plastic injection 2.12 percentage points
111,689,128.46 103,189,257.33 7.61% -23.24% -21.44%
hardware down
1.78 percentage points
Foam pieces 34,661,675.11 29,900,031.12 13.74% -16.58% -18.27%
up
According to products
3.43 percentage points
Monitors 74,499,745.27 70,560,597.57 5.29% -47.04% -48.89%
up
Plastic injection 2.12 percentage points
111,689,128.46 103,189,257.33 7.61% -23.24% -21.44%
hardware down
1.78 percentage points
Foam pieces 34,661,675.11 29,900,031.12 13.74% -16.58% -18.27%
up
According to region
2.57 percentage points
Hong Kong 65,650,225.45 63,428,099.47 3.38% -45.87% -47.28%
up
0.33 percentage points
Central China 155,200,323.39 140,221,786.55 9.65% -30.45% -30.70%
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.
V. Investment analysis
1. Situation of equity investment outside
(1) Situation of investment outside
□ Applicable √ Not applicable
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
The Company had no investment outside in the Period.
(2)Holding equity of financial enterprise
□ Applicable √ Not applicable
The Company had no equity of financial enterprise held in the Period.
(3)Securities investment
□ Applicable √ Not applicable
The Company had no securities investment in the Period.
(4) Statement of holding other listed companies’ equity
□ Applicable √ Not applicable
The Company had no other listed company’s equity held in the Period
2. Trust financing, investment of derivatives and entrustment loan
(1) Trust financing
√ Applicable □ Not applicable
In 10 thousand Yuan
Amount
Amount of reserve
of for
Whether Determin Actual
Related Amount Start date End date principal devaluati
Name of related ation Estimated gains/loss
relationsh Type of trust of trust of trust actual on of
trustee trade or method of income es in
ip financing financing financing taking withdrawi
not (Y/N) reward period
back in ng (if
period applicable
)
CITIC Trust
2014-12- 2015-12- By
Trust Co., N/A N financial 10,000 0 1,200 590
26 25 contract
Ltd. products
CITIC Trust
2014-12- 2015-12- By
Trust Co., N/A N financial 10,000 0 1,200 590
26 25 contract
Ltd. products
CITIC Trust
2014-12- 2015-12- By
Trust Co., N/A N financial 10,000 0 1,200 590
26 25 contract
Ltd. products
CITIC Trust
2014-12- 2015-12- By
Trust Co., N/A N financial 10,000 0 1,200 590
26 25 contract
Ltd. products
12
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
CITIC Trust
2014-12- 2015-12- By
Trust Co., N/A N financial 10,000 0 1,200 590
26 25 contract
Ltd. products
Total 50,000 -- -- -- 0 6,000 2,950
Capital resource Owned fund
Overdue un-received principal and
1,533.33
accumulated earnings amount
Lawsuit involved (if applicable) N/A
Disclosure date for approval from the
2014-07-22
Board for trust financing (if applicable)
Disclosure date for approval from board of
shareholders for trust financing (if 2014-08-09
applicable)
(2) Investment of derivatives
□ Applicable √ Not applicable
The Company has no derivatives investment in the Period
(3) Entrustment loan
□ Applicable √ Not applicable
The Company has no entrustment loan in the Period
3. Application of raised proceeds
□ Applicable √ Not applicable
The Company has no application of raised proceeds in the Period
4. Main subsidiaries and stock-jointly companies
√ Applicable □ Not applicable
Particular about main subsidiaries and stock-jointly companies
In RMB
Company Main products or Operating Operating
Type Industries Register capital Total assets Net Assets Net profit
name service revenue profit
R&D, production,
Hengfa
sales of products
Technolog Subsidia Production
and import and 181,643,111.00 498,642,690.01 199,741,491.96 221,470,121.90 -3,173,973.76 -2,126,765.71
y ry sales
export business
Company
etc.
Huafa Property Property leasing
Subsidia
Property manageme and management 1,000,000.00 1,000,373.86 -343,520.71 1,103,334.00 175,344.35 175,294.35
ry
Company nt of self-owned
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
property
Property leasing
Huafa Property
Subsidia and management
Hengtian manageme 1,000,000.00 999,385.37 999,385.37 0.00 -554.63 -554.63
ry of self-owned
Company nt
property
Property leasing
Huafa Property
Subsidia and management
Hengtai manageme 1,000,000.00 1,000,169.89 1,000,169.89 0.00 229.89 229.89
ry of self-owned
Company nt
property
5. Major project invested by non-raised funds
□ Applicable √ Not applicable
No major project invested by non-raised funds in Period
VI. Prediction of business performance from January – September 2015
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
VII. Explanation from the Board and Supervisory Committee for “Qualified Opinion” from
the CPA of this year’s
□ Applicable √ Not applicable
VIII. Explanation on “Qualified Opinion” of previous year from the Board
□ Applicable √ Not applicable
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
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
XI. In the report period, reception of research, communication and interview
√ Applicable □ Not applicable
Time Place Way Type Reception Contents discussed and material provided
Telephone Communicating operation situation of the
Headquarter of Individual
Jan. to June 2015 communicatio Individuals Company, assets status and process of city
the Company investor
n update projects and private placement
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
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. Lawsuits
Significant lawsuits and arbitrations
□Applicable √Not applicable
The Company had no significant lawsuits or arbitrations in the Period.
Other lawsuits
□Applicable √Not applicable
III. Question from media
□ Applicable √ Not applicable
No universal questioned by media in reporting period
IV. Bankruptcy reorganization
□ Applicable √ Not applicable
In reporting period, the Company has no bankruptcy reorganization occurred.
V. Transaction in assets
1. Assets acquisition
√ Applicable □ Not applicable
Ratio of the
Relate Relationship
Counterpa Assets Trading Impact on net profit in Discl
d with the
rty or purcha price (in Impact on gains/losse total net profit osure
Progress transac counterparty
ultimate sed or 10 Company’s s of the of the date Disclosure index
(note 2) tion or (applicable to
controlling replac thousand business (note 3) Company Company, (note
not the related
party ed Yuan) (note 4) contributed by 5)
(Y/N) transactions)
the assets
part of the
Benefit a lot for Control by the
shops are http://www.cninfo
Wuhan Shop the property same controlling 2015
completed .com.cn/finalpage
New along 1,250 leasing 0 0.00% Y shareholders -06-1
the /2015-06-10/1201
Oriental street development of and ultimate 0
ownership 129010.PDF
the Company controlling party
transfer
16
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
2. Sales of assets
□ Applicable √ Not applicable
The Company did not sell assets in the Period
3. Business combination
□ Applicable √ Not applicable
The Company has no business combined in the Period
VI. Implementation of the company’s equity incentive and the effects
□ Applicable √ Not applicable
No equity incentive in reporting period
VII. Significant related transaction
1. Related transaction connected to routine operations
√ Applicable □ Not applicable
Proporti
Whether
Related on in Trading
over the Related
Related transactio the limit
Related Related Related Related approve transacti Similar Date of
transacti Pricing n amount amount approved Index of
relations transaction transaction transactio d on market price disclosur
on principal (in 10 of the (in 10 disclosure
hip type content n price limited settleme obtained e
parties thousand same thousand
or not nt mode
Yuan) transact Yuan)
(Y/N)
ion
Purchasin The average
Same
g LCD market price
controlli Synchronize Telegrap
HK overall refers to the 2015-04
ng Purchase d with the 5,187.21 5,187.21 25.00% 47,116.3 N hic
Yutian monitor price of same -28
sharehol market transfer
machine specification
der
set s which is http://ww
Confirmed searched w.cninfo.c
with 1% of from om.cn/fina
current through the lpage/201
Same market world 5-04-28/1
Hengshe
controlli Purchasin average Telegrap famous 20092093
ng 2015-04
ng Purchase g LCD price in 299.19 299.19 1.44% 9,178.5 N hic professional 0.PDF
Photoele -28
sharehol monitors principle, transfer market
ctricity
der and refer to survey
both their company
bargaining website
power http://www.
17
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
witsview.co
m
recognized
authority in
the industry
Same Sales LCD According
and LCD
controlli overall to the Telegrap
HK professional 2015-04
ng Sales monitor customer 6,014.54 6,014.54 24.18% 35,857.34 N hic
Yutian market -28
sharehol machine sales order transfer
survey
der set price sure
company
website
http://www.
witsview.co
m.
Total -- -- 11,500.94 -- 92,152.14 -- -- -- -- --
Details of returned large sales N/A
Predict on total amount of daily related In the reporting period, Hengfa Technology Company purchased LCD from Hengsheng Photoelectricity
trade on the way in this period according Company with $ 489,400 approximately, 3.26% of the annual amount predicted at the beginning of the year;
to classification, as well as actual purchased LCD from HK Yutian Company with $ 8,484,700, approximately, 11.02% of the annual amount
implementation in reporting period (if predicted at the beginning of the year; sold LCD whole machine to HK Yutian Company with $ 983,800
applicable) approximately, 16.79% of the annual amount predicted at the beginning of the year.
Reasons for major differences between
trading price and market reference price Not applicable
(if applicable)
2. Related transaction incurred by purchase or sales of assets
√ Applicable □ Not applicable
Appraisal
Book value of Market Transact
Relate value of the assets fair value Transfer Related ion
Related Date
Related d the assets transferred (in 10 price (in transacti gains/los
Related transacti Pricing of Index of
transaction transac transferred (in 10 thousand 10 on ses (in
relationship on principal disclos disclosure
parties tion (in 10 thousand Yuan) (if thousan settleme 10
content ure
type thousand Yuan) (if applicabl d Yuan) nt mode thousand
Yuan) applicable e) Yuan)
)
Control by Determine
same by two http://www.cninfo.
Wuhan Assets Shop
controlling parties 2015-0 com.cn/finalpage/
New acqui purchasi 653 1,283 1,250 In cash 0
shareholder based on 6-10 2015-06-10/12011
Oriental sition ng
and ultimate the market 29010.PDF
controlling price
18
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
party
Reasons of major difference of the
Not applicable
transfer price and book value or the
appraisal value (if applicable)
Impact on Company’s operation results The transactions makes the assets and liability increased without affected the operation result in the
and financial status 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 related transactions
□ Applicable √ Not applicable
The Company had no other related transactions in the reporting period
VIII. Non-business capital occupying by controlling shareholders and its related parties
□ Applicable √ Not applicable
No non-business capital occupied by controlling shareholders and its related parties in Period
IX. Major contract and implantation
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable √ Not applicable
The Company had no trusteeship in the reporting period.
(2) Contract
□ Applicable √ Not applicable
The Company had no contract in the reporting period.
(3) Leasing
□ Applicable √ Not applicable
19
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
The Company had no leasing in the reporting period.
2. Guarantee
√ Applicable □ Not applicable
In 10 thousand Yuan
Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)
Related
Actual date of Complete Guarante
Name of the Announce
Guarantee happening (Date Actual Guarantee Guarantee implemen e for
Company ment
limit of signing guarantee limit type term tation or related
guaranteed disclosure
agreement) not party
date
Guarantee of the Company for the subsidiaries
Related
Actual date of Complete Guarante
Name of the Announce
Guarantee happening (Date Actual Guarantee Guarantee implemen e for
Company ment
limit of signing guarantee limit type term tation or related
guaranteed disclosure
agreement) not party
date
Hengfa Joint liability
2015-04-28 30,000 9,589.85 1 year N N
Technology guaranty
Total amount of actual
Total amount of approving
occurred guarantee for
guarantee for subsidiaries in 30,000 14,689.14
subsidiaries in report period
report period (B1)
(B2)
Total balance of actual
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the 30,000 9,589.85
the end of reporting period
end of reporting period (B3)
(B4)
Guarantee of the subsidiaries for the subsidiaries
Related
Actual date of Complete Guarante
Name of the Announce
Guarantee happening (Date Actual Guarantee Guarantee implemen e for
Company ment
limit of signing guarantee limit type term tation or related
guaranteed disclosure
agreement) not party
date
Total amount of guarantee of the Company (total three abovementioned guarantee)
Total amount of approving Total amount of actual
guarantee in report period 30,000 occurred guarantee in report 14,689.14
(A1+B1+C1) period (A2+B2+C2)
Total amount of approved Total balance of actual
guarantee at the end of report 30,000 guarantee at the end of report 9,589.85
period (A3+B3+C3) period (A4+B4+C4)
The proportion of the total amount of actually guarantee in the
32.45%
net assets of the Company(A4+ B4+C4)
Including:
Amount of guarantee for shareholders, actual controller and its
0
related parties(D)
The debts guarantee amount provided for the guaranteed
0
parties whose assets-liability ratio exceed 70% directly or
20
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
indirectly(E)
Proportion of total amount of guarantee in net assets of the
0
Company exceed 50%(F)
Total amount of the aforesaid three guarantees(D+E+F) 0
Explanation on guarantee with composite way
Nil
(1) Guarantee outside against the regulation
□ Applicable √ Not applicable
No guarantee outside against the regulation in Period
3. Other material contracts
□ Applicable √ Not applicable
The Company had no other material contracts in the reporting period.
4. Other material transactions
□ Applicable √ Not applicable
The Company had no other material transactions in the reporting period.
X. Commitments made by the Company or shareholders holding above 5% shares of the
Company in reporting period or occurred in the previous reporting period but continued to
reporting period
√ Applicable □ Not applicable
Commitmen Dated for
Commitments Contents Commitment term Implementation
t party commitment
Share Merger
N/A N/A
Reform
The Company held the 3rd meeting of the Board and the 3rd
Within 1 year after
meeting of supervisors respectively on 18 April 2014 to
transferred of this
consider and approve the resolution on change of assets
equity acquisition:
injection commitment from controlling shareholder,
1. Injected relevant
pursuant to which, our controlling shareholder Wuhan
Commitments in capital of plastic 12 April 2007 to
Wuhan Zhongheng Group’s proposal on its commitment change
report of injection business 11 April 2008;
Zhongheng 2007-03-29 plan relating to that “within a year commencing from the
acquisition or into the Company; 13 May 2014 to
Group date when it is approved at general meeting, Wuhan
equity change 2.70% equity of the 12 May 2015
Zhongheng Group will sell the street shops in the first floor
Hengsheng
of phase I of“Yutian Happiness Sea”Project to the
Photoelectricity will
Company in cash ”was approved. The above commitment
inject into the
change plan has been considered and approved at the 2013
Company.
annual general meeting held on 13 May 2014. During the
21
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
reporting period, our wholly-owned subsidiary Hengfa
Science and Technology signed property purchase and sale
contract with Wuhan New East (the wholly-owned
subsidiary of Wuhan Zhongheng Group). According to
consideration at the 2nd extraordinary board meeting for
2015, the Company has finished property transfer
registration for No. 1# and 2# properties, and will complete
property transfer registration for No. 6# and 7# properties
by 16 March 2016.
Commitments in N/A N/A
assets
reorganization
Commitments in N/A N/A
initial public
offering or
refinancing
Other N/A N/A
commitments to
minority
shareholders of
the Company
Completed on
Y
time or not (Y/N)
XI. Engagement and non-reappointment of CPA
Whether the semi-annual report was audited or not
□ Yes √ No
The semi-annual report had not been audited.
XII. Penalty and rectification
□ Applicable √ Not applicable
The Company had no penalty or rectification in the reporting period.
XIII. Risk disclosure of delisting with laws and rules violated
□ Applicable √ Not applicable
The Company has no delisting risks with laws and rules violated in Period
XIV. Other material events
√ Applicable □ Not applicable
(I) The Company signed Asset Exchange Contract with Wuhan Zhongheng Group on 29 April 2009 (details were
22
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
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.
The Company convoked the first extraordinary meeting of the Board in 2015 on February 16, 2015 and the first
extraordinary general meeting of the Board in 2015 on March 4, 2015, which considered and approved the
“Motion on promoting and implementing the urban renewal project for the renewal units of Hwafa area at
Gongming street, Guangming new district, Shenzhen”, specified that the Company and Wuhan Zhongheng Group
shall obtain the corresponding compensatory consideration for removal from the respectively owned project plots
and the respectively contributed and constructed above-ground buildings in accordance with Shenzhen urban
renewal policies and regulations and the provision of relevant governmental departments before the land
development, it is estimated that the compensatory consideration obtained by the Company accounts for 50.5% of
the total consideration and Wuhan Zhongheng Group accounts for 49.5% by calculation.
The Company convened the 5th extraordinary board meeting for 2015 and the 2nd extraordinart general meeting
for 2015 on 15 June and 2 July 2015 respectively, to consider and approve the resolution on implementation of
urban refresh project of “refresh units in Huafa region, Gongming street, Guangming new district, Shenzhen” and
related transaction. Pursuant to which, the series of agreements entered into between the Company and Shenzhen
Qianhai Zhongzheng City Development Management Co., Ltd. and Shenzhen Zhongzheng Yutian Real Estate
Company (subsidiaries of CITIC Group) as well as the controlling shareholder Wuhan Zhongheng New Science
and Technology Industrial Group Company in respect of the urban refresh project of “refresh units in Huafa
region, Gongming street, Guangming new district, Shenzhen” became effective officially and put into
implementation. Those agreements included: Cooperation Framework Agreement relating to Gongming Huafa
Refresh Project and Cooperation Framework Agreement relating to the urban refresh project of “refresh units in
Huafa region, Gongming street, Guangming new district, Shenzhen” dated 2 June 2015, and the Cooperation
Agreement relating to Gongming Huafa Urban Refresh Project and Relocation Compensation Agreement relating
to Gongming Huafa Urban Refresh Project dated 15 June 2015.
Due to the official effection and implementation of the above agreements, the Company would be granted with
relocation compensation of RMB500 million in cash and compensated commercial properties with GFA not less
than 100,000 square meter (among which, 700,000 sq.m can be retained by the Company and 300,000 can be sold
externally.). It is predicted for the Company to obtain corresponding income in the coming four years, which will
enable it to improve its income and assets scale and ensure steady development in a long term. The detailed
prediction based on construction schedule is as follows: RMB500 million cash will be granted to the Company in
2015; in 2016, it will be granted with such commercial properties as held for own use; in 2017, it will be granted
23
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
with such commercial properties as available for sale; in 2018, upon completion of project construction and filing
for equity transfer registration, the Company will settle the final income with assistance from third auditor. As for
the profit earned from the project, the Company will receive corresponding income based on its land interest’s
proportion of 50.5%. Details are set out in the announcement published at Juchao information website
(www.cninfo.com.cn) on 16 June and 3 July 2015.
(II) With purpose of further optimize the capital structure, improve financial status of the Company and
providing necessary caital condition and liquidity for the upgrade of industry business transformation,
specialization of the property operation and development of large-scale, the Company plans to private offering
A-share. Controlling shareholder - Wuhan Zhongheng New Technology Industry Group Co., Ltd. subscribe 87.6
million shares at most in cash, fund raised no more than 599.184 million Yuan (issuance cost included) in total,
the fund are raised for debt payment and supplement current capital in order to laying a solid foundation of the
sustainable development of the Company. Relevant private placment of A-share has been deliberated and
approved by third extraordinary meeting fo 2015 of the Board, and shall submite for approval by general meeting
and implemente after verify by CSRC, found more in notice released on Juchao Website (www.cninfo.com.cn)
dated 20 March 2015 and 20 May 2015.
(III)our controlling shareholder Wuhan Zhongheng Group holds 116,489,894 shares of the Company, accounting
for 41.14% of our total share capital. Because related companies of Wuhan Zhongheng Group were involved in
debt dispute and the creditors applied for property preservation, the above shares were judicially sealed on 14
October 2014. During the reporting period, the seal has been released. Details are set out in the announcement
published at Juchao information website (www.cninfo.com.cn) on 8 May 2015.
24
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Shares
In share
Before the Change Increase/Decrease in the Change (+, -) After the Change
Bon Capitalizat
New
us ion of Proportio
Amount Proportion shares Others Subtotal Amount
share public n
issued
s reserve
I. Restricted shares 116,489,894 41.14% 0 0 0 0 0 116,489,894 41.14%
1.State shareholding 0
2. State-owned corporate
0
shares
3. Other domestic shares 116,489,894 116,489,894 41.14%
Including: domestic
116,489,894 41.14% 116,489,894 41.14%
corporate shares
Domestic nature
0
person shares
4. Foreign shares 0
Including: Foreign
0
corporate shares
Foreign nature person
0
shares
II. Unrestricted shares 166,671,333 58.86% 166,671,333 58.86%
1. RMB Ordinary shares 64,675,497 22.84% 64,675,497 22.84%
2. Domestically listed
101,995,836 36.02% 101,995,836 36.02%
foreign shares
3. Foreign listed foreign
0
shares
4. Other 0
III. Total shares 283,161,227 100.00% 283,161,227 100.00%
Reasons for share changed
□ Applicable √ Not applicable
Approval of share changed
□ Applicable √ Not applicable
Ownership transfer of share changed
□ Applicable √ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□ Applicable √ Not applicable
25
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable
Explanation on changes of total shares and shareholder structure as well as assets and liability structure
□ Applicable √ Not applicable
II. Amount of shareholders of the Company and particulars about shares holding
In share
Total preference shareholders
Total common shareholders at with voting rights recovered at
30,469 0
period-end end of reporting period (if
applicable) (see Note 8)
Particulars about shares held above 5% by common shareholders or top ten common shareholders
Total common Amount of Amount of Number of share
Proporti Changes
shareholders restrict un-restrict pledged/frozen
Full name of Nature of on of
in report
Shareholders shareholder shares at the end of common common State of
held period Amount
report period shares held shares held share
Domestic Pledge 116,489,894
Wuhan Zhongheng
non-state-owned 41.14% 116,489,894 0 116,489,894 0
Group Freeze 0
corporate
SEG (HONG KONG) Pledge 0
Foreign corporate 5.58% 16,569,560 0 0 16,569,560
CO., LTD. Freeze 0
GOOD HOPE Pledge 0
CORNER
Foreign corporate 4.91% 13,900,000 0 0 13,900,000
INVESTMENTS Freeze 0
LTD
Domestic nature Pledge 0
Ye Guoqing 0.81% 2,303,657 0 2,303,657
person Freeze 0
Domestic Pledge 0
Heilan Group non-state-owned 0.42% 1,192,273 0 1,192,273
Freeze 0
corporate
Everbright Securities Pledge 0
Foreign corporate 0.40% 1,134,500 0 1,134,500
(H.K.) Co., Ltd. Freeze 0
Domestic nature Pledge 0
BINGHUA LIU 0.31% 876,213 0 876,213
person Freeze 0
China Construction Pledge 0
Bank- Morgan
State-owned
Stanley Huaxin 0.30% 860,822 0 860,822
corporate Freeze 0
Multi-factor Selected
Stock Fund
Li Jianting Domestic nature 0.26% 749,965 0 749,965 Pledge 0
26
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
person Freeze 0
GUOTAI JUNAN Pledge 0
SECURITIES(HONG Foreign corporate 0.25% 703,857 0 703,857
Freeze 0
KONG)LIMITED
Strategy investors or general corporate
becomes top 10 shareholders due to rights N/A
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
Explanation on related relationship or the consistent actor that are prescribed in Measures for the Administration of Disclosure of
concerted action among the Shareholder Equity Changes of Listed Companies. The Company neither knew whether there
abovementioned 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 common shares held
Amount of listed common shares held Type of shares
Shareholders’ name
at period-end Type Amount
SEG (HONG KONG) CO., LTD. 16,569,560 Domestically listed foreign shares 16,569,560
GOOD HOPE CORNER
13,900,000 Domestically listed foreign shares 13,900,000
INVESTMENTS LTD
Ye Guoqing 2,303,657 RMB common share 2,303,657
Heilan Group 1,192,273 RMB common share 1,192,273
Everbright Securities (H.K.) Co., Ltd. 1,134,500 Domestically listed foreign shares 1,134,500
BINGHUA LIU 876,213 Domestically listed foreign shares 876,213
China Construction Bank- Morgan
Stanley Huaxin Multi-factor Selected 860,822 RMB common share 860,822
Stock Fund
Li Jianting 749,965 RMB common share 749,965
GUOTAI JUNAN
703,857 Domestically listed foreign shares 703,857
SECURITIES(HONGKONG)LIMITED
Shenzhen Guohong Lianhe Investment
Management Co., Ltd. – Guohong Phase I 666,933 RMB common share 666,933
Security Investment Fund
Expiation on associated relationship or Among the top ten unrestricted shareholders, the Company neither knew whether there exists
consistent actors within the top 10 associated relationship among the other tradable shareholders, nor they belong to consistent
un-restrict common shareholders and actors that are prescribed in Measures for the Administration of Disclosure of Shareholder
between top 10 un-restrict common Equity Changes of Listed Companies. Among the top ten shareholders, Wuhan Zhongheng
shareholders and top 10 common Group neither bears associated relationship with other shareholders, nor belongs to the
shareholders consistent actor that are prescribed in Measures for the Administration of Disclosure of
27
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Shareholder Equity Changes of Listed Companies.
Explanation on top 10 shareholders In top ten shareholders, Ye Guoqing holds 2,303,657 shares of the Company, among which,
involving margin business (if 1,552,857 shares are held through the credit account, representing 67.41% of the total shares
applicable)(see note4) held, and takes 0.55% of the total shares of the Company
Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement
dealing in reporting period
□ Yes √ No
The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy-back
agreement dealing in reporting period.
III. Changes of controlling shareholders or actual controller
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
Changes of controlling shareholders had no change in reporting period.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
Changes of actual controller in reporting period had no change in reporting period.
IV. Share holding increasing plan proposed or implemented in reporting period from
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
28
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company had no preferred stock in the reporting.
29
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Section VIII. Directors, Supervisors and Senior Executives
I. Changes of shares held by directors, supervisors and senior executives
√ Applicable □ Not applicable
Increasing Decreasing Restricted Restricted
Shares Shares Restricted shares
shares held shares held shares be shares be
Working held at held at be awarded at
Title in this in this awarded at awarded in
Name status period-beg period-end period-end
period period period-begin the period
in (Share) (Share) (Share)
(Share) (Share) (Share) (Share)
Li Currently
Chairman 0 0 0 0 0 0 0
Zhongqiu in office
Li Vice Currently
0 0 0 0 0 0 0
Yongping chairman in office
Chen Director Office-leav
0 0 0 0 0 0 0
Zhigang ing
Wang Currently
Director 0 0 0 0 0 0 0
Feng in office
Li Independe Currently
0 0 0 0 0 0 0
Xiaodong nt director in office
Qiu Independe Currently
0 0 0 0 0 0 0
Daliang nt director in office
Zhang Independe Currently
0 0 0 0 0 0 0
Zhaoguo nt director in office
Chairman
Huang of the Currently
0 0 0 0 0 0 0
Yanbo Supervisor in office
y
Supervisor Currently
Geng Qu 0 0 0 0 0 0 0
in office
Zhao Currently
Supervisor 0 0 0 0 0 0 0
Xiangfeng in office
Tang Deputy Currently
0 0 0 0 0 0 0
Ganyu GM in office
Secretary
Weng Office-leav
of the 0 0 0 0 0 0 0
Xiaojue ing
Board
Currently
Cao Li CFO 0 0 0 0 0 0 0
in office
30
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Secretary
Currently
Zhong Ke of the 0 0 0 0 0 0 0
in office
Board
Total -- -- 0 0 0 0 0 0 0
II. Resignation and dismissal of directors, supervisors and senior executives
√ Applicable □ Not applicable
Name Title Type Date Reasons
Chen Zhigang Director Office-leaving 2015-04-23 Resign from director due to physical cause
Secretary of the Resign from secretary of the Board due to personal
Weng Xiaojue Office-leaving 2015-05-10
Board reasons
Secretary of the
Zhong Ke Appointment 2015-05-11 Appointed as new secretary of the Board
Board
31
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
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.
2015-06-30
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 34,048,950.83 28,819,357.68
Settlement provisions
Capital lent
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes receivable 35,207,249.84 100,821,063.85
Accounts receivable 145,030,926.38 112,425,468.57
Accounts paid in advance 116,306,225.46 5,669,119.87
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance
receivable
Interest receivable 15,333,333.33
Dividend receivable
Other receivables 10,648,891.50 109,094,812.29
Purchase restituted finance asset
32
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Inventories 33,889,198.54 30,880,050.55
Divided into assets held for sale
Non-current asset due within one
year
Other current assets 500,000,000.00 500,000,000.00
Total current assets 890,464,775.88 887,709,872.81
Non-current assets:
Loans and payments on behalf
Finance asset available for sales
Held-to-maturity investment
Long-term account receivable
Long-term equity investment
Investment property 30,647,285.20 31,274,663.74
Fixed assets 194,192,938.12 186,438,814.34
Construction in progress 3,083,170.00 2,853,356.00
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 47,119,537.85 47,866,685.21
Expense on Research and
Development
Goodwill
Long-term expenses to be
310,208.20 345,658.24
apportioned
Deferred income tax asset 6,960,856.50 6,251,934.59
Other non-current asset
Total non-current asset 282,313,995.87 275,031,112.12
Total assets 1,172,778,771.75 1,162,740,984.93
Current liabilities:
Short-term loans 151,607,991.73 138,114,376.32
Loan from central bank
Absorbing deposit and interbank
deposit
Capital borrowed
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
33
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Derivative financial liability
Notes payable 27,176,095.34 39,994,397.62
Accounts payable 64,369,030.05 65,547,836.32
Accounts received in advance 2,075,716.36 727,331.06
Selling financial asset of
repurchase
Commission charge and
commission payable
Wage payable 3,706,958.14 6,208,793.90
Taxes payable 16,842,989.80 18,552,046.85
Interest payable
Dividend payable
Other accounts payable 38,405,825.75 24,179,349.31
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Divided into liability held for sale
Non-current liabilities due within 1
year
Other current liabilities
Total current liabilities 304,184,607.17 293,324,131.38
Non-current liabilities:
Long-term loans 570,300,000.00 585,300,000.00
Bonds payable
Including: preferred stock
Perpetual capital
securities
Long-term account payable
Long-term wages payable
Special accounts payable
Projected liabilities 2,765,583.81 2,765,583.81
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 573,065,583.81 588,065,583.81
Total liabilities 877,250,190.98 881,389,715.19
34
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Owner’s equity:
Share capital 283,161,227.00 283,161,227.00
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 109,496,837.33 109,496,837.33
Less: Inventory shares
Other comprehensive income
Reasonable reserve
Surplus public reserve 77,391,593.25 77,391,593.25
Provision of general risk
Retained profit -174,521,076.81 -188,698,387.84
Total owner’s equity attributable to
295,528,580.77 281,351,269.74
parent company
Minority interests
Total owner’s equity 295,528,580.77 281,351,269.74
Total liabilities and owner’s equity 1,172,778,771.75 1,162,740,984.93
Legal Representative: Li Zhongqiu
Person in charge of accounting works: Cao Li
Person in charge of accounting institute: Wu Aijie
2. Balance Sheet of Parent Company
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 8,739,785.00 14,802,258.59
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes receivable
Accounts receivable 1,857,222.07 1,857,222.07
Account paid in advance 1,005,472.83
35
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Interest receivable 15,333,333.33
Dividends receivable
Other receivables 64,240,586.56 106,214,702.41
Inventories 14,806.50 14,806.50
Divided into assets held for sale
Non-current assets maturing within
one year
Other current assets 500,000,000.00 500,000,000.00
Total current assets 590,185,733.46 623,894,462.40
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments
Long-term receivables
Long-term equity investments 186,608,900.00 187,608,900.00
Investment property 30,647,285.20 31,274,663.74
Fixed assets 97,915,961.10 100,029,320.14
Construction in progress 3,083,170.00 2,853,356.00
Project materials
Disposal of fixed assets
Productive biological assets
Oil and natural gas assets
Intangible assets 5,205,964.98 5,278,437.84
Research and development costs
Goodwill
Long-term deferred expenses 266,666.65 291,666.67
Deferred income tax assets 7,056,901.94 7,056,901.94
Other non-current assets
Total non-current assets 330,784,849.87 334,393,246.33
Total assets 920,970,583.33 958,287,708.73
Current liabilities:
Short-term borrowings 19,700,000.00 20,000,000.00
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
36
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Notes payable
Accounts payable 9,740,367.33 10,745,840.16
Accounts received in advance 1,723,873.14 420,611.24
Wage payable 758,998.32 724,418.36
Taxes payable 11,000,041.63 11,286,781.44
Interest payable
Dividend payable
Other accounts payable 18,681,688.18 56,873,489.93
Divided into liability held for sale
Non-current liabilities due within 1
year
Other current liabilities
Total current liabilities 61,604,968.60 100,051,141.13
Non-current liabilities:
Long-term loans 570,300,000.00 585,300,000.00
Bonds payable
Including: preferred stock
Perpetual capital
securities
Long-term account payable
Long-term wages payable
Special accounts payable
Projected liabilities 2,765,583.81 2,765,583.81
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 573,065,583.81 588,065,583.81
Total liabilities 634,670,552.41 688,116,724.94
Owners’ equity:
Share capita 283,161,227.00 283,161,227.00
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 109,496,837.33 109,496,837.33
37
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Less: Inventory shares
Other comprehensive income
Reasonable reserve
Surplus reserve 77,391,593.25 77,391,593.25
Retained profit -183,749,626.66 -199,878,673.79
Total owner’s equity 286,300,030.92 270,170,983.79
Total liabilities and owner’s equity 920,970,583.33 958,287,708.73
3. Consolidated Profit Statement
In RMB
Item Current Period Last Period
I. Total operating income 248,734,629.86 366,621,826.36
Including: Operating income 248,734,629.86 366,621,826.36
Interest income
Insurance gained
Commission charge and commission
income
II. Total operating cost 265,260,708.90 365,080,280.21
Including: Operating cost 207,463,525.37 326,921,602.88
Interest expense
Commission charge and commission
expense
Cash surrender value
Net amount of expense of
compensation
Net amount of withdrawal of
insurance contract reserve
Bonus expense of guarantee slip
Reinsurance expense
Operating tax and extras 3,677,294.51 3,005,524.09
Sales expenses 5,131,770.58 5,564,699.14
Administration expenses 18,594,919.77 19,519,931.83
Financial expenses 30,393,198.67 10,209,515.26
Losses of devaluation of asset 0.00 -140,992.99
Add: Changing income of fair
38
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
value(Loss is listed with “-”)
Investment income (Loss is listed
29,500,643.47 0.00
with “-”)
Including: Investment income on
affiliated company and joint venture
Exchange income (Loss is listed
with “-”)
III. Operating profit (Loss is listed with
12,974,564.43 1,541,546.15
“-”)
Add: Non-operating income 807,053.65 652,682.97
Including: Disposal gains of
161,398.90
non-current asset
Less: Non-operating expense 313,178.96 97,524.24
Including: Disposal loss of
97,351.51
non-current asset
IV. Total Profit (Loss is listed with “-”) 13,468,439.12 2,096,704.88
Less: Income tax expense -708,871.91 640,767.95
V. Net profit (Net loss is listed with “-”) 14,177,311.03 1,455,936.93
Net profit attributable to owner’s of
14,177,311.03 1,455,936.93
parent company
Minority shareholders’ gains and
losses
VI. Net after-tax of other comprehensive
income
Net after-tax of other comprehensive
income attributable to owners of parent
company
(I) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss
1. Changes as a result of
re-measurement of net defined benefit
plan liability or asset
2. Share of the other
comprehensive income of the investee
accounted for using equity method which
will not be reclassified subsequently to
profit and loss
(II) Other comprehensive income
39
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
items which will be reclassified
subsequently to profit or loss
1. Share of the other
comprehensive income of the investee
accounted for using equity method which
will be reclassified subsequently to profit
or loss
2. Gains or losses arising
from changes in fair value of
available-for-sale financial assets
3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale financial
assets
4. The effect hedging portion
of gains or losses arising from cash flow
hedging instruments
5. Translation differences
arising on translation of foreign currency
financial statements
6. Other
Net after-tax of other comprehensive
income attributable to minority
shareholders
VII. Total comprehensive income 14,177,311.03 1,455,936.93
Total comprehensive income
14,177,311.03 1,455,936.93
attributable to owners of parent Company
Total comprehensive income
attributable to minority shareholders
VIII. Earnings per share:
(i) Basic earnings per share 0.0501 0.0051
(ii) Diluted earnings per share 0.0501 0.0051
Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and
realized 0 Yuan at last period for combined party
Legal Representative: Li Zhongqiu
Person in charge of accounting works: Cao Li
Person in charge of accounting institute: Wu Aijie
40
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
4. Profit Statement of Parent Company
In RMB
Item Current Period Last Period
I. Operating income 26,161,173.96 19,690,535.70
Less: Operating cost 3,256,287.14 3,355,943.00
Operating tax and extras 1,655,383.66 1,326,375.12
Sales expenses
Administration expenses 9,218,109.84 10,625,182.87
Financial expenses 25,557,934.72 5,283,456.79
Losses of devaluation of asset 168,721.11
Add: Changing income of fair
value(Loss is listed with “-”)
Investment income (Loss is
29,499,999.98
listed with “-”)
Including: Investment income
on affiliated company and joint venture
II. Operating profit (Loss is listed
15,973,458.58 -1,069,143.19
with “-”)
Add: Non-operating income 157,306.00 88,333.00
Including: Disposal gains of
non-current asset
Less: Non-operating expense 1,717.45
Including: Disposal loss of
non-current asset
III. Total Profit (Loss is listed with
16,129,047.13 -980,810.19
“-”)
Less: Income tax expense -42,180.28
IV. Net profit (Net loss is listed with
16,129,047.13 -938,629.91
“-”)
V. Net after-tax of other comprehensive
income
(I) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss
1. Changes as a result of
re-measurement of net defined benefit
plan liability or asset
41
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
2. Share of the other
comprehensive income of the investee
accounted for using equity method
which will not be reclassified
subsequently to profit and loss
(II) Other comprehensive
income items which will be reclassified
subsequently to profit or loss
1. Share of the other
comprehensive income of the investee
accounted for using equity method
which will be reclassified subsequently
to profit or loss
2. Gains or losses arising
from changes in fair value of
available-for-sale financial assets
3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale
financial assets
4. The effect hedging
portion of gains or losses arising from
cash flow hedging instruments
5. Translation differences
arising on translation of foreign
currency financial statements
6. Other
VI. Total comprehensive income 16,129,047.13 -938,629.91
VII. Earnings per share:
(i) Basic earnings per share
(ii) Diluted earnings per share
5. Consolidated Cash Flow Statement
In RMB
Item Current Period Last Period
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor 183,618,610.88 197,910,143.89
services
42
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Net increase of customer deposit
and interbank deposit
Net increase of loan from central
bank
Net increase of capital borrowed
from other financial institution
Cash received from original
insurance contract fee
Net cash received from reinsurance
business
Net increase of insured savings
and investment
Net increase of amount from
disposal financial assets that measured
by fair value and with variation
reckoned into current gains/losses
Cash received from interest,
commission charge and commission
Net increase of capital borrowed
Net increase of returned business
capital
Write-back of tax received
Other cash received concerning
109,260,397.00 12,763,483.79
operating activities
Subtotal of cash inflow arising from
292,879,007.88 210,673,627.68
operating activities
Cash paid for purchasing
commodities and receiving labor 221,324,808.05 351,029,497.12
service
Net increase of customer loans and
advances
Net increase of deposits in central
bank and interbank
Cash paid for original insurance
contract compensation
Cash paid for interest, commission
charge and commission
Cash paid for bonus of guarantee
slip
43
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Cash paid to/for staff and workers 31,468,469.13 29,924,620.37
Taxes paid 11,053,191.84 5,286,876.42
Other cash paid concerning
12,003,945.13 13,020,320.30
operating activities
Subtotal of cash outflow arising from
275,850,414.15 399,261,314.21
operating activities
Net cash flows arising from operating
17,028,593.73 -188,587,686.53
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
14,166,666.65
income
Net cash received from disposal of
fixed, intangible and other long-term 50,000.00
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
14,166,666.65 50,000.00
activities
Cash paid for purchasing fixed,
3,537,547.11 2,870,541.76
intangible and other long-term assets
Cash paid for investment
Net increase of mortgaged loans
Net cash received from
subsidiaries and other units obtained
Other cash paid concerning
99,356.51
investing activities
Subtotal of cash outflow from investing
3,636,903.62 2,870,541.76
activities
Net cash flows arising from investing
10,529,763.03 -2,820,541.76
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
44
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
investment
Including: Cash received from
absorbing minority shareholders’
investment by subsidiaries
Cash received from loans 172,101,597.40 799,000,437.23
Cash received from issuing bonds
Other cash received concerning
financing activities
Subtotal of cash inflow from financing
172,101,597.40 799,000,437.23
activities
Cash paid for settling debts 174,100,580.11 364,293,982.29
Cash paid for dividend and profit
26,951,241.80 9,819,249.04
distributing or interest paying
Including: Dividend and profit of
minority shareholder paid by
subsidiaries
Other cash paid concerning
financing activities
Subtotal of cash outflow from financing
201,051,821.91 374,113,231.33
activities
Net cash flows arising from financing
-28,950,224.51 424,887,205.90
activities
IV. Influence on cash and cash
equivalents due to fluctuation in 29,560.85 41,484.50
exchange rate
V. Net increase of cash and cash
-1,362,306.90 233,520,462.11
equivalents
Add: Balance of cash and cash
22,392,147.12 50,704,319.86
equivalents at the period -begin
VI. Balance of cash and cash
21,029,840.22 284,224,781.97
equivalents at the period -end
6. Cash Flow Statement of Parent Company
In RMB
Item Current Period Last Period
I. Cash flows arising from operating
activities:
Cash received from selling 28,713,390.03 18,611,154.73
45
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
commodities and providing labor
services
Write-back of tax received
Other cash received concerning
22,742,334.43 50,396,603.18
operating activities
Subtotal of cash inflow arising from
51,455,724.46 69,007,757.91
operating activities
Cash paid for purchasing
commodities and receiving labor
service
Cash paid to/for staff and workers 2,961,727.35 2,542,177.05
Taxes paid 2,995,386.87 2,250,010.47
Other cash paid concerning
25,812,424.01 289,661,908.46
operating activities
Subtotal of cash outflow arising from
31,769,538.23 294,454,095.98
operating activities
Net cash flows arising from operating
19,686,186.23 -225,446,338.07
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
14,166,666.65
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
0.00
investing activities
Subtotal of cash inflow from investing
14,166,666.65
activities
Cash paid for purchasing fixed,
21,011.00 882,600.00
intangible and other long-term assets
Cash paid for investment 1,000,000.00
Net cash received from
subsidiaries and other units
46
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Other cash paid concerning
investing activities
Subtotal of cash outflow from investing
21,011.00 1,882,600.00
activities
Net cash flows arising from investing
14,145,655.65 -1,882,600.00
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
Cash received from loans 14,700,000.00 627,000,000.00
Cash received from issuing bonds
Other cash received concerning
financing activities
Subtotal of cash inflow from financing
14,700,000.00 627,000,000.00
activities
Cash paid for settling debts 29,999,965.00 187,890,800.00
Cash paid for dividend and profit
24,604,032.66 7,130,341.85
distributing or interest paying
Other cash paid concerning
financing activities
Subtotal of cash outflow from financing
54,603,997.66 195,021,141.85
activities
Net cash flows arising from financing
-39,903,997.66 431,978,858.15
activities
IV. Influence on cash and cash
equivalents due to fluctuation in 9,682.19 12,367.49
exchange rate
V. Net increase of cash and cash
-6,062,473.59 204,662,287.57
equivalents
Add: Balance of cash and cash
14,802,258.59 18,575,925.94
equivalents at the period -begin
VI. Balance of cash and cash
8,739,785.00 223,238,213.51
equivalents at the period -end
7. Statement of Changes in Owners’ Equity (Consolidated)
This Period
In RMB
47
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
This Period
Owners’ equity attributable to parent company
Other
equity instrument
Item Less: Other Provisio Minorit Total
Perpet Reason
Share Capital Invento compre Surplus n of Retaine y owners’
ual able
capital Prefer capita reserve ry hensive reserve general d profit interests equity
red Other reserve
l shares income risk
stock
securi
ties
283,16 -188,69
I. Balance at the 109,496 77,391, 281,351
1,227. 8,387.8
end of the last year ,837.33 593.25 ,269.74
00 4
Add:
Changes of
accounting policy
Error
correction of the
last period
Enterprise
combine under
the same control
Other
II. Balance at the 283,16 109,496 77,391,
-188,69
281,351
beginning of this 1,227. 8,387.8
,837.33 593.25 ,269.74
year 00 4
III. Increase/
Decrease in this 14,177, 14,177,
year (Decrease is 311.03 311.03
listed with “-”)
(i) Total 14,177, 14,177,
comprehensive
311.03 311.03
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
48
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
4. Other
(III) Profit
distribution
1. Withdrawal of
surplus reserves
2. Withdrawal of
general risk
provisions
3. Distribution for
owners (or
shareholders)
4. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 283,16 109,496 77,391,
-174,52
295,528
end of the report 1,227. 1,076.8
,837.33 593.25 ,580.77
period 00 1
Last Period
In RMB
Last Period
Owners’ equity attributable to the parent Company
Other Minorit
Item Less: Other Provisio Total
equity instrument Reason y
Share Capital Invento compre Surplus n of Retaine interest owners’
able equity
capital Prefer Perpet reserve ry hensive reserve general d profit s
red ual Other reserve
shares income risk
stock capita
49
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
l
securi
ties
283,16 -196,38
I. Balance at the 109,496 77,391, 273,663
1,227. 6,008.1
end of the last year ,837.33 593.25 ,649.47
00 1
Add:
Changes of
accounting policy
Error
correction of the
last period
Enterprise
combine under the
same control
Other
II. Balance at the 283,16 109,496 77,391,
-196,38
273,663
beginning of this 1,227. 6,008.1
,837.33 593.25 ,649.47
year 00 1
III. Increase/
Decrease in this 7,687,6 7,687,6
year (Decrease is 20.27 20.27
listed with “-”)
(i) Total 7,687,6 7,687,6
comprehensive
20.27 20.27
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4 Other
(III) Profit
distribution
1. Withdrawal of
surplus reserves
2. Withdrawal of
general risk
provisions
50
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
3. Distribution for
owners (or
shareholders)
4. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 283,16 109,496 77,391,
-188,69
281,351
end of the report 1,227. 8,387.8
,837.33 593.25 ,269.74
period 00 4
8. Statement of Changes in Owners’ Equity (Parent Company)
This Period
In RMB
This Period
Other
equity instrument
Other Total
Item Share Perpetu Less: Retaine
Capital comprehe Reasonab Surplus
Inventory owners’
capital Preferre al reserve nsive le reserve reserve d profit
capital Other shares equity
d stock income
securiti
es
-199,87
I. Balance at the 283,161, 109,496,8 77,391,59 270,170,9
8,673.7
end of the last year 227.00 37.33 3.25 83.79
9
51
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Add: Changes
of accounting
policy
Error
correction of the
last period
Other
II. Balance at the 283,161, -199,87
109,496,8 77,391,59 270,170,9
beginning of this 8,673.7
227.00 37.33 3.25 83.79
year 9
III. Increase/
Decrease in this 16,129, 16,129,04
year (Decrease is 047.13 7.13
listed with “-”)
(i) Total 16,129, 16,129,04
comprehensive
047.13 7.13
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4. Other
(III) Profit
distribution
1. Withdrawal of
surplus reserves
2. Distribution for
owners (or
shareholders)
3. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
52
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 283,161, -183,74
109,496,8 77,391,59 286,300,0
end of the report 9,626.6
227.00 37.33 3.25 30.92
period 6
Last period
In RMB
Last period
Other
equity instrument
Other Total
Item Share Perpetu Less: Retaine
Capital comprehe Reasonab Surplus
Inventory owners’
capital Preferre al reserve nsive le reserve reserve d profit
capital Other shares equity
d stock income
securiti
es
-205,22
I. Balance at the 283,161, 109,496,8 77,391,59 264,828,0
1,580.1
end of the last year 227.00 37.33 3.25 77.42
6
Add: Changes
of accounting
policy
Error
correction of the
last period
Other
II. Balance at the 283,161, -205,22
109,496,8 77,391,59 264,828,0
beginning of this 1,580.1
227.00 37.33 3.25 77.42
year 6
III. Increase/
Decrease in this 5,342,9 5,342,906
year (Decrease is 06.37 .37
listed with “-”)
53
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
(i) Total 5,342,9 5,342,906
comprehensive
06.37 .37
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4. Other
(III) Profit
distribution
1. Withdrawal of
surplus reserves
2. Distribution for
owners (or
shareholders)
3. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
54
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
IV. Balance at the 283,161, -199,87
109,496,8 77,391,59 270,170,9
end of the report 8,673.7
227.00 37.33 3.25 83.79
period 9
I I I . Basic information of the Company
Shenzhen Zhongheng Huafa Co., Ltd. (hereinafter referred to as the Company, and together referred to the Group
with its subsidiaries) was established on 8 December 1981 with business license No. 440301501120670. The legal
representative is Mr. Li Zhongqiu and registered address is block 411, Huafa North road, Futian district,
Shenzhen.
The Company operates as a manufacturer of computer, telecommunication and other electronic equipments. The
operation scope: production and operation of printed circuit board for various color TV, liquid crystal displayer,
liquid crystal screen (produced and operated in branches), recorder, audio equipments, electronic watch, game
video, refined plastic injection parts, light package materials (produced and operated in Wuhan), hardware
components (including molds), coating and surface processing, tin wire, development of properties (SFDCD
No.7226760) and property management. The Company establishes associate companies in Wuhan and Jilin, and
sets branches in provincial capitals (other than Lhasa) and direct municipal cities.
The Company establishes general meeting, board of directors and supervisors. General meeting serves as the
power organ which exercises legal rights to govern our operating policies, proceeds raising, investment and profit
distribution. The board of directors reports to general meeting, and is entitled to exercise legal rights on our
operation decisions. Our management is responsible for implementing resolutions of general meeting and board of
directors, and presides over operation and management.
Financial report disclosed approved date: 21st August 2015
Compare with beginning of the Period, Yutian Henghua Company decreased due to the sales in the Period. Found
more in relevant content of ‘IX. Equity in other entity” in the Note and “VIII. Change of consolidation scope”
IV. Basis of preparation of financial statements
1. Preparation base
The financial statements were stated in compliance with Accounting Standard for Business Enterprises and other
relevant regulations, in respect of the actual transactions and proceedings, on a basis of ongoing operation, as well
as the accounting policy and estimation carried in the “Important accounting policy and estimation” in the Notes.
55
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
2. Going concern
The Group has sustainable operation ability within 12 months since end of the Period, and there are no major
events that impact sustainable operation ability of the Company.
V. Major Accounting Policies and Estimation
Specific accounting policies and estimation attention:
The specific accounting policy and estimation formulated by the Group in line with the real operational
characteristics and relevant accounting standards including operation cycle, recognition and measure of bad debt
provision of the account receivable, send out stocks and valuate, classification and depreciation method of fixed
assets, amortization of intangible assts, revenue recognition and measures etc.
1. Statement on observation of Accounting Standard for Business Enterprises
Financial statements prepared by the Company were in accordance with requirements of Accounting Standard for
Business Enterprises, which truly and completely reflected the financial information of the Company, such as
financial position, operation achievements and cash flow.
2. Accounting period
The accounting period of the Group is the calendar date from 1 January to 31 December.
3. Business cycles
Business cycles of the Group is 12 months, and consider as the liquidity standards of the assets and liabilities
4. Recording currency
The Company’s reporting currency is the RMB Yuan.
5. Accountant arrangement method of business combination under common control and not under common
control
As acquirer, the Company measures the assets and liabilities acquired through business combination under
common control at their carrying values as reflected in the consolidated financial statement of the ultimate
controller as of the combination date. Capital reserve shall be adjusted in respect of any difference between
carrying value of the net assets acquired and carrying value of the combination consideration paid. In case that
capital reserve is insufficient to offset, the Company would adjust retained earnings.
The acquiree’s net identifiable assets, liabilities or contingent liabilities acquired through business combination
not under common control shall be measured at fair value as of the acquisition date. The cost of combination
represents the fair value of the cash or non-cash assets paid, liabilities issued or committed and equity securities
issued by the Company as at the date of combination in consideration for acquiring the controlling power in the
acquiree, together with the sum of any directly related expenses occurred during business combination(in case of
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
such business combination as gradually realized through various transactions, the combination cost refers to the
sum of each cost of respective separate transaction). Where the cost of the combination exceeds the acquirer’s
interest in the fair value of the acquirer’s identifiable net assets acquired, the difference is recognized as goodwill;
where the cost of combination is lower than the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, the Company shall firstly make further review on the fair values of the net identifiable assets, liabilities
or contingent liabilities acquired as well as the fair value of the non-cash assets portion of combination
consideration or the equity securities issued by the Company. In case that the Company finds the cost of
combination is still lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets after
such further review, the difference is recognized in non-operating income for the current period when combination
occurs.
6. Measures on Preparation of Consolidated Financial Statements
The Company shall put all the subsidiaries controlled and main body structured into consolidated financial
statements.
Any difference arising from the inconformity of accounting year or accounting policies between the subsidiaries
and the Company shall be adjusted in the consolidated financial statements.
All the material inter-company transactions, non-extraordinary items and unrealized profit within the combination
scope are written-off when preparing consolidated financial statement. Owners’ equity of subsidiary not
attributable to parent company and current net gains and losses, other comprehensive income and total
comprehensive income attributable to minority shareholders are recognized as non-controlling interests, minority
interests, other comprehensive income attributable to minority shareholders and total comprehensive income
attributable to minority shareholders in consolidated financial statement respectively.
As for subsidiary acquired through business combination under common control, its operating results and cash
flow will be included in consolidated financial statement since the beginning of the period when combination
occurs. When preparing comparative consolidated financial statement, the relevant items in previous year’s
financial statement shall be adjusted as if the reporting entity formed upon combination has been existing since
the ultimate controller commenced relevant control.
As for equity interests of the investee under common control acquired through various transactions which
eventually formed business combination, the Company shall supplement disclosure of the accounting treatment in
consolidated financial statement in the reporting period when controlling power is obtained. For example, as for
equity interests of the investee under common control acquired through various transactions which eventually
formed business combination, adjustments shall be made as if the current status had been existing when the
ultimate controller commenced control in connection of preparing consolidated financial statement; in connection
with preparing comparative statement, the Company shall consolidate the relevant assets and liabilities of the
acquiree into the Company’s comparative consolidated financial statement to the extent not earlier than the timing
when the Company and the acquiree are all under control of the ultimate controller, and the net assets increased
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
due to combination shall be used to adjust relevant items under owners’ equity in comparative statement. In order
to prevent double computation of the value of the acquiree’s net assets, the relevant profits and losses, other
comprehensive income and change of other net assets recognized during the period from the date when the
Company acquires original equity interests and the date when the Company and the acquiree are all under ultimate
control of the same party (whichever is later) to the date of combination in respect of the long-term equity
investment held by the Company before satisfaction of combination shall be utilized to offset the beginning
retained earnings and current gains and losses in the period as the comparative financial statement involves,
respectively.
As for subsidiary acquired through business combination not under common control, its operating results and cash
flow will be included in consolidated financial statement since the Company obtains controlling power. When
preparing consolidated financial statement, the Company shall adjust the subsidiary’s financial statement based on
the fair value of the various identifiable assets, liabilities or contingent liabilities recognized as of the acquisition
date.
As for equity interests of the investee not under common control acquired through various transactions which
eventually formed business combination, the Company shall supplement disclosure of the accounting treatment in
consolidated financial statement in the reporting period when controlling power is obtained. For example, as for
equity interests of the investee not under common control acquired through various transactions which eventually
formed business combination, when preparing consolidated financial statement, the Company would re-measure
the equity interests held in the acquiree before acquisition date at their fair value as of the acquisition date, and
any difference between the fair value and carrying value is included in current investment income. in case that the
equity interests in acquiree held by the Company before the relevant acquisition date involves other
comprehensive income at equity method and change of other owners’ equity (other than net gains and losses, other
comprehensive income and profit distribution), then the equity interests would transfer to investment gains and
losses for the period which the acquisition date falls upon. The other comprehensive income arising from change
of the net liabilities or net assets under established benefit scheme as acquiree’s re-measured such scheme is
excluded.
The transaction with non-controlling interest to dispose long-term equity investment in a subsidiary without losing
control rights over the subsidiary, the difference between the proceeds from disposal of interests and the decrease
of the shared net assets of the subsidiary is adjusted to capital premium (share premium). In case capital reserve is
not sufficient to offset the difference, retained earnings will be adjusted.
As for disposal of part equity investment which leads to losing control over the investee, the Company would
re-measure the remaining equity interests at their fair value as of the date when the Company loses control over
the investee when preparing consolidated financial statement. The sum of consideration received from disposal of
equity interest and fair value of the remaining equity interest, less the net assets of the original subsidiary
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
attributable to the Company calculated based on the original shareholding proportion since the acquisition date or
the date then consolidation commences, is included in investment gains and losses for the period when control is
lost, meanwhile to offset goodwill. Other comprehensive income related to equity interest investment in original
subsidiaries is transferred into current investment gains and losses upon lost of control.
If the disposal of the equity investment of a subsidiary is realized through multiple transactions until loss of
control and is a package deal, the accounting treatment of these transactions should be dealt with as one
transaction of disposal of the subsidiary until loss of control. However, before the Company loses total
control of the subsidiary, the differences between the actual disposal price and the share of the net assets of the
subsidiary disposed of in every transaction should be recognized as other comprehensive income in the
consolidated financial statements, and transferred to profit or loss when losing control.
7. Accounting treatment for joint venture arrangement and joint controlled entity
The joint venture arrangement of the Company consists of joint controlled entity and joint venture. As for jointly
controlled entity, the Company determines the assets held and liabilities assumed separately as a party to the
jointly controlled entity, recognizes such assets and liabilities according to its proportion, and recognizes relevant
income and expense separately under relevant agreement or according to its proportion. As for asset transaction
relating to purchase and sales with the jointly controlled entity which does not constitute business activity, part of
the gains and losses arising from such transaction attributable to other participators of the jointly controlled entity
is only recognized.
8. Determining standards of the cash and cash equivalents
Cash in the cash flow statement comprises the Group’s cash on hand and deposits that can be readily withdrawn
on demand. Cash equivalents are short-term (within 3 moths), highly liquid investments held by the Group, that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value
9. Foreign currency business and foreign currency financial statement conversion
(1) Foreign currency business
As for the foreign currency business, the Company converts the foreign currency amount into RMB amount
pursuant to the spot exchange rate as of the business day. As at the balance sheet date, monetary items expressed
by foreign currency are converted into RMB pursuant to the spot exchange rate as of the balance sheet date. The
conversion difference occurred is recorded into prevailing gains and losses, other than the disclosure which is
made according to capitalization rules for the exchange difference occurred from the special foreign currency
borrowings borrowed for constructing and producing the assets satisfying condition of capitalization.
(2) Conversion of foreign currency financial statement
Spot exchange rate as of the balance sheet date is adopted for conversion of assets and liabilities in foreign
currency balance sheet; as for the items in statement of owners’ equity except for “Undistributed profit”,
conversion is made pursuant to the spot exchange rate of business day; income and expense items in income
statement then are also converted pursuant to the spot exchange rate of transaction day. Difference arising from
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
the aforementioned conversions shall be listed separately in items of other comprehensive income. Spot exchange
rate as of the occurrence date of cash flow is adopted for conversion of foreign currency cash flow. The amount of
cash affected by exchange rate movement shall be listed separately in cash flow statement.
10. Financial instrument
While the Company comes to party of the finacnal instrument contract, recognized a financial assets or financial
liabilities
(1) Financial assets
1) Classification, recognition and measurement for financial assts
In consideration of investment targets and economic essence, the Company groups the financial assets owned by it
as four categories, namely financial liability measured by fair value and whose movement is recorded into
prevailing gains and losses, held-to-maturity investment, accounts receivables, as well as financial assets
available-for-sale.
Financial assets at fair value through profit or loss consist of financial assets held for trading and those designated
as financial assets at fair value through profit or loss at initial recognition. The Group shall classify financial assets
as financial assets held for trading as long as they meet one of the following conditions: the purpose of acquiring
the financial assets is to sell them within a short time; they fall under a portfolio of identifiable financial
instruments for centralized management, and there is objective evidence that the Company has managed the
portfolio in a manner for making profits within a short time; they fall under derivative instruments, except those
designated as effective hedging instruments, financial guarantee contracts and equity-linked investments that are
not quoted in an active market and whose fair value cannot be measured reliably and have to be settled through
delivery. The Group shall designate financial instruments as financial assets at fair value through profit or loss at
initial recognition only when they meet one of the following conditions: The designation can eliminate or
significantly reduce inconsistencies in terms of recognition and measurement of relevant gains or losses caused by
different measurement bases of the financial instruments. The formal written documents of corporate risk
management or investment strategies have recorded that the financial portfolio is managed and assessed on the
basis of the fair value and this is reported to the key management personnel. The financial instrument is a hybrid
instrument containing one or more embedded derivatives, unless the embedded derivatives do not significantly
change the cash flow of the hybrid instrument or obviously should not be separated from the relevant hybrid
instrument. The hybrid instrument contains embedded derivatives that need to be separated but cannot be
measured separately on the acquisition date or on the subsequent balance sheet date. This type of financial assets
designated by the Group mainly comprises of financial assets held for trading, which shall be subsequently
measured at fair value. Changes in fair value shall be accounted for in gains or loss from changes in fair value.
The interests or cash dividends acquired while the Group holds the assets shall be recognized as investment gains.
In the process of disposal, the balance between its fair value and the initial booked amount shall be recognized as
investment gains or loss and gains or loss from changes in fair value will be adjusted.
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Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity dates that the Group has the positive intention and ability to hold to maturity. Held-to –maturity
investments using the effective interest method are subsequently measured at amortized cost, the amortization or
impairment and gains or losses are recognized upon termination arising and are recognized in the profit or loss for
the current period.
Trade receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Trade receivables are subsequently measured at amortized cost at effective interest method. Gains
or losses arising from amortization, depreciation and de-recognition shall be included in profit or loss for the
period.
Available-for-sale financial assets are non-derivatives that are either designated or not classified as other financial
assets. In this type of asset, the equity instruments without quoted price in an active market and whose fair value
cannot be reliably measured and the derivative financial instruments related to and settled by delivery of an equity
instrument, are subsequently measured at cost; the other instruments in an active market, although there is no
active market price or the market price but the fair value can be reliably measured, are measured at fair value, and
the changes in fair value are recognized in other comprehensive income. These financial assets are subsequently
measured at fair value, except for impairment losses and foreign exchange gain and loss of monetary financial
assets, the change in fair value of available for sale financial assets are recognized directly in shareholders’ equity,
when the financial asset is derecognized, the cumulative amount of changes in fair value recognized directly in
equity before is recognized in the income statement. Interests of available for sale debt instruments held by
investment which are calculated by the effective interest method, and cash dividends related to available for sale
equity instruments declared by the investee issued are recognized as investment income in profit or loss. Equity
instrument investment for which fair value cannot be measured reliably and which is not quoted in an active
market shall be measured at cost.
2) Recognition and measure for the transfer of financial assets
The financial assets meet one of following requirements will be terminated recognition: ① The contract rights of
collecting cash flow of the financial assets is terminated; ②The financial assets has already been transferred, and
the Company has transferred almost all risks and remunerations of financial assets ownership to the transferee; ③
The financial assets has been transferred, even though the Company has neither transferred nor kept almost all
risks and remunerations of financial assets ownership, the Company has given up controlling the financial assets.
If the enterprise has neither transferred or kept almost all risks and remunerations of financial assets ownership,
nor given up controlling the financial assets, then confirm the relevant financial assets according to how it
continues to involve into the transferred financial assets and confirm the relevant liabilities accordingly.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
If the entire transfer of financial assets satisfies the demand for derecognition, reckon the balance between the
book value of the transferred financial assets and the sum of consideration received from transfer and fluctuation
accumulated amount of fair value formerly reckoned in other consolidated income in the current profits and
losses.
If part transfer of financial assets satisfies the demand for derecognition, apportion the integral book value of the
transferred financial assets between the derecognized parts and the parts not yet derecognized according to each
relative fair value, and reckon the balance between the sum of consideration received from transfer and fluctuation
accumulated amount of fair value formerly reckoned in other consolidated income that should be apportioned to
the derecognized parts and the apportioned aforementioned carrying amounts in the current profits and losses.
3) Impairment testing and accounting treatment for financial assets
Except for the financial assets which are measured by fair value and whose fair value change is recorded into
prevailing gains and losses, the Company will make check in the carrying value of other financial assets as at the
balance sheet date. If there is objective evidence proving impairment of certain financial assets, the Company then
makes provision for impairment.
When the financial assets calculated by amortized cost decrease in value, count and draw the provision for
impairment according to the balance between present value and book value of predicted future cash flows
(Excluding future credit losses that haven’t occurred yet.). If there is any objective evidence to indicate that the
financial assets has recovered and is objectively connected with matters occurred after confirming the losses, the
formerly confirmed impairment losses will be reversed and reckoned in current profits and losses.
When the financial assets has impairment, the accumulating losses previously and directly reckoned in
shareholder's equity and formed due to shrinkage of fair value will be transferred and reckoned in impairment
losses. As for the debt instrument investment available for sale with confirmed impairment losses, if its fair value
rises after and it is objectively connected with matters occurred after confirming the primary impairment losses,
the formerly confirmed impairment losses will be reversed and reckoned in current profits and losses. And the
debt instrument investment available for sale with confirmed impairment losses shall be directly reckoned in
stockholder's equity if its fair value rises after.
(2)Financial liability
1) Classification, determining basis and measure of the financial liability
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
When making the initial recognition for financial liabilities, the Company classifies the financial liabilities into
ones which are measured by fair value and whose change is recorded into prevailing gains and losses, and other
financial liabilities.
Financial liabilities which are measured by fair value and whose change is recorded into prevailing gains and
losses include tradable financial liabilities and financial liabilities which are measured by fair value and whose
change is recorded into prevailing gains and losses at the initial recognition day. Follow-up measurements are
made by fair value. Recorded into prevailing gains and losses are the gains or losses formed through fair value
change and dividend and interest expenditure regarding to the financial liabilities.
As for other financial liabilities, effective interest rate method is adopted and follow-up measurement is made
according to amortized cost.
2) De-recognition condition for financial liability
As for the financial liabilities with its whole or part present obligations released, the company shall de-realize
such financial liabilities or part of it. if the company enters into agreement with its creditor to substitute for the
existing financial liabilities by means of assuming new financial liabilities, then the company shall de-realize the
existing financial liabilities and realize the new financial liabilities provided that the contract clauses of the new
and the existing financial liabilities are different in substance. If the company makes substantial amendment to the
whole or part contract clauses of the existing financial liabilities, it shall de-realize the existing financial liabilities
or part of it. Meanwhile, the financial liabilities with amendment to its clauses shall be realized as new financial
liabilities. In case of derecognizing of financial liabilities in whole or part, the difference between the carrying
value of such de-realized financial liabilities and consideration paid shall be recorded in current gains and losses.
(3) Determination of fair value of financial assets and financial liabilities
The Group measures the fair value of financial assets and financial liabilities at the price of the principal market.
If there is no principal market, the fair value of financial assets and financial liabilities shall be measured at the
price of the most advantageous market, and a valuation technique which is applicable at that time and has
sufficient data as well as other information support will be adopted. The Group categories inputs for the fair value
measurements into three levels. The Group would use the inputs by the order of Level 1, Level 2 and Level 3.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the
asset or liability. The Group will give priority to the use of the Level 1 of the input value, finally using Level 3 of
input values. The level of measurement result of fair value depends on the lowest level of the input which means
material to measurement of fair value in general.
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11. Account receivables
(1)Account Receivable withdrawal on single significant amount and with bad debt provision accrued for
single item
The Company’s account receivable with above RMB 500,000 in
Determine basis or amount standards for single significant
single item is defined as account receivables with significant
amount
amount in single item.
Withdrawal method for account with single significant amount and Withdrawal bad debt provision according to difference between
withdrawal single item bad debt provision the current value of future cash flow and book values
(2) Receivables with bad debt provision accrual by credit portfolio
Combination Bad debt provision accrual
Age group Age analysis method
In combination, accounts whose bad debts provision was accrued by age analysis:
√ Applicable □ Not applicable
Account age Rate for receivables Rate for other receivables
Within 1 year (one year included) 0.00% 0.00%
1－2 years 5.00% 5.00%
2－3 years 10.00% 10.00%
Over 3 years 30.00% 30.00%
In combination, withdrawal proportion of bad debt provision based on balance proportion:
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods:
□ Applicable √ Not applicable
(3) Account receivable with minor single amount but with withdrawal bad debt provision for single item
Account receivable which can not be reflected its risk
Reasons for withdrawal single item bad debt provision characteristic while accrual the bad debt provision in line with
combination for those account with minor amount
Accrual bad debt reserves according to the difference of present
Withdrawal method for bad debt provision
value of future cash flow lower its book value
12. Inventories
The Company’s inventories are including raw materials, product in process, stock goods, low-value consumption
goods, semi-finished goods and work in process-outsourced etc.
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The inventory taking system shall be on a perpetual basis. Inventories are initially measured at cost. When
inventories are delivered, first-in-first-out method is adopted to determine the actual cost of inventories delivered.
Packaging materials and low-value consumable are amortised by one-time written-off.
For inventories with tremendous number and relatively low unit price, inventory impairment loss is provided
according to the type of inventory. For other inventories, inventory impairment provision is provided at the
difference of cost of a single item of inventory exceeding its net realizable value. Net realizable value of
goods-in-stock, work-in-progress or held-for-sale raw materials are determined by their estimated sales less the
related selling expenses and taxes. Net realizable value for raw material for held for production are determined by
the estimated selling price of finished goods less the estimated cost to completion, selling expenses and taxes.
13. Long-term equity investment
Long-term equity investment of the Company is mainly about investment in subsidiary, investment in associates
and investment in joint-ventures.
Our judgment of joint control is based on the fact that all participants involved or groups of participants jointly
control the arrangement, and that policies of relevant activities must be unanimously agreed by participants who
jointly control the arrangement.
When the Group owns 20% or above but less than 50% of the voting right of the investee directly, or indirectly
through subsidiaries, it is considered to have a material influence on the investee. If the voting right in the investee
is less than 20%, the influence on investee will be decided based on facts and circumstances including
representatives in the board of directors of similar authority of the investee, or participation in the process of
formulating the financial and operating policies of the investee, having significant transactions with the investee,
dispatching management personnel to the investee, and providing key technology and data to the investee.
An investee that is under the control of the Group is deemed as a subsidiary of the Group. For long-term equity
investments acquired through a business combination under common control, they will be used as the initial
investment cost of long-term equity investment according to the share of the merged party in the book value of net
assets in the financial statements of the ultimate controlling party on the date of merger. If the book value of net
assets of the merged party at the date of merger is negative, long-term equity investment cost is recognized as nil.
As for the package deals which acquire equity of investee under the same control through multiple deals and
ultimately form merger, accounting for long term equity investment in financial statements of parent company
shall be further disclosed during the period when the Company acquires control. For business combination
resulted in an enterprise under common control by acquiring equity of the absorbing party under common control
through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat
as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
transaction in obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of
the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity
under the consolidated financial statements of the ultimate controlling party on the date of combination. The
difference between the initial cost of the long-term equity investment and the aggregate of the carrying amount of
the long-term equity investment before merging and the carrying amount the additional consideration paid for
further share acquisition on the date of combination shall offset against the capital reserve. If the capital reserve is
insufficient to offset, the retained earnings shall be adjusted.
Long-term equity investment required through enterprise combined under the same control, the combination costs
shall consider as the initial investment cost.
As for the package deals which acquire equity of investee not under the same control through multiple deals and
ultimately form merger, accounting for long term equity investment in financial statements of parent company
shall be further disclosed during the period when the Company acquires control. For instance, for shareholding
which obtained by different transactions in stages and become business combination finally, if it belongs to
package transaction, the accounting method for which each transaction applies will treat as one transaction which
obtains control. If it does not belong to package transaction, Initial investment cost will be the sum of the carrying
value of the equity investment which it originally holds, and initial investment cost will change to cost method.
For shareholding which it holds before the date of acquisition which uses equity method, other related
comprehensive income which use equity method for accounting shall not be adjusted, such investment shall use
the same accounting basis as the invested company when it directly dispose related assets or liabilities upon
disposal. For shareholding which it holds before acquisition and accounted for under fair value method in the
available-for-sale financial assets, the accumulated change in fair value which is originally included in other
comprehensive income shall be change to profit or loss for the current period on the date of combination.
Aside from the long-term equity investments acquired through business merger, long-term equity investments
acquired by cash will be used as investment cost according to the actual payment of the purchase price; long-term
equity investments acquired through issuance of equity securities will be used as investment cost according to the
fair value of the equity securities issued; long-term equity investments from investors will be used as investment
cost according to the investment contracts or agreement value; if company owns long-term equity investments
which are acquired through debt restructuring, non-monetary assets exchange and other means, investment cost
shall be determined according to the provisions of relevant accounting standards of enterprises and practical
situation of company.
The Group’s investments in subsidiaries are accounted for using the cost method and using equity method for the
investments in joint ventures and associates.
Investments in subsidiaries are adjusted by equity method when there is addition or recovery of investment,
include the amount of the additional investment costs paid and the fair value of the related transaction costs of
equity investments. The cash dividends or profit distribution declared by the investees are recognised as
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
investment income in profit or loss.
Subsequent measurement adopts the long-term equity investment accounted by equity method. Increase or
decrease the book value of long-term equity investments according to the variations of other investment unit
owners’ rights and interests. Determination of the reversionary shares of net income and loss of the investee
should be based on the fair value of the identifiable assets when investment is made according to the accounting
policies and accounting period of the Group. And offset the internal profits and losses caused between associated
enterprises and joint ventures. Calculate the parts attributable to investment enterprise according to share-holding
proportion, confirm after the adjustment to net profit of the investee.
For long-term equity investment, the balance between its book value and actual payment will be accounted into
the profit of the current period. When handling the long-term equity investment accounted by equity method
which is accounted into owners’ equity due to the changes in owners’ equity aside from the net income and loss of
the investee, the parts which were accounted into owners’ equity shall be transferred into profit and loss of
investment of current period according to corresponding proportion.
If the Group loses joint control or material influence on investee due to disposal of certain equity investment and
other reasons, any retained interests shall be calculated according to the financial assets available for sale. The
balance between book value and fair value of retained interests on the date of losing joint control or material
influence will be accounted into current profit and loss. Other comprehensive income recognized in original
equity investment using equity method shall be treated under accounting method subject to the basis on which the
relevant assets or liabilities of the investee at the termination of equity method calculation.
When the Group loses control over the investee due to disposal of certain long-term equity interest, and the
retained equity could have joint control or significant impact on the investee, the retained equity shall be measured
by equity method, the difference between the carrying value of the equity and the consideration on disposal shall
be recognized as investment income, and the retained equity shall be adjusted to be measured by equity method. If
the retained equity after disposal fails to have joint control or significant impact on the investee, accounting
treatment shall be made according to relevant provisions of the available for sale financial assets, the difference
between the carrying value of the equity and the consideration on disposal shall be recognized as investment
income, and the difference between the fair value and the carrying value of the retained equity shall be recognized
as profit and loss of investment income in the period in which they are incurred.
As to the transactions incurred by our step-by-step disposal of equity till a complete loss of the controlling
interest,
if they are not a package deal, our company would make accounting treatment separately for each of them; if they
are a package deal, our company would treat them as deals incurred by disposing subsidiary till losing controlling
interest and make corresponding accounting treatment. But, before losing control, the difference between the
disposing price of each deal and the carrying value of long-term equity investment corresponding to the disposed
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
equity, shall be recognized as other comprehensive income and be transferred to the profits and losses of the
current period when control ceases.
14. Investment real estate
Measurement mode
Measured by cost method
Depreciation or amortization method
Investment real estate of the Company are with depreciation accural or amotization by straight-line method
The predicted service life and net rate of salvage value and annual depreciation (amortization) for every
investment real estate of the Company are listed as follows:
Predicted rate of salvage value Depreciation rate per
Type Depreciation term(Year)
(%) annum (%)
Land use rigths 50 10.00 1.80
Houses and buildings 5-50 10.00 1.80-18.00
15. Fixed assets
(1) Confirmation conditions
Fixed assets of the Company represent the tangible assets which have the followed characteristic simultaneously:
held by the Company for purpose of producing commodities, providing labor service, leasing or operational
management, service life exceeds one year, and unit price exceeds RMB 2,000.
Fixed assets shall be recognized while the economic benefit (with such assets concerned) is likely flow to the
Group, and the cost can be measured reliably. The Group’s fixed assets including house and buildings, machinery
equipment, molding tools, transportation equipment, instrument equipment, tool equipment and office facilities.
(2) Depreciation method
Depreciation rate per
Type Method Depreciation term Rate of salvage value
annum
Houses and buildings Straight-line depreciation 20-50 10.00% 1.80-4.50
Machinery equipment Straight-line depreciation 10 10.00% 9.00
Molding tools Straight-line depreciation 3 10.00% 30.00
Transportation
Straight-line depreciation 5 10.00% 18.00
equipment
Instrument equipment Straight-line depreciation 5 10.00% 18.00
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Tool equipment Straight-line depreciation 5 10.00% 18.00
Office facilities Straight-line depreciation 5 10.00% 18.00
16. Construction in process
From the date on which the fixed assets built by the Company come into an expected usable state, the projects
under construction are converted into fixed assets on the basis of the estimated value of project estimates or
pricing or project actual costs, etc. Depreciation is calculated from the next month. Further adjustments are made
to the difference of the original value of fixed assets after final accounting is completed upon completion of
projects.
17. Borrowing costs
In terms of the borrowing costs involving fixed assets, investment real estate and stocks directly attributable to
over one year construction or production to achieve its intended use or sale, the capitalization of the borrowing
costs can commence only when all of the conditions are satisfied; expenditures for the asset are being incurred,
borrowing costs are being incurred, and activities relating to the acquisition, construction or production of the
asset that are necessary to prepare the asset for its intended use or sale have commenced. When the qualified asset
under acquisition, construction or production is ready for the intended use or sale, the capitalization of the
borrowing costs shall be ceased. The amount of other borrowing costs shall be recognized as an expense in the
period in which they are incurred. If the qualified asset is interrupted abnormally during construction or
production, and interruption has lasted for three consecutive months, the capitalization of the borrowing costs
shall be suspended till construction or production resumes.
Capitalization shall be exercised for interest expense actually occurred from special borrowings in current period
after deduction of the interest income arising from unutilized borrowing capital which is saved in banks or
deduction of investment income obtained from temporary investment; For recognization of capitalized amount of
common borrowing, it equals to the weighted average of the assets whose accumulated expense or capital
disburse is more than common borrowing times capitalization rate of occupied common borrowing. Capitalization
rate is determined according to weighted average interest rate of common borrowing.
18. Intangible assets
(1) Evaluation, service life and impairment test
The Company holds intangible assets including land use right, trademark, patent technology and non-patent
technology etc.; intangible assets are measured according to the effective costs paid for obtaining the assets. For
those intangible assets purchased in by the Company, their effective cost consist of actual payment and relevant
other expenditure; for the intangible assets input by investors, effective cost is determined according to the value
69
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
agreed in investment contracts and agreements, while if the agreed value is not fair, then effective value is
confirmed according to fair value. As for the intangible assets owned by acquiree which required through the
combination under the different control, and the assets are not recognized in their finacnial statemetns, recognized
such assets as intangible assets by fair value while initially recognized the assets.
Land use right is averagely amortized according to its transfer term commencing from the sate of transfer;
trademark use-rights averagely amortized by 10 years; patent technology, non-patent technology and other
intangible assets is averagely amortized according to the shortest of their predicted service life, beneficial term
concluded by contract and effective term regulated by laws. Amortization amount is recorded in assets cost and
current gains and losses relevant to beneficial objectives. Re-examination on predicted service life and
amortization method of the intangible assets which have limited service life shall be conducted at the end of each
year. If changed, it would be treated as change of accounting estimation.
19. Impairment of long-term assets
On each balance sheet date, long-term equity investment, investment real estate under cost model measurement,
fixed assets, projects under construction, productive biological assets measured at cost method, oil and gas assets,
and intangible assets with limited useful life will be tested for impairment. If there is any impairment indicator for
the intangible asset, the intangible asset will be tested for impairment. As to goodwill and intangible assets with
infinite useful life, impairment test will be performed annually at the end of the year. If the book value of the
assets exceeds its recoverable amount after the impairment test, the impairment loss is recognised as an
impairment loss of these assets and the amount shall not be reversed in the subsequent accounting period.
20. Long-term deferred expenses
Long-term deferred expenses of the Company refer to the expense which has been paid out while should be
amortized from the current period and periods thereafter, with amortization term over 1 year (excluding 1 year).
Such expense is averagely amortized during the beneficial period. If such long-term deferred expense could not
bring benefit to following accounting periods, the unamortized value of the item shall be fully transferred to
current gains and losses.
21. Staff remuneration
(1) Accounting treatment of short-term remuneration
Short-term remuneration includes: staff salary, bonus, allowances and subsidies, staff benefits, social insurances
like medical insurance, work-related injury insurance and maternity insurance, housing fund, labor union funds
and staff education funds, as well as the non-monetary benefits. During the accounting period when staff provides
70
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
services, the short-term remuneration actually occurred is recognized as liabilities and shall be included in current
gains and losses or related asset costs according to the beneficial items. Among which, the non-monetary benefits
are measured by fair value.
(2) Accounting treatment of retirement benefits
Retirement benefit mainly including the defined contribution plans. Among which, the defined contribution plans
including basic pension, un-employmetn insurance and annuity, the corresponding payable funds shall reckoned
into relevant assets’ cost or current gains.losses while occurred.
(3) Accounting treatment of Dismission welfare
Termination benefits are incurred when the Group terminates the employment relationship with employee before
the expiry of the employment contracts or provides compensation as an offer to encourage employee to accept
voluntary redundancy. If the Group has a formal plan for termination of employment relationship or has made an
offer for voluntary redundancy which will be implemented immediately, and the Group cannot unilaterally
withdraw from the termination plan or the redundancy offer, a provision for the compensation payable arising
from the termination of employment relationship with employees is recognised with a corresponding charge to the
profit or loss for the period. Termination benefits are accounted for as other long term staff remuneration if the
benefits are not expected to be fully settled within 12 months after the end of annual reporting period.
Employee internal retirement plan is adopted according to the same principles as set out above as retirement
benefits. The salary and social insurance contribution to be paid for the internal retired employees for the period
from cease of service to their normal retirement dates shall be included in profit or loss for the period as
retirement benefits when conditions required for recognition of projected liabilities are met.
(4) Accounting treatment of other long-term employee benefits
Other long term employee benefits provided by the Company to employees are accounted for under defined
withdraw plan if satisfying such plan, otherwise would be accounted for under defined income plan.
22. Accrual liability
If the business in connection with such contingencies as a security involving a foreign party, commercial
acceptance bill discount, pending litigation or arbitration, product quality assurance, etc. meets all of the following
conditions, the Company will confirm the aforesaid as liabilities: the obligation is an existing obligation of the
Company; performance of the obligation is likely to cause economic benefits to flow out of the enterprise; the
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
amount of the obligation is reliably measurable.
A provision shall be initially measured at the best estimate of the expenditure required to settle the related present
obligation. Considering the factors, such as risk, uncertainties, and time value of money related to the
contingencies. Where the effect of the time value of money is material, the best estimate shall be determined by
discounting the related future cash outflows. Carrying value of predicted liabilities is reviewed on each balance
sheet date, and if any change thereof is found, carrying value will be adjusted to reflect the best estimate.
23. Share-based payment
The equity-settled share-based payment in return for employee services shall be measured at the fair value of the
equity instruments granted to the employees. As to a equity-settled share-based payment in return for employee
services, if the right cannot be exercised until the vesting period comes to an end or until the prescribed
performance conditions are met, then on each balance sheet date within the vesting period, the services obtained
in the current period shall, based on the best estimate of the number of vested equity instruments, be included in
the relevant costs or expenses and the capital reserves at the fair value of the equities instruments on the date of
the grant.
A cash-settled share-based payment shall be measured in accordance with the fair value of liability calculated and
confirmed based on the shares or other equity instruments undertaken by an enterprise. As to a cash-settled
share-based payment instruments, if the right may be exercised immediately after the grant, the fair value of the
liability undertaken by the enterprise shall, on the date of the grant, be included in the relevant costs or expenses,
and the liabilities shall be increased accordingly. As to a cash-settled share-based payment, if the right may not be
exercised until the vesting period comes to an end or until the specified performance conditions are met, on each
balance sheet date within the vesting period, the services obtained in the current period shall, based on the best
estimate of the information about the exercisable right, be included in the relevant costs or expenses and the
corresponding liabilities at the fair value of the liability undertaken by the enterprise.
An enterprise shall, on each balance sheet date and on each account date prior to the settlement of the relevant
liabilities, re-measure the fair values of the liabilities and include the changes in the current profits and losses.
In case the Group cancels the granted equity instruments during the vesting period (other than those canceled due
to failure to meet exercisable conditions), it shall be deemed as accelerated exercise thereof, which means the
remaining equity-based payment plan during vesting period shall be deemed as all exercisable conditions have
been met, and all expenses for the remaining vesting period shall be recognized in the period in which granted
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
equity instruments are cancelled.
24. Revenue
The revenue of the Group is mainly revenue from sales of goods, provision of labor services, transference of
assets use right and construction contracts. Revenue recognition principles are as follows:
(1) Sales of goods: Revenue recognition principle of sales of goods by the Group is as follows: The revenue from
selling goods shall be realized, when main risks and rewards related to the ownership of goods have been
transferred to buyers, and the Group doesn’t hold continuing management rights or effective control rights of
goods, the amount of relevant revenue can be measured reliably and relevant economic benefits may flow into the
Group, and related cost incurred or to be incurred can be measured in a reliable way.
(2) Revenue from provision of services: revenue from the rendering of services is recognised only when all of the
following conditions are satisfied: (a) the amount of revenue and costs for the transaction involving the rendering
of services can be measured reliably; (b) the associated economic benefits can flow into the Group; (c) and the
stage of completion of the service can be measured reliably. When the provision of services is commenced and
completed in different accounting year, the revenue is recognised percentage of completion method at the balance
sheet date the outcome of the transaction can be estimated reliably. The percentage of completion shall be
determined by the cost incurred and the estimated whole cost. When the outcome of a transaction involving the
rendering of services cannot be estimated reliably and it is probable that the cost incurred will be recovered,
revenue shall be recognised only to the extent of the expenses recognised that are recoverable. When the outcome
of a transaction cannot be estimated reliably and it is not probable that the costs incurred will be recovered,
revenue is not recognised and the costs incurred are recognised as an expense for the year.
(3) Revenue from transference of assets: the revenue from transference of right to use assets shall be recognized
when the economic benefits related to transactions may flow into the Group and the amount of relevant revenue
can be measured reliably.
25. Government grants
(1) Determination bases for government grant of capital nature and the relevant accounting treatment
For government grant of capital nature, the grants are obtained to purchase or construct any form of long-term
assets. Government grants related to assets are recognised as deferred income over the useful lives of the related
assets and are averagely allocated into profit or loss for the period.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
(2) Determination bases for government grant related to income and the relevant accounting treatment
Government grant related to income refers to that other than government grant related to assets. This type of grant
is recognised as deferred income if it is used to make up relevant expenses or losses for subsequent periods, and
shall be included in profit or loss for the period in which relevant expenses are recognised. If it is used to make up
incurred expenses or losses, it shall be included in profit or loss for the period directly.
26. Deferred Income Tax Assets and Deferred Income Tax Liabilities
A deferred tax asset and deferred tax liability shall be determined by a difference (temporary difference) between
the carrying amount of an asset or liability and its tax base. The deferred tax asset shall be recognized for the carry
forward of unused deductible losses that it is probable that future taxable profits will be available against which
the deductible losses can be utilized. For temporary difference arising from initial recognition of goodwill, no
corresponding deferred income tax liabilities will be recognized. For temporary difference arising from initial
recognition of assets and liabilities occurred in the transaction related to non business combination which neither
affect accounting profit nor assessable income (or deductable losses), no corresponding deferred income tax assets
and deferred income tax liabilities will be recognized. As of the balance sheet date, deferred income tax assets and
deferred income tax liabilities are measured at the effective tax rate applicable to the period when recovery of
assets or settlement of liabilities occur. The Company recognizes deferred income tax assets to the extent of future
assessable income tax which is likely to be obtained to offset deductable temporary difference, deductable losses
and tax credits.
27. Lease
(1) Accounting treatment of operating lease
The operating lease is the lease apart from the financial lease. The Company, as a lease holder, accounts the rents
into current period by straight line method during the term of the lease. The Company, as a leaser, accounts the
rental income into current period by straight line method during the term of the lease.
(2) Accounting treatment of finance lease
The financial lease is the lease in which all risks and returns related to the ownership of assets are transferred in
substance. The Company as a lease holder, on the date of lease, the financial lease is recognized as the fixed asset
at lower cost of fair value of the rental asset and the NPV of minimum payment of leasing. The minimum payment
of leasing is recognized as long-term payable and the difference is accounted into unrecognized financing
expense.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
28. Change of the major accounting policy and estimation
(1) Changes of major accounting policies
□ Applicable √ Not applicable
(2) Changes of important accounting estimate
□ Applicable √ Not applicable
VI. Taxation
1. Major taxes and tax rates
Tax Basis Tax rate
VAT Revenue from the good sales 17%
Operation tax Taxable income 5%
City maintaining & construction tax
Taxable turnover tax 7%
Corporation income tax
Taxable income tax 25%
Educational surtax Taxable turnover tax 3%
Housing property tax 70% of the original house value 1.2%
Disclose reasons for different taxpaying body
Taxpaying body Income tax rate
VII. Notes to major items in consolidated financial statements
1. Monetary capital
In RMB
Item Closing balance Opening balance
Cash on hand 655,371.60 516,454.17
Cash in bank 20,374,468.62 21,875,692.95
Other monetary fund 13,019,110.61 6,427,210.56
Total 34,048,950.83 28,819,357.68
Other explanation
(1)Other monetary fund at period-end refers to the margin of bank acceptance.
(2)Among the monetary fund at period-end, 13,019,110.61 Yuan have restriction. And monetary fund of 6,427,210.56 Yuan
restricted at beginning of the Period.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
2. Note receivables
(1) Classification of notes receivable
In RMB
Item Closing balance Opening balance
Bank acceptance bill 35,207,249.84 100,821,063.85
Total 35,207,249.84 100,821,063.85
(2) Notes receivable already pledged by the Company at the end of the period
In RMB
Item Amount pledge at period-end
Bank acceptance bill 25,084,823.02
Total 25,084,823.02
(3) Notes endorsement or discount and undue on balance sheet date
In RMB
Item Amount derecognition at period-end Amount not derecognition at period-end
Bank acceptance bill 26,982,245.99
Commercial acceptance bill 4,213,950.93
Total 31,196,196.92
3. Accounts receivable
(1) Accounts receivable by category:
In RMB
Closing balance Opening balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category Book
Accrual Accrual Book value
Amount Ratio Amount value Amount Ratio Amount
ratio ratio
Account receivable
with single
significant amount 7,649,789.
7,649,789.11 4.88% 6,227,694.47 81.41% 1,422,094.64 6.17% 6,227,694.47 81.41% 1,422,094.64
and withdrawal bad 11
debt provision
separately
Receivables with bad 143,731,032. 143,608,831. 111,125,57
91.82% 122,200.33 0.09% 89.67% 122,200.33 0.11% 111,003,373.93
debt provision 07 74 4.26
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
accrual by credit
portfolio
Accounts with single
minor amount but
5,160,953.
with bad debts 5,160,953.41 3.30% 5,160,953.41 100.00% 4.16% 5,160,953.41 100.00% 0.00
41
provision accrued
individually
156,541,774. 11,510,848.2 145,030,926. 123,936,31
Total 100.00% 11,510,848.21 112,425,468.57
59 1 38 6.78
Account receivable with single significant amount and withdrawal bad debt provision separately at period end:
√ Applicable □ Not applicable
In RMB
Account Closing balance
receivable(units) Account receivable Bad debt reserve Accrual ratio Reasons
Shenzhen Portman
2,555,374.75 2,555,374.75 100.00% Irrecoverable
Bowling Club Co., Ltd.
The client has financial
Hong Kong Haowei
1,870,887.18 448,792.54 23.99% strain, unable to collected
Industrial Co., Ltd.
on time
TCL Ace Appliance
1,325,431.75 1,325,431.75 100.00% Irrecoverable
(Huizhou) Co., Ltd.
Qingdao Haier Parts
1,225,326.15 1,225,326.15 100.00% Irrecoverable
Purchasing Co., Ltd.
Skyworth Multimedia
672,769.28 672,769.28 100.00% Irrecoverable
(Shenzhen) Co., Led.
Total 7,649,789.11 6,227,694.47 -- --
Account receivable provided for bad debt reserve under aging analysis method in the groups:
√ Applicable □ Not applicable
In RMB
Closing balance
Age
Account receivable Bad debt reserve Accrual ratio
Sub item of within one year
Subtotal of within 1 year 143,173,704.31
2-3 years 224,990.00 22,499.00 10.00%
Over 3 years 332,337.76 99,701.33 30.00%
Total 143,731,032.07 122,200.33
Explanation on combination determines:
In combination, withdrawal proportion of bad debt provision based on balance proportion for account receivable:
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods for account receivable:
Nil
(2) Top 5 account receivables at ending balance by arrears party
Total year-end balance of top five receivables by arrears party amounting to 127,132,116.09 Yuan, takes 81.21 percent of the total
account receivable at year-end, bad debt provision accrual correspondingly at year-end amounting as 1,225,326.15 Yuan.
4. Advance payment
(1) Advance payment by age
In RMB
Closing balance Opening balance
Age
Amount Ratio Amount Ratio
within one year 116,306,225.46 100.00% 4,042,321.66 71.30%
1-2 years 1,496,115.65 26.39%
2-3 years 130,682.56 2.31%
Total 116,306,225.46 -- 5,669,119.87 --
Explanation on important advance payment with over one year age without settled on-time:
Nil
(2) Top 5 advance payment at ending balance by prepayment object
Total year-end balance of top five advance payment by prepayment object amounting to 97,574,794.28 Yuan, takes 83.89 percent of
the total advance payment at year-end
Other explanation:
Nil
5. Interest receivable
(1) Category
In RMB
Item Closing balance Opening balance
Income from trust investment financial
15,333,333.33
products
Total 15,333,333.33
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
(2) Major overdue interest
Whether occurring
Borrower Closing balance Overdue time Overdue reasons impairment or not (Y/N)
and criterion
CITIC Trust Co., Ltd. 15,333,333.33 2015-06-21 N
Total 15,333,333.33 -- -- --
Other explanation:
Nil
6. Other accounts receivable
(1) Other accounts receivable by category
In RMB
Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Category Book
Accrual Accrual Book value
Amount Ratio Amount value Amount Ratio Amount
ratio ratio
Other account
receivable with
single significant 5,662,187.
5,662,187.38 25.68% 5,662,187.38 100.00% 0.00 4.70% 5,662,187.38 100.00%
amount and 38
withdrawal bad debt
provision separately
Other receivables
with bad debt 10,716,323.2 10,648,891.5 109,162,24
48.61% 67,431.78 0.63% 90.60% 67,431.78 0.06% 109,094,812.29
provision accrual by 8 0 4.07
credit portfolio
Other accounts with
single minor amount
5,668,513.
but with bad debts 5,668,513.51 25.71% 5,668,513.51 100.00% 0.00 4.70% 5,668,513.51 100.00%
51
provision accrued
individually
22,047,024.1 11,398,132.6 10,648,891.5 120,492,94
Total 100.00% 11,398,132.67 109,094,812.29
7 7 0 4.96
Other receivable with single significant amount and withdrawal bad debt provision separately at end of period:
√ Applicable □ Not applicable
In RMB
Other account Closing balance
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
receivable(units) Account receivable Bad debt reserve Accrual ratio Reasons
Portman 4,021,734.22 4,021,734.22 100.00% Irrecoverable
Zhao Baomin 564,646.35 564,646.35 100.00% Irrecoverable
Traffic accident
555,785.81 555,785.81 100.00% Irrecoverable
compensation
Court of the Botou,
520,021.00 520,021.00 100.00% Irrecoverable
Hebei Province
Total 5,662,187.38 5,662,187.38 -- --
In combination, other accounts receivable whose bad debts provision was accrued by age analysis:
√ Applicable □ Not applicable
In RMB
Closing balance
Age
Other accounts receivable Bad debt provision Accrual ratio
Sub item of within one year
Subtotal of within 1 year 9,908,210.94
1-2 years 328,685.91 16,434.30 5.00%
2-3 years 464,152.99 46,415.30 10.00%
Over 3 years 15,273.94 4,582.18 30.00%
Total 10,716,323.78 67,431.78
Explanation on combination determines:
In combination, withdrawal proportion of bad debt provision based on balance proportion for other account receivable:
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods for other account receivable:
□ Applicable √ Not applicable
(2) Other receivables by nature
In RMB
Nature Ending book balance Opening book balance
Margin 440,955.24 330,400.00
Borrowing 2,687,342.89 2,472,108.12
Intercourse funds 9,727,077.66 107,947,763.80
Salary and utilities pay for another 1,163,783.36 1,832,111.50
Rent receivable 7,545,893.39 7,181,456.09
Other 481,971.63 729,105.45
Total 22,047,024.17 120,492,944.96
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
(3) Top 5 other receivables at ending balance by arrears party
In RMB
Ratio in total ending
Ending balance of
Company Nature Closing balance Age balance of other
bad bet provision
receivables
Portman Rent receivable 4,021,734.22 Over 3 years 18.24% 4,021,734.22
Zhao Baomin Rent receivable 564,646.35 Over 3 years 2.56% 564,646.35
Traffic accident
Intercourse funds 555,785.81 Over 3 years 2.52% 555,785.81
compensation
Court of the Botou,
Intercourse funds 520,021.00 Over 3 years 2.36% 520,021.00
Hebei Province
xStaff canteen Intercourse funds 489,214.70 Over 3 years 2.22% 489,214.70
Total -- 6,151,402.08 -- 27.90% 6,151,402.08
7. Inventory
(1) Inventory classification
In RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserve reserve
Raw materials 17,930,509.53 1,260,134.51 16,670,375.02 16,000,026.71 1,260,134.51 14,739,892.20
Goods in process 1,584,869.44 1,584,869.44 1,296,995.00 1,296,995.00
Finished goods 12,939,566.09 549,643.94 12,389,922.15 12,222,310.12 549,643.94 11,672,666.18
Low-value
consumption 1,030,435.17 51,587.59 978,847.58 440,625.54 51,587.59 389,037.95
goods
Semi-finished
2,224,645.36 33,070.70 2,191,574.66 2,740,898.61 33,070.70 2,707,827.91
goods
Work in
process-outsource 73,609.69 73,609.69 73,631.31 73,631.31
d
Total 35,783,635.28 1,894,436.74 33,889,198.54 32,774,487.29 1,894,436.74 30,880,050.55
(2) Inventory depreciation reserve
In RMB
Increase in the current period Decrease in the current period
Item Opening balance Closing balance
Accrual Other Switch back or Other
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
write-off
Raw materials 1,260,134.51 1,260,134.51
Finished goods 549,643.94 549,643.94
Low-value
consumption 51,587.59 51,587.59
goods
Semi-finished
33,070.70 33,070.70
goods
Total 1,894,436.74 1,894,436.74
8. Other current assets
In RMB
Item Closing balance Opening balance
Trust financial products 500,000,000.00 500,000,000.00
Total 500,000,000.00 500,000,000.00
Other explanation:
Trust financing products represent “CITIC Qianjing Green City Investment Fund Collective Trust Plan” issued by CITIC Trust Co.,
Ltd, with annual expected yield rate of 12%. The term is 12 months, with interest paid at each quarter end. Products principal shall be
realized upon expiration of term.
9. Investment real estate
(1) Investment real estate measured at cost
√ Applicable □ Not applicable
In RMB
Item House and building Land use rights Construction in process Total
I. original book value
1.Opening balance 107,661,686.94 107,661,686.94
2. increased in the
Period
(1) outsourcing
(2) Inventory\fixed
assets\construction in
process transfer-in
(3) increased by
combination
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
3. decreased in the
Period
(1) disposal
(2) other
transfer-out
4.Closing balance 107,661,686.94 107,661,686.94
II. Accumulated
depreciation and
accumulated
amortization
1.Opening balance 76,387,023.20 76,387,023.20
2. increased in the
627,378.54 627,378.54
Period
(1) accrual or
627,378.54 627,378.54
amortization
3. decreased in the
Period
(1) disposal
(2) other
transfer-out
4.Closing balance 77,014,401.74 77,014,401.74
III. Depreciation reserves
1.Opening balance
2. increased in the
Period
(1) accrual
3. decreased in the
Period
(1) disposal
(2) other
transfer-out
4.Closing balance
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IV. Book value
1. Ending Book
30,647,285.20 30,647,285.20
value
2. Opening Book
31,274,663.74 31,274,663.74
value
(2) Investment real estate measured by fair value
□ Applicable √ Not applicable
10. Fixed assets
(1) Fixed assets
In RMB
Houses and Machinery Transportatio Tool Office Molding Instrument
Item Total
buildings equipment n equipment equipment facilities tools equipment
I. original
book value:
1.Opening
218,393,134.33 79,156,580.89 4,141,422.87 9,391,187.88 5,804,317.08 12,334,943.70 3,043,325.06 332,264,911.81
balance
2.
increased in 13,000,000.00 58,252.43 31,282.05 28,445.19 1,579,914.41 35,897.42 14,733,791.50
the Period
(1)
13,000,000.00 58,252.43 31,282.05 28,445.19 1,579,914.41 35,897.42 14,733,791.50
Purchase
(2)
construction
in process
transfer-in
(3)
increased by
combination
3.
decreased in
the Period
(1)
disposal or
scrapping
84
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
4.Closing 231,393,134. 79,214,833.3 13,914,858.1 346,998,703.
4,141,422.87 9,422,469.93 5,832,762.27 3,079,222.48
balance 33 2 1 31
II.
Accumulated
depreciation
1.Opening 67,614,462.4 50,560,780.9 145,234,488.
2,759,043.05 6,600,313.27 5,208,507.72 9,919,995.33 2,571,385.40
balance 0 0 07
2.
increased in 2,713,288.44 3,125,656.91 204,104.64 142,232.39 63,589.22 650,474.63 80,321.49 6,979,667.72
the Period
(1)
2,713,288.44 3,125,656.91 204,104.64 142,232.39 63,589.22 650,474.63 80,321.49 6,979,667.72
accrual
3.
decreased in
the Period
(1)
disposal or
scrapping
4.Closing 70,327,750.8 53,686,437.8 10,570,469.9 152,214,155.
2,963,147.69 6,742,545.66 5,272,096.94 2,651,706.89
balance 4 1 6 79
III.
Depreciation
reserves
1.Opening
558,539.32 5,220.01 5,325.93 5,029.81 17,494.33 591,609.40
balance
2.
increased in
the Period
(1)
accrual
3.
decreased in
the Period
(1)
disposal or
scrapping
85
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
4.Closing
558,539.32 5,220.01 5,325.93 5,029.81 17,494.33 591,609.40
balance
IV. Book
value
1. Ending 161,065,383. 24,969,856.1 194,192,938.
1,173,055.17 2,674,598.34 555,635.52 3,344,388.15 410,021.26
Book value 49 9 12
2. Opening 150,778,671. 28,037,260.6 186,438,814.
1,377,159.81 2,785,548.68 590,779.55 2,414,948.37 454,445.33
Book value 93 7 34
(2)Fixed assets temporarily idle
In RMB
Accumulated Impairment
Item Original book value Book value Note
depreciation provision
Machinery
430,718.00 308,414.27 98,614.27 23,689.46
equipment
Molding tools 8,350,729.36 7,515,656.43 835,072.93
Transportation
207,000.00 186,300.00 20,700.00
equipment
Instrument
5,800.00 5,220.00 580.00
equipment
Total 8,994,247.36 8,015,590.70 98,614.27 880,042.39
(3)Fixed assets rent out through operating lease
In RMB
Item Ending book value
Houses and buildings 94,089,782.69
Machinery equipment 457,476.91
Total 94,547,259.60
(4) Certificate of title un-completed
In RMB
Item Book value Reasons
Still in process of relevant property
Warehouse 2,769,858.68
procedures
New dormitory 4,106,925.86 Still in process of relevant property
86
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
procedures
Total 6,876,784.54
Other explanation
Nil
11. Construction in progress
(1) Construction in progress
In RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Huafa Building
reconstruction 654,356.00 654,356.00 654,356.00 654,356.00
project
Gongming E-city
reconstruction 2,428,814.00 2,428,814.00 2,199,000.00 2,199,000.00
project
Total 3,083,170.00 3,083,170.00 2,853,356.00 2,853,356.00
(2) Changes of major projects under construction
In RMB
Accumul including
Proporti
Fixed ated : interest Interest
Other on of
Increase assets amount capitaliz capitaliz
Budget Opening decrease Closing project Sourceof
Item d in the transfer-i Progress of ed ation rate
balance d in the balance investme funds
Period n in the interest amount of the
Period nt in
Period capitaliz of the year
budget
ation year
Huafa
Building
654,356. 654,356.
reconstru Other
00 00
ction
project
Gongmi
ng E-city
2,199,00 229,814. 2,428,81
reconstru Other
0.00 00 4.00
ction
project
87
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Other
2,853,35 229,814. 3,083,17
Total -- -- --
6.00 00 0.00
12. Intangible assets
(1) Particular about intangible assets
In RMB
Non-patent
Item Land use rights Patent Software expenses Total
technology
I. original book
value
1.Opening
55,187,826.36 661,878.97 55,849,705.33
balance
2. increased in
the Period
(1) Purchase
(2) internal
R&D
(3)
increased by
combination
3. decreased in the
Period
(1) disposal
4.Closing
55,187,826.36 661,878.97 55,849,705.33
balance
II. accumulated
amortization
1.Opening
7,680,617.85 302,402.27 7,983,020.12
balance
2. increased in
722,204.40 24,942.96 747,147.36
the Period
(1) accrual 722,204.40 24,942.96 747,147.36
88
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
3. decreased in
the Period
(1) disposal
4.Closing
8,402,822.25 327,345.23 8,730,167.48
balance
III. Depreciation
reserves
1.Opening
balance
2. increased in
the Period
(1) accrual
3. decreased in
the Period
(1) disposal
4.Closing
balance
IV. Book value
1. Ending Book
46,785,004.11 334,533.74 47,119,537.85
value
2. Opening
47,507,208.51 359,476.70 47,866,685.21
Book value
The intangible assets resulted by internal R&D takes 0.00% of the ending balance of intangible assets of the Company at period-end
13. Long-term unamortized expenses
In RMB
Increased in the Amortized in the
Item Opening balance Other decrease Closing balance
Period Period
Membership charge
291,666.67 25,000.02 266,666.65
of the golf
Renovation costs 53,991.57 10,450.02 43,541.55
Total 345,658.24 35,450.04 310,208.20
Other explanation
Nil
89
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
14. Deferred income tax assets and deferred income tax liabilities
(1) Deferred income tax assets un-offset
In RMB
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Depreciation reserves of
22,241,854.51 5,560,538.64 22,241,854.51 5,560,538.64
assets
Deductible losses 2,835,687.62 708,921.91
Accrual liability 2,765,583.81 691,395.95 2,765,583.81 691,395.95
Total 27,843,125.94 6,960,856.50 25,007,438.32 6,251,934.59
(2) Deferred income tax assets and deferred income tax liabilities listed after off-set
In RMB
Ending balance of Trade-off between the Opening balance of
Trade-off between the
deferred income tax deferred income tax deferred income tax
Item deferred income tax
assets or liabilities after assets and liabilities at assets or liabilities after
assets and liabilities
off-set period-begin off-set
Deferred income tax
6,960,856.50 6,251,934.59
assets
(3) Details of unrecognized deferred income tax assets
In RMB
Item Closing balance Opening balance
Deductible losses 13,272,785.11 27,567,291.70
Depreciation reserves of assets 3,153,172.51 3,153,172.51
Total 16,425,957.62 30,720,464.21
(4) Deductible losses of un-recognized deferred income tax assets expired on the followed year
In RMB
Year Ending amount Opening amount Note
2015 142,552.20
2016 220,463.95 253,206.10
2017 10,004,563.53 24,123,775.77
90
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
2018 3,047,757.63 3,047,757.63
Total 13,272,785.11 27,567,291.70 --
Other explanation:
Nil
15. Short-term loans
(1)Types of short-term loans
In RMB
Item Closing balance Opening balance
Pledge loans 21,000,000.00 15,000,000.00
Mortgage loans 110,907,991.73 103,114,376.32
Debt of honors 19,700,000.00 20,000,000.00
Total 151,607,991.73 138,114,376.32
Explanation on category of short-term loans:
Nil
16. Notes payable
In RMB
Type Closing balance Opening balance
Trade acceptance 27,176,095.34 39,994,397.62
Total 27,176,095.34 39,994,397.62
Total notes payable matured un-paid at period-end amounting to 0.00 Yuan.
17. Account payable
(1) Account payable
In RMB
Item Closing balance Opening balance
Material money 64,369,030.05 65,547,836.32
Total 64,369,030.05 65,547,836.32
(2)Important account payable with over one year account age
In RMB
Item Closing balance Reasons of un-paid or carry-over
Shenzhen YH Global Logistic Co., Ltd. 2,858,885.97 Not yet settled
91
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Taiwan LG Company 1,906,267.50 Not yet settled
Total 4,765,153.47 --
Other explanation:
Nil
18. Account received in advance
(1) Account received in advance
In RMB
Item Closing balance Opening balance
Payment for goods 2,075,716.36 727,331.06
Total 2,075,716.36 727,331.06
19. Wages payable
(1) Wages payable
In RMB
Decreased during the
Item Opening balance Increase during the year Closing balance
year
I. Short-term compensation 6,213,887.72 29,217,994.15 31,719,829.91 3,712,051.96
II. Post-employment
welfare- defined -5,093.82 2,135,912.69 2,135,912.69 -5,093.82
contribution plans
Total 6,208,793.90 31,353,906.84 33,855,742.60 3,706,958.14
(2) Short-term compensation
In RMB
Decreased during the
Item Opening balance Increase during the year Closing balance
year
1. Wages,bonuses,allowances
5,388,866.30 25,335,162.30 27,881,415.84 2,842,612.76
and subsidies
2. Welfare for workers
2,696,901.39 2,696,901.39 0.00
and staff
3. Social insurance 23,041.98 762,197.58 762,197.58 23,041.98
Including: Medical
23,041.98 662,823.12 662,823.12 23,041.98
insurance
Work injury
41,697.88 41,697.88 0.00
insurance
92
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Maternity
57,676.58 57,676.58 0.00
insurance
4. Housing accumulation
24,310.00 379,315.10 379,315.10 24,310.00
fund
5. Labor union
expenditure and
777,669.44 44,417.78 0.00 822,087.22
personnel education
expense
6. Short-term
0.00 0.00
compensated absences
7. Short-term
0.00 0.00
profit-sharing plan
Total 6,213,887.72 29,217,994.15 31,719,829.91 3,712,051.96
(3) Defined contribution plans
In RMB
Decreased during the
Item Opening balance Increase during the year Closing balance
year
1. Basic endowment
-5,093.82 1,995,303.17 1,995,303.17 -5,093.82
insurance
2. Unemployment
140,609.52 140,609.52 0.00
insurance
3. Enterprise annuity 0.00
Total -5,093.82 2,135,912.69 2,135,912.69 -5,093.82
Other explanation:
Nil
20. Tax payable
In RMB
Item Closing balance Opening balance
Value-added tax 5,978,749.70 7,294,271.06
Business tax 1,354,175.01 1,405,738.37
Enterprise income tax 8,292,508.42 8,804,564.06
Individual income tax 41,232.68 35,016.79
Urban maintenance and construction tax 105,923.19 124,888.48
Housing property tax 670,622.69 452,346.57
93
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Tenure tax 331,171.77 330,904.20
Educational surtax 36,724.52 33,119.68
Other 31,881.82 71,197.64
Total 16,842,989.80 18,552,046.85
Other explanation:
Nil
21. Other payable
(1) Classification of other payable according to nature of account
In RMB
Item Closing balance Opening balance
Margin and deposit 13,383,771.62 11,080,224.58
Leasing management costs 1,205,215.89 1,393,897.07
Equipment account payable 246,722.49 246,722.49
Intercourse funds 22,285,175.83 9,851,796.05
After-sale and repair 397,177.20 333,642.00
Other 887,762.72 1,273,067.12
Total 38,405,825.75 24,179,349.31
(2) Significant other payable with over one year age
In RMB
Item Closing balance Reasons of un-paid or carry-over
Zhenxing Branch of CMBC 1,170,008.00 Not yet settled
Linghang Technology (Shenzhen) Co., Ltd. 656,345.28 Not yet settled
Shenzhen Ostar Display Electronic Co.,
578,259.83 Not yet settled
Ltd.
Shenzhen Yongdasheng Investment
558,970.00 Not yet settled
Development Co., Ltd.
Kangde International Co., Ltd. 247,513.68 Not yet settled
Total 3,211,096.79 --
Other explanation
Nil
22. Long-term loans
(1)Classification of long-term loans
94
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
In RMB
Item Closing balance Opening balance
Mortgage loans 570,300,000.00 585,300,000.00
Total 570,300,000.00 585,300,000.00
Explanation on category of long-term loans:
Nil
Other explanation, interest rate included collars:
Lending rate refers to the higher benchmark interest rate for loan of the Bank at the same time and the same level, the Period carried
out with 8.333%.
23. Accrual liability
In RMB
Item Closing balance Opening balance Causes
Pending action 2,765,583.81 2,765,583.81 Commercial and labor disputes
Total 2,765,583.81 2,765,583.81 --
Other explanation, including relevant explanation on important assumptions and estimations for the important accrual liability:
Found more in the explanation on “Contingency”
24. Share capital
In RMB
Changeduringthe year(+,-)
Shares
Opening Closing
New shares transferred
balance Bonus share Other Subtotal balance
issued from capital
reserve
Total shares 283,161,227.00 283,161,227.00
Other explanation:
Nil
25. Capital reserve
In RMB
Decreased during the
Item Opening balance Increase during the year Closing balance
year
Capital premium (Share
96,501,903.02 96,501,903.02
capital premium)
Other Capital reserves 12,994,934.31 12,994,934.31
95
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Total 109,496,837.33 109,496,837.33
Other explanation, including the changes in the Period and cause of changes:
Nil
26. Surplus reserves
In RMB
Increase during the Decrease during this
Item Opening balance Closing balance
period period
Statutory surplus
21,322,617.25 21,322,617.25
reserves
Free surplus reserves 56,068,976.00 56,068,976.00
Total 77,391,593.25 77,391,593.25
Explanation on surplus reserves, including the changes in the Period and cause of changes:
Nil
27. Retained profit
In RMB
Item Current period Last period
Retained profits at the end of last year before
-188,698,387.84 -196,386,008.11
adjustment
Retained profits at the beginning of the year after
-188,698,387.84 -196,386,008.11
adjustment
Add: The net profits belong to owners of patent
14,177,311.03 7,687,620.27
company of this period
Retained profit at period-end -174,521,076.81 -188,698,387.84
Details about adjusting the retained profits at the beginning of the period:
1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations affect the retained
profits at the beginning of the period amounting to 0 Yuan.
2) The changes in accounting policies affect the retained profits at the beginning of the period amounting to 0 Yuan.
3) The major accounting error correction affects the retained profits at the beginning of the period amounting to 0 Yuan
4) Merge scope changes caused by the same control affect the retained profits at the beginning of the period amounting to 0 Yuan.
5) Other adjustments affect the retained profits at the beginning of the period amounting to 0 Yuan
28. Operating income and cost
In RMB
Item Current Period Last Period
96
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Income Cost Income Cost
Main operating 220,850,548.84 203,649,886.02 344,441,701.65 322,656,640.81
Other operating 27,884,081.02 3,813,639.35 22,180,124.71 4,264,962.07
Total 248,734,629.86 207,463,525.37 366,621,826.36 326,921,602.88
29. Business tax and surcharges
In RMB
Item Current Period Last Period
Business tax 1,229,313.48 919,344.05
City maintenance and construction tax 1,174,351.04 880,800.95
Educational surtax 503,299.14 377,486.11
Housing property tax 221,129.34 221,129.28
Tenure tax 119,997.06 119,997.05
Local educational development charge 334,429.41 251,715.96
Other 94,775.04 235,050.69
Total 3,677,294.51 3,005,524.09
Other explanation:
Nil
30. Sales expenses
In RMB
Item Current Period Last Period
Wages 2,561,706.55 2,366,623.38
Transportation charge 1,360,594.47 1,640,972.15
Inspection charges 198,425.89 25,888.25
Customs fee 82,077.60 42,010.48
Commodity wastage 135,667.65 135,866.33
Other 793,298.42 1,353,338.55
Total 5,131,770.58 5,564,699.14
Other explanation:
Nil
31. Administration expenses
In RMB
97
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Item Current Period Last Period
Salary 2,529,243.66 3,414,921.41
Depreciation charger 2,565,709.55 2,222,108.41
Social insurance charge 3,374,203.85 2,860,536.72
Entertainment expenses 858,681.46 1,056,157.06
Tax and surcharge 2,272,979.33 1,057,982.57
Welfare expenses of employee 855,496.44 1,382,314.05
Travelling expenses 902,790.08 812,526.04
Intangible assets amortization 747,147.36 747,147.33
Transportation fee 597,837.91 578,267.87
Consulting fee 403,726.00 1,525,594.57
Security fee 455,580.56 798,185.86
Repair charge 543,829.14 540,639.15
Auditing fee 797,169.81 763,171.95
Office costs 435,606.13 374,404.37
Communication expenses 195,132.09 155,905.69
Low-value consumption goods
95,480.48 313,042.21
amortization
Security information disclosure fee 277,639.60 181,550.56
Court costs 15,849.00 6,520.89
Other expenses 670,817.32 728,955.12
Total 18,594,919.77 19,519,931.83
Other explanation:
Nil
32. Financial expenses
In RMB
Item Current Period Last Period
Interest expenses 28,796,081.34 11,565,916.38
Less: Interest income 66,409.22 158,372.81
Add: losses from exchange 427,093.90 -1,276,739.86
Add: Other expenses 1,236,432.65 78,711.55
Total 30,393,198.67 10,209,515.26
Other explanation:
Nil
98
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
33. Asset impairment loss
In RMB
Item Current Period Last Period
I. Bad debt loss 0.00 168,721.11
II. Inventory falling price loss 0.00 -309,714.10
Total 0.00 -140,992.99
Other explanation:
Nil
34. Investment income
In RMB
Item Current Period Last Period
Investment income from disposal of long-term
643.49 0.00
equity investment
Investment income from financial products
29,499,999.98 0.00
investment
Total 29,500,643.47 0.00
Other explanation:
Investment gains 643.49 Yuan arising from disposal of the Yutian Henghua Company in the Period
35. Non-operating income
In RMB
Amount reckoned into current
Item Current Period Last Period
non-recurring gains/losses
Non-current assets disposal
161,398.90
gains
Including: fixed assets disposal
161,398.90
gains
Accepting donations 3,500.00 74,500.00 3,500.00
Account unable to paid 623,987.65 327,211.07 623,987.65
Income from penal sum 156,906.00 88,333.00 156,906.00
Income from penalty 22,240.00 1,240.00 22,240.00
Other 420.00 0.00 420.00
Total 807,053.65 652,682.97 807,053.65
Government subsidy reckoned into current gains/losses:
99
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
In RMB
Item Amount of this period Amount of last period Assets related/Income related
Other explanation:
Nil
36. Non-operating expenditure
In RMB
Amount reckoned into current
Item Current Period Last Period
non-recurring gains/losses
Non-current assets disposal
97,351.51
losses
Including: fixed assets disposal
97,351.51
losses
Donations 50,000.00 50,000.00
Other 263,178.96 172.73 263,178.96
Total 313,178.96 97,524.24 313,178.96
Other explanation:
Nil
37. Income tax expense
(1) Statement of income tax expense
In RMB
Item Current Period Last Period
Current income tax expense 50.00 145,199.68
Deferred income tax expenses -708,921.91 495,568.27
Total -708,871.91 640,767.95
(2) Adjustment on accounting profit and income tax expenses
In RMB
Item Current Period
Total profit 13,468,439.12
Income tax measured by statutory/applicable tax rate 3,367,109.78
Impact from in-deductible costs, expenses and losses 118,672.55
Impact on deductible losses of the deferred income tax assets
-3,485,732.33
un-recognized previous
100
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
The deductible temporary differences or deductible losses of the
-708,921.91
un-recognized deferred income tax assets in the Period
Income tax expense -708,871.91
Other explanation
Nil
38. Items of statement of cash flow
(1) Other cash received in relation to operation activities
In RMB
Item Current Period Last Period
Intercourse funds between the units 100,949,004.51 3,434,265.95
Collecting management fee and utilities
5,401,204.38 4,913,980.50
etc.
Borrowing paid by the employee 791,229.19 1,261,913.53
Margin 2,052,549.70 2,994,951.00
Interest income 66,409.22 158,372.81
Total 109,260,397.00 12,763,483.79
Explanation:
The other cash received in relateion to operation activiteis in the Period including the Intercourse funds between the units, collecting
management fee and utilities, personal dealings, margin and other intercourse funds.
(2) Other cash paid in relation to operation activities
In RMB
Item Current Period Last Period
Intercourse funds between the units 2,097,872.27 1,865,088.02
Advances to employees 943,718.19 1,217,820.00
Court costs 15,849.00 6,520.89
Deposit, margin 424,257.00 286,550.00
Entertainment charge 858,681.46 1,056,157.06
Utilities 1,944,134.86 1,528,542.54
Travelling expenses 902,790.08 812,526.04
Transportation fee 1,860,594.47 2,366,623.38
Transportation fee 597,837.91 578,267.87
Repair charge 543,829.14 540,639.15
Auditing consulting fee 403,726.00 1,525,594.57
101
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Security costs 135,580.56 144,675.50
Handling charge of the financial institute 124,046.01 78,711.55
Office costs 435,606.13 374,404.37
Communication expenses 195,132.09 155,905.69
Other 520,289.96 482,293.67
Total 12,003,945.13 13,020,320.30
Explanation:
Other cash paid in relation to operation activity in the Period including the management expenses and sales expenses paid in cash, the
intercourse funds between the units, personal dealings, margin, collecting utilities and management fee etc.
(3) Cash paid related with investment activities
In RMB
Item Current Period Last Period
The equity transfer amount received from
subsidiary disposal less than the balance of
99,356.51 0.00
monetary fund held by subsidiary on
disposal date
Total 99,356.51
Explanation:
Nil
39. Supplementary information to statement of cash flow
(1) Supplementary information to statement of cash flow
In RMB
Supplementary information This Period Last Period
1. Net profit adjusted to cash flow of
-- --
operation activities:
Net profit 14,177,311.03 1,455,936.93
Add: Assets impairment provision -140,992.99
Depreciation of fixed assets, consumption of
oil assets and depreciation of productive 6,979,667.72 7,047,696.42
biology assets
Intangible assets amortization 747,147.36 747,147.33
Amortization of long-term deferred expenses 35,450.04 585,416.60
Loss from disposal of fixed assets, intangible
-50,000.00
assets and other long-term assets(gain is
102
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
listed with “-”)
Financial expenses (gain is listed with “-”) 28,796,081.34 12,009,100.55
Investment loss (gain is listed with “-”) -29,500,643.47
Decrease of deferred income tax
-708,921.91 495,568.27
asset( (increase is listed with “-”)
Decrease of inventory (increase is listed with
-3,009,147.99 -7,538,818.68
“-”)
Decrease of operating receivable accounts
10,817,171.40 -151,010,599.10
(increase is listed with “-”)
Increase of operating payable accounts
-11,305,521.79 -52,188,141.86
(decrease is listed with “-”)
Net cash flow arising from operating
17,028,593.73 -188,587,686.53
activities
2. Material investment and financing not
-- --
involved in cash flow
3. Net change of cash and cash equivalents: -- --
Balance of cash at period end 21,029,840.22 284,224,781.97
Less: Balance of cash equivalent at
22,392,147.12 50,704,319.86
year-begin
Net increasing of cash and cash equivalents -1,362,306.90 233,520,462.11
(2) Net cash received from subsidiary disposal in the Period
In RMB
Amount
Cash or cash equivalent received in the Period from subsidiary
0.00
disposal in the Period
Including: --
Less: Cash and cash equivalent held by the Company on date of
99,356.51
controlling rights loss
Including: --
Including: --
Net cash received from subsidiary disposal -99,356.51
Other explanation:
Nil
103
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
(3) Constitution of cash and cash equivalent
In RMB
Item Closing balance Opening balance
Ⅰ. Cash 21,029,840.22 22,392,147.12
Including: stock cash 655,371.60 516,454.17
Bank deposit available for payment
20,374,468.62 21,875,692.95
at any time
Ⅲ. Balance of cash and cash equivalent at
21,029,840.22 22,392,147.12
period-end
Other explanation:
Nil
40. Assets with ownership or use right restricted
In RMB
Item Ending book value Reason
Monetary fund 13,019,110.61 Bank acceptance issued
Fixed assets 45,395,043.78 Mortgage for Bank loans received
Intangible assets 46,785,004.11 Mortgage for Bank loans received
Investment real estate 30,647,285.20 Mortgage for Bank loans received
Total 135,846,443.70 --
Other explanation:
Nil
41. Item of foreign currency
(1) Item of foreign currency
In RMB
Closing balance of foreign
Item Rate of conversion Ending RMB balance converted
currency
Monetary fund -- -- 8,979,741.05
Including: USD 1,464,052.07 6.1136 8,950,628.74
HKD 36,915.98 0.78861 29,112.31
Accounts receivable -- -- 47,655,564.45
Including: USD 7,795,008.58 6.1136 47,655,564.45
Account paid in advance 17,502,107.31
104
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Including: USD 2,862,815.25 6.1136 17,502,107.31
Short-term loans 45,898,231.90
Including: USD 7,507,562.14 6.1136 45,898,231.90
Accounts payable 7,266.62
Including: USD 1,188.60 6.1136 7,266.62
Other explanation:
VIII. Change of consolidated range
1. Subsidiary disposal
Whether has the condition of loss controlling rights with disposing subsidiary on one time or not?
√Y □N
In RMB
Differencebetween Other
Determination
thedisposalprice comprehensive
method and
and proportion ofProportion income
main
Determinationthesubsidiary’snet ofthe Book valueof Fair valueofGainsorlosses transferred into
hypothesisfor
Priceofthe Wayofthe Time pointof basis forthe assetsenjoyin residual theresidual theresidual oftheresidual investment
Ratioofthe theresidual
Subsidiary equity equity controlright time pointof aspectofthe equityonequityon dateequityon date equity income ,which
equitydisposed equity’s fair
disposed disposed lose controlright consolidated datewhenwhen control when controlre-measured by related with the
valueonthe
lose financial statement, control rightslose rightslose fair value equity
datewhen
which isrespond torightslose investmentof
controlright
thedisposal original
lose
investment subsidiary
Actual
controlli
ng rights
transfer,
Yutian 1,000,00 2015-04- resolutio 0.00
100.00% Sell 643.49 0.00 0.00 0.00 0.00
Henghua 0.00 30 n of the %
Sharehol
der’
General
Meeting
Other explanation:
Nil
Whether has the condition of loss controlling rights with disposing subsidiary on multiple steps through many transactions or not?
□Y √ N
105
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
IX. Equity in other entity
1. Equity in subsidiary
(1) Constitute of enterprise group
Main operation Share-holding ratio
Subsidiary Registered place Business nature Acquired way
place Directly Indirectly
Huafa Lease Property
Shenzhen Shenzhen 60.00% Investment
Company management
Huafa Property Property
Shenzhen Shenzhen 100.00% Investment
Company management
Hengfa
Production and
Technology Wuhan Wuhan 100.00% Investment
sales
Company
Huafa Hengtian Property
Shenzhen Shenzhen 100.00% Investment
Company management
Huafa Hengtai Property
Shenzhen Shenzhen 100.00% Investment
Company management
Explanation on share-holding ratio in subsidiary different from ratio of voting right:
Nil
Basis of the condition of controlling invested unit with half or below voting rights held and not controlling the invested unit with half
or above voting rights held
Nil
Basis for important structured entity and controls that included in consolidation range:
Nil
Basis for agent or client of the Company recognized:
Nil
Other explanation:
Nil
X. Risk related with financial instrument
Main financial instrument of the Company including loans, account receivable, account payable, transactional
financial assets and transactional financial liabilities etc; Risks concerned with the above mentioned financial
instrument, and the risk management policy takes for lower the risks are as follow: Management of the Company
manage and supervise the risk exposure in order to control the above mentioned risks in a limit range.
1. Targets and policy for the risk manaegment
Aims of engaging in the risk management is to achieve equilibrium between the risk and benefit, lower the
adverse impact on performance of the Company to minimum standards, and maximized the benefit for
106
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
shareholders and other investors. Base on the risk management targets, the basic tactics of the risk management is
to recognized and analyzed the vary risks that the Company counted, established an appropriate risk exposure
baseline and carrying risk management, supervise the vary risks timely and reliably in order to control the risk in a
limited range.
(1) Market risks
Market risk of the financial instrument refers to the fair value of financial instrument or future cash flow due to
fluctuations in the market price changes and produces, mainly includes the exchange risks, IRR and other price
risk.
1) Foreign exchange (FX) risk
The Group’s foreign exchange exposure is mainly related to USD and HKD. Except for the displayer operations
conducted by the Company’s second level subsidiary Hengfa Science and Technology Company is denominated
in USD, other main business operations of the Group are settled in RMB. As of 30 June 2015, except for assets
and liabilities with balances in USD fragmentary HKD balances depicted as below, all other assets and liabilities
of the Group are denominated in RMB. The exchange rate risk arisen from those USD and HKD denominated
assets and liabilities may affect the results of operation of the Group. The Group closely monitors the influences
arising from change of interest rate.
Item 2015-6-30(RMB) 2014-12-31(RMB)
Monetary fund –USD 8,950,628.74 1,647,548.30
Monetary fund-HKD 29,112.31 131,467.38
Account receivable–USD 47,655,564.45 23,844,905.37
Account paid in 17,502,107.31 599,151.38
advance–USD
Account payable–USD 7,266.62 7,294.32
Short-term loans–USD 45,898,231.90 53,114,376.32
The Company keep an eye on the impact from exchange rate moverment
2) Interest rate risk (IRR)
The interest rate risk of the Group generated from interest-bearing debts such as bank borrowings. Financial
liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at
fixed rates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its
fixed rate and floating rate contracts depending on the prevailing market conditions. As at 30 June 2015, most of
the interest-bearing debts are floating borrowings contracts with floating rates in RMB and USD with total amount
of RMB721,907,991.73 (31 December 2014: RMB723,414,376.32).
Risk of cash flow movement of financial instruments arising from change of interest rate mainly relates to bank
borrowings at floating rate. The Group establishes policies to maintain floating rates for these borrowings, so as to
eliminate fair value risk of change of interest rate.
107
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
3) Price risk
Since the Group sells displayers at market price, it is influenced by fluctuation of market price accordingly.
(2) Credit risk
Credit risk refers to failure of performance by a party to financial instrument which results in property loss of
another party. As at 30 June 2015, the Group’s potential maximum exposure to credit risk is mainly because of the
counter-parties’ failure to perform their obligations leading to losses on financial assets of the Group and the
financial burden assumed by the Group, including: to reduce credit risk, a team, responsible for confirming credit
limitations, reviewing paper work related to credit, and executing supervisory procedures, has been built up within
the Group in order to ensure that necessary measures have been taken to retrieve expired claims. In addition, the
Group reviews the recoverability of each single receivable at each balance sheet date, ensuring sufficient bad-debt
provisions have been made for unrecoverable amounts. Therefore, the Management reckons that credit risks
exposure of the Group has been reduced significantly.
The liquidities of the Group are deposited in banks with high credit rating, thus the credit risk of liquidities is
relatively low.
The Group has adopted necessary policies to ensure that all clients have good credit history. The Group has no
significant concentration risk of credit except for that arising from the top 5 of accounts receivable.
Total top 5 account receivable amounting to 125,906,789.94 Yuan
(3) Liquidity risk
Liquidity risk refers to the risk that the Group could not engage the financial obligations at the maturity date. The
method of the Group to manage liquidity risk is to ensure adequate cash flows to perform obligations at maturity,
so that not to cause any unacceptable losses or damages of the Group reputation. The analysis of liabilities
structure and durations would be made periodically to ensure the cash is adequate. The Group monitors the usage
of bank borrowings and ensures compliance with the borrowing agreements. In the meantime, the Group would
make the financing negotiations with financial institutions to maintain credit lines and reduce liquidity risks.
The analysis of financial assets and financial liabilities held by the Group is analyzed as below, in terms of the
maturity of undiscounted remaining contractual obligations:
Balance dated 30 June 2015
Item within one year 1-2 years 2-3 years Over 3 years Total
Financial assets
Monetary fund 34,048,950.83 34,048,950.83
Note receivable 35,207,249.84 35,207,249.84
Account receivable 145,030,926.38 145,030,926.38
Other receivable 10,648,891.50 10,648,891.50
Account paid in 116,306,225.46 116,306,225.46
advance
Other current assets 500,000,000.00 500,000,000.00
108
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Financial liability
Short-term loans 151,607,991.73 151,607,991.73
Note payable 27,176,095.34 27,176,095.34
Account payable 64,369,030.05 64,369,030.05
Other apayable 34,771,705.15 3,634,120.60 38,405,825.75
Account received in 2,075,716.36 2,075,716.36
advance
Wages payable 3,706,958.14 3,706,958.14
Long-term loans 570,300,000.00 570,300,000.00
2. sensitivity analysis
The Group adopted sensitivity analysis of reasonableness and the probable change effect of risk variables on
equity or profit or loss. Since risk variables rarely change in isolation, the correlation between the variables can
bring significant influence to the financial statement. The following sensitivity analysis is assumed the risk
variable is independently carried out.
(1) Sensitive analysis on foreign exchange risk
Sensitive analysis assumption on foreign exchange risk: all overseas operating net investment hedge and cash
flow hedge are highly effective.
Based on the above assumption, with other variables remained unchanged, the possible reasonable change of
exchange rate has below tax effects on profit or loss and equity for the period
Item Exchange rate Jan. to Jun. 2015 Jan. to Jun. 2014
movement Impact on net profit Impact on owners Impact on net profit Impact on owners
equity equity
All foreign Yuan appreciation 5% 1,058,696.79 1,058,696.79 7,782,475.20 7,782,475.20
currency
All foreign Yuan Depreciation 5% -1,058,696.79 -1,058,696.79 -7,782,475.20 -7,782,475.20
currency
XI. Related party and related transactions
1. Parent company of the enterprise
Share-holding ratio
Voting right ratio on
Parent company Registration place Business nature Registered capital on the enterprise for
the enterprise
parent company
Wuhan Zhongheng
Wuhan Production and sales 34500000 41.14% 41.14%
Group
109
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Explanation on parent company of the enterprise
Change of the registered capital
Controlling shareholder Opening balance Increased Decreased Ending balance
Wuhan Zhongheng Group 34,500,000 0 0 34,500,000
Shares helding or equity and changes
Controlling shareholder Holding amount Holding ratio (%)
Ending balance Opening balance Ending raio Opening ratio
Wuhan Zhongheng 116,489,894.00 116,489,894.00 41.14 41.14
Group
Ultimate controlling party of the Company is Li Zhongqiu
Other explanation:
Nil
2. Subsidiary of the Enterprise
Found more in “Constitute of the emperies”
3. Other related party
Other related party Relationship with the Enterprise
Control by same controlling shareholder and ultimate controlling
Shenzhen Zhongheng Huafa Technology Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Wuhan Hengsheng Yutian Industrial Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Wuhan Hengsheng Photoelectricity Industry Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Hong Kong Yutian International Investment Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Wuhan New Oriental Real Estate Development Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Wuhan Zhongheng Property Management Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Wuhan Guanggu Display System Co., Ltd
party
Control by same controlling shareholder and ultimate controlling
Wuhan Yutian Xingye Land Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Wuhan Yutian Dongfang Land Co., Ltd.
party
110
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Control by same controlling shareholder and ultimate controlling
Wuhan Xiahua Zhongheng Electronic Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Wuhan Zhongheng Yutian Trade Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Wuhan Yutian Hongguang Zhiye Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Shenzhen Zhongheng Huayu Investment Holding Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Famous Fky Capital Limited
party
Control by same controlling shareholder and ultimate controlling
Yutian International Co., Ltd.
party
Control by same controlling shareholder and ultimate controlling
Hong Kong Zhongheng Yutian Co., Ltd.
party
Other explanation
Nil
4. Related transaction
(1) Goods purchasing, labor service providing and receiving
Goods purchasing/labor service receiving
In RMB
Trading limit Whether over the limit
Related party Content Current Period Last Period
approved (Y/N)
Hong Kong Yutian
International Commodities
51,872,144.42 471,163,000.00 N 84,194,940.24
Investment Co., purchased
Ltd.
Wuhan Hengsheng
Commodities
Photoelectricity 2,991,900.00 91,785,000.00 N 22,721,458.51
purchased
Industry Co., Ltd.
Goods sold/labor service providing
In RMB
Related party Content Current Period Last Period
Hong Kong Yutian International
Sales of LCD 60,145,369.93 121,292,733.90
Investment Co., Ltd.
Explanation
111
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
(2) Related lease
As a lessor:
In RMB
Lease revenue recognized in the Lease revenue recognized in
Lessee Type of assets lease
Period last Period
Shenzhen Zhongheng Huafa
Houses and buildings 1,472,769.00 1,472,769.00
Technology Co., Ltd.
As a lessee:
In RMB
Lease revenue recognized in the Lease revenue recognized in
Lessor Type of assets lease
Period last Period
Explanation
(3). Related guarantee
As a guarantor
In RMB
Guarantee completed or
Secured party Amount guarantee Starting date Expired date
not (Y/N)
Hengfa Technology
70,000,000.00 2014-08-28 2015-08-28 N
Company
Hengfa Technology
48,000,000.00 2014-09-29 2015-09-29 N
Company
As a secured party
In RMB
Guarantee completed or
Guarantor Amount guarantee Starting date Expired date
not (Y/N)
Li Zhongqiu 20,000,000.00 2014-12-04 2015-12-04 N
Explanation
(4) Related party’s assets transfer and debt reorganization
In RMB
Related party Content Current Period Last Period
Wuhan New Oriental Real
Shop purchase 12,500,000.00 0.00
Estate Development Co., Ltd.
112
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
(5) Remuneration of key manager
In RMB
Item Current Period Last Period
Total remuneration 733,423.26 741,672.20
5. Receivable/payable items of related parties
(1) Receivable item
In RMB
Closing balance Opening balance
Item Related party
Book balance Bad debt reserves Book balance Bad debt reserves
Hong Kong Yutian
Account receivable International 41,747,156.33 23,844,905.37
Investment Co., Ltd.
Hong Kong Yutian
Account paid in
International 16,789,018.56 1,745,857.69
advance
Investment Co., Ltd.
Wuhan Hengsheng
Account paid in
Photoelectricity 92,636,754.65
advance
Industry Co., Ltd.
(2) Payable item
In RMB
Item Related party Ending book balance Opening book balance
Shenzhen Zhongheng Huafa
Account received in advance 598,775.24 276,329.24
Technology Co., Ltd.
Wuhan Hengsheng
Account payables Photoelectricity Industry Co., 1,231,780.60
Ltd.
Wuhan New Oriental Real
Other payables 10,500,000.00
Estate Development Co., Ltd.
113
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
XII. Commitment or contingency
1. Contingency
(1) Contingency on balance sheet date
1. Contingent liabilities arising from outstanding lawsuits or arbitrations
(1)Shanxi Hualing sued the Company for contract undertaking dispute
Shanxi Hualing sued the Company for contract undertaking dispute (SFFMECZ N0. 2441(2007)): Shanxi Hualing
demanded the Company to indemnify it against the losses suffered by Shanxi Hualing due to the Company’s sale
of printed circuit boards with implied quality defects from 30 May 2006 to 9 May 2007, with the subject amount
of RMB3,100,773.20. The Company received the relevant summons from People’s Court of Futian District,
Shenzhen on 14 January 2008. On 6 March 2008, the Court opened the first session where both parties completed
questioning of evidence.
The Company raised counterclaim in connection with this lawsuit on 12 November 2007, to sue Shanxi Hualing
for default of goods payments and relevant interests to the Company, with subject amount of RMB1, 054,290.19.
On 6 March 2008, the Court opened the first session where both parties completed questioning of evidence.
On 25 July 2009, People’s Court of Futian District, Shenzhen made judgment in respect of the above case
(SFFMECZ N0. 2441(2007)): the Company is required to pay default indemnification of RMB1,797,975.48 to
Shanxi Hualing within 10 days commencing from the effective date of the judgment, and Shanxi Hualing is
required to pay the remaining goods payment of RMB869,458.96 and relevant interest loss to the Company within
10 days commencing from the effective date of the judgment.
The Company appealed to the Intermediate People’s Court of Shenzhen on 31 August 2009 in respect of the
above judgment, and the Intermediate People’s Court of Shenzhen issued civil verdict in respect of the case on 22
March 2010 (SZFMEZZ N0. 2227(2009)): the civil verdict (SFFMECZ N0. 2441(2007)) issued by People’s Court
of Futian District , Shenzhen is withdrawn, and this case is returned to People’s Court of Futian District for retrial
since the Intermediate People’s Court of Shenzhen determines that the major facts haven’t been clearly stated and
evidence is insufficient in respect of this case in the original judgment.
On 5 May 2013, People’s Court of Futian District, Shenzhen made judgment in respect of the above case
(SFFMECZ N0. 9(2010)): the Company is required to pay default indemnification of RMB2, 386,995.81 to
Shanxi Hualing within 10 days commencing from the effective date of the judgment, and Shanxi Hualing is
required to pay the remaining goods payment of RMB869,458.96 and relevant interest loss to the Company within
10 days commencing from the effective date of the judgment.
The Company appealed to the Intermediate People’s Court of Shenzhen on 7 June 2013 in respect of the above
judgment. According to the existing judgment, the Company made provision of RMB2,360,203.26 for lawsuit
114
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
expenses and recognized the same as predicted liabilities.
(2)As at the date for authorization of publication of this financial report, this case is not concluded yet.
(2)Unexecuted labor dispute which is recognized as predicted liabilities in previous years
Pursuant to execution notice (SFFZZ No. 522—529 (2008)) issued by People's Court of Shenzhen in relation to
the labor disputes involving Cai Yaoqiang and other 13 persons, the arbitration awards No. 1069-1077, No. 1079,
No. 1081 and No. 1085-1087 (SLZC[2007]) issued by Shenzhen Labor Dispute Arbitration Committee have been
legally effective. As illustrated by Basic Corporate Information Credit Report, there is outstanding subject amount
of RMB38, 386.00 in total under the above disputes, and the Company has recognized the same as predicted
liabilities.
The former staff Yang Guangze sued the Company for indemnification for his salary, bonus, overtime payment,
housing provident fund and holiday compensation. Court has ruled the Company to pay illness leaving payment of
RMB23, 851.00 to Yang Guangze for the period from May 2007 to December 2008.
2. Other than the above mentioned contingent issues, the Group has no other significant contingent issues as of 30
June 2015.
XIII. Events after balance sheet date
1. Explanation on other events after balance sheet date
Till end of the date the financial reprot disclosed, the Company has no important evetns aftere balance sheet date need to disclosed
XIV. Other important events
1. Other
The Company has no other important evetns need to disclosed up to 30 June 2015
XV. Principle notes of financial statements of parent company
1. Account receivable
(1) Category
In RMB
Closing balance Opening balance
Book balance Bad debt reserves Book balance Bad debt reserves
Category Book
Accrual Accrual Book value
Amount Ratio Amount value Amount Ratio Amount
ratio ratio
Account receivable 5,094,41 3,672,31 1,422,094 5,094,4 3,672,319 1,422,094.6
48.59% 72.09% 48.59% 72.09%
with single 4.36 9.72 .64 14.36 .72 4
115
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
significant amount
and withdrawal bad
debt provision
separately
Receivables with bad
debt provision 557,327. 122,200. 435,127.4 557,327 122,200.3
5.32% 21.93% 5.32% 21.93% 435,127.43
accrual by credit 76 33 3 .76 3
portfolio
Accounts with single
minor amount but
4,832,15 4,832,15 4,832,1 4,832,157
with bad debts 46.09% 100.00% 46.09% 100.00%
7.56 7.56 57.56 .56
provision accrued
individually
10,483,8 8,626,67 1,857,222 10,483, 8,626,677 1,857,222.0
Total
99.68 7.61 .07 899.68 .61 7
Account receivable with single significant amount and withdrawal bad debt provision separately at period end:
√ Applicable □ Not applicable
In RMB
Closing balance
Account receivable(units)
Account receivable Bad debt reserves Accrual ratio Accrual ratio
TCL ACE APPLIANCE
1,325,431.75 1,325,431.75 100.00% Irrecoverable
(HUIZHOU) CO., LTD.
Skyworth Multimedia
672,769.28 672,769.28 100.00% Irrecoverable
(Shenzhen) Co., Led.
Qingdao Haier Parts
1,225,326.15 1,225,326.15 100.00% Irrecoverable
Purchasing Co., Ltd.
The client has financial
Hong Kong Haowei
1,870,887.18 448,792.54 23.99% strain, unable to collected
Industrial Co., Ltd.
on time
Total 5,094,414.36 3,672,319.72 -- --
Account receivable provided for bad debt reserve under aging analysis method in the groups:
√ Applicable □ Not applicable
In RMB
Closing balance
Age
Account receivable Bad debt reserves Accrual ratio
Sub item of within one year
2-3 years 224,990.00 22,499.00 10.00%
Over 3 years 332,337.76 99,701.33 30.00%
116
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Total 557,327.76 122,200.33
Explanation on combination determines:
In combination, withdrawal proportion of bad debt provision based on balance proportion for account receivable:
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods for account receivable:
(2) Top 5 receivables at ending balance by arrears party
Total receivables collected by arrears party for the Period amounting to RMB 5,475,583.32, takes 52.23 percent in closing balance of
the account receivables, RMB 4,053,488.68 are accrual correspondingly for bad debt reserves.
2. Other accounts receivable
(1) Category
In RMB
Closing balance Opening balance
Book balance Bad debt reserves Book balance Bad debt reserves
Category Book
Accrual Accrual Book value
Amount Ratio Amount value Amount Ratio Amount
ratio ratio
Other account
receivable with
single significant 10,221,0 10,221,0 10,221, 10,221,04
12.79% 100.00% 0.00 8.39% 100.00% 0.00
amount and 46.53 46.53 046.53 6.53
withdrawal bad debt
provision separately
Other receivables
with bad debt 64,303,2 62,709.0 64,240,58 106,277 106,214,70
80.50% 0.10% 87.21% 62,709.06 0.06%
provision accrual by 95.62 6 6.56 ,411.47 2.41
credit portfolio
Other accounts with
single minor amount
5,359,98 5,359,98 5,359,9 5,359,981
but with bad debts 6.71% 100.00% 0.00 4.40% 100.00% 0.00
1.34 1.34 81.34 .34
provision accrued
individually
79,884,3 15,643,7 64,240,58 121,858 15,643,73 106,214,70
Total
23.49 36.93 6.56 ,439.34 6.93 2.41
Other receivable with single significant amount and withdrawal bad debt provision separately at end of period:
√ Applicable □ Not applicable
In RMB
117
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Other account Closing balance
receivable(units) Other receivable Bad debt reserves Accrual ratio Accrual ratio
Huafa Lease Company 4,558,859.15 4,558,859.15 100.00% Irrecoverable
Portman 4,021,734.22 4,021,734.22 100.00% Irrecoverable
Zhao Baomin 564,646.35 564,646.35 100.00% Irrecoverable
Traffic accident
555,785.81 555,785.81 100.00% Irrecoverable
compensation
Court of the Botou, Hebei
520,021.00 520,021.00 100.00% Irrecoverable
Province
Total 10,221,046.53 10,221,046.53 -- --
In combination, other accounts receivable whose bad debts provision was accrued by age analysis:
√ Applicable □ Not applicable
In RMB
Closing balance
Age
Other receivable Bad debt reserves Accrual ratio
Sub item of within one year
Subtotal of within 1 year 63,589,637.18
1-2 years 234,231.51 11,711.58 5.00%
2-3 years 464,152.99 46,415.30 10.00%
Over 3 years 15,273.94 4,582.18 30.00%
Total 64,303,295.62 62,709.06
Explanation on combination determines:
In combination, withdrawal proportion of bad debt provision based on balance proportion for other account receivable:
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods for other account receivable:
□ Applicable √ Not applicable
(2) Other receivables by nature
In RMB
Nature Ending book balance Opening book balance
Borrowing 2,012,455.74 2,119,400.72
Intercourse funds 70,295,084.38 112,557,582.53
Income from rents 7,545,893.39 7,181,456.09
Other 30,889.98
Total 79,884,323.49 121,858,439.34
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
(3) Top 5 other receivables at ending balance by arrears party
In RMB
Ratio in total ending
Ending balance of
Company Nature Closing balance Book age balance of other
bad bet provision
receivables
Huafa Lease
Intercourse funds 4,558,859.15 Over 3 years 5.71% 4,558,859.15
Company
Leasing expenses
Portman 4,021,734.22 Over 3 years 5.03% 4,021,734.22
receivable etc.
Leasing expenses
Zhao Baomin 564,646.35 Over 3 years 0.71% 564,646.35
receivable etc.
Traffic accident
Intercourse funds 555,785.81 Over 3 years 0.70% 555,785.81
compensation
Court of the Botou,
Intercourse funds 520,021.00 Over 3 years 0.65% 520,021.00
Hebei Province
Total -- 10,221,046.53 -- 12.80% 10,221,046.53
3. Long-term equity investment
In RMB
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Investment for
187,208,900.00 600,000.00 186,608,900.00 188,208,900.00 600,000.00 187,608,900.00
subsidiary
Total 187,208,900.00 600,000.00 186,608,900.00 188,208,900.00 600,000.00 187,608,900.00
(1) Investment for subsidiary
In RMB
Ending balance of
Impairment
The invested entity Opening balance Increased Decreased Closing balance impairment
accrual
provision
Huafa Lease
600,000.00 600,000.00 600,000.00
Company
Huafa Property
1,000,000.00 1,000,000.00
Company
Hengfa
183,608,900.00 183,608,900.00
Technology
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Company
Huafa Trade
0.00
Company
Yutian Henghua
1,000,000.00 1,000,000.00 0.00
Company
Huafa Hengtian
1,000,000.00 1,000,000.00
Company
Huafa Hengtai
1,000,000.00 1,000,000.00
Company
Total 188,208,900.00 0.00 1,000,000.00 187,208,900.00 0.00 600,000.00
4. Operating income and cost
In RMB
Current Period Last Period
Item
Income Cost Income Cost
Other business 26,161,173.96 3,256,287.14 19,690,535.70 3,355,943.00
Total 26,161,173.96 3,256,287.14 19,690,535.70 3,355,943.00
Other explanation:
Nil
5. Investment gains
In RMB
Item Current Period Last Period
Investment income from financial products 29,499,999.98
Total 29,499,999.98
XVI. Supplementary Information
1. Current non-recurring gains/losses
√ Applicable □ Not applicable
In RMB
Item Amount Note
Profit and loss of assets delegation on others’
29,499,999.98
investment or management
Other non-operating income and expenditure
493,874.69
except for the aforementioned items
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Other gains/losses satisfy qualification of the
643.49
non-recurring gains/losses
Less: Impact on income tax 7,576,494.92
Total 22,418,023.24 --
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
2. REO and earnings per share
Earnings per share
Profits during report period Weighted average ROE Diluted EPS
Basic EPS (RMB/Share)
(RMB/Share)
Net profits belong to common stock
4.92% 0.0501 0.0501
stockholders of the Company
Net profits belong to common stock
stockholders of the Company after
-2.86% -0.0291 -0.0291
deducting nonrecurring gains and
losses
3. Difference of the accounting data under accounting rules in and out of China
(1) Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
(2) Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2015
Section X. Documents Available for Reference
I. Text of semi-annual report with the signature of the Chairman;
II. Financial report carrying the signatures and seals of the unit leader, person in charge of the accounting works
and head of the accounting department;
III. All documents disclosed on China Securities Journal, Securiteis Times and Hong Kong Commercial Daily
appointed by the CSRC;
IV. Article of Association;
V. Other relevant documents
【Note】The Report is prepared in bilingual versions of Chinese and English respectively, in the event of any
discrepancy in understanding the two aforementioned versions, the Chinese version shall prevail.
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