Shenzhen SEG Co., Ltd Semi-annual Report 2011
Shenzhen SEG Co., Ltd.
SEMI-ANNUAL REPORT 2011
Important Prompts
The Board of Directors, the Board of Supervisors, Directors, Supervisors and Senior Executives of
Shenzhen SEG Co., Ltd hereby guarantee that no false or misleading statement or major omission was
made to the materials in this report and that they will assume all the responsibilities, individually and
jointly, for the trueness, accuracy and completeness of the report.
Attendance of the meeting by Directors: Except Director Mr. Zhang Guangliu entrusted Chairman of the
Board of Directors Mr. Wang Chu to attend the meeting and vote on behalf of him because of his leave on
business, Independent Director Mr. Jiang Yigang entrusted Independent Director Mr. Yang Rusheng to
attend the meeting and vote on behalf of him because of his leave on business. all the rest seven Directors
attended this meeting reviewing the 2011 Semi-Annual Report.
Chairman of the Board of Directors of the Company Mr. Wang Chu, Chief Financial Officer Mr. Li Lifu
and Manager of the Finance Department Mr. Ying Huadong hereby declare that the Financial Statements
enclosed in this Semi-Annual Report are true and complete.
The financial statements in this report are unaudited.
The report was prepared in both Chinese and English. Should there be any dispute on interpretation of the
report, the Chinese version shall prevail.
Date of Information Disclosure: August 16, 2011
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
CONTENTS
Definitions ...................................................................................................................................................... 3
Chapter 1 Company Profile.......................................................................................................................... 5
Chapter 2 Changes in Share Capital and Information of Shares Held by Main Shareholders ............. 7
Chapter 3 Information of Directors, Supervisors and Senior Executives .............................................. 10
Chapter 4 Report of the Board of Directors ............................................................................................. 10
Chapter 5 Important Matters .................................................................................................................... 19
Chapter 6 Financial Statements (Unaudited)............................................................................................ 33
Chapter 7 Documents Available for Inspection ...................................................................................... 103
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Definitions
Unless otherwise specified in the report, the following abbreviations possess the meanings as follows:
The Company, Company: Shenzhen SEG Co., Ltd.
SEG Group: Shenzhen SEG Group Co., Ltd.
ST Samsung: Shenzhen SEG Samsung Co., Ltd.
SEG Storage and Transportation: Shenzhen SEG Storage and Transportation Co., Ltd.
SEG Baohua: Shenzhen SEG Baohua Enterprise Development Co., Ltd.
Xi’an SEG: Xi’an SEG Electronics Market Co., Ltd.
Suzhou SEG: Suzhou SEG Electronics Market Management Co., Ltd.
Xi’an Hai Rong SEG: Xi’an Hai Rong SEG Electronics Market Co., Ltd.
SEG Nanjing: Shenzhen SEG Nanjing Electronics Market Management Co., Ltd.
ST 07: the former Shenzhen SEG Dasheng Co., Ltd, which is now renamed as Shenzhen Zero-Seven Co.,
Ltd.
SHIC: Shenzhen SEG Hi-tech Investment Co., Ltd.
SEG Industry: Shenzhen SEG Industry Investment Co., Ltd.
SEG Engineering: Shenzhen SEG Engineering Industry Co., Ltd.
Longgang SEG: Shenzhen SEG Electronics Market Management Co., Ltd.
SEG E-commerce: Shenzhen SEG E-commerce Co., Ltd.
“Buy-it” store: Shenzhen SEG Industry Investment Co., Ltd, whose 91.79% shares are held by the
Company, opened the “Buy-it” store on the third floor of Phase II of Shenzhen SEG Electronics Market on
October 1, 2009. Its main businesses include the wholesale and retail of computer products and accessories,
mobile communication equipment, digital products, the wholesale and retail of office products and the
repair services of computer products. Its business model transferred from self-management to united
trading in March 2010.
SEG Road: It’s an integrated information platform of market management integrating with the functions of
access control, petty-amount-payment, and query system and information dissemination.
Changsha SEG: the former Changsha Xinxing Development Co., Ltd., renamed as Changsha SEG
Development Co., Ltd. on March 18, 2010
DEM Hotel Changsha: Shenzhen DEM Hotel Management Co., Ltd. Changsha Branch
Friendship Group: Xinjiang Friendship (Group) Co., Ltd.
SASABS: State-owned Assets Supervision and Administration Bureau of Shenzhen Municipal People’s
Government (Note: According to the requirement of the Notice on the Adjustment of Name and Nature of
State-owned Assets Supervision and Administration by the Shenzhen Municipal People's Government
issued by the Shenzhen Municipal People’s Government on June 24, 2011 (SHEN FU [2011] No. 96),
Shenzhen State-owned Assets Supervision and Administration Bureau was renamed as “State-owned Assets
Supervision and Administration Commission of Shenzhen Municipal People’s Government” (hereinafter
referred to as “SASABS”).
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
CSRC: China Securities Regulatory Commission
Shenzhen Securities Regulatory Bureau: Shenzhen Securities Regulatory Bureau of China Securities
Regulatory Commission
The Articles of Association: Articles of Association of Shenzhen SEG Co., Ltd
Unless otherwise specified, the amounts referred to in the report are in RMB.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Chapter 1 Company Profile
(1) Chinese name of the Company: 深圳赛格股份有限公司
English name: SHENZHEN SEG CO., LTD.
(2) Legal representative: Wang Chu
(3) Secretary of the Board of Directors: Zheng Dan
Representative of Securities Affairs: Fan Chonglan
Contact address: 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen
Tel: (86)755-8374 7939
Fax: (86)755-8397 5237
E-mail: segcl@segcl.com.cn
(4) Registered address: 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen
Office address: 31/F, Tower A, the Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen
Post code: 518028
Company’s Website: http://www.segcl.com.cn
E-mail: segcl@segcl.com.cn
(5) Newspapers selected by the Company for information disclosure of 2011: China Securities Journal,
Securities Times, Securities Daily and Hong Kong Commercial Daily.
Website specified by CSRC for publishing the semi-annual report: http://www.cninfo.com.cn (the
Cninfo Website)
Website of the Company: http://www.segcl.com.cn
The place where the annual report is prepared and kept: Secretary’s Office of Board of Directors, 31/F,
Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen
(6) Company’s stock Listed with: Shenzhen Stock Exchange
Short forms and code numbers of the share: A-share SHEN SEG 000 058
B-share SHEN SEG-B 200058
(7) Other Relevant Information of the Company
1) Initial registration date: July 16, 1996
Registered address: 16/F, Baohua Technology Building, Huaqiang Road (N), Futian District,
Shenzhen
2) Date of change of registration: June 9, 2003
Registered address changed to: 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District,
Shenzhen
3) Date of change of registration: July 6, 2005
Changes to business scope: Domestic commerce, goods supply and sale, excluding commodities
under special operation, control and sale, engaging in other industries as may be applied for with
specific projects, economic information consultancy, property lease, real estate agency and
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
operation of SEG special electronic markets (licenses for special markets shall be specially
applied for).
4) Date of change of registration: September 27, 2006
Registered capital changed to: RMB 784,799,010 Yuan
Paid-in capital changed to: RMB 784,799,010 Yuan
5) Date of change of the registration number of the company legal person’s business license: August
28, 2008
Registration number of the company legal person’s business license after change:
440301103573251
6) Tax registration No.:
State Tax: 440301279253776
Local Tax: 440304279253776
(8) Main Financial Data and Indicators Unit: (RMB) Yuan
Compared with the end of
At the end of this At the end of last last year, the
report period year increase/decrease rate (%) at
the end of this repoart period
Total assets (RMB Yuan) 1,495,026,367.83 1,466,272,625.92 1.96%
Owenr’s euqity attributable to shareholders of
1,110,372,381.95 1,083,983,092.76 2.43%
the listed company (RMB Yuan)
Share capital (shares) 784,799,010.00 784,799,010.00 0.00%
Net asset per share attributable to shareholders
1.4148 1.3812 2.43%
of the listed company (RMB Yuan per share)
Compared with the same
Reporting period Same period of period of last year,
(January-June) last year increase/decrease rate (%) in
this report period
Total operating revenues (RMB Yuan) 203,405,221.49 178,297,428.20 14.08%
Operating profit (RMB Yuan) (%) 40,165,703.67 39,086,023.77 2.76%
Total profit (RMB Yuan) 40,489,706.46 39,206,273.43 3.27%
Net profit attributable to shareholders of the
26,332,388.35 26,896,844.71 -2.10%
listed company
Net profit attributable to shareholders of the
listed company after deduction of 26,144,053.78 24,568,074.69 6.41%
non-recurring gains and losses (RMB Yuan)
Basic earnings per share (RMB Yuan/share) 0.0335 0.0343 -2.33%
Diluted earnings per share (RMB Yuan/share) 0.0335 0.0343 -2.33%
Weighted average ROE 2.40% 2.60% -0.20%
Weighted average return on equity after
deduction of non-recurring gains and losses 2.38% 2.37% 0.01%
(%)
Net cash flow arising from operating activities 23,025,932.62 28,248,913.00 -18.49%
Net cash flow arising from operating activities
0.0293 0.0360 -18.61%
per share
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Items of Non-recurring Gains and Losses
√Applicable □Inapplicable Unit: (RMB) Yuan
Items of Non-recurring Gains and Losses Amount
Gains and losses from disposal of non-current liability, including the write-off part of the accrued
45,316.88
provision for asset impairment.
Other non-operating incomes and expenses except the above-mentioned items 289,834.65
Infuenced amount of the minority equity -48,421.69
Influenced amount of the income taxes -98,395.27
Total 188,334.57
Items of Fair Value Measurement
√Applicable □Inapplicable Unit: (RMB) Yuan
Period-begi
Period-end Change in Impact on the gains and Impact on the equity
Item nning
amount current period losses of current period of current period
amount
Financial assets
808,297.56 743,973.58 -64,323.98 0.00 -48,886.22
available for sale
(9) Descriptions of Differences in Domestic and Overseas Accounting Standards
Based on Domestic accounting standard Based on overseas accounting standard
Net profit 26,332,388.35 26,332,388.35
Net assets 1,110,372,381.95 1,110,372,381.95
Explanations on difference No difference
Chapter 2 Changes in Share Capital and Information of Shares
Held by Main Shareholders
(1) Information of Changes in Share Capital
In the report period, the changes to the share structure of the Company are as follows.
Before the change Increase/decrease by (+) this time After the change
Transfer
Newly of capital
Bonus
Quantity Proportion issued public Others Subtotal Quantity Proportion
shares
shares reserve a s
shares
I. Restricted
35,464 0.00% 0 0 0 0 0 35,464 0.00%
shares
1. State-owned
0 0.00% 0 0 0 0 0 0 0.00%
shares
2. State-owned
legal person’s 0 0.00% 0 0 0 0 0 0 0.00%
shares
3. Other domestic
0 0.00% 0 0 0 0 0 0 0.00%
shares
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Before the change Increase/decrease by (+) this time After the change
Transfer
Newly of capital
Bonus
Quantity Proportion issued public Others Subtotal Quantity Proportion
shares
shares reserve a s
shares
Thereinto:
Domestic
non-state-owned 0 0.00% 0 0 0 0 0 0 0.00%
legal person’s
shares
Domestic natural
0 0.00% 0 0 0 0 0 0 0.00%
person’s shares
4. Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
foreign investors
Thereinto: Shares
held by overseas 0 0.00% 0 0 0 0 0 0 0.00%
legal persons
Shares held by
overseas natural 0 0.00% 0 0 0 0 0 0 0.00%
persons
5. Senior
35,464 0.00% 0 0 0 0 0 35,464 0.00%
executives’ shares
II. Unrestricted
784,763,546 100.00% 0 0 0 0 0 784,763,546 100.00%
shares
1. RMB ordinary
538,302,228 68.59% 0 0 0 0 0 538,302,228 68.59%
shares
2. Domestically
listed foreign 246,461,318 31.40% 0 0 0 0 0 246,461,318 31.40%
shares
3. Overseas listed
0 0.00% 0 0 0 0 0 0 0.00%
foreign shares
4. Others 0 0.00% 0 0 0 0 0 0 0.00%
III. Total shares 784,799,010 100.00% 0 0 0 0 0 784,799,010 100.00%
(2) Number of Shareholders in this report period
According to the Shareholder List of the Company ended on June 30, 2011 provided by Shenzhen Branch of China
Securities Depository and Clearing Company Limited, the Company has 62,926 shareholders, including 44,924 of
A-shares and 18,002 of B-shares.
(3) Information of Shares Held by Top Ten Shareholders
(Based on the data ended on June 30, 2011 provided by Shenzhen Branch of China Securities Depository and
Clearing Company Limited)
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Total shareholders 62,926
Information of shares held by top ten shareholders
Quantity of Quantity of
Share-holding Total shares
Name of shareholder Nature of shareholder restricted shares pledged
proportion held
shares held or frozen
Shenzhen SEG Group 237,359,66
State-owned legal person 30.24% 0 83,679,833
Co., Ltd. 6
Guangzhou Fodak Domestic
Enterprise Group Co., non-state-owned legal 2.41% 18,880,334 0 0
Ltd. person
Taifook Securities
Company Overseas legal person 1.02% 7,980,784 0 00
Limited-Account Client
Gong Qianhua Overseas natural person 0.68% 5,311,520 0 0
Zhu Wei Domestic natural person 0.52% 4,066,739 0 0
Tang Lizhu Domestic natural person 0.48% 3,796,200 0 0
Guotai Junan Securities
Overseas legal person 0.47% 3,689,041 0 0
(Hong Kong) Limited
Dalian Huaxin Trust Co.,
Domestic
Ltd – Beta 1 Structured
non-state-owned legal 0.38% 3,000,000 0 0
Securities Investment
person
Portfolio
Cao Xianhua Domestic natural person 0.34% 2,702,000 0 0
China Merchants
Securities (Hong Kong) State-owned legal person 0.34% 2,672,676 0 0
Co., Ltd
Information of top ten shareholders holding unrestricted shares
Quantity of unrestricted
Name of shareholder Type of share
shares held
Shenzhen SEG Group Co., Ltd. 237,359,666 RMB ordinary share
Guangzhou Fodak Enterprise Group Co., Ltd. 18,880,334 RMB ordinary share
Domestically listed foreign
Taifook Securities Company Limited-Account Client 7,980,784
shares
Domestically listed foreign
Gong Qianhua 5,311,520
shares
Zhu Wei 4,066,739 RMB ordinary share
Tang Lizhu 3,796,200 RMB ordinary share
Domestically listed foreign
Guotai Junan Securities (Hong Kong) Limited 3,689,041
shares
Dalian Huaxin Trust Co., Ltd – Beta 1 Structured
3,000,000 RMB ordinary share
Securities Investment Portfolio
Cao Xianhua 2,702,000 RMB ordinary share
Domestically listed foreign
China Merchants Securities (Hong Kong) Co., Ltd 2,672,676
shares
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
In the Company's top 10 shareholders, there is no associated relationship between SEG
Statements of association
Group and any of the other shareholders, nor any situation of concerted actions specified in
or concerted actions
the Administrative Measures for Information Disclosed by Listed Companies on
among the aforesaid
Shareholding Changes. It is unknown whether other shareholders in the top ten have
shareholders
associated relationships or are concerted actions.
4. In this report period, SEG Group remained to be the position of Company's first majority
shareholder.
Chapter 3 Information of Directors, Supervisors and Senior
Executives
(1) Changes of Directors, Supervisors and Senior Executives in the Company’s Shareholdings
As of the end of this report period, except Ms Zheng Dan, the Company’s Director, Vice General Manager
and Secretary of the Board of Directors and Mr. Jiang Yigang, the Independent Director, no other Directors,
Supervisors and Senior Executives of the Company held any shares of the Company. In the report period,
there were no changes to the numbers of A-shares held by Ms Zheng Dan and Mr. Jiang Yigang
respectively.
Period-beginn
Change Period-end Reason for
Name Title ing shares
amount shares held change
held
Director/Vice General Manager/Secretary
Zheng Dan 35,586 0 35,586 N/A
of the Board of Directors
Jiang Yigang Independent Director 11,700 0 11,700 N/A
(2) Changes of the Company’s Directors, Supervisors and Senior Executives in this Report Period
In this report period, there were no changes in the positions of the Company’s Directors, Supervisors and
Senior Executives.
Chapter 4 Report of the Board of Directors
I. Analysis on the Financial Conditions and Operating Results in the Report Period
In the first half of 2011, the Company took the development strategy of the Twelfth 5-Year Plan as a guide,
focused on the Company's operating plans and objectives of 2011, continued to strengthen the
establishment of internal control and improved the levels of basic management and standardization
construction. The Company developed innovative businesses vigorously while constantly paying attention
to operation, thus maintaining a steady growth.
In this report period, the operating incomes of the Company reached RMB 203,405,200 Yuan, with an
increase rate of 14.08% over the same period of previous year. Major reasons for the growth in the
operating incomes compared with the same period of previous year are: 1. Substantial income increased in
this report period reported by “Buy-it” stores since their business model transferred from self-management
to united trading in March 2010; 2. Income increase in this report period reported in both electronics
market and property leasing business. The Company achieved a total profit of RMB 40,489,700 Yuan with
an increase rate of 3.27% over the same period of previous year, and realized a net profit of RMB
26,332,400 Yuan with a decrease rate of 2.10% compared with the same period of previous year. The main
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
reasons for the decrease include that the income tax in Shenzhen increased (from 22% to 24%), the “SEG
Network” operated by SEG E-commerce Co. Ltd, a newly established holding subsidiary, has not yet
formally launched, and that SEG Nanjing is still in the preparatory period. The two companies did not gain
any income during the report period, but their organization costs were credited to the cost of current period,
which resulted in the losses of the above two companies in this report period.
(1) Analysis of the Changes in the Compositions of Assets and Liabilities and Corresponding Reasons
in this Report Period
Unit: RMB Yuan
Item June 30, 2011 December 31, 2010 Change rate
Total Assets 1,495,026,367.83 1,466,272,625.92 1.96%
Advances 40,240,293.95 25,974,587.30 54.92%
Other receivables 25,547,965.43 10,859,116.83 135.27%
Inventory 931,049.76 4,205,886.55 -77.86%
Constructions in progress 1,865,001.30 7,128,010.06 -73.84%
Long Term Expenses to be Amortized 20,632,728.44 13,977,797.51 47.61%
Accounts payable 8,640,734.76 14,129,256.31 -38.85%
Wages payable 6,962,170.89 10,264,284.67 -32.17%
Taxes and fees payable 6,170,185.52 14,037,120.99 -56.04%
Total owners’ equities attributable to the parent
1,110,372,381.95 1,083,983,092.76 2.43%
company
Reasons for Changes
Main reason for the increase in advances: According to the relevant agreements, the rents that SEG
Suzhou prepaid to the lessor of the property increased in this report period.
Main reason for the increase in other receivables: DEM Hotel Bao’an Branch was being decorated and
organized in this report period. Therefore other receivables included RMB 13,010,000 Yuan of the leasing
deposit and fitting deposit that SEG Baohua paid to the property of the hotel.
Main reason for the decrease in inventory: The business model of “Buy-it” transferred from
self-management to united trading in this report period which destocked the products and decreased the
inventory.
Main reason for the decrease in constructions in progress: The decoration project of the new store was
completed after Longgang SEG was relocated in this report period, and the account balance of the
construction in progress was transferred to long-term deferred expenses, so this item decreased.
Main reason for the increase in long-term deferred expenses: The decoration project of the new store
was completed after Longgang SEG was relocated in this report period, and the account balance of the
construction in progress was transferred to long-term deferred expenses, so long-term deferred expenses
increased.
Main reason for the decrease in accounts payable: The decoration project of the new store was
completed and accepted after Longgang SEG was relocated in this report period, and the unpaid
construction cost was settled, so accounts payable decreased.
Main reason for the decrease in wages payable: The Company paid employees for the salary of
December, 2010 and the year-end bonus of 2010, which were accrued at the end of previous year in this
report period
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Main reason for the decrease in taxes payable: The Company paid for the corporate income tax accrued
in 2010 to the taxation departments in this report period.
Main reason for the increase in owners’ equities attributable to the parent company: The Company
achieved profitability in this report period, and increased a retained profit of 26,328,300 RMB Yuan.
(2) Changes in Operating Results
Unit: RMB Yuan
January-June, January-June, Percentage
Item Reasons for Change
2011 2010 of Change
1. The income of “Buy-it” store has increased
considerably since its business model
transferred from self-management to united
Operating income 203,405,221.49 178,297,428.20 14.08%
trading in March, 2010. In this report period,
the revenues of e-market businesses and
property operations of the Company increased.
1. The operating income of the Company
increased in this report period and the
operating cost increased accordingly at the
Operating cost 139,750,385.92 115,533,447.61 20.96% same time. 2. The organization costs of the
newly established investment companies
including Nanjing SEG and SEG E-commerce
were credited to the cost of current period.
In this report period, the site leasing cost of
Sales expenses 1,413,793.99 2,515,389.39 -43.79%
“Buy-it” store decreased.
The interest income of the Company was
credited to the financial expenses with
negative value. In this report period, the
Company had no bank loans, so there was no
Financial expenses -4,865,527.56 -2,504,676.18 94.26% interest expense, and the received interest
income of bank deposits increased (that is, the
negative value of financial expenses
increased). This is the main reason for the
change of financial expenses.
In the same period of previous year, the
Company sold the stock “ST 07”, one of the
Company’s financial assets available for sale,
and gained an investment income of RMB
2,950,000 Yuan. There was no such
investment income in this report period. In
Investment income -4,552,269.39 -2,864,222.75 58.94% addition, ST Samsung had a loss of
32,040,000 RMB Yuan in the same period of
previous year and had a loss of RMB
25,250,000 Yuan in this report period. The loss
of Samsung decreased, which influenced the
current investment income by RMB 1,520,000
Yuan.
Non-operating 362,863.65 592,004.10 -38.71% In the same period of last year, the Company
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
January-June, January-June, Percentage
Item Reasons for Change
2011 2010 of Change
income performed “car-ownership reform”, and the
sales income of buses were credited to this
item, while there was no such issue in this
report period.
In the same period of last year, approved by
the Board, the Company donated 300,000
Non-operating
38,860.86 471,754.44 -91.76% RMB Yuan in support of the anti-poverty
expenses
project of Zhanjiang ecological farming, while
there was no such issue in this report period.
The taxable profit increased and the income
Income tax 12,468,026.82 9,914,971.86 25.75% tax rate increased from 22% to 24% in
Shenzhen this year in this report period.
In this report period, the Company acquired a
new company, SEG E-commerce (the
Company holds its 51% shares). When SEG
Gains and losses of
E-commerce was established, SEG Network
minority 1,689,291.29 2,394,456.86 -29.45%
was not open to business, and made a loss of
shareholders
4.08 million RMB Yuan in this report period,
which reduced the Company's minority gains
and losses by 2 million.
In the same period of last year, the invested
company ST Samsung, whose 22.45% shares
held by the Company, gained the financial
support of 56 million RMB Yuan from its
shareholder Samsung Corning Co., Ltd, which
was credited to the capital reserves. In view
Other
that the Company audits ST Samsung under
comprehensive 40,563.07 10,740,742.78 -99.62%
the equity method, the donations received by
income
ST Samsung would affect the capital reserves
of the Company according to the proportion of
investment, while no such issue happened to
ST Samsung in this report period, therefore,
the amount of this item in this report period is
lower than that in the same period of last year.
Total The main reason is that other comprehensive
comprehensive 28,062,242.71 40,032,044.35 -29.90% income is lower than that in the correpsonding
income period of last year.
Total
comprehensive The main reason is that other comprehensive
income attributable 26,389,289.19 37,615,599.63 -29.84% income attributable to the parent company is
to shareholders of lower than that in the same period of last year.
the parent company
Total The main reason is that the net profit
comprehensive 1,672,953.52 2,416,444.72 -30.77% attributable to minority shareholders decreased
income attributable in this report period.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
January-June, January-June, Percentage
Item Reasons for Change
2011 2010 of Change
to minority
shareholders
II. Operation Status in this Report Period
(1) The business scope of the Company includes domestic commerce, goods supply and sale (excluding
commodities under special operation, control and sale), industrial investment (licenses for specific projects
subject to application), economic information consultancy, property lease, estate agency, and operation of
SEG special electronics markets (the license for the special market subject to application and approval).
Main Business Areas:
1. Operation and Management of Electronics Market
In this report period, the Company promoted new projects vigorously and made substantial progress. The
Company set up a wholly-owned company Nanjing SEG in Nanjing in this report period. Currently, the
preparatory work for the opening of Nanjing SEG has been basically completed. Xi’an Hai Rong SEG
which is invested and controlled by the Company signed the contract in this report period. Longgang SEG
completed the relocation of new market and officially opened on January 21, 2011. Shenzhen SEG
Communication Market, Shajing SEG Electronics Market and Huzhou SEG Digital Plaza signed the
contracts on entrusted operation and management basis. Wenzhou SEG Electronics Market and Xiamen
SEG Electronics Market that are also operated on the entrusted the operation and management basis were
open to business on scheduled. The preparation of Jiaxing SEG Electronics Market is being carried out
smoothly as planned and is going to be open to business at the end of August, 2011.
In this report period, the operation and management of the electronics market of the Company realized an
operating income of RMB 92,770,000 Yuan and made a total profit of RMB 31,560,000 Yuan, with an
increase rate of 1.75% over the same period of last year.
2. Bonded Warehousing and Foreign transportation
Bonded warehousing and foreign transportation are characterized by low entrance barrier and intense
competition, and that the business operations are significantly influenced by domestic and international
economic situation as well as many uncertainties in the operations. In this report period, the storage and
transportation operations achieved the operating income of RMB 33,970,000 Yuan with a decrease rate of
4.50% over the same period of last year, and made a total profit of RMB 2.65 million Yuan with a decrease
rate of 20.66% compared with the same period of last year. The main reason for the decrease is that the
Company reduced twelve operating vehicles that had reached the end of service life, which resulted in
lower operating incomes. In addition, the businesses of the Company are mainly settled in Hong Kong
dollar and the exchange rate of Hong Kong dollar depreciated by 4.68% in this report period compared
with the same period of last year.
3. Property Operation and Management
In this report period, the Company realized an operating income of property operation and management
amounting to RMB 56,170,000 Yuan and made a total profit of RMB 23,720,000 Yuan, with an increase
rate of 12.41% over the same period of last year.
(1) SEG Baohua which is engaged in property operation and management, whose 66.58% shares are held
by the Company, was stably operated in this report period. The property it operates has always maintained a
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
high occupancy rate. In this report period, SEG Baohua realized an operating income amounting to RMB
29,620,000 Yuan, with an increase rate of 16.75% over the same period of last year, and made a total profit
of RMB 10,540,000 Yuan, with a increase rate of 34.27% over the same period of last year. DEM Hotel
Changsha realized an operating income amounting to RMB 4.63 million in this report period. The main
reason for its increase both in operating income and total profit year on year in this report period is that it
raised the rent of part of its properties in this report period and that the business income of DEM Hotel
increased slightly.
(2)In this report period, the property rental business directly operated by the headquarters of the Company
realized an operating income of RMB 7.08 million Yuan, with an increase rate of 19.39% over the same
period of last year, and made a total profit of RMB 5.61 million Yuan, with an increase rate of 35.51% over
the same period of last year.
4. Other Businesses
The Company also achieved initial progress in the innovation and development of other markets in addition
to the electronics market. SEG E-commerce whose 51% shares are held by the Company was incorporated
on January 24, 2011 and held opening ceremony on March 27, 2011. The project contract of DEM Hotel
Bao’an Branch was signed. Its decoration work has been completed so far and the preparations for its
opening are in progress. “SEG Road”, the information platform of electronics market, was developed
smoothly. Phase I of the project was run on a trial basis in May and was formally launched on July 1. Phase
II of the project is under development.
(2) Table of Main Businesses Classified According to Industries or Products
Unit: RMB ‘0000 Yuan
Main Businesses Classified According to Industries or Products
Increase/
Increase/decrease Increase/decrease
decrease rate of
rate of operating rate of the rate of
Rate of operating cost
Classified according to Operating Operating income gross profit
gross compared with
industries or products income cost compared with compared with
profit (%) the same
the same period the same period
period of last
of last year (%) of last year (%)
year (%)
Electronics market
operation and property 114,234,700 67,755,000 40.69% 6.54% 7.43% -0.49%
leasing service
Bonded warehousing and
33,872,000 28,060,700 17.16% -4.47% -2.07% -2.03%
foreign transportation
United trading of
37,196,200 36,711,500 1.30% 76.05% 77.63% -0.88%
electronic products sales
Hotel 4,625,400 3,874,300 16.24% 6.93% 26.34% -12.86%
Main Businesses Classified According to Districts
Unit: RMB ‘0000 Yuan
Increase/decrease rate of operating
District Operating income
income on a year-on-year basis (%)
Shenzhen 137,062,900 17.42%
Xi’an 12,221,900 11.67%
Suzhou 16,949,200 16.89%
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Increase/decrease rate of operating
District Operating income
income on a year-on-year basis (%)
Changsha 10,904,600 5.21%
Overseas 12,813,400 -17.83%
(3) Statements on the significant changes in the Company’s main businesses or their structures, main
business profitability and composition of profits in this report period
1. In this report period, there were no major changes in the Company’s main businesses and their structures.
2. In this report period, the Company established two newly invested companies including SEG
E-commerce and Nanjing SEG. These two newly established companies had no income in this report period,
but their organization costs were all credited to the cost, resulting in the decrease of the rate of the gross
profit of the Company’s whole business compared with the same period of last year.
3. The composition of profits did not change significantly compared with that in the same period of last
year.
(4) In this report period, the Company had no other operation and business activities that influenced the
profits significantly.
(5) Joint stock company whose investment income accounted for more than 10% of the net profit
ST Samsung, whose 22.45% shares are held by the Company and whose registered capital is RMB
896,671,464, is primarily engaged in the manufacturing and sales of CRT glass bulb and STN-ITO coated
glass. As of the end of this report period, ST Samsung's total assets amount to RMB 430,640,000 Yuan and
net assets amount to RMB 242,461,700 Yuan. In this report period, its production and operation businesses
were discontinued, its operating income was zero, and its total profit was RMB –25,250,000 Yuan.
(6) Problems and Difficulties in the Operations
1. Changsha SEG continued to be influenced by the constructions of Changsha subway, and its business
environment further deteriorated. The customer flow sharply declined compared with the same period of
last year, which harmed the confidence of the commercial tenants in the market and directly led to the
largely increased market vacancy. Moreover, the tenants often defaulted in rent payment.
2. With increasingly fierce competition in the market, the physical stores of SEG Electronics Market are
faced with the impact of 3C marketplaces and other similar e-commerce markets. In addition, SEG
E-commerce is also faced the challenges of various B2B and B2C websites which have operated maturely.
3. Due to the influence of multiple factors including the domestic and international economic environment,
national policies and currency exchange rate, the Company's bonded warehousing and foreign
transportation are faced with higher pressure of operation as well as the risks of increased costs, narrowed
profit margins and decreased revenues.
4. Vicious competition in the leasing price of the property business has become increasingly serious due to
the influence of the overall leasing situation of office buildings in the North Area of Huaqiang Road,
Shenzhen.
5. The business type of “Buy-it” store is single. It is in the adjustment period of strategic transformation of
business model and business development.
III. The Company did not modify the annual business plan of 2011 disclosed in the annual report of
2010. In the second half of 2011, the Company will continue to accomplish various tasks according to
the annual business plan of 2011 disclosed in the annual report of 2010. The focuses are as follows:
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
(1) SEG E-commerce will promote the construction “SEG Network” vigorously, integrate the physical
resources in the system, and will actively and orderly accomplish all the tasks of opening “SEG network”.
(2) Explore new projects in electronics market and make preparations at the initial stage for the expanding
of new electronics market.
(3) Further strengthen the construction of internal control, infrastructure management and standardization
construction.
Further strengthening the management of internal standards and consolidating the foundation is a powerful
guarantee for the Company to continue to expand and carry out various innovative businesses
comprehensively. 1. Continue to construct internal control standards and establish comprehensive and
rigorous implementation system of internal control through clearing up all the system processes and risks. 2.
Comprehensively carry out the optimization of human resources system, and construct scientific
standardized and effective human resources system. 3 Establish standard systems for the development in
order to standardize the relevant development work of the Company and provide important reference and
guidance to the market development. 4 Prepare management manuals for marketing operations, and lay a
good foundation for the replicable management of the management of SEG Electronics Market. 5. Upgrade
the VI image of the existing market to enhance the visual identification of SEG Electronics Market and
make its brand image more vivid and vibrant.
(4) Continue to focus on the main business (中文稿上打“主页”，应是“主业”，英文已经改好) of
electronics market and promote the innovation work of various types of value-added services.
(5) Pay attention to the dynamic situation of property rental business and stabilize the property operation
and management.
(6) Adjust the business structure to ensure the healthy development of foreign transportation and bonded
warehousing.
(7) Actively promote the vigorous development of channel businesses of “Buy-it” store.
(8) Continue to carry out the management on the indicators comparison. By comparing key indicators,
identify gaps, promote professional operation and management, improve operational efficiency, enhance
market competitiveness, and improve economic benefit.
(9) Continue to strengthen the management on safety in production.
IV. Investment Information
(1) No fund was raised by the Company in this report period; no occasion that the use of the fund raised
before this report period lasted in this report period occurred.
(2) Practical progress and earnings of the significant project investment of non-offering funds
1. Reviewed and approved by the Fifth Session of the Fifth Meeting of the Board of Directors of the
Company held on December 10, 2010, the Company, SEG Group which is the controlling shareholder of
the Company, and its holding subsidiary SEG High-tech Investment Co., Ltd. (hereinafter referred to as
“SEG Hi-tech”) jointly invested and set up “Shenzhen SEG E-commerce Co., Ltd”.The registered capital of
Shenzhen SEG E-commerce Co., Ltd is RMB 48,000,000 Yuan (with initial investment of RMB 30,000,000
Yuan) and the parties made investment in cash in accordance with their share-holding proportion: 51% by
the Company, 34% by SEG Group and 15% by SEG Hi-tech. The Company invested RMB 24,480,000
Yuan according to the shareholding ratio (for details, refer to the Announcement on the Resolution in the
Fifth Session of the Fifth Meeting of the Board of Directors of Shenzhen SEG Co., Ltd. and the
Announcement on the Connected Transaction on the Joint Investment and Establishment of An E-commerce
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Company by Shenzhen SEG Co., Ltd. and the Accoiated Parties disclosed in China Securities Journal,
Securities Times, Securities Daily, Hong Kong Commercial Daily and Cninfo on December 13, 2010). The
Company invested RMB 15,300,000 Yuan in January 2011 as the initial investment. Shenzhen SEG
E-commerce Co., Ltd completed the registration in Market Supervision Administration of Shenzhen
Municipality in January 24, 2011, and was formally established on March 27, 2011. Currently, the SEG
Network operated by SEG E-commerce will be officially launched. Various businesses of SEG
E-commerce are in full swing.
2. Reviewed and approved by the Fifth Provisional Session of the Fifth meeting of the Board of Directors
of the Company held on January 10, 2011, SEG Baohua, whose 66.58% shares are held by the Company,
rented the property of Jingyang Hotel in Bao'an District Shenzhen (legal representative: Chen Jingsheng)
and invested RMB 9.98 million Yuan in DEM Hotel Bao’an Branch (for details, refer to the Announcement
on the Resolution in the Fifth Provisional Session of the Fifth Meeting of the Board of Directors of
Shenzhen SEG Co., Ltd. and the Announcement on the Outward Investment of the Controlling Subsidiary of
Shenzhen SEG Co., Ltd. disclosed in China Securities Journal, Securities Times, Securities Daily, Hong
Kong Commercial Daily and Cninfo on January 11, 2011, and the Announcement on the Signing of Property
Rental Contract of the Controlling Subsidiary of Shenzhen SEG Co., Ltd released in China Securities
Journal, Securities Times, Securities Daily, Hong Kong Commercial Daily and Cninfo on Feburary 1, 2011).
As of the disclosure date of this report, the decoration work of DEM Hotel Bao’an Branch had been
completed and it will be open to business as soon as possible.
3. Reviewed and approved by the Eighth Provisional Session of the Fifth Meeting of the Board of Directors
of the Company held on April 7, 2011, the Company invested RMB 20 million Yuan in establishing
Nanjing SEG in Nanjing, and Nanjing SEG rented the commercial shops of podium building from the first
to five floors of Huali International, the property owned by Nanjing Yunde Investment & Development Co.,
Ltd., to operate SEG Electronics Market and related supporting businesses (for details, refer to the
Announcement on the Resolution in the eighth Provisional Session of the Fifth Meeting of the Board of
Directors of Shenzhen SEG Co., Ltd. and the Announcement on the Investment of Shenzhen SEG Co., Ltd.
in Nanjing SEG Electronics Market Project disclosed in China Securities Journal, Securities Times,
Securities Daily, Hong Kong Commercial Daily and Cninfo on April 9, 2011). Currently, Nanjing SEG was
incorporated and its decoration work will soon be completed. Upon the normal operation of the company, it
will increase the operating incomes and profits of the Company and further enhance the influence of SEG
Electronics Market in East China.
4. Reviewed and approved by the Eleventh Provisional Session of the Fifth Meeting of the Board of
Directors of the Company held on June 22, 2011, the Company and Xi’an Hai Rong Real Estate Group Co.,
Ltd. (hereinafter referred to as “Hai Rong Group”) jointly funded and established “Xi’an Hai Rong SEG”.
To operate SEG Electronics Market, Xi’an Hai Rong SEG rented the No 1 and No 2 buildings of Haijing
International located in the intersection of No 2 Fengcheng Road and Wenjing Road in the Economic
Development Zone of Xi’an City. The registered capital of “Xi’an Hai Rong SEG” is RMB 3 million Yuan.
The Company invested RMB 1.53 million Yuan, accounting for 51% of its total share capital. Hai Rong
Group contributed RMB 1.47 million Yuan, accounting for 49% of its total share capital (for details, refer to
the Announcement on the Resolution in the Eleventh Provisional Session of the Fifth Meeting of the Board
of Directors of Shenzhen SEG Co., Ltd. and the Announcement on the Investment of Shenzhen SEG Co., Ltd.
in Xi’an SEG Electronics Market (Economic Development Zone) Project disclosed in China Securities
Journal, Securities Times, Securities Daily, Hong Kong Commercial Daily and Cninfo on June 24, 2011).
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
5. According to the Use Plan on the Income of Selling 73.24% Shares of Shenzhen SEG CLP Color Display
Devices Co., Ltd. approved by the Third Provisional General Meeting of Shareholders of 2007 on
December 21, 2007, the Company obtained the income from selling the shares amounting to RMB
384,510,000 Yuan and 100 million Yuan was used to invest in the new SEG Electronics Market (for details,
refer to the Announcement on the Resolution in the Third Provisional General Meeting of Shareholders of
Shenzhen SEG Co., Ltd. in 2007 released in Securities Times, China Securities Journal, Hong Kong Wen
Wei Po and Cninfo on December 22, 2007). In this report period, the investment of the money is as follows:
(1) The Company invested RMB 20 million Yuan in Nanjing SEG from the income from selling the shares.
(2) The Company invested RMB 1.53 million Yuan in Xi’an Hai Rong SEG from the income from selling
the shares.
V. Warnings that the total net profit from the beginning of this year to the end of next report period
may be estimated to be negative or may change significantly compared with that in the same period
of last year and the reasons
□applicable Inapplicable
VI Statement on the Fair Value Measurement Adopted by the Company
According to Accounting Standards for Enterprises No. 22 - Recognition and Measurement of Financial
Instruments, the Company classified the stock of Xinjiang Friendship (Group) Co Ltd. as “financial assets
available for sale”, and audited the assets by using the fair value measurement model based on the closing
price of this stock in the stock market on the balance sheet date. For details, refer to the relevant content of
“Chapter Five Important Matters”.
Chapter 5 Important Matters
I. Governance of the Company
(1) In this report period, the Company continued to improve the governance structure and standardize the
operations in strict accordance with the Company Law, Securities Law, and Code of Corporate Governance
for Listed Companies, Articles of Association and other relevant requirements of laws and regulations on
the governance of listed companies, but the following matters still exist:
1. The controlling shareholders manage the Company through the Property Right Representative Report
System. The Company’s controlling shareholder SEG Group is a state-controlled company in Shenzhen and
Shenzhen State-owned Assets Supervision and Administration Bureau is the controlling shareholder of
SEG Group. The “Property Right Representatives Report System” must be implemented for the purpose of
state-owned assets management according to the management methods of Shenzhen for state-owned assets.
2. In respect of assessment on human resources, the Company’s controlling shareholder SEG Group
implements the annual performance assessment on General Manager according to the completing of annual
operation indicators and other indicators stipulated by SEG Group.
(2) The Company has been submitting nonpublic information to the majority shareholders and actual
controllers.
It is the Property Right Representative Report System and National Statistics Bureau that require the
Company to submit nonpublic information to the majority shareholders and the actual controllers. In
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
accordance with the requirements of state-owned assets supervision department, the Company has been
submitting monthly bulletin to its majority shareholders and actual controller and reporting important issues
to its majority shareholders and actual controllers before they are disclosed in public. The Company
submitted to Shenzhen Securities Regulatory Bureau the Table of Listed Companies’ Submission of
Nonpublic Information to the Majority Shareholders and the Actual Controllers and the Commitment Letter
on October 18, 2007. Shenzhen SEG Group issued the Letter of Commitment to Strengthen the
Management on Nonpublic Information to Shenzhen Securities Regulatory Bureau. Meanwhile, the
Company has established and implemented the Non-public Information Insider Reporting System and the
Confidentiality System of Shenzhen SEG Co., Ltd for Insiders of Non-public Information and has monthly
reported to Shenzhen Securities Regulatory Bureau about its reports of nonpublic information. On July 15,
2009, the managerment level of the Company and all staff of the headquarters signed the Confidentiality
Agreement with the Company one by one, which defined their responsibility for the confiditiality of the
business secrets and nonpublic information of the Company.
The nonpublic information the Company offered to the majority shareholder and actual controller is as
follows:
Relationship
Organization Procedure
between the Time or
to which Type of of check
No. organization Procedure of report period of Basis for report
information information and
and the report
is reported approval
Company
The invested company of
the Company and the The Notice on Matters
financial staff at the about Preparation of
The bulletin
Headquarters prepare the Monthly Financial Flash
of main
report and consolidate the Reports by Companies The Board
Controlling financial
statements, which are under Supervision and of Directors
1 SEG Group shareholder indicators of Monthly
reviewed by the leadership Administration of SASAC, approves
(30.24%) the company
of the Financial the file of SASAC of the the report.
registered in
Department and reported State Council (GUO ZI
Shenzhen
through the State-owned TING PING JIA [2003]
Asset Management No. 23 )
Information System.
The invested company of The Notice on Matters
the Company and the about Preparation of
Summary financial staff at the Monthly Financial Flash
sheet of Headquarters prepare the Reports by Companies The Board
Controlling
implementatio sheet and consolidate the under Supervision and of Directors
2 SEG Group shareholder Monthly
n of monthly statements, which are Administration of SASAC, approves
(30.24%)
expense reported through the the file of SASAC of the the report.
budget State-owned Asset State Council ((GUO ZI
Management Information TING PING JIA [2003]
System. No. 23 )
Summary The invested company of The Notice on Matters The Board
Controlling
sheet of the Company and the about Preparation of of Directors
3 SEG Group shareholder Monthly
monthly cash financial staff at the Monthly Financial Flash approves
(30.24%)
flow Headquarters prepare the Reports by Companies the report.
- 20 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Relationship
Organization Procedure
between the Time or
to which Type of of check
No. organization Procedure of report period of Basis for report
information information and
and the report
is reported approval
Company
sheet and consolidate the under Supervision and
statements, which are Administration of SASAC,
reported through the the file of SASAC of the
State-owned Asset State Council ((GUO ZI
Management Information TING PING JIA [2003]
System. No. 23 )
The Notice on Matters
about Preparation of
The financial personnel at Monthly Financial Flash
Summary
the Headquarters prepare Reports by Companies The Board
Controlling sheet of
the sheet that is reported under Supervision and of Directors
4 SEG Group shareholder deposits and Quarterly
through the State-owned Administration of SASAC, approves
(30.24%) loans of the
Asset Management the file of SASAC of the the report.
Headquarters
Information System. State Council ((GUO ZI
TING PING JIA [2003]
No. 23 )
The invested company of The Notice on Matters
Summary
the Company and the about Preparation of
sheet of
financial staff at the Monthly Financial Flash
quarterly
Headquarters prepare the Reports by Companies The Board
Controlling non-operating
sheet and consolidate the under Supervision and of Directors
5 SEG Group shareholder gains and Quarterly
statements, which are Administration of SASAC, approves
(30.24%) losses of the
reported through the the file of SASAC of the the report.
company
State-owned Asset State Council ((GUO ZI
registered in
Management Information TING PING JIA [2003]
Shenzhen
System. No. 23 )
It has been reported since
June 2009. The Notice on Matters
Summary
The invested company of about Preparation of
sheet of
the Company and the Monthly Financial Flash
quarterly
financial staff at the Reports by Companies The Board
Controlling information on
Headquarters prepare the under Supervision and of Directors
6 SEG Group shareholder investment Quarterly
sheet and consolidate the Administration of SASAC, approves
(30.24%) properties of
statements, which are the file of SASAC of the the report.
the company
reported through the State Council ((GUO ZI
registered in
State-owned Asset TING PING JIA [2003]
Shenzhen
Management Information No. 23 )
System.
Monthly They should be reported
The Notice of Shenzhen The Board
Controlling consolidated every month after being
SEG Co., Ltd on of Directors
7 SEG Group shareholder statements printed, signed and sealed monthly
Submitting of Monthly approves
(30.24%) (including the and reported every quarter
Statements the report.
Balance Sheet, through the State-owned
- 21 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Relationship
Organization Procedure
between the Time or
to which Type of of check
No. organization Procedure of report period of Basis for report
information information and
and the report
is reported approval
Company
the Profit Asset Management
Statement, the Information System. They
Cash Flow have been reported on line
Statement, the from July 2008.
Notes to
Preparation of
the Statements
and the
Financial
Statements)
Controlling It was provided by Article
SEG Group shareholder Three of the Statistics
(30.24%) Law of the People’s
Republic of China that
state organs, social
organizations, companies,
public institutions and
privately or individually
owned businesses, on
Statistical which statistical survey is
survey on the implemented, must
statements or comply with the Statistics
monthly and Law and the regulations of The Board
monthly
annual reports the state and provide of Directors
8 Sealed by the Company and
Shenzhen of the statistical data faithfully approves
Government annually
Statistics production of but not make a false the report.
branch
Bureau electronics report, conceal data,
information refuse to report, delay the
industry report, or fabricate or
falsify data.
Self-governing mass
organizations at the grass
roots level and citizens
have the obligation to
provide truthfully the
information required by
the statistical survey of
the state.
Summary The Notice on Matters
The Board
Controlling sheet of about Preparation of
of Directors
9 SEG Group shareholder quarterly Sealed by the Company Quarterly Monthly Financial Flash
approves
(30.24%) financial Reports by Companies
the report.
assets under Supervision and
- 22 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Relationship
Organization Procedure
between the Time or
to which Type of of check
No. organization Procedure of report period of Basis for report
information information and
and the report
is reported approval
Company
Administration of SASAC,
the file of SASAC of the
State Council ((GUO ZI
TING PING JIA [2003]
No. 23 )
(2) In this report period, the progress of the Company in the construction of internal control
standards
In respect of the overall deployment of the five ministries and commissions including Ministry of Finance
and CSRC (China Securities Regulatory Commission) in promoting the listed companies to implement the
basic standards of internal control, according to the spirit of the video conferencing held by CSRC on
promoting the capital market to implement internal control standards of companies and the requirement of
the Notice on the Work Related to the Pilot Run of Internal Control Standards of Listed Companies
Registered in Shenzhen (Document GONG SI ZI [2011] No. 31 issued by Shenzhen Securities Regulatory
Bureau), the Board of Directors and management level of the Company attached great importance to
internal control standards, organized Directors, Supervisors, Senior Executives and relevant personnel of
various functional departments of the Company to learn the “basic standards of internal control” and other
related guidelines, and actively carried out the construction work of internal control of the Company. In this
report period, the progress in the implementation of internal control is as follows:
1. The Seventh Provisional Session of the Fifth Meeting of the Board of Directors held by the Company on
March 7, 2011 reviewed and approved the Proposal on the Issues Related to the Establishment of the
Organizational Structure of Internal Control Standards of the Company, and set up the leading team and
working team of internal control construction, with the chairman of the Company bearing the primary
responsibility and the audit department as a leading department responsible for implementing specific work
of internal control.
2. The Company established the scope of the main body responsible for design and evaluation of internal
control, invited the agency advisory organizations to bid for the “design and evaluation project of internal
control system of the Company”, and fully communicated with the three agents involved in the bidding. On
April 13, 2011, the leading team of internal control of the Company guided the establishment of the
“bidding team for the design and evaluation project of internal control system”, which opened and
evaluated the bidding under the supervision of representatives of the disciplinary committee and the Board
of Supervisors of the Company. Ultimately, Deloitte Touche Tohmatsu Co., Ltd. Shenzhen Branch
(hereinafter referred to as "Deloitte") won the bid. The Company communicated with the agency on
internal control work programs three times and confirmed the schedules, staffing and focuses of internal
control work.
3. The Company formulated implementation plans for internal control, confirmed the organizational
structure, staffing, work content and time schedule, which were submitted to the Tenth Provisional Session
of the Fifth Meeting of the Board of Directors for review and approval on April 28, 2011, and disclosed in
the Cninfor website on April 30, 2011.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
4. The Company issued the Notice on Carrying Out the Work of Internal Control Standards to all of its
subsidiaries on May 6, 2011, arranged specific requirements and completion time of internal control
standards for all the holding subsidiaries, and forwarded the Basic Standards of Internal Control of
Companies formulated by the Ministry of Finance (CAI KUAI [2008] No.7) and the Supporting Guidelines
of Internal Control of Companies formulated by Ministry of Finance, CSRC, the Audit Commission, China
Banking Regulatory Commission and China Insurance Regulatory Commission, and required the
headquarters and all its holding subsidiaries to learn and experience seriously.
5. On May 9, 2011, the agency Deloitte officially started to carry out the work. It has completed the
“Design of Plans and Processes for the Project”, which is the first stage of “the First Team of Organizations
under the Construction of Internal Control”. It has basically completed the work of the second stage, that is,
“the Construction of Internal Control” (including evaluating the risks of the business processes, describing
the business processes associated with financial statements and standard internal control processes,
identifying the weaknesses of the existing internal control and making recommendations for the
improvement of internal control), as well as the work of the third stage, that is, “the Evaluation of Internal
Control System” (including conducting the walk-through testing of the business processes, preparing the
evaluation and testing templates of internal control and making recommendations for the improvement in
combination with the test results). Relevant manuals of internal control application and manuals of internal
control evaluation are being prepared.
6. From June 3 to 17, 2011, Deloitte submitted three batches of drafts on the “Achievements of Internal
Control Construction” to the Company.
7. On June 21, 2011, the Company’s working team of internal control construction held a “Special Meeting
on the Project of Internal Control Construction”, and required each department of the Company to review,
confirm and make comments on internal control process and risk control matrix prepared by the agency
Deloitte.
8. On June 29 and July 1, 2011, some members of the leading team and working team of internal control
construction of the Company participated in the “Special Discussion Session of China Resources Sanjiu
Medical and Pharmaceutical Co., Ltd.” and the “Special Discussion Session of Shenzhen Expressway
Company Limited”, which were both part of the “Discussion Sessions on Internal Control Construction of
Listed Companies Registered in Shenzhen” held by Shenzhen Securities Regulatory Bureau.
9. On June 30, 2011, the agency Deloitte gave the “Trainings on the Construction of Internal Control
System” to the management and all the employees of the Company, the working team of internal control
construction of the Company and the working teams of internal control construction of the holding
subsidiaries, which introduced the design of internal control system, basic standards of internal control and
the supporting guidelines, and the implementation procedures of the construction of internal control system.
In addition, Deloitte joined in the on-site discussion with the participants and answered their questions after
the trainings.
10. On July 1, 2011, the Company opened up a column named “Discussions on Internal Control” on the
EKP office system, so that all employees were involved in the work of internal control as a long-term work.
At present, the actual implementation of internal control of the Company is in progress according to the
schedule of the proposal on the implementation of internal control standards.
II. The Implementation of Distribution of Profits in this report period
(1) In this report period, the Company did not implement the distribution of profits or the capitalizing the
capital reserves.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
(2) In the mid-term of 2011, the company will not implement the distribution of profits or capitalizing the
capital reserves.
III. Major Litigations and Arbitrations of the Company in this report period
According to the SYBASE Purchase Contract (the “Contract”) signed on the date of June 25, 2010 by and
between Guangzhou ECS Co., Ltd. (hereinafter referred to as “Guangzhou ECS”) and the Company's
subsidiary SEG Industry, Guangzhou ECS shall buy from SEG Industry the SYBASE software for reselling.
The differences between the descriptions of payment terms in the respective Procurement Contract held by
each party led to the dispute over the collection and payment between both parties. The payment terms in
the Procurement Contract had two alternatives. The first item was that “the seller shall issue VAT Invoice
of full amount of the contract to the buyer within 60 days after the products reach the place of delivery and
are accepted through power-on operation (i.e. before August 30th 2010), and then the buyer shall pay the
full price”. The second item was that “the seller shall issue VAT Invoice of full amount on the contract to
the buyer, and the buyer shall pay the full price within 7 days after the buyer receives full payment from
users”. The Procurement Contract held by SEG Industry marked both items with “√”, while the
Procurement Contract held by Guangzhou ECS only marked the second item with “√”. Guangzhou ECS
sold the SYBASE software to Guangzhou Yu Shi Information Technology Co., Ltd. (hereinafter referred to
as “Guangzhou Yu Shi”), which then sold the software to end users. As Guangzhou Yu Shi did not pay for
Guangzhou ECS, Guangzhou ECS has filed a lawsuit against Guangzhou Yu Shi. The legal representative
of Guangzhou Yu Shi has emigrated. According to the analysis on the Procurement Contract held by
Guangzhou ECS, a necessary condition for Guangzhou ECS to pay is that Guangzhou ECS receives the
payment from Guangzhou Yu Shi. According to the lawyer's analysis of the current situation, there is a high
possibility that SEG Industry cannot receive the payment. The contract amount is RMB 3,052,571.00 Yuan,
and at the end of 2010, 90% of it had been credited to bad debt, i.e. RMB 2,747,313.90 Yuan. The
Company has filed a lawsuit in the court. The Court has accepted it and will hold a hearing on a certain
date.
IV. Major Procurement or Sale of Assets or Assets Restructuring
No major procurement or sale of assets or assets restructuring was made by the Company in this report
period.
V. Major Transactions with Associated Parties
(1) No major transactions of buying or selling or providing labor services with associated parties were
made by the Company in this report period.
(2) Transactions of daily operation with associated parties
1. In this report period, the transaction of daily operation with associated parties made by the Company was
that the Company provided sporadic transportation services to Shenzhen SEG Hi-tech Co., Ltd. (a
subsidiary of the controlling shareholder).
Unit: RMB Yuan
Name of associated party January-June, 2011
Shenzhen SEG Hi-tech Co., Ltd 165,404.05
2. In this report period, approved by the Board of Directors, the Company and SEG Group signed the Lease
Contract of Real Estate. According to the contract, the Company paid RMB 249,000 Yuan to rent part of
the property of the eighth floor of SEG Plaza owned by SEG Group as the warehouse of the commercial
tenants of the electronics market.
- 25 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Unit: RMB Yuan
Name of Associated Party January-June, 2011
Shenzhen SEG Group Co., Ltd. 249,000
(3) Reviewed and approved by the fifth session of the fifth meeting of the Board of Directors of the
Company held on December 10, 2010, the Company, the Company's controlling shareholder Shenzhen
SEG Group and its holding subsidiary Shenzhen SEG Hi-tech jointly invested and set up “Shenzhen SEG
E-commerce Co., Ltd.”. For details, refer to “(2) Practical progress and earnings of the significant project
investment of non-offering funds in 4) Investment Information in Chapter Four The Report of the Board
of Directors” in this report.
(4) Reviewed and approved by the Sixth Provisional Session of the Fifth Meeting of the Board of Directors
held on January 26, 2011, based on friendly consultation by both parties, the Company was entrusted by
SEG Group to operate and manage “SEG Communications Market” which was under direct operation and
management of SEG Group before, in order to resolve the horizontal competition between the Company
and its controlling shareholder SEG Group. Both parties signed the Contract of Entrusted Operation and
Management on SEG Communications Market. (for details, refer to the Announcement on the Resolution in
the Sixth Provisional Session of the Fifth Meeting of the Board of Directors of Shenzhen SEG Co., Ltd. and
the Announcement on the Transaction with Related Party of Shenzhen SEG Co., Ltd. to Solve the
Horizontal Competition between the Company and Its Controling Shareholder. disclosed in China
Securities Journal, Securities Times, Securities Daily, Hong Kong Commercial Daily and the website of
Cninfo on January 28, 2011, and the Announcement on the Signing of Property Rental Contract of the
Controlling Subsidiary Company of Shenzhen SEG Co., Ltd released on China Securities Journal,
Securities Times, Securities Daily, Hong Kong Commercial Daily and the Cninfo website on Feburary 1,
2011. In this report period, the Company received RMB 200,000 Yuan for the management service fee of
the first year from SEG Group.
Unit: RMB Yuan
Name of Associated Party January-June, 2011
Shenzhen SEG Group Co., Ltd. 200,000.00
(5) No major procurement or sale of assets was made by the Company in this report period with associated
parties.
(6) Creditor’s rights, liabilities and guarantees of the Company and its associated parties
1. Deals of creditor’s rights and liabilities of the Company and its associated parties:
Semi-annual Summary Table of Financial Transactions of
Controlling Shareholders and Other Associated Parties in 2011
Unit: RMB Yuan
Is it the
illegal
Relationship
capital
Name of between the Subject of Debit Credit Balance at Reserves Occupancy
Balance at the occupancy Occupancy
associated associated financial amount amount the of credited method Repayment
period-beginning prohibited nature
party party and the statement happened happened period-end bad debts and reason
by
Company
document
No. 56
- 26 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
A B C D E F G H I J K L
Shenzhen
SEG
Shareholder’s Other Operating
Property 2,000.00 2,000.00 Deposit ---- No
subsidiary receivables occupancy
Management
Co., Ltd.
Shenzhen
Incomings
SEG Orient Associated Other Operating
443,910.00 443,910.00 443,910.00 and ---- No
Industrial company receivables occupancy
outgoings
Co, Ltd
Shenzhen
Controlling Other Operating
SEG Group 80,000.00 80,000.00 Deposit ---- No
shareholder receivables occupancy
Co., Ltd.
Total 525,910.00 545,510.00 443,910.00
2. No guaranties were made between the Company and associated parties.
VI. Major Contracts and the Implementation
(1) Property Rental and other Matters Related to Assets
1. Reviewed and approved by the Fifth Provisional Session of the Fifth Meeting of the Board of Directors
of the Company held on January 10, 2011, SEG Baohua, whose 66.58% shares held by the Company,
rented the property of Jingyang Hotel in Bao'an District Shenzhen (legal representative: Chen Jingsheng)
and invested RMB 9.98 million Yuan in establishing DEM Hotel Bao’an Branch. For details, refer to “(2)
Practical progress and earnings of the significant project investment of non-offering funds in 4 Investment
Information of Chapter Four The Report of the Board of Directors”.
2. Reviewed and approved by the Eighth Provisional Session of the Fifth Meeting of the Board of Directors
held on April 7, 2011, the Company agreed to invest RMB 20 million Yuan in establishing a wholly owned
subsidiary in Nanjing (hereinafter referred to as “project company”). The project company rented the
commercial shops of podium building from the first to fifth floors of Huali International, the property
owned by Nanjing Yunde Investment and Development Co., Ltd. (hereinafter referred to as “Nanjing
Yunde”), to operate SEG Electronics Market and related supporting businesses. The Company and Nanjing
Yunde signed the Leasing Contract of the First to Fifth Floors of the Commercial shops of Pordium
Building of Huali International Located in No. 67 Zhujiang Road Nanjing City. In addition, the Company
signed the Supplemental Agreement with Nanjing Yunde. For details, refer to “(2) Practical progress and
earnings of the significant project investment of non-offering funds in 4 Investment Information of
Chapter Four The Report of the Board of Directors”.
(2) The Company’s Operation and Management on “SEG Communications Market” Entrusted by SEG
Group
In this report period, reviewed and approved by the Sixth Provisional Session of the Fifth Meeting of the
Board of Directors held on January 26, 2011, based on friendly consultation by both parties, the Company
was entrusted by SEG Group to operate and manage “SEG Communications Market” which was under
direct operation and management of SEG Group, in order to resolve the competition between the Company
and its controlling shareholder SEG Group. Both parties signed the Contract of Entrusted Operation and
Management on SEG Communications Market. For details, refer to the relevant content of 5) Major
Transactions with associated parties in this chapter.
(3) No entrusted finance management was made by the Company in this report period.
- 27 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
(4) Major Guarantee Contracts
No guarantee contracts were made by the Company with associated parities in this report period. As of the
end of this report period, the balance of the Company’s guarantee for others is zero (including the guarantee
for controlling subsidiaries).
VII. Commitment Implementation of the Shareholders with Over 5% Shares
(1) According to the Article Five of the Equity Transfer Agreement signed by the Company with SEG
Group when the Company was listed, SEG Group agreed that the Company and its subsidiaries and
associated companies to use the eight trademarks registered by SEG Group at the State Trademark Office;
SEG Group agreed that the Company used the aforesaid trademarks or similar signs as the Company’s logo
and used the trademarks and signs during its operation; the Company needn’t pay any fee to SEG Group for
using the aforesaid trademarks or signs. In this report period, this issue was still executed according to the
commitment.
(2) In 2007, Shenzhen Securities Regulatory Bureau pointed out during the spot inspection, “there is
horizontal competition in the business of electronics markets between the Company and SEG Group”. The
Company received the written Letter of Commitment from SEG Group on September.14, 2007, which says,
“SEG Group and Shenzhen SEG Co., Ltd (hereinafter referred to as Shenzhen SEG) have similar business
in electronics market in Shenzhen. This phenomenon was produced by historic reasons and has its objective
background of market development”. The Group hereby promises that it will not individually operate a
market in a same city whose business is similar with that of Shenzhen SEG. The aforesaid issue was
disclosed on the Securities Times, the China Securities Journal and the Hong Kong Wen Wei Po and the
Cninfo Website on September 18, 2007. In this report period, SEG Group executed the aforesaid
commitment.
(3) On October 18, 2007, the major shareholder of the Company SEG Group and Shenzhen Securities
Regulartory Bureau issued a Letter of Commitment to Strengthen the Management on Nonpublic
Information which promises, “Our Company will establish and improve the internal control system for the
management on the obtained nonpublic information of listed company, and urge the insiders of our
company and actual controller of our company not to use your company's nonpublic information to buy or
sell the securities of your company, nor recommend others to buy or sell the securities of your company,
nor disclose your company’s nonpublic information. We’ll also provide the name list of the insiders of our
company and actual controller of our company who know your company’s nonpublic information
truethfully, accurately and completely in a timely manner. Your company shall send the name list to
Shenzhen Securities Regulartory Bureau and Shenzhen Stock Exchange for record.” In this report period,
SEG Group fulfilled its commitments.
VIII. Special Statement and Independent Comments of Independent Directors on the Capital
Occupancy of Associated Parties and the Company’s Guaranty to Other Parties
According to the spirit of Notice Concerning Some Issues on Regulating the Funds between Listed
Companies and Associated Parties and Listed Companies' Provision of Guaranty to Other Parties
(ZHENG JIAN FA No. 56 [2003] promulgated by CSRC) and On Regulating the External Guaranties
Provided by Listed Companies (ZHENG JIAN FA No. 120 [2005] promulgated by CSRC), as the
company’s independent directors, we inspected the capital occupancy of associated parities and the
Company’s provision of guaranty to other parties with a practical and realistic attitude, and issued
following special statement and independent comments:
- 28 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
In this report period, no controlling shareholder and other associated parties occupied the funds of the
Company in non-operating manner. No guaranties to controlling shareholder or other associated parties
whose 50% shares were held by the Company or non-legal entities or individuals were provided. No illegal
guaranties were provided.
In this report period, the Company did not provide guaranties to other parities, and the balance of exernal
guaranties was zero.
Independent Directors: Jiang Yigang, Yang Rusheng, Zhou Hanjun
IX. The net profit of ST Samsung whose 22.45% shares are held by the Company attributable to
parent company was RMB -25.25 million Yuan in this report period, reducing the company's
investment income RMB 5.67 million Yuan in this report period.
X. Reception Research, Communication and Interview in this report period
Reception Reception Reception
Reception way Discussed matter and provided materials
date place object
Meeting room
Feb. 16, Spot Zhang
of the Basic information of the Company
2011 investigation Chenxiao
Company
Inquired the reasons for the delisting of the
Telephone
Mar.1, 2011 The Company Investor Company, and the Company provided the delisting
communication
anouncement.
Inquired the reasons for the delisting of the
Mar. 8, Telephone
The Company Investor Company, and the Company provided the delisting
2011 communication
anouncement.
Inquired the reasons for the delisting of the
Mar. 9, Telephone
The Company Investor Company, and the Company provided the delisting
2011 communication
anouncement.
Inquired the reasons for the delisting of the
Mar. 11, Telephone
The Company Investor Company, and the Company provided the delisting
2011 communication
anouncement.
Inquired the reasons for the delisting of the
Mar. 15, Telephone
The Company Investor Company, and the Company provided the delisting
2011 communication
anouncement.
Inquired the reasons for the delisting of the
Mar. 17, Telephone
The Company Investor Company, and the Company provided the delisting
2011 communication
anouncement.
Inquired the reasons for the delisting of the
Mar. 28, Telephone
The Company Investor Company, and the Company provided the delisting
2011 communication
anouncement.
Inquired the reasons for the delisting of the
Mar. 30, Telephone
The Company Investor Company, and the Company provided the delisting
2011 communication
anouncement.
Inquired the reasons for the delisting of the
Company, and the Company provided the delisting
Mar. 31, Telephone
The Company Investor anouncement. The caller inquired about the content
2011 communication
of the shareholders' meeting, and the company
provided the announcement of the notice concerning
- 29 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Reception Reception Reception
Reception way Discussed matter and provided materials
date place object
holding the shareholders’ meeting.
Inquired the reasons for the delisting of the
April 7, Telephone
The Company Investor Company, and the Company provided the delisting
2011 communication
anouncement.
Inquired the reasons for the delisting of the
April 28, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 6, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 10, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Zhang
Xiaoqing,
General
Manager of
the
Meeting room Inquired the reasons for the delisting of the
May 10, Spot Investigation
of the Company and the time to relist, and the Company
2011 investigation Department
Company provided the delisting anouncement.
of Hanzhou
Galaxy
investment
management
Co,Ltd
Inquired the reasons for the delisting of the
May 11, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 16, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 17, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 18, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 19, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 20, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
May 23, Telephone Inquired the reasons for the delisting of the
The Company Investor
2011 communication Company and the time to relist, and the Company
- 30 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Reception Reception Reception
Reception way Discussed matter and provided materials
date place object
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 26, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
May 30, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
June 17, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
Inquired the reasons for the delisting of the
June 28, Telephone
The Company Investor Company and the time to relist, and the Company
2011 communication
provided the delisting anouncement.
XI. On February 28, 2011, the major shareholders of the Company issued a notice that the major
shareholders of the Company were planning for a major issue, and the Company’s stock would be delisted
from March 1, 2011 to prevent abnormal fluctuation of the Company's stock price and protect the interests
of investors.
XII. In this report period, none of the Company and the Board of Directors, Directors, Supervisors
and Senior Executives was subject to the inspection of China Securities Regulatory Commission, or
the administrative penalty and reprimand of China Securities Regulatory Commission, or the public
censure of Stock Exchange.
XIII. Other Major Issues
(1) Equity of other listed companies held by the Company
√ Applicable inapplicable
Unit: RMB Yuan
Initial Proportion in Gains and Changes on
Stock Short form of Period-ending
investment equity of the losses in this owners’ equity in
code the security book value
amount Company report period this report period
Friendship
600778 90,405.00 0.04% 743,973.58 --- -48,886.22
Group
000068 ST Samsung 279,307,046.38 22.45% 113,322,616.58 -5,668,166.62 -5,668,166.62
Total 279,397,451.38 - 114,066,590.16 (5,668,166.62) (5,717,052.84)
Note: The conditional tradable shares of ST Samsung held by the Company removed the restrictions on sale
for the first time on March 4, 2009. The Company completed the procedures of removing restrictions on
sale of ST Samsung Stock it held for the second time on March 23, 2010, and added new tradable shares
amounting to 44,833,600 shares. On February 16, 2011, the Company completed the procedures of
removing restrictions on sale of ST Samsung Stock it held for the third time on February 16, 2011, and
added new tradable shares amounting to 120,091,790 shares. In this report period, the Company did not sell
the ST Samsung stock.
(2) Investment Securities
Applicable √ Inapplicable
- 31 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
(3) Directory Index of the Company’s Information Disclosure in the First Half of 2011
Number and Name Disclosure
No. Magazine and Website Published on
of the Announcement Date
China Securities Journal, Securities Times,
Announcement on the Resolution in the
Securities Daily, Hong Kong Commercial Daily
1 Fifth Provisional Session of the Fifth Jan. 11, 2011
and the Cninfo website:
Meeting of the Board of Directors
http://www.Cninfo.com.cn
Announcement on the External Investment
2 Jan. 11, 2011 Ditto.
of Controlling Subsidiaries
Announcement on the Resolution in the
3 Sixth Provisional Session of the Fifth Jan. 28, 2011 Ditto.
Meeting of the Board of Directors
Announcement on the Associated
Transactions to Solve the Horizontal
4 Jan. 28, 2011 Ditto.
Competition between the Company and
Controlling Shareholders
Announcement on the Signing of Property
5 Rental Agreement of Controlling Feb. 1, 2011 Ditto.
Subsidiaries
6 Delisting Announcement Mar. 1, 2011 Ditto.
Announcement on the Resolution in the
7 Seventh Provisional Session of the Fifth Mar. 8, 2011 Ditto.
Meeting of the Board of Directors
Announcement on the Resolution in the
8 Sixth Session of the Fifth Meeting of the Mar. 29, 2011 Ditto.
Board of Directors
Announcement on the Holding of 16th
9 Mar. 29, 2011 Ditto.
Shareholders’ Meeting (2010)
Announcement on the Estimated Matters of
10 Routine Operating Associated Transactions Mar. 29, 2011 Ditto.
of the Company in 2011
Announcement on the Retroactive
11 Adjustments of the Retained Earnings at the Mar. 29, 2011 Ditto.
End of 2010
Announcement on the Resolution in the
12 Fourth Session of the Fifth Meeting of the Mar. 29, 2011 Ditto.
Board of Supervisors
Abstract of the Annual Report of 2010 Ditto.
13 Mar. 29, 2011
Full Text of the Annual Report of 2010 The Cninfo website: http://www.Cninfo.com.cn
China Securities Journal, Securities Times,
Announcement on the Resolution in the
Securities Daily, Hong Kong Commercial Daily
14 Eighth Provisional Session of the Fifth April 12, 2011
and the Cninfo website:
Meeting of the Board of Directors
http://www.Cninfo.com.cn
Announcement on the Investment in the
15 April 12, 2011 Ditto.
Project of Nanjing SEG Electronics Market
Announcement on the Progress of the
16 April 18, 2011 Ditto.
Investment in the Project of Nanjing SEG
- 32 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Number and Name Disclosure
No. Magazine and Website Published on
of the Announcement Date
Electronics Market
Text of the First Quarterly Report of 2011 Ditto.
17 Full Text of the First Quarterly Report of April 20, 2011
The Cninfo website: http://www.Cninfo.com.cn
2011
China Securities Journal, Securities Times,
Announcement on the Resolution in the 16th Securities Daily, Hong Kong Commercial Daily
18 April 23, 2011
Shareholders’ Meeting (2010) and the Cninfo website:
http://www.Cninfo.com.cn
Announcement on the Resolution in the
19 Tenth Provisional Session of the Fifth April 30, 2011 Ditto.
Meeting of the Board of Directors
Announcement on the Resolution in the
20 Eleventh Provisional Session of the Fifth June 24, 2011 Ditto.
Meeting of the Board of Directors
Announcement on the Investment in the
21 Project of Xi’an SEG Electronics Market June 24, 2011 Ditto.
(Economic Development District)
Chapter 6 Financial Statements
Shenzhen SEG Co., Ltd.
Auditor’s Report and Financial Statements for
the First Half of the Year 2011
Balance Sheet
Prepared by: Shenzhen SEG Co., Ltd As of June 30th 2011 Unit:
(RMB) Yuan
- 33 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Balance at the period-end Balance at the year-beginning
Item
Consolidated Parent Company Consolidated Parent Company
Current assets:
Monetary capital 595,142,900.27 447,193,424.500 572,818,178.75 451,763,240.33
Deposit reservation for balance
Loans to banks and other financial
institutions
Transaction financial assets
Notes receivable
Accounts receivable 21,627,855.80 400,000.000 25,022,650.83 400,000.00
Advances to suppliers 40,240,293.95 140,738.920 25,974,587.30 1,014,030.88
Premiums receivable
Reinsurance accounts receivable
Reinsurance deposit receivable
Interests receivable
Dividends receivable 0.00 3,220,484.170 5,220,484.17
Other receivables 25,547,965.43 39,572,877.840 10,859,116.83 45,689,683.40
Redemptory financial assets for
sale
Inventory 931,049.76 4,205,886.55
Non-current assets due within one
year
Other current assets
Total current assets 683,490,065.21 490,527,525.43 638,880,420.26 504,087,438.78
Non-current assets:
Entrusted loans and advances
issued
Financial assets available for sale 743,973.58 808,297.56
Held-to-maturity investment
Long-term accounts receivable
Long-term equity investment 136,690,464.73 353,087,963.77 141,242,734.12 322,340,233.16
Investment property 573,849,926.30 331,996,809.570 584,274,468.23 337,246,328.53
Fixed assets: 57,737,956.55 21,848,387.890 58,882,067.31 22,340,255.50
Construction in progress 1,865,001.30 7,128,010.06
Engineering materials
Disposal of fixed assets
Productive biological assets
Oil & gas assets
Intangible assets 556,385.13 404,161.440 631,364.93 486,729.42
Development expenses
Goodwill 10,328,927.82 - 10,328,927.82
Long-term expenses to be
20,632,728.44 1,911,084.410 13,977,797.51 1,336,897.67
apportioned
Deferred income tax assets 9,130,938.77 6,376,755.450 10,118,538.12 6,376,755.45
Other non-current assets
Total non-current assets 811,536,302.62 715,625,162.53 827,392,205.66 690,127,199.73
Total assets 1,495,026,367.83 1,206,152,687.96 1,466,272,625.92 1,194,214,638.51
Current liabilities:
Short-term loans
Loans from the Central Bank
Deposits attracted and accounts
due to banks and other financial
institutions
Loans from banks and other
financial institutions
Transaction financial liabilities
Notes payable
Accounts payable 8,640,734.76 2,261,717.920 14,129,256.31 2,348,122.72
Advances from customers 113,871,668.08 64,463,208.960 120,590,384.85 75,224,054.77
Financial assets sold for
repurchase
Commissions payable
Wages payable 6,962,170.89 3,450,112.840 10,264,284.67 5,907,588.47
Taxes payable 6,170,185.52 2,495,952.980 14,037,120.99 10,663,834.34
Interest payable
Dividends payable 1,532,673.03 119,803.290 1,292,320.37 153,403.29
Other payables 125,001,945.27 49,789,793.940 110,795,570.46 45,214,909.19
Reinsurance accounts payable
Insurance deposit
- 34 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Balance at the period-end Balance at the year-beginning
Item
Consolidated Parent Company Consolidated Parent Company
Acting trading securities
Acting underwriting securities
Non-current liabilities due within
one year
Other current liabilities
Total current liabilities 262,179,377.55 122,580,589.93 271,108,937.65 139,511,912.78
Non-current liabilities:
Long-term loans
Bonds payable
Long-term accounts payable
Special payables
Anticipated liabilities
Deferred income tax liabilities 21,007,581.49 - 21,577,482.19
Other non-current liabilities
Total non-current liabilities 21,007,581.49 0.00 21,577,482.19 0.00
Total liabilities 283,186,959.04 122,580,589.93 292,686,419.84 139,511,912.78
Owners' equity (or shareholders'
equity)
Capital (or share capital) actually
784,799,010.00 784,799,010.000 784,799,010.00 784,799,010.00
received
Capital public reserve 407,652,171.11 404,980,399.080 407,684,719.56 404,980,399.08
Less: Treasury shares
vi. Special reserve
Surplus public reserve 102,912,835.67 102,912,835.670 102,912,835.67 102,912,835.67
General risk provision
Retained profits -184,669,692.95 -209,120,146.72 -211,002,081.30 -237,989,519.02
Translation difference in foreign
currency the financial statements -321,941.88 - -411,391.17
in foreign currency
Total owners' equity attributable to
1,110,372,381.95 1,083,572,098.03 1,083,983,092.76 1,054,702,725.73
the parent company
Minority shareholders' equity 101,467,026.84 89,603,113.32
Total owners' equity 1,211,839,408.79 1,083,572,098.03 1,173,586,206.08 1,054,702,725.73
Total liabilities and owner's equity 1,495,026,367.83 1,206,152,687.96 1,466,272,625.92 1,194,214,638.51
Responsible person of the Company: Responsible person of the accounting
Responsible financial officer: Li Lifu
Wang Chu department: Ying Huadong
- 35 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Profit Statement
Prepared by: Shenzhen SEG Co., Ltd For the period from January to June 2011 Unit:
(RMB) Yuan
Amount of the current year Amount of the previous period
Item
Consolidated Parent Company Consolidated Parent Company
I. Total operating incomes 203,405,221.49 59,204,916.880 178,297,428.20 56,215,822.38
Including: Operating revenues 203,405,221.49 59,204,916.880 178,297,428.20 56,215,822.38
Less: Interest incomes
Earned premiums
Commissions income
II. Total operating costs 158,687,248.43 25,191,261.40 136,347,181.68 26,934,447.67
Including: Operating costs 139,750,385.92 19,328,330.040 115,533,447.61 19,408,492.15
Interest expenses Less:
Commissions
Surrender value
Net compensation pay-outs
Net insurance deposit accrued
Insurance dividends
Reinsurance expenses
Business taxes and surcharges 8,072,822.01 3,221,312.540 7,265,802.65 3,091,611.88
Sale expenses 1,413,793.99 - 2,515,389.39
Management expenses 14,315,774.07 7,931,189.820 13,537,218.21 7,434,954.20
Financial expenses -4,865,527.56 (5,289,571.000) -2,504,676.18 -3,000,610.56
Losses from asset impairment 0.00 -
Incomes from change of fair value
0.00 -
(Losses marked with "-")
Incomes from investment (Losses
-4,552,269.39 3,012,802.61 -2,864,222.75 6,518,419.69
marked with "-")
Including: Incomes from
investment in joint ventures and
associated enterprises
Incomes from exchange (Losses
marked with "-")
III. Operating profits (Losses
40,165,703.67 37,026,458.09 39,086,023.77 35,799,794.40
marked with "-")
Plus: Non-operating incomes 362,863.65 13,346.740 592,004.10 182,798.62
Less: Non-operating expenses 38,860.86 5,200.000 471,754.44 328,294.09
Including: Loss from disposal of
non-current assets
IV. Total profits (Total losses
40,489,706.46 37,034,604.83 39,206,273.43 35,654,298.93
marked with "-")
Less: Income tax 12,468,026.82 8,165,232.530 9,914,971.86 7,090,445.09
V. Net profits (Net losses marked
28,021,679.64 28,869,372.30 29,291,301.57 28,563,853.84
with "-")
Net profits attributable to
shareholders of the parent 26,332,388.35 28,869,372.30 26,896,844.71 28,563,853.84
company
Minority shareholders' gains and
1,689,291.29 - 2,394,456.86
losses
VI. Earnings per share:
(I) Basic earnings per share 0.0336 0.0368 0.0343 0.0364
(II) Diluted earnings per share 0.0336 0.0368 0.0343 0.0364
VII. Other comprehensive incomes 40,563.07 - 10,740,742.78 10,632,190.67
VIII. Total comprehensive incomes 28,062,242.71 28,869,372.30 40,032,044.35 39,196,044.51
Total comprehensive incomes
attributable to shareholders of the 26,389,289.19 28,869,372.30 37,615,599.63 39,196,044.51
parent company
Total comprehensive incomes
attributable to minority 1,672,953.52 - 2,416,444.72
shareholders
Responsible person of the Company: Responsible person of the accounting
Responsible financial officer: Li Lifu
Wang Chu department: Ying Huadong
- 36 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Cash Flow Statement
Prepared by: Shenzhen SEG Co., Ltd For the period from January to June 2011 Unit:
(RMB) Yuan
Amount of this period Amount of the previous period
Item
Consolidated Parent Company Consolidated Parent Company
I. Cash flow from operating
activities
Cash received from sales and
203,682,152.70 55,525,539.64 175,732,532.01 51,629,618.39
service
Net increase of customers' deposits
and accounts due to banks and 0.00 0.00
other financial institutions
Net increase of loans from the
0.00 0.00
Central Bank
Net increase of loans from other
0.00 0.00
financial institutions
Cash received from premiums of
0.00 0.00
original insurance contracts
Net cash received from reinsurance
0.00 0.00
business
Net increase of deposit of the
0.00 0.00
insured and investment
Net increase of income from
0.00 0.00
disposal of tradable financial assets
Cash received from interest and
0.00 0.00
commissions
Net increase of loans from banks
0.00 0.00
and other financial institutions
Net increase of redemption capital 0.00 0.00
Tax refunds 0.00
Other cash received concerning
211,913,016.09 104,436,013.22 147,664,961.63 76,127,934.08
operating activities
Subtotal of cash inflow from
415,595,168.79 159,961,552.86 323,397,493.64 127,757,552.47
operating activities
Cash paid for goods and service 90,504,542.41 10,981,611.88 72,688,153.10 10,604,204.24
Net increase in loans and advances
0.00 0.00
to customers
Net increase of accounts due from
the Central Bank and other 0.00 0.00
financial institutions
Cash paid for compensation
pay-outs of original insurance 0.00 0.00
contracts
Cash paid for interest and
0.00 0.00
commissions
Cash paid as insurance dividends 0.00 0.00
Cash paid to and on behalf of
27,144,192.70 11,753,204.52 22,357,018.62 10,180,306.48
employees
Taxes and fees paid 62,740,678.74 51,111,659.38 71,085,749.55 59,254,011.26
Other cash paid concerning
212,179,822.32 64,855,215.91 129,017,659.37 36,677,487.72
operating activities
Subtotal of cash outflow for
392,569,236.17 138,701,691.69 295,148,580.64 116,716,009.70
operating activities
Net cash flow from operating
23,025,932.62 21,259,861.17 28,248,913.00 11,041,542.77
activities
II. Cash flow from investment
activities
Cash received from withdrawal of
0.00
investment
Cash received from investment
9,565,072.00 9,382,537.10
income
Net cash received from disposal of
fixed assets, intangible assets and 35,170.00 0.00 4,362,974.77 4,215,980.77
other long-term assets
Net cash received from disposal of
subsidiaries and other business 0.00
units
- 37 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Amount of this period Amount of the previous period
Item
Consolidated Parent Company Consolidated Parent Company
Other cash received concerning
0.00
investment activities
Subtotal of cash inflow from
35,170.00 9,565,072.00 4,362,974.77 13,598,517.87
investment activities
Cash paid for purchase and
construction of fixed assets,
11,542,580.52 61,149.00 7,475,604.60 191,784.25
intangible assets and other
long-term assets
Cash paid for investment 35,300,000.00
Net increase of mortgage loans 0.00 0.00
Net cash paid for acquisition of
subsidiaries and other business 0.00
units
Other cash paid concerning
0.00
investment activities
Subtotal of cash outflow for
11,542,580.52 35,361,149.00 7,475,604.60 191,784.25
investment activities
Net cash flow from investment
-11,507,410.52 -25,796,077.00 -3,112,629.83 13,406,733.62
activities
III. Cash flow from financing
activities:
Cash received from attraction of
14,700,000.00 0.00
investment
Including: Cash received by
subsidiaries from investment of 14,700,000.00 0.00
minority shareholders
Cash received from obtainment of
0.00
loans
Cash received from issuance of
0.00 0.00
bonds
Other cash received concerning
0.00
financing activities
Subtotal of cash inflow from
14,700,000.00
financing activities
Cash paid for repayment of debts 0.00
Cash paid for distribution of
dividends and profits or repayment 3,898,369.30 33,600.00 3,406,502.37
of interests
Including: Dividends and profit
paid by subsidiaries to minority 0.00
shareholders
Other cash paid concerning
0.00
financing activities
Subtotal of cash outflow for
3,898,369.30 33,600.00 3,406,502.37
financing activities
Net cash flow from financing
10,801,630.70 -33,600.00 -3,406,502.37
activities
IV. Influence from exchange rate
fluctuation of cash and cash 4,568.72 0.00 -57,654.24 -59,398.49
equivalents
V. Net Increase of cash and cash
22,324,721.52 -4,569,815.83 21,672,126.56 24,388,877.90
equivalents
Plus: Period-beginning balance of
572,818,178.75 451,763,240.33 485,135,270.94 375,350,393.53
cash and cash equivalents
VI. Period-end balance of cash and
595,142,900.27 447,193,424.50 506,807,397.50 399,739,271.43
cash equivalents
Responsible person of the Company: Responsible person of the accounting
Responsible financial officer: Li Lifu
Wang Chu department: Ying Huadong
- 38 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Consolidated Statement on Changes of Owners' Equity
Prepared by: Shenzhen SEG Co., Ltd For the First Half of 2011 Unit: (RMB) Yuan
January to June, 2011 Year 2010
Owners' equity attributable to the parent company Owners' equity attributable to the parent company
Item Minority Minority
Paid-in capital Capital Less: Surplus General Total owners' Paid-in capital Capital Less: General Total owners’
Special Retained shareholders' Special Surplus public Retained shareholder
(or share public Treasury public risk Others equity (or share public Treasury risk Others equity
reserve profits equity reserve reserve profits s' equity
capital) reserve shares reserve provision capital) reserve shares provision
407,684,71 102,912, -211,002,0 89,603,113.3 1,173,586,20 396,922,48 -269,532, 90,739,857. 1,105,298,55
I. Ending balance of the previous year 784,799,010.00 -411,391.17 784,799,010.00 102,912,835.67 -542,916.63
9.56 835.67 81.30 2 6.08 2.95 717.25 78 2.52
Plus: Change due to alteration of
accounting policies
Correction to errors of the previous period
Others
407,684,71 102,912, -211,002,0 89,603,113.3 1,173,586,20 396,922,48 -269,532, 90,739,857. 1,105,298,55
II. Beginning balance of the current year 784,799,010.00 -411,391.17 784,799,010.00 102,912,835.67 -542,916.63
9.56 835.67 81.30 2 6.08 2.95 717.25 78 2.52
III. Increase and decrease of the current 26,332,388 11,863,913.5 38,253,202.7 10,762,236 58,530,63 -1,136,744. 68,287,653.5
-32,548.45 89,449.29 131,525.46
year (Decrease marked with "-") .35 2 1 .61 5.95 46 6
26,332,388 28,021,679.6 59,217,70 4,329,427.0 63,547,128.0
(I) Net Profits 1,689,291.29
.35 4 1.05 1 6
10,762,236 10,959,040.0
(II) Other comprehensive incomes -32,548.45 89,449.29 -16,337.77 40,563.07 131,525.46 65,278.02
.61 9
Subtotal of the above-mentioned items (I) 26,332,388 28,062,242.7 10,762,236 59,217,70 4,394,705.0 74,506,168.1
-32,548.45 89,449.29 1,672,953.52 131,525.46
and (II) .35 1 .61 1.05 3 5
(III) Capital invested or decreased by 14,700,000.0 14,700,000.0
owners 0 0
14,700,000.0 14,700,000.0
1. Capital invested by owners
0 0
Amount of share-based payment recorded
into owners' equity
3 Others Less:
-4,509,040.0 -4,509,040.0 -687,065. -5,531,449.
(IV) Profit distribution -6,218,514.59
0 0 10 49
1. Accrual of surplus public reserve
2. Accrual of general risk provision
3. Amount distributed to owners (or -4,509,040.0 -4,509,040.0 -5,531,449.
-5,531,449.49
shareholders) 0 0 49
-687,065.
4 Others: -687,065.10
10
(V) Internal carrying forward of owners'
equity
1.Capital public reserve transferred to
increase capital (or share capital)
2. Surplus public reserve transferred to
increase capital (or share capital)
3. Surplus public reserve compensating
losses
4 Others Less:
(VI) Special reserve
1. Accrual of this period
2. Amount utilized in this period
(VII) Others
407,652,17 102,912, -184,669,6 101,467,026. 1,211,839,40 407,684,71 -211,002, 89,603,113. 1,173,586,20
IV. Ending balance of this period 784,799,010.00 -321,941.88 784,799,010.00 102,912,835.67 -411,391.17
1.11 835.67 92.95 84 8.79 9.56 081.30 32 6.08
Responsible person of the Company: Wang Chu Responsible financial officer: Li Lifu Responsible person of the accounting department: Ying Huadong
- 39 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Statement on Changes of Owners' Equity of the Parent Company
Prepared by: Shenzhen SEG Co., Ltd For the First Half of 2011 Unit: (RMB) Yuan
January to June, 2011 Year 2010
Paid-in capital
Paid-in capital Less: General Less: General
Item Capital public Special Surplus public Total owners' (Share capital) Capital public Special Surplus public Total owners'
(or share Treasury risk Retained profits Treasury risk Retained profits
reserve reserve reserve equity actually reserve reserve reserve equity
capital) shares provision shares provision
received
I. Ending balance of the previous year 784,799,010.00 404,980,399.08 102,912,835.67 -237,989,519.02 1,054,702,725.73 784,799,010.00 394,348,208.41 102,912,835.67 -304,735,104.11 977,324,949.97
Plus: Change due to alteration of accounting
0.00
policies
Correction to errors of the previous period 0.00
Others 0.00
II. Beginning balance of the current year 784,799,010.00 404,980,399.08 102,912,835.67 -237,989,519.02 1,054,702,725.73 784,799,010.00 394,348,208.41 102,912,835.67 -304,735,104.11 977,324,949.97
III. Increase and decrease of the current year
28,869,372.30 28,869,372.30 10,632,190.67 66,745,585.09 77,377,775.76
(Decrease marked with "-")
(I) Net Profits 28,869,372.30 28,869,372.30 0.00 66,745,585.09 66,745,585.09
(II) Other comprehensive incomes 10,632,190.67 10,632,190.67
Subtotal of the above-mentioned items (I)
28,869,372.30 28,869,372.30 10,632,190.67 66,745,585.09 77,377,775.76
and (II)
(III) Capital invested or decreased by owners
1. Capital invested by owners
2. Amount of share-based payment recorded
into owners' equity
3 Others Less:
(IV) Profit distribution
1. Accrual of surplus public reserve
2. Accrual of general risk provision
3. Amount distributed to owners (or
shareholders)
4 Others:
(V) Internal carrying forward of owners'
equity
1. Capital public reserve transferred to
increase capital (or share capital)
2. Surplus public reserve transferred to
increase capital (or share capital)
3. Surplus public reserve compensating
losses
4 Others Less:
(VI) Special reserve
1. Accrual of this period
2. Amount utilized in this period
(VII) Others
IV. Ending balance of this period 784,799,010.00 404,980,399.08 102,912,835.67 -209,120,146.72 1,083,572,098.03 784,799,010.00 404,980,399.08 102,912,835.67 -237,989,519.02 1,054,702,725.73
Responsible person of the Company: Wang Chu Responsible financial officer: Li Lifu Responsible person of the accounting department: Ying Huadong
- 40 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Shenzhen SEG Co., Ltd.
Notes to 2011 Interim Financial Statements
i. Company Profile
Shenzhen SEG Co., Ltd. (hereinafter referred to as the “Company” or "the Company") was incorporated on July 16,
1996 through public offering with Shenzhen SEG Group Co., Ltd. as the sole initiator upon the approval of relevant
authorities of Shenzhen Municipality and the State in accordance with relevant provisions of the Company Law of the
People’s Republic of China. The Company received a Business License for Enterprise Legal Person (with Shen Si Zi
No. N16886), the registration number of which is No. 44030110357325. And upon the approval of the securities
administration departments of Shenzhen Municipality and the State governments, the Company’s B shares and A
shares were listed with and traded on Shenzhen Stock Exchange respectively in July and December, 1996. The
Company deals with leasing industry and business service industry.
On June 7, 2006, a resolution was adopted at the general meeting of shareholders on the share merger reform of the
Company. According to the plan on the fixed conversion of capital public reserve into increase of capital share, the
Company distributed such converted and increased capital share to the tradable A-share shareholders. Such
shareholders obtained 4.6445 shares of converted and increased capital share for each 10 shares, which totaled
40,233,322 shares of converted and increased capital share. As a result, relevant non-tradable A shares were also
authorized to be listed and circulated. Among the converted and increased capital share obtained by the tradable
A-share shareholders, 6,997,054 shares were received due to the company's share capital expansion and the rest of
33,236,268 shares were the consideration paid to the tradable A-share shareholders by non-tradable A-share
shareholders under fixed arrangements.
Ended on June 30, 2010, the total capital share of the company had amounted to 784,799,010 shares, including 35,464
restricted shares and 784,763,546 unrestricted shares.
Business Scope: Domestic commerce, goods supply and sale, excluding commodities under special operation, control
and sale, engaging in other industries as may be applied for with specific projects, economic information consultancy,
property lease, real estate agency and operation of SEG special electronics markets (licenses for special markets shall
be specially applied for). Location of Registration: 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District,
Shenzhen
The basic organizational structure of the Company:
- 41 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Department of Property
Department of Human
Financial Department
Planning Department
Audit Department
Marketing and
Department of
Resources
Operation
Operation
Office
ii. Main Accounting Policies, Accounting Estimates and Errors of the Previous Period
(1) Basis for preparation of the financial statements
The Company conducts confirmation and measurement on the basis of the going-concern principle, according to
the transactions and matters that have actually occurred and in accordance with the Accounting Standard for
Business Enterprises (ASBE) - Basic Standard and other accounting standards and other relevant provisions and
prepares the financial statements on such basis.
(2) Statement on compliance to ASBE
The financial statements prepared by the Company comply with the requirements of the ASBE and truthfully and
completely reflect relevant information on the financial position, operating results, and cash flows of the
Company.
(3) Accounting period
A fiscal year lasts from January 1 to December 31 of the Gregorian calendar.
(4) Recording currency
Renminbi is the recording currency of the financial statements of the Company.
The currency of the main economic environment where an overseas subsidiary operates is the recording currency
of the subsidiary, which is translated into Renminbi when the financial statements are prepared.
(5) Accounting treatment method for the merger of the enterprises under the control of the same entity and
those not under the control of the same entity
1) Merger of the enterprises under the control of the same entity
The assets and liabilities acquired by the Company in the merger are calculated according to the book value
of the merged party on the date of merger. The capital public reserve is adjusted according to the difference
- 42 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
between the book value of net assets acquired in the merger and that of the consideration of the merger (or
the total book value of issued shares). The retained earnings are adjusted if the capital public reserve is not
sufficient for writing off.
The various relevant expenses paid by the Company for the merger, including the auditing fee, evaluation
fee, and legal fee for the merger, are recorded into the gains and losses of this report period at the time when
the fees occur.
The service fee and commissions related to issuance of equity securities during the merger are set off
against premium income of equity securities. The retained earnings are offset if the premium income is not
sufficient for offsetting.
When the accounting policies of the merged parties are not consistent with those of the Company, the
Company makes adjustments in accordance with its own accounting policies on the date of merger and then
confirms in accordance with the ASBE.
2) Merger of the enterprises not under the control of the same entity
The assets paid and the liabilities incurred or assumed by the Company as the consideration on the date of
merger are calculated according to sound value. The difference between the sound value and its book value
is recorded into the gains and losses of this report period.
The Company makes distributions on the consolidated cost on the purchasing date.
When the merger cost is more than the sound value of the recognizable net assets of the purchased party, the
difference is confirmed by the Company as goodwill. When the merger cost is less than the sound value of
the recognizable net assets of the purchased party, the difference is dealt with in accordance with the
provisions as follows: (1) Review the sound value of the recognizable assets, the liabilities and the
contingent liabilities and the merger cost; (2) When the merger cost is indeed less than the sound value of
the recognizable net assets of the purchased party after review, the difference is recorded into the gains and
losses of this report period.
For other assets of the purchased party (not limited to the already confirmed assets of the purchased party)
acquired in the merger, except intangible assets, if economic interests generated from the assets are likely to
flow into the Company and the sound value of the interests can be measured reliably, the interests are
separately confirmed and measured according to their sound value. The intangible assets whose sound value
can be measured reliably are separately confirmed as intangible assets and measured according to their
sound value. For other liabilities of the purchased party acquired in the merger, except contingent liabilities,
if economic interests are likely to flow out of the Company because of relevant obligations conducted and
the sound value of the interests can be measured reliably, the interests are separately confirmed and
measured according to the sound value. The contingent liabilities of the purchased party acquired in the
merger, whose sound value can be measured reliably, are confirmed as liabilities and measured according to
their sound value.
(6) Preparation method of the consolidated financial statements
The scope of the consolidated financial statements of the Company is determined based on the control status, and
all subsidiaries are included in the scope.
- 43 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
The accounting policies and accounting period adopted by all the subsidiaries included in the consolidation scope
should be consistent with those of the Company. Otherwise, the Company makes necessary adjustments
according to its own accounting policies and accounting period when preparing the consolidated financial
statements.
The consolidated financial statements are prepared by the Company based on individual financial statements of
the Company and its subsidiaries as well as other relevant materials after the long-term equity investment in the
subsidiaries have been adjusted by the equity method.
During the consolidation, the influence on the consolidated balance sheet, the consolidated profit statement, the
consolidated cash flow statement and the consolidated statement on changes of owner’s equity, by internal
transactions between the Company and its subsidiaries and among the subsidiaries, is offset.
When the current losses undertaken by the minority shareholders of a subsidiary are more than the proportion
enjoyed by the minority shareholders in the owners’ equity of the subsidiary at the period beginning, the
difference should still be offset against the equity of the minority shareholders.
Within the report period, the period-beginning amount of the consolidated balance sheet is adjusted if a
subsidiary is increased in this report period through the merger of enterprises under the control of the same entity.
The income, expenses and profits of the subsidiary from the beginning of this report period when it was merged
to the end of this report period are included in the consolidated profit statement. The cash flow of the subsidiary
from the beginning of this report period when it was merged to the end of this report period is included in the
consolidated cash flow statement.
Within the report period, the period-beginning amount of the consolidated balance sheet is not adjusted if a
subsidiary is increased in this report period through the merger of enterprises not under the control of the same
entity. The income, expenses and profits of the subsidiary from the purchasing date to the end of this report
period are included in the consolidated profit statement. The cash flow of the subsidiary from the purchasing date
to the end of this report period is included in the consolidated cash flow statement.
Within the report period, if the Company disposes a subsidiary, the income, expenses and profits of the
subsidiary from the period beginning to the disposal date are included in the consolidated profit statement and the
cash flow of the subsidiary in the same period is included in the consolidated cash flow statement.
(7) Standards for determination of cash and cash equivalents
In the preparation of the cash flow statement, the cash on hand and the bank deposits available for payment at
any time, owned by the Company, are confirmed as cash. The investments that meet the four conditions of
shorter term (to be mature within 3 months from the purchasing date), strong liquidity, easiness in being
converted into known cash, very small risk of value fluctuation are confirmed as cash equivalents.
(8) Translation of Foreign currency businesses and translation of the financial statements in foreign currency
1) Foreign currency businesses
Foreign currency businesses are recorded into accounts after relevant amounts are translated into RMB
according to the current exchange rate on the transaction date as the exchange rate for translation.
The balance of the monetary items in foreign currency is translated according to the current exchange rate
on the balance sheet date while the translation difference caused is all recorded into the gains and losses of
this report period, except the difference from the special foreign currency loans related to the assets whose
- 44 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
purchase and construction meet the conditions for capitalization, which are dealt with according to the
principles for capitalization of loan expenses. The non-monetary items in foreign currency measured by the
historical cost method are translated according to the current exchange rate on the transaction date and the
amount in the recording currency is not changed. The non-monetary items in foreign currency measured by
sound value are translated according to the current exchange rate on the confirmation date of the sound
value while the translation difference caused is recorded into the gains and losses of this report period or
into capital public reserve.
2) Translation of the financial statements in foreign currency
The assets and liabilities items in the balance sheet are translated according to the current exchange rate on
the balance sheet date. The owners’ equity items other than “retained profits” are translated according to the
current exchange rate at the time when incurred. The income and expense items in the profit statement are
translated according to the current exchange rate on the transaction date. The translation difference in the
financial statements in foreign currency caused by the above-mentioned methods is listed separately under
the owner’s equity items in the balance sheet.
When an overseas operation is disposed, the translation difference in the financial statements in foreign
currency related to the overseas operation, which is listed under the owner’s equity items in the balance
sheet, is transferred from the owner’s equity items to the gains and losses of this report period of the period
when the disposal is carried out. When an overseas operation is partly disposed, the translation difference is
calculated according to the proportion of the disposal, which is transferred to the gains and losses of this
report period of the period when the disposal is carried out.
(9) Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
1) Classification of financial instruments
According to the purposes of the acquisition and holding of financial assets and the assumption of financial
debts, the management classifies them as follows: financial assets and liabilities measured according to the
sound value whose changes are recorded into the gains and losses of this report period, including transaction
monetary assets or liabilities and the financial assets or liabilities (and those that can be directly assigned as
financial assets or liabilities measured according to sound value and whose changes are recorded into the
gains and losses of this report period), held-to-maturity securities, loans and accounts receivable, financial
assets available for sale, and other financial liabilities.
2) Confirmation basis for and measurement method of financial instruments
i. Financial assets (financial liabilities) measured by sound value and with changes included in the the
gains and losses of this report period
The sound value (with the cash dividends declared but not yet distributed or the bond dividends not yet
received with the interest payment period expired deducted) is taken as the initially confirmed amount
at the time of acquisition. Relevant transaction expenses are recorded into the gains and losses of this
report period.
The interests and cash dividends obtained during the time of holding are confirmed as investment
income. At the time of disposal, the difference between the sound value and the initial recorded amount
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
in the account is confirmed as investment income and the gains and losses from changes of sound
value are adjusted at the same time.
ii. Held-to-maturity investment
At the time of acquisition the sum of the sound value (with the bond interests deducted, which are not
yet received with the term of interest payment expired) and relevant transaction expenses are taken as
the initial confirmed amount.
During the period of share-holding, the interest income is calculated and confirmed in accordance with
the amortized and the actual interest rate, which is recorded into the investment income. The actual
interest rate is determined at the time of acquisition and remains unchanged within the anticipated
existence period or a shorter period applicable.
At the time of disposal, the difference between the price of acquisition and the book value of such
investment is recorded into investment income.
iii. Accounts receivable
For the accounts receivable formed from the commodities sold or labor services provided by the
Company and those of other enterprises held by the Company other than the priced debt tools in the
active market, including accounts receivable, notes receivable, advances, other accounts receivable,
long-term accounts receivable, the price money in contracts or agreements of the purchaser is taken as
the initial confirmed amount. For those with a financing nature, the current value is taken as the initial
confirmed amount.
At the time of collection or disposal, the difference between the price of acquisition and the book value
of such accounts receivable are recorded into the gains and losses of this report period.
iv. Financial assets available for sale
The sum of the sound value (with the cash dividends declared but not yet distributed or the bond
dividends not yet received with the interest payment period expired deducted) and relevant transaction
expenses are taken as the initially confirmed amount at the time of obtainment.
The interests or cash dividends obtained during the time of holding are confirmed as investment
income. Such assets are measured according to the sound value at the end of the period and the
changes of sound value are recorded into capital public reserve (other capital public reserve).
At the time of disposal, the difference between the price of acquisition and the book value of such
financial assets is recorded into investment gains and losses. At the same time, the amount of the
disposed part of the assets originally recorded in the accumulative amount of the changes in the sound
value of owners’ equity is transferred and recorded into investment gains and losses.
v. Other financial liabilities
The sum of the sound value of such assets and relevant transaction expenses is taken as the initially
confirmed amount. The amortized cost is adopted in the subsequent measurement.
3) Confirmation basis for and measurement method of financial assets transfer
In the case of the transfer of the financial assets of the Company, if almost all the risks and returns in the
ownership rights of the financial assets are transferred to the assignee, the confirmation of such financial
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assets is terminated, and if almost all the risks and returns in the ownership rights of such financial assets
are retained, the confirmation of such financial assets is not terminated.
In the judgment whether a financial asset transfer meets the above conditions for termination of its
confirmation, the principle of substance prevailing form is adopted. The Company divides financial assets
transfer into the complete transfer and the partial transfer. Where the complete transfer of financial assets
meets the conditions for termination of confirmation, the difference of the following two amounts is
recorded into the gains and losses of this report period.
i. The book value of the transferred financial assets;
ii. The sum of the consideration received due to transfer and the accumulated amount of the changes in
sound value originally recorded in owners’ equity (involving the situation when the transferred
financial assets are the financial assets available for sale).
If the partial transfer of financial assets meets conditions for termination of confirmation, the part with its
confirmation terminated and that with its confirmation not terminated, among the book value of all the
transferred financial assets, are apportioned separately according to their relevant sound value while the
difference between the following two amounts is recorded into the gains and losses of this report period.
i. The book value of the part with its confirmation terminated;
ii. The sum of the consideration of the part with its confirmation terminated and the part of the
accumulated amount of the changes in sound value originally recorded in owners’ equity
corresponding to the part with its confirmation terminated (involving the situation when the transferred
financial assets are the financial assets available for sale).
Where the financial assets transfer does not meet the conditions for termination of confirmation, the
confirmation of such financial assets is continued. The received consideration is confirmed as a financial
liability.
4) Conditions for the termination of the confirmation of financial liabilities
If all or a part of current obligations of a financial liability are discharged, the confirmation of the financial
liability or part of it is terminated. If the Company signs an agreement with the creditor to substitute an
existing financial liability by assuming a new financial liability and the contract terms for the new liability
and the existing one are not consistent, the confirmation of the existing financial liability is terminated and
the new financial liability is confirmed in the meantime.
If material alteration has been made to all or a part of contract terms of the existing financial liability, the
confirmation of the existing liability or part of it is terminated and, in the meantime, the liability after the
alteration is made is confirmed as a new financial liability.
If the confirmation of all or a part of a financial liability is terminated, the difference between the book
value of the liability with its confirmation terminated and the consideration (including non-cash assets
transferred or the new liability assumed) is recorded into the gains and losses of this report period.
If the Company repurchases a part of a financial liability, the total book value of the liability is allocated on
the purchasing date according to the respective relative sound value of the part with its confirmation
continued and that with its confirmation terminated. The difference between the book value allocated to the
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
part with its confirmation terminated and the consideration (including non-cash assets or the new liability
assumed) is recorded into the gains and losses of this report period.
5) Methods for the determination of the sound value of financial assets and liabilities
The prices in the active market are referred to with respect to both the financial assets and liabilities of the
Company, which are measured by sound value.
6) Accrual of impairment provision for financial assets (excluding accounts receivable)
i. Impairment provision for financial assets available for sale:
If the sound value of the financial assets available for sale sees a large decrease at the end of the period
or it is anticipated that such decrease tendency is not provisional upon the comprehensive analysis of
various relevant factors, then it can be determined that impairment occurred to such assets. All the
accumulative losses formed from the decrease of the sound value originally and directly recorded into
owners’ equity are transferred out and relevant impairment loss is confirmed.
ii. Impairment provision for held-to-maturity investments
The measurement of the impairment loss of held-to-maturity investments is carried out with reference
to the method for the measurement of the impairment loss of accounts receivable.
(10) Accounts receivable
1) Confirmation and accrual method of the bad debt provision for accounts receivable with significant
individual amount
Criteria for being a significant individual amount:
It means the top five accounts receivable
At the end of the period, impairment test should be conducted individually on accounts receivable of large
amount. If there are objective evidences proving that such accounts receivable suffer impairment,
impairment losses should be confirmed and bad debt provision accrued, according to the difference of the
current value of their future cash flow lower than their book value. For the accounts receivable and other
receivables for which impairment tests show no indications of impairment, the bad debt provision is accrued
by the aging analysis method taking the duration as the feature of credit risks.
2) Accounts receivable for which bad debt provision is accrued according to different combinations:
i. Determination basis for combinations of credit risk characteristics
It is categorized according to different durations.
ii. Accrual method determined according to the combination based on credit risk characteristics:
Aging analysis method
Accrual proportion of accounts Accrual proportion of other
Duration of the accounts
receivable (%) accounts receivable (%)
Within 1 year (including 1
0 0
year)
1-2 years 5 5
2-3 years 10 10
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Over 3 years 20 20
Notes on the accrual of bad debt provision
Bad debt provision was not accrued for the incomings and outgoings between the Company and related
parties.
iii. Accounts receivable with an insignificant amount individually, for which the bad debt provision is
separately accrued:
The accounts receivable with an insignificant amount individually have big risk in recovery, so bad
debt provision was accrued by the specific identification method.
The difference between the current value of the estimated future cash flow and its book value, if the
former is less than the latter, is accrued as bad debt provision and recorded into the gains and losses of
this report period.
(11) Inventory
1) Classification of inventory
Inventory is classified as follows: goods en route, raw materials, circulating materials, in-stock goods,
goods in process, goods-in-transit and consigned processing materials.
2) Pricing method of delivered inventory
The pricing of the inventory is made according to the weighted average method at the time of delivery.
3) Determination basis for the net realizable value of inventory and accrual method of inventory
fall-in-price provision
After a complete counting and examination of the inventory at the end of the period, the inventory
fall-in-price provision is accrued or adjusted according to the lower between the inventory cost and the net
realizable value.
The net realizable value of the goods inventory directly for sale such as finished products, goods and
materials for sale is determined in regular production and operation according to the amount of the
estimated sale price of such inventory minus estimated sale expenses and relevant taxes. That of the
material inventory to be processed is determined in regular production and operation according to the
estimated sale price of the finished products produced minus estimated sale expenses and relevant taxes.
That of the inventory held for the performance of sale or service contracts is calculated on the basis of the
contract price. Where the quantity of the inventory is more than the quantity ordered in the sale contract, the
net realizable value of the surplus of such inventory is calculated on the basis of the general sale price.
At the end of the period, the inventory fall-in-price provision is accrued according to individual inventory
items. However, the decline provision for the inventory of a large quantity and a low unit price is accrued
according to the type of the inventory. For the inventory involving the product series produced and sold in
the same region, having identical or similar final use or purpose, and being difficult to be separated from
other items for measurement, relevant inventory fall-in-price provision is accrued in a combined manner.
Where the factors previously causing the recording of the reduction of inventory value stop to exist, the
reduced amount is restored and transferred back from the amount of the originally accrued inventory
fall-in-price provision. The transferred amount is recorded into the gains and losses of this report period.
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4) Inventory taking system
The perpetual inventory method is adopted in the stock inventory.
5) Amortization method of low value consumables and packaging materials
i. For low value consumables, the one-off amortization method is adopted.
ii. For packaging materials, the one-off amortization method is adopted
(12) Long-term equity investment
1) Determination of investment cost
i. Long-term equity investment formed from enterprise merger
In the merger of the enterprises under the control of the same entity, if the Company pays cash,
transfers non-monetary assets or bears debts, and issues equity securities as the consideration of the
merger, the book value of the shares of the owners’ equity obtained from the merged party on the
merger date is taken as the initial investment cost of the long-term equity investment. The capital
public reserve is adjusted for the difference between the initial investment cost of the long-term equity
investment and the consideration and retained profits are adjusted if the capital public reserve is not
sufficient for off-setting. All direct relevant expenses during the merger, including the auditing fee,
evaluation fee and legal fee for the merger, are recorded into the gains and losses of this report period
at the time when the fees occur.
In the merger of the enterprises not under the control of the same entity, the cost for the merger is the
sound value of the assets paid and the liabilities incurred or assumed as well as the equity securities
issued by the purchasing party for the acquisition of the control of the purchased party. All direct
relevant expenses for the merger, including agency fees like auditing fee, evaluation fee and legal fee
and relevant management fee, are recorded into the gains and losses of this report period at the time
when the fees occur. The transaction costs for the equity securities or debt securities issued as the
purchase price are recorded into the initial recognized amount. In the merger of enterprises realized
through several exchange transactions, the cost for the merger is the total amount of cost for different
single transactions. If future items likely to influence the merger cost, for which a relevant agreement
has been reached, are estimated very possible to occur on the purchasing date and the amount of their
influence on the merger cost can be measured reliably. These future items are also recorded into the
cost for the merger.
ii. Long-term equity investment obtained in other ways
The purchase price money actually paid is taken as the initial investment cost of the long-term equity
investment obtained by cash.
The sound value of the issued equity securities is taken as the initial investment cost of the long-term
equity investment obtained from the issuance of equity securities.
The value agreed in investment contracts or agreements (with the cash dividends declared but not yet
distributed or profits deducted) of the long-term equity investment given by the investors is taken as
the initial investment cost, unless the value agreed in investment contracts or agreements is not the
sound value.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Under the premises that the non-monetary assets exchange is of commercial nature and that the sound
value of the assets received and given out in the exchange can be measured reliably, the initial
investment cost of the long-term equity investment received in non-monetary assets exchange is
determined on the basis of the sound value of the assets given out, unless there are definite evidences
that the sound value of the received assets is more reliable. For the non-monetary assets exchange that
do not meet the above premises, the book value of the received assets and relevant taxes payable is
taken as the cost of the long-term equity investment.
The initial investment cost of the long-term equity investment obtained through debt restructuring is
determined according to its sound value.
2) Subsequent measurement and income confirmation
i. Subsequent measurement
The accounting of the long-term equity investment of the Company into the subsidiaries is done
according to the cost method. Such investment is adjusted according to the equity method in the
preparation of the consolidated financial statements.
The accounting of the long-term equity investment that does not involve the joint control over or
significant influence on the invested organizations, that does not have quoted prices in the active
market, and whose sound value cannot be reliably measured, is done according to the cost method.
The accounting of the long-term equity investment that involves the joint control over or significant
influence on the invested organizations is done according to the equity method. When the Company
can exercise significant influence on or joint control over the invested organizations, if the initial
investment cost is larger than the investment, the Company should enjoy the difference with the due
share of the sound value of the discernible net assets of the invested organizations and the initial
investment cost of the long-term equity investment should not be adjusted, if the initial investment cost
is smaller than the investment, the Company should enjoy the difference with the due share of the
sound value of the discernible net assets of the invested organizations and such difference is recorded
into the gains and losses of this report period
In the accounting treatment of the changes in owners' equity other than net gains and losses of the
invested organizations, the book value of the long-term equity investment is adjusted and the capital
public reserve (other capital public reserve) added or decreased with respect to the part of the changes
in owners’ equity other than net gains and losses of the invested organizations that the Company should
enjoy or bear according to the proportion of shareholding under the circumstance that the proportions
of shareholding remain unchanged.
ii. Confirmation of gains and losses
Under cost method, the Company confirms investment income according to the cash dividends or
profits enjoyed by the Company, for which the invested organization declares to distribute, except the
actual amount paid when investment is acquired and cash dividends and profits included in the
consideration and declared but yet to be distributed.
Under equity method, the Company confirms the due share of the losses incurred by the invested
organizations under the equity method, the following sequence is adopted: First, the book value of the
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long-term equity investment is offset. Second, if the book value of the long-term equity investment is
not sufficient for the offsetting, the investment loss should continue to be confirmed within the limit of
the book value of other long-term equity that practically constitutes net investments into the invested
organization and the book values of long-term accounts receivable and others are offset. Finally, if the
enterprise still bears additional obligations as agreed in the investment contract or agreement after the
above processing, liabilities are confirmed according to the anticipated obligations to be borne and
recorded into the investment loss of this report period.
Where the invested organizations realize profits in the later periods, the Company should make
accounting treatment in the reversed sequence against the above after deducting the shared loss not yet
confirmed, reduce the book balance of the confirmed anticipated liabilities, restore other long-term
equity that practically constitutes net investments into the invested organizations and the book value of
the long-term equity investment, and confirm investment income at the same time.
3) Basis that the invested organizations are under common control or significant influence
If the common control over a certain economic activity as agreed in a contract exists only with the
unanimous agreement of the investors who need to share the controlling powers in the important financial
and operation decisions related to such economic activity, such investors are deemed as exercising joint
control with other parities over the invested organization. If an investor has the power to participate in the
decision-making of the financial and operation matters of an enterprise but cannot control or jointly control
with other parties the formation of such policies, then such investor is deemed as being able to exercise
significant influence over the invested organizations.
4) Impairment test method and accrual method of impairment provision
For the long-term equity investment that does not have price quotations in the active market, whose sound
value cannot be reliably measured, and the accounting of which is conducted with cost method, its
impairment loss is determined by the difference between its book value and the current value determined
through discounting the future cash flow according to the current market return rate of similar financial
assets
For other long-term equity investments facing impairment except the goodwill formed due to enterprise
mergers, if measurement results of recoverable amount of a long-term equity investment indicate that such
recoverable amount is lower than the book value of the investment, the difference between the two is
confirmed as impairment loss.
An impairment test is carried out to the goodwill formed due to enterprise mergers whether the goodwill
faces impairment or not.
Once the impairment loss of long term equity investment is confirmed, such loss will not be transferred
back.
(13) Investment property
Investment property refers to the property held for earning rental or increasing the value of capital, including the
right to use of the rented land, the right to use of the land held for transfer after the value increases, and the
rented building.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
The investment property presently held by the Company is measured in a cost mode. For investment properties,
the depreciation policy for the buildings for rent measured according to the cost mode is the same as that for the
fixed assets of the Company and the amortization policy for the use right of land for rent is the same as that for
intangible assets.
For investment properties facing impairment, the Company evaluates their recoverable amount and confirms
relevant impairment loss if the recoverable amount is less than the book value.
Once the impairment loss of long term equity investment is confirmed, such loss will not be transferred back.
(14) Fixed assets:
1) Conditions on confirmation of fixed assets
Fixed assets refer to the tangible assets held for the purpose of the manufacture of commodities, provision
of labor services, lease or operation and management with a term of use exceeding one fiscal year. The
confirmation of fixed assets can be made only when all the following conditions are satisfied:
i. Where the economic interests related to such fixed assets are likely to flow into the company;
ii. Where the cost of such fixed assets can be measured reliably.
2) Depreciation method of various fixed assets
The fixed assets depreciation is accrued according to the straight line method and the depreciation rate is
determined according to the type of fixed assets, anticipated service life and anticipated net residual value
rate.
For the fixed assets leased by financing lease, if it can be reasonably determined that the ownership right of
the leased assets will be obtained upon the expiration of the lease term, depreciation is accrued within the
remaining service life of the leased assets; and if it cannot be reasonably so determined, depreciation is
accrued during the shorter one of the lease term and the remaining service life of the leased assets.
Depreciation period and annual depreciation rate of various fixed assets:
Category Depreciation period (year) Residual value rate (%) Annual depreciation rate
Houses and buildings 20-40 5 4.75-2.375
Machinery equipment 5-10 5 19.00-9.50
Electronic equipment 5-10 5 19.00-9.50
Fixed assets acquired by
5-10 5 19.00-9.50
financing lease
Transportation equipment 5-10 5 19.00-9.50
Other equipment 10 5 9.50
3) Impairment test method of fixed assets and accrual method of impairment provision
The Company estimates at the end of every period whether there are indications of impairment on its fixed
assets.
Where there are indications of impairment on some assets, the recoverable amount of such assets is
estimated. The recoverable amount may be determined according to the higher one of the net value of the
sound value of the assets minus the disposal expenses and the current value of the anticipated future cash
flow of the assets.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
When the recoverable amount of the assets is lower than its book value, the book value of such assets may
be reduced and recorded into the recoverable amount. The reduced amount is confirmed as assets
impairment loss and recorded into the gains and losses of this report period.
At the same time, the corresponding assets impairment provision is accrued. After the confirmation of loss
of assets impairment, corresponding adjustments are made in the future periods on the depreciation or
amortized expenses of the impaired assets so that the adjusted book value of such assets (with the
anticipated net residual value deducted) can be amortized systematically within the remaining service life.
Once the impairment loss of fixed assets is confirmed, the loss will not be transferred back in later
accounting periods.
Where there are indications of impairment on a certain fixed asset, the enterprise estimates the recoverable
amount of the asset based on the individual asset. If it is hard for the enterprise to estimate the recoverable
amount of the asset, the enterprise makes estimation based on the asset group to which the asset belongs.
4) Confirmation basis and pricing method for fixed assets obtained by financing lease
An asset is confirmed as a fixed asset obtained by financing lease if the lease agreement between the
Company and the leasing party provides one of the following conditions:
i. The ownership of the leased asset belongs to the Company when the lease period expires;
ii. The Company has an option to purchase the asset and the purchasing price is far lower than the sound
value of the asset when the option right is used;
iii. The lease period takes up most of the service life of the asset;
iv. The current value of the minimum payment on leasing date does not differ greatly with the sound value
of the asset;
Between the sound value and the current value of the minimum payment of the leased asset, the lower one is
taken by the Company on leasing date as the recorded value in account and the difference as financing fee
not confirmed.
(15) Construction in progress
1) Type of construction in progress
The accounting of construction in progress is made according to the classification of the projects determined
in project establishment.
2) Standards and time points for the construction in progress being carried forward to fixed assets
For a construction in progress, all expenses during the construction till the desired usable status of the asset
is reached are taken as the recorded value of the fixed asset. If a construction in progress has reached the
desired usable status but has not conducted final accounting, it is transferred into fixed assets when it
reaches the desired usable status, according to the estimated value based on project budget, construction
cost or actual cost; in the meantime, depreciation is accrued according to the Company’s depreciation
policies for fixed assets; when the final accounting is conducted the temporarily estimated value is adjusted
according to the actual cost while the accrued depreciation amount is not adjusted.
3) Impairment test method of construction in progress and accrual method of impairment provision
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
The Company estimates at the end of every period whether there are indications of impairment on
construction in progress.
Where there are indications of impairment on some assets, the recoverable amount of such assets is
estimated. The recoverable amount may be determined according to the higher one of the net value of the
sound value of the assets minus the disposal expenses and the current value of the anticipated future cash
flow of the assets.
Where the recoverable amount of the assets is lower than its book value, the book value of such assets may
be reduced and recorded into the recoverable amount. The reduced amount is confirmed as assets
impairment loss and recorded into the gains and losses of this report period.
At the same time, the corresponding assets impairment provision is accrued. Once the impairment loss of a
construction in progress is confirmed, it will not be transferred back in later accounting periods.
Where there are indications of impairment on a construction in progress, the enterprise estimates the
recoverable amount based on the individual construction. If it is hard for the enterprise to estimate the
recoverable amount of the individual construction, the enterprise makes estimation based on the asset group
to which the construction belongs.
(16) Borrowing costs
1) Confirmation principle of borrowing costs capitalization
Where the borrowing costs incurred by the Company can be directly attributable to the purchase, building or
production of the assets that meet the conditions of capitalization, such assets are capitalized and recorded
into relevant assets cost. Other borrowing costs are confirmed as expenses according to the incurred amount
at the time of incurrence and recorded into the gains and losses of this report period.
The assets that meet the conditions of capitalization refer to the assets such as fixed assets, investment
property and inventory that can reach the anticipated usable or salable status only after a considerable time
of purchase, building or production activities.
The borrowing costs may be capitalized when all of the following conditions are met:
i. The assets expenditure has already incurred, including that incurred in the form of cash payment,
non-monetary assets transfer or bearing of debts with interests for the purchase, building or production
of the assets that meet the conditions of capitalization.
ii. The borrowing costs have already been incurred.
iii. The construction or production activities necessary for putting the assets into a usable or salable status
have already started.
2) Capitalization term of borrowing costs
The capitalization term refers to the period between the start time point and the end time port of the
capitalization of the borrowing costs, excluding the period in which the capitalization is suspended.
Where the purchase, building or production of the assets that meet the conditions of capitalization has put
such assets into the anticipated usable or salable status, the capitalization of the borrowing costs is stopped.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Where part of the projects in the purchase, building or production of the assets that meet the conditions of
capitalization have been completed and reached the anticipated usable or salable status, the capitalization of
the borrowing costs of such part of the assets is stopped.
Where different parts of the assets purchased, built or produced have been completed but cannot be used or
sold till the whole assets have been completed, the capitalization of the borrowing costs is stopped when the
whole assets are completed.
3) Suspension period of capitalization
Where abnormal discontinuation has occurred in the purchase, building or production of the assets that meet
the conditions of capitalization and the time of discontinuation exceeds three months consecutively, the
capitalization of the borrowing costs is suspended. If the discontinuation is a necessary procedure in the
process during which the assets purchased or produced, which meet the conditions of capitalization, reach
the usable or salable status, the capitalization of the borrowing costs is continued. The borrowing costs
occurring in the suspension period are confirmed as the gains and losses of this report period and the
capitalization is continued until the purchasing and production activities of the assets are restarted.
4) Calculation method of the amount of borrowing costs capitalization
The interest expenses of special loans (with the interest income of the unused borrowed funds deposited in
the bank or the investment income obtained from temporary investment deducted) and relevant auxiliary
expenses are capitalized before the assets that meet the conditions of capitalization, purchased, built or
produced with such loans, reach the anticipated usable or salable status.
The amount of the interests of common loans that are capitalized is calculated and determined by the
weighted average of the accumulative parts of the assets expenditure exceeding special loans multiplied by
the capitalization rate of common loans. The capitalization rate is determined according to the weighted
average interest rate of common loans.
Where the loans involve discount or premium, the amount of discount or premium to be amortized in each
accounting period is determined in accordance with the actual interest rate method and the amount of
interests of each period should also be adjusted.
(17) Intangible assets
1) Pricing method of intangible assets
i. The Company carries out initial measurement by cost method when acquiring intangible assets;
The cost of the intangible assets purchased from outside includes purchase price money, relevant taxes
and other expenses incurred due to putting such assets to the anticipated use that can be directly
attributed to such assets. Where the price money of the purchased intangible assets is paid on a
deferred basis within a term exceeding regular credit conditions and actually of a financing nature, the
cost of the intangible assets is determined on the basis of the current value of the price money in
purchase.
The recorded value in the account of the fixed assets obtained from debtors for the repayment of debts
in debt restructuring is determined on the basis of the sound value of the fixed assets. The difference
between the book value of debt restructuring and the sound value of the fixed assets used for the
repayment of debts is recorded into the gains and losses of this report period.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Under the premises that the non-monetary assets exchange is of commercial nature and that the sound
value of the assets received and given out in the exchange can be measured reliably, the initial
investment cost of the long-term equity investment received in non-monetary assets exchange is
determined on the basis of the sound value of the assets given out, unless there are definite evidences
that the sound value of the received assets is more reliable. For the non-monetary assets exchange that
do not meet the above premises, the book value of the received assets and relevant taxes payable is
taken as the cost of the long-term equity investment.
The recorded value in the account of the intangible assets obtained by the merger of the enterprises
under the control of the same entity is determined according to the book value of the merged party. The
recorded value in the account of the intangible assets obtained by the merger of the enterprises under
the control of different entities is determined according to the sound value.
The cost of the intangible assets formed through internal R&D activities includes: the cost of materials
and labor consumed in the development of such intangible assets, registration fee, the amortization of
other patent rights and franchises used in the development process and the interests expenses that meet
the conditions of capitalization, and other direct expenses incurred due to putting such intangible assets
into the anticipated use.
ii. Subsequent measurement
The Company estimates the service life when acquiring intangible assets.
The intangible assets with limited service life are amortized according to the straight line method
within the period that such assets bring economic benefits to the enterprise. Where the period cannot be
anticipated in which such intangible assets bring economic interests to the enterprise, such intangible
assets are deemed as having indeterminate service life and no amortization will be made.
2) The conditions on the estimation of the service life of the intangible assets with limited service life:
Item Estimated service life Basis
UFIDA software 5 Benefit period
KOA software 5 Benefit period
Money collection software 5 Benefit period
Land use right 50 Benefit period
At the end of each period, the service life and amortization method of the intangible assets with limited
service life are reviewed.
Upon review, the service life and amortization method of the intangible assets at the end of this period are
consistent with the previous estimation.
3) Accrual of impairment provision for intangible assets
Where there are obvious indications of impairment on the intangible assets whose service life is fixed, an
impairment test is carried out at the end of the period.
For the intangible assets whose service life is not fixed, an impairment test is carried out at the end of each
period.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
An impairment test is carried out to intangible assets and the recoverable amount of the assets is estimated.
The recoverable amount may be determined according to the higher one of the net value of the sound value
of the assets minus the disposal expenses and the current value of the anticipated future cash flow of the
assets.
Where the recoverable amount of the assets is lower than its book value, the book value of such assets may
be reduced and recorded into the recoverable amount. The reduced amount is confirmed as assets
impairment loss and recorded into the gains and losses of this report period.
At the same time, the corresponding assets impairment provision is accrued. After the confirmation of assets
impairment loss, corresponding adjustments are made in the future periods on the depreciation or amortized
expenses of the impaired assets so that the adjusted book value of such assets (with the anticipated net
residual value deducted) can be amortized systematically within the remaining service life.
Once the impairment loss of an intangible asset is confirmed, it is not transferred back in later accounting
periods.
Where there are indications of impairment on an intangible asset, the Company estimates the recoverable
amount based on the individual intangible asset. If it is hard for the Company to estimate the recoverable
amount of the individual asset, the Company makes estimation based on the asset group to which the asset
belongs.
4) Classification standards for research and development phases of R&D projects inside the Company
Research phase: a phase in which creative and planned investigation and research activities are carried out
for the purpose of obtaining and understanding new scientific or technological knowledge.
Development phase: a phase in which research results or other knowledge, before being produced or used
for commercial purposes, are applied in a certain plan or design for the purpose of producing materials,
equipments and products that are new or feature substantial improvement.
The expenses for inside R&D projects during the research phase are recorded into the gains and losses of
this report period when the expenses occur.
5) Specific standards for meeting the conditions of capitalization by research phase
The expenditure in the development stage of the research and development project can be confirmed as
intangible assets only when all the following conditions are met:
i. The completion of such intangible assets makes it usable or its sale technically feasible.
ii. There is an intention to complete such intangible assets and use or sell it.
iii. The way that the intangible assets generate economic interests can prove that the product using such
intangible assets or the intangible assets itself have market. If the intangible assets are to be used
internally, its usefulness is proved.
iv. The Company has sufficient technical and financial resources and other resources to support the
completion of the development of such intangible assets and the capacities to use or sell such
intangible assets.
v. The expenditure attributed to the development stage of such intangible assets can be reliably measured.
(18) Long-term expenses to be apportioned
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
The long-term expenses to be apportioned are averaged and amortized in the benefit period.
1) Among these: The prepaid rent charge of the fixed assets acquired by operating lease is averaged and
amortized according to the term provided in the rent contract or other reasonable method.
2) The expenditure on the improvement of operating leased fixed assets should be averaged and amortized
according to the shorter one of the remaining part of the lease term and the remaining service life.
(19) Transfer of the assets with repurchase conditions
If the Company signs a repurchase agreement when selling products or transferring other assets, whether the
products sold meet the conditions for income confirmation is judged according to the articles of the agreement. If
the repurchase is a financing transaction, the Company does not confirm sales income when delivering products
or assets. If the repurchase price is higher than the selling price, interests are accrued for the difference during
repurchase period and recorded into financial expenses.
(20) Anticipated liabilities
In the case that the Company is involved in proceedings like lawsuits, debt guarantee, loss contracts,
restructuring and so on, the proceedings are confirmed as anticipated liabilities if they very possibly need
delivery of assets or provision of labor service and their amount can be measured reliably.
1) Confirmation standards for anticipated liabilities
The obligations related to contingencies, which meet all the following conditions, are confirmed by the
Company as anticipated liabilities.
The obligation is a current obligation undertaken by the Company;
The fulfillment of the obligation is very likely to cause an outflow of economic interests from the Company;
The amount of the obligation can be measured reliably.
2) Measurement method of anticipated liabilities
Initial measurement is carried out to anticipated liabilities of the Company according to the optimum
estimation amount of the required expense when relevant obligations are fulfilled.
When determining the optimum estimation amount, the Company considers in a comprehensive way the
factors related to contingencies like risks, uncertainties and time value of currency. Where there are great
influences of time value of currency, the optimum estimation amount is determined after discounting
relevant future cash flows.
The optimum estimation amount is determined according to different situations as follows:
Where there is a continuous range (or interval) of the required expense and different results in the range
have same possibility to occur, the optimum estimation amount is determined according to the intermediate
value of the range, i.e. the average of the maximal and the minimum amounts.
Where there is no continuous range (or interval) or there is a continuous range but different results have
different possibilities to occur, if contingencies involve individual proceedings, the optimum estimation
amount is the amount most likely to occur, and if contingencies involve several proceedings, the optimum
estimation amount is determined according to various possible results and the calculation of relevant
probabilities.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
If all expenses or part of them, which are used by the Company for paying off anticipated liabilities, are
anticipated to be compensated by a third party and compensation amount is basically sure to be received, the
compensation amount is confirmed separately as an asset, which should not exceed the book value of the
anticipated liabilities.
(21) Share payment and equity instruments
1) Types of share payment
The payment of employees’ shares settled with equity is recorded into costs and expenses and capital public
reserve (other capital public reserves) according to the sound value of the equity instruments on the grant
date (the method of the determination of the grant date is specifically set) and the subsequent changes of the
sound value will not be confirmed. No adjustments will be made to the confirmed costs and expenses and
total owners' equity after the option becomes exercisable. The share capital and share capital premium are
confirmed according to the conditions of the exercise of the options and the capital public reserve confirmed
during the vesting period (other capital public reserve) is carried forward. Among these: For the share
payment in exchange for the employees' services, relevant assets costs and the current expenses are
recorded on each balance sheet date within the vesting period, on the basis of the best estimation of the
number of exercisable equity instruments and according to the sound value of the equity instruments on the
grant date and as capital public reserve (other capital public reserve). The share payment in exchange for the
service of other parties is measured according to the sound value of the service exchanged from other
parties. If such sound value cannot be measured reliably but the sound value of the equity instruments can
be measured reliably, then the above share payment is measured according to the sound value of the equity
instruments on the date of service obtainment and recorded into relevant assets cost or expense and as other
capital public reserve in the capital public reserve.
For the share payment involving employees settled in cash, measurement is made once again on the sound
value of the equity instruments on each balance sheet date to determine costs and expenses and wage
payable. On each balance sheet date within the vesting period, measurement is made according to the sound
value of the liabilities borne as calculated and determined on the basis of the share or other equity
instruments and on the basis of the best estimation of the number of exercisable equity instruments. The
results are recorded into relevant assets costs or expenses and as wage payable. No cost expenses will be
confirmed after the option becomes exercisable. The sound value of the wage payable is re-measured and
the changes of such sound value are recorded into gains and losses from changes of sound value.
2) Determination method of sound value
For equity instruments such as the granted option, which exist in the active market, the sound value is
determined according to their prices in the active market. For those not existing in the active market, the
sound value is determined by adopting the option pricing model, which should be selected in consideration
of the following factors: ① option exercise price; ② option period; ③ the current price of the
underlying shares; ④ the predicted fluctuation rate of the share price, ⑤ the estimated dividend of the
share; ⑥ risk free rate in the option period; ⑦ payment of shares of installment options
3) Basis for the determination of the best estimation of the exercisable equity instruments
On each balance sheet date in the vesting period, the Company should make the best estimation on the basis
of the latest subsequent information on the changes of the number of the employees with exercisable option
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
and adjust the number of the exercisable equity instruments. On the vesting date, the ultimate number of the
anticipated exercisable equity instruments should be consistent with the actual quantity of the exercisable
options.
The accumulative amount of the cost expenses to be confirmed in this report period is calculated on the
basis of the sound value of the above equity instruments and the anticipated exercisable equity instruments.
Such amount deducted by the accumulative confirmed amount in the last period is taken as the amount of
cost expenses to be confirmed in this report period.
(22) Income
1) Standards for confirmation time of sales income
The realization of the income from the sale of commodities is confirmed when the Company has already
transferred the main risks and consideration in the ownership right of the commodities to the purchaser, the
Company has not retained any further management right connected to the ownership right nor implement
effective control over the sold commodities, the amount of the revenue can be reliably measured, relevant
economic interests are likely to flow into the enterprise, and relevant costs incurred or to be incurred can be
measured reliably.
2) Basis for confirmation of income from transfer of asset use right
For economic interests related to transactions, which are very likely to flow into the Company and whose
amount can be reliably measured, the amount of the income from the transfer of asset use right is
determined according to the conditions as follows:
i. The amount of interest income is determined according to the time and actual interest rate of other
people using the monetary fund of the enterprise.
ii. The amount of the income from use fee is determined in accordance with the time and method of
charges as agreed in relevant contract or agreement.
iii. The amount of the rent income is determined by equally allocating the total income of the lease
contract in the entire contract period without deducting the rent-free period.
3) Basis for and method of determining contract completion progress when confirming income from
labor service and construction contracts by percentage-of-completion method
Where the results of the labor services provided on the balance sheet date can be estimated reliably, the
income from the provision of labor services is confirmed with the percentage of completion method. The
completion progress of a labor service transaction is determined by surveying the work completed.
The total amount of the income from the provision of labor services is determined according to the price
money received or receivable of a relevant contract or agreement, unless the price money received or
receivable of a relevant contract or agreement is unfair. The labor services income of this report period is
confirmed on the balance sheet date according to the resulted amount of the total amount of income from
provision of labor services times the completion percentage and deducted by the accumulative amount of
the confirmed income from provision of labor services in previous accounting periods. At the same time, the
labor cost of this report period is carried forward according to the estimated total cost of the provision of
labor services times the completion percentage and deducted by the accumulative amount of the confirmed
labor cost in previous accounting periods.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Where the results of the provision of labor services on the balance sheet date cannot be estimated reliably,
such results are processed respectively according to the following conditions:
i. Where it is estimated that the labor services cost incurred can be compensated, the income from
provision of labor services is confirmed according to the amount of the labor services cost incurred and
the same amount is transferred into the labor cost.
ii. Where it is estimated that the labor services cost incurred cannot be compensated, the labor services
cost incurred is recorded into the gains and losses of this report period and no income is confirmed.
(23) Government subsidies
1) Type
Government subsidies refer to the monetary assets and non-monetary assets obtained by the Company from
the government free of charge. The subsidies are divided into those related to assets and those related to
profits.
2) Accounting treatment method
The government subsidies related to the purchase and construction of long-term assets like fixed and
intangible assets are confirmed as deferred profits and recorded by phases into the non-operating income
according to the service life of the assets purchased and constructed.
The government subsidies related to profits, used to compensate relevant expenses or losses in later periods,
are confirmed as deferred profits when they are obtained; the subsidies, used to compensate relevant
expenses or losses having occurred, are confirmed as the current non-operating income when they are
obtained.
(24) Deferred income tax assets and liabilities
1) Basis for the confirmation of deferred incomes tax assets
The Company confirms the deferred incomes tax assets generated from the deductible temporary difference.
2) Basis for confirmation of deferred income tax liabilities
The temporary difference between the payable tax but not paid of this report period and that of previous
periods is confirmed by the Company as deferred income tax liabilities. The temporary difference generated
from goodwill transactions or transactions not of enterprise mergers, which, at the transaction time, do not
influence accounting profits or the amount of the tax payable, is not included.
(25) Operating lease and financing lease
1) Accounting treatment of operating lease
i. The fee paid by the Company for rented assets is apportioned by the straight-line method in the whole
lease term without deduction of the rent-free period and recorded into current expenses. The initial
direct expenses related to lease transactions, paid by the Company, are recorded into current expenses.
In case that the leasing party undertakes the lease-related expenses that should be undertaken by the
Company, the Company deducts the expenses from the total lease fee and the lease fee after deduction
is apportioned in the lease term and recorded into current expenses.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
ii. The lease fee received by the Company from leasing of assets is apportioned by the straight-line
method in the whole lease term without deduction of the rent-free period and recorded into the lease
income. The initial direct expenses related to lease transactions, paid by the Company, are recorded
into current expenses. Those with significant amounts are capitalized and recorded by periods into
current profits in the whole lease term according to the same basis for confirmation of the lease
income.
In case that the Company undertakes the lease-related expenses which should be undertaken by the
lessee, the Company deducts the expenses from the total lease income and the lease expenses after
deduction are allocated in the lease term.
2) Accounting treatment of financing lease
i. Assets acquired under financing lease: Between the sound value of rented assets and the minimum
lease payment, the Company adopts the lower one as the recording value of the rented assets, the
minimum lease payment as the recording value of long-term accounts payable, and the difference
between the two as financing expenses yet to be confirmed.
The financing expenses yet to be confirmed are apportioned by the Company by the actual interest rate
method in the lease term of the assets and recorded into accounting expenses. Assets given out under
financing lease:
ii. The difference between the total residual value, without guarantee, of the financing lease payment
receivable and the current value is confirmed by the Company on the lease-beginning date as financing
profits yet to be realized, and as the lease income in future lease periods. The initial direct expenses
related to lease transactions are recorded into the initial calculation of financing lease payment
receivable and the amount of profits confirmed in the lease term is reduced.
(26) Changes of main accounting policies and accounting estimates
1) Changes of accounting policies
In accordance with the provisions of the Interpretation No. 4 of the ASBE, in the merger of the enterprises
not under the control of the same entity, the agency fees and other management fees, like auditing, legal
service and consultancy fees, paid by the purchasing party for the merger should be recorded into the gains
and losses of this report period at the time of occurrence; in the consolidated financial statements, when the
current losses undertaken by the minority shareholders of a subsidiary are more than the proportion enjoyed
by the minority shareholders in the owners’ equity of the subsidiary at the period beginning, the difference
should still be offset against the equity of the minority shareholders. In this report period, the Company
made changes to its accounting policies in accordance with the above-mentioned provisions.
2) Changes of accounting estimates
No change was made to the main accounting estimates in this report period.
(27) Correction to the accounting errors in the previous period
1) Retrospective restatement
No accounting error was adjusted by the retrospective restatement method in this report period.
2) Prospective application
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
No accounting error was adjusted by the prospective application method in this report period.
iii. Taxes
(1) Main tax types and tax rates imposed on the Company
Tax category Basis Tax rate
Value-added tax Income from sale of products 17
Operating tax Lease income 5
Urban maintenance and construction tax Value-added tax and business tax payable 7
Education surtax Value-added tax and business tax payable 3
Enterprise income tax Taxable income 24 , 25 , 16.5
The enterprise income tax rate for Xi’an SEG Electronics Market Co., Ltd, Suzhou SEG Electronics Market
Management Co., Ltd and Changsha SEG Development Co., Ltd, subsidiaries of the Company, was 25%.
The enterprise income tax rate of SEG (Hong Kong) Storage and Transportation Co., Ltd., a subsidiary indirectly
controlled by the Company, was 16.5%.
The enterprise income tax rate of rest companies except the above-mentioned ones was 24%.
(2) Tax preference and official documents
In accordance with the Notice of the State Council on the Implementation of Interim Enterprise Income Tax
Preference Policies (Guo Fa [2007] No. 39), from January 1, 2008, the enterprises enjoying low tax rate policies
should gradually adopt the statutory tax rate within 5 years after the new tax law is implemented. For the
enterprises enjoying an enterprise income tax rate of 15%, the rate should be 18% in 2008, 20% in 2009, 22% in
2010, 24% in 2011 and 25% in 2012; for those enjoying a rate of 24%, the rate should be 25% from 2008; the
enterprises in Shenzhen Special Economic Zone should enjoy a low tax rate of 15% in accordance with the
Regulations of the Special Economic Zones of Guangdong Province. The enterprise income tax rate of the
Company in 2011 was 24% in accordance with the above-mentioned policies.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
iv. Enterprise Merger and the Consolidated Financial Statements
Unless specifically noted otherwise, the unit for amounts in the formulas of this section is RMB ten thousand Yuan.
(3) Information on subsidiaries
1) The subsidiaries acquired through establishment or investment
The amount The balance after the difference
Balance of of minority
Actual the net Share-holdi Voting Financial
between of the period
shareholders allocated to the lossesshareholders and
minority
Full name of Type of Place of Nature of Registere investmen actual ng right Minority ’ equity
statements shareholders offsetting the period-beginning shares enjoyed
subsidiary subsidiary registratio business d capital Business scope t at the investment proportion proportio consolidate by minority shareholders, in case the
n end of the in (%) n (%) d or not ' equity minority
period subsidiarie than latter, offset
shareholders former is moreowners’theequity ofis the
against the
s ’ gains and parent company
losses
Xi’an SEG Share- Service Domestic trade;
Electronics controlled Xi’an industry 3,000 material supply 1,950.00 650.00 650.00 Yes 1,956.50
market Co., Ltd subsidiary and marketing
Shenzhen SEG
Electronics Share- Service Domestic trade;
Market controlled Shenzhen industry 3,000 material supply 2,100.00 700.00 700.00 Yes 269.50
Management Co., subsidiary and marketing
Ltd
Suzhou SEG Share- Service Domestic trade;
Electronics controlled Su Zhou industry 3,000 material supply 1,350.00 450.00 450.00 Yes 2,983.70
market Co., Ltd subsidiary and marketing
Shenzhen Hotel
Chengguo Share- management,
Business Hotel controlled Shenzhen Service 10,000 information and 10,000 665.80 665.80 Yes
Management Co., subsidiary industry consultancy
Ltd property
management
Shenzhen SEG Share-
E-Commerce Co., controlled Shenzhen 48,000 15,300 510.00 510.00 Yes 12,702.40
Ltd subsidiary
Shenzhen SEG
Electronics Share- Service Domestic trade;
Market controlled Nanjing industry 20,000 material supply 20,000 1,000.00 1,000.00 Yes
Management Co., subsidiary and marketing
Ltd
Half of the directors, the Chairman of the Board, the General Manager, the Chief Financial Officer and the management team of Suzhou SEG
Electronics Market Management Co., Ltd are all dispatched by the Company that actually controls the operation of Suzhou SEG, so Suzhou SEG was
included into the consolidation scope.
2) Subsidiaries acquired through the merger of enterprises under the control of the same entity
The balance after the
difference between the
The amount losses of the period
Balance of of minority allocated to minority
Actual the net Share- Voting Financial shareholders’ shareholders and the
Full name of Type of Place of Nature of Registered Business investment actual holding right Minority equity
statements shareholders' offsetting period-beginning shares
subsidiary subsidiary registration business capital scope at the end investment proportion proportion consolidate enjoyed by minority
of the in (%) (%) d or not equity minority shareholders, in case
period subsidiaries shareholders’ the former is more than
gains and the latter, is offset
losses against the owners’
equity of the parent
company
Shenzhen SEG Share- Property lease
Baohua Service
Electronics Co., controlled
subsidiary
Shenzhen industry 30,808.80 and
management
20,512.50 665.80 665.80 Yes 21,731.60
Ltd
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
The balance after the
difference between the
The amount losses of the period
Balance of of minority allocated to minority
Actual the net Share- Voting Financial shareholders’ shareholders and the
Full name of Type of Place of Nature of Registered Business investment actual holding right Minority equity
statements shareholders' offsetting period-beginning shares
subsidiary subsidiary registration business capital scope at the end investment proportion proportion consolidate enjoyed by minority
of the in (%) (%) d or not equity minority shareholders, in case
period subsidiaries shareholders’ the former is more than
gains and the latter, is offset
losses against the owners’
equity of the parent
company
Shenzhen SEG Share- Overseas
Storage and controlled Shenzhen Service 66,000 transportation 65,729.10 995.90 995.90 Yes 361.50
Transportation subsidiary industry and bonded
Co., Ltd. storage
Storage and
relevant
transportation
Shenzhen SEG service,
Orient Industrial Share-contr HK$ production HK$
Development Co., olled
subsidiary
Shenzhen Storage 16,600 and operation 16,600 995.90 995.90 Yes
Ltd. of electronic,
mechanical
and electrical
products
SEG (Hong Kong) Share-contr Hong Transporta
Company Limited olled Kong tion HK$ 500 Transportation HK$ 500 995.90 995.90 Yes
subsidiary
Shenzhen SEG Share-contr Investment in
Industry olled Shenzhen Investmen 25,500 industrial and 23,780.00 917.90 917.90 Yes 1,686.00
Investment Co., subsidiary t commercial
Ltd businesses,
3) Subsidiaries acquired through the merger of enterprises not under the control of the same entity
The balance after the
The amount difference between the
of minority losses of the period
Actual Balance of shareholders’ allocated to minority
investment the net Share-holding Voting Financial Minority equity shareholders and the
Full name of Type of Place of Nature of Registered Business actual
at the end investment right statements
proportion proportion consolidated shareholders' offsetting period-beginning shares
subsidiary subsidiary registration business capital scope of the (%) equity minority enjoyed by minority
period in (%) or not case the
shareholders’ shareholders, in than the
subsidiaries gains and former is more
losses latter, is offset against the
owners’ equity of the
parent company
Changsha SEG Share- Service
Development Co., controlled Changsha industry 35,000 Property
lease 69,000 460 510 Yes 59,795.00
Ltd subsidiary
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
The capital structure of Changsha SEG Development Co., Ltd at present is that the Company is the first majority
shareholder holding 46% shares of Changsha SEG, Jinhong Group Co., Ltd holds 40% shares and Huaya Management
Co., Ltd holds 14% shares, among which, Jinhong Group Co., Ltd and Huaya Management Co., Ltd have no
associated relationship with each other. Half of the directors, the Chairman of the Board, the General Manager, the
Chief Financial Officer and the management team of Changsha SEG Development Co., Ltd are all dispatched by the
Company from its own staffs. Therefore, the Company has obtained the control of Changsha SEG Development Co.,
Ltd.
(4) Special purpose entities and operating entities whose share-controlling right is formed through trusted
operation or lease taking
There were no special purpose entities or operating entities whose share-controlling right was formed through
trusted operation or lease taking in this report period.
(5) Entities newly included in the consolidation scope in this report period
In this report period, Shenzhen SEG E-Commerce Co., Ltd and Shenzhen SEG Nanjing Electronics Market
Management Co., Ltd, newly set up by the Company, were included in the consolidation scope.
(6) No merger of the enterprises under the control of the same entity occurred in this report period.
(7) No merger of the enterprises not under the control of the same entity occurred in this report period.
(8) There were no subsidiaries decreased in this report period, the shares of which were sold and upon which
the controlling right was lost.
(9) No counter-purchase took place in this report period.
(10) No consolidation by merger took place in this report period.
(11) Translation exchange rate for the main items of the financial statements of overseas operating entities
It is provided by Article 12 of the ASBE No. 19-Translation of Foreign Currency that:
When making translation on the financial statements for overseas operation, the enterprises should abide by the
regulations as follows:
1) The assets and liabilities items in the balance sheet are translated according to the current exchange rate on
the balance sheet date. The owners’ equity items other than "retained profits” are translated according to the
current exchange rate at the time when incurred.
2) The items of income and expenses in the Profit Statement are translated according to the spot exchange rate
on the transaction date. They may also be translated according to the exchange rate determined by a
systematic and reasonable method, which is close to the spot exchange rate of the transaction date.
The translation difference in the financial statements in foreign currency caused by the above-mentioned methods 1
and 2 is listed separately under the owner’s equity items in the balance sheet.
The translation difference of relevant financial statements in foreign currency by overseas operating entities, which
are included in the Consolidated Financial Statements of the Company in this report period, is as follows:
Main items of Exchange rate for The translation difference of the financial
Overseas operating Recording
financial translation of the statements in foreign currency, which is listed by
entity currency
statements financial statements the Financial Statements as of 31.12.10
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
SEG (Hong Kong) Assets and
HK$ 0.8316 -32.19
Company Limited liabilities
v. Notes on the Main Items of the Consolidated Financial Statements
Unless specifically noted otherwise, the unit for the following amounts is RMB Yuan.
(12) Monetary capital
Item Period-end balance Period-beginning balance
Amount in Conversion Amount in RMB Amount in Conversion Amount in RMB
foreign rate foreign rate
currency currency
Cash
RMB 614,830.06 375,167.26
US$ 973.00 6.4725 6,297.74 542.00 6.6227 3,589.50
HK$ 66,579.69 0.8316 55,367.67 391,696.07 0.8509 333,294.19
Subtotal 676,495.47 712,050.95
Bank deposit -
RMB 591,473,712.07 569,665,431.34
US$ 7,485.89 6.4725 48,452.42 6,561.46 6.6227 43,454.75
HK$ 3,537,235.82 0.8316 2,941,565.31 2,806,912.54 0.8509 2,388,401.88
Subtotal 594,463,729.80 572,097,287.97
Other monetary capital
RMB 2,675.00 8,839.83
US$
Subtotal 2,675.00 8,839.83
Total 595,142,900.27 572,818,178.75
(13) Accounts receivable
1) Accounts receivable disclosed according to different types
Period-end amount Period-beginning amount
Book balance Bad debt provision Book balance Bad debt provision
Type
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts receivable
with a significant
amount individually,
11,897,173.07 33.60 11,591,915.97 97.43 11,897,173.07 30.66 11,591,915.97 97.43
for which bad debt
provision is
separately accrued
Accounts receivable for which bad debt provision is accrued according to different combinations
Bad debt provision
accrued for
20,922,679.61 59.09 1,434.14 0.01 24,317,474.64 62.67 1,434.14 0.01
Combination 1 by
the aging analysis
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Period-end amount Period-beginning amount
Book balance Bad debt provision Book balance Bad debt provision
Type
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
method
Subtotal of
20,922,679.61 59.09 1,434.14 0.01 24,317,474.64 62.67 1,434.14 0.01
combinations
Accounts receivable
with an insignificant
amount individually,
2,586,810.03 7.31 2,185,456.80 84.48 2,586,810.03 6.67 2,185,456.80 84.48
for which bad debt
provision is
separately accrued
Total 35,406,662.71 100.00 13,778,806.91 38.92 38,801,457.74 100.00 13,778,806.91 35.51
Notes on types of accounts receivable:
1) Accounts receivable in the combination, for which bad debt provision was accrued by the aging analysis
method:
Period-end balance Period-beginning balance
Duration of the Book balance Book balance
Bad debt Bad debt
accounts Proportion Proportion
Amount provision Amount provision
(%) (%)
Less than 1 year 20,893,996.81 99.86 24,288,791.91 99.88 -
1-2 years 28,682.80 0.14 1,434.14 28,682.73 0.12 1,434.14
2-3 years - 0.00 -
Over 3 years - 0.00 -
Total 20,922,679.61 100.00 1,434.14 24,317,474.64 100.00 1,434.14
2) Bad debt provision accrued at the end of the period for the accounts receivable with a significant amount
individually, for which impairment tests are separately carried out.
Content of account Amount of bad Percentage of
Book balance Reason
receivable debt provision provision
The duration is more than 5 years and the
Jiangsu Unicom 3,092,011.09 3,092,011.09 100.00
account is impossible to be recovered.
Shenzhen Liyuanshun The duration is more than 5 years and the
1,906,865.35 1,906,865.35 100.00
Industrial Co., Ltd account is impossible to be recovered.
Shanghai Tianci The duration is more than 5 years and the
899,000.00 899,000.00 100.00
Industrial Co., Ltd account is impossible to be recovered.
Zhejiang Financial The duration is more than 5 years and the
786,000.00 786,000.00 100.00
Information Co., Ltd account is impossible to be recovered.
Guangzhou Jiajie There is a big risk in recovery due to the
3,052,571.00 2,747,313.90 90.00
Technology Co., Ltd dispute.
Shuangxionghui Fabric The duration is over 5 years and the
2,160,725.63 2,160,725.63 100.00
Co., Ltd account has not been recovered yet.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Content of account Amount of bad Percentage of
Book balance Reason
receivable debt provision provision
Total 11,897,173.07 11,591,915.97 97.43
3) There are no receivable accounts, the total amount or a large proportion of which have been accrued as bad
debt provision before this report period but were recovered or transferred back with the total amount or a
large proportion in this report period.
4) No accounts receivable are recovered through other methods like restructuring in this report period.
5) No accounts receivable are actually charged off in this report period.
6) Among the period-end accounts receivable, no accounts are receivable from corporate shareholders that
hold over 5% (including 5%) shares with voting right of the Company.
7) Top five period-end accounts receivable
Percentage in the total
Relationship with
Name of company Amount Duration amount of accounts
the Company
receivable
Shenzhen Runneng Digital Within one year
Customer 6,282,609.13 17.74
Co., Ltd. (including one year)
Guangzhou Jiajie Within one year
Customer 3,052,571.00 8.62
Technology Co., Ltd. (including one year)
Jiangsu Unicom Customer 3,092,011.09 Over 5 years 8.73
Within one year
NipponExpress(HK)Co.,Lyd. Customer 2,186,499.27 6.18
(including one year)
Shuangxionghui Fabric Co.,
Customer 2,160,725.63 Over 5 years 6.10
Ltd.
Total 16,774,416.12 47.38
8) For details on the accounts receivable from related parties at the period end, please refer to Section VI (V)
in the Notes.
9) There are no receivable accounts whose confirmation is terminated in this report period.
10) There are no receivable accounts taken as objects for securitization in this report period.
(14) Advances
1) Advances listed according to different account-age
Period-end balance Period-beginning balance
Age of the accounts
Amount Proportion (%) Amount Proportion (%)
Less than 1 year 40,239,253.95 100.00 15,939,292.30 61.36
1-2 years 1,040.00 0.00 35,295.00 0.14
2-3 years 10,000,000.00 38.50
Over 3 years - -
Total 40,240,293.95 100.00 25,974,587.30 100.00
2) Top five advances
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Relationship with Reason for not
Name of company Amount Duration
the Company being settled
Tonmac International Electronics Within one year Prepaid rent
Partner 20,000,000.00
(Suzhou) Co., Ltd (including one year) charge
Xi'an Gaoke (Group) New West
Within one year Prepaid rent
China Industrial Development Co., Partner 10,000,000.00
(including one year) charge
Ltd
Prepaid
Shanghai Lingba Advertising Co., Within one year
Supplier 2,928,000.00 renovation
Ltd (including one year)
payment
Within one year Prepaid park
Profit Step Enterprises Limited Supplier 405,129.32
(including one year) rent charge
Jiangsu Huahai Fire Engineering Prepaid
Within one year
Installation Co., Ltd., Jiangning Supplier 262,633.50 renovation
(including one year)
Branch payment
Total 33,595,762.82
3) Among the period-end advances, no advances are receivable from corporate shareholders that hold
over 5% (including 5%) of the shares with voting right of the Company.
(15) Other receivables
1) Receivables disclosed according to different types:
Period-end amount Period-beginning amount
Book balance Bad debt provision Book balance Bad debt provision
Type
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
Other receivables
with a significant
amount
individually, for 26,413,223.34 45.52 23,413,223.34 88.64 26,413,223.34 60.96 23,413,223.34 88.64
which bad debt
provision is
separately accrued
Other receivables for which bad debt provision is accrued according to different combinations
Combination 1 21,331,460.09 36.77 182,717.40 0.86 6,642,611.49 15.33 182,717.40 2.75
Subtotal of
21331460.09 36.77 182,717.40 0.86 6,642,611.49 15.33 182,717.40 2.75
combinations
Other receivables
with an insignificant
amount
individually, for 10,275,391.39 17.71 8,876,168.65 86.38 10,275,391.39 23.71 8,876,168.65 86.38
which bad debt
provision is
separately accrued
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Period-end amount Period-beginning amount
Book balance Bad debt provision Book balance Bad debt provision
Type
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
Total 58,020,074.82 100.00 32,472,109.39 55.97 43,331,226.22 100.00 32,472,109.39 74.94
Notes on types of other receivables:
i. Other receivables in the combination, for which bad debt provision is accrued by the aging analysis
method:
Period-end balance Period-beginning balance
Book balance Book balance
Duration of the accounts Bad debt Bad debt
Proportion Proportion
Amount provision Amount provision
(%) (%)
Less than 1 year 20,181,010.33 94.61 5,483,632.75 82.55
1-2 years 232,598.28 1.09 11,629.91 249,656.25 3.76 12,482.81
2-3 years 124,828.10 0.59 12,482.81 116,299.11 1.75 11,629.91
Over 3 years 793,023.38 3.72 158,604.68 793,023.38 11.94 158,604.68
Total 21,331,460.09 100.00 182,717.40 6,642,611.49 100.00 182,717.40
ii. Bad debt provision accrued at the end of the period for the accounts receivable with a significant
amount individually, for which impairment tests are separately carried out.
Name of Content of other Amount of Percentage of
company receivables Book balance bad debt provision Reason
provision
No.1: Yangjiang Debt restructuring The duration is more than 5
Yuntong Grease of SEG Orient 8,530,276.35 8,530,276.35 100.00 years and the account is
Co., Ltd impossible to be recovered.
Creditor’s right Debt restructuring The duration is more than 5
transferred in by of SEG 5,904,271.52 5,904,271.52 100.00 years and the account is
SEG Communications impossible to be recovered.
Communications
Shenzhen Debt restructuring The duration is more than 5
Lianjing Trade of SEG Orient 5,697,287.51 5,697,287.51 100.00 years and the account is
Co., Ltd. impossible to be recovered.
Shenzhen Top Debt restructuring The duration is more than 5
Industry Co., of SEG Orient 3,281,387.96 3,281,387.96 100.00 years and the account is
Ltd. impossible to be recovered.
Tonmac
International
Electronics Rent deposit 3,000,000.00 - -
(Suzhou) Co.,
Ltd
Total 26,413,223.34 23,413,223.34 88.64
2) There are no other receivables, the total amount or a large proportion of which have been accrued as bad
debt provision before this report period but recovered or transferred back with the total amount or a large
proportion in this report period. There are no other receivables recovered in this report period by other
methods like restructuring, either.
3) No other receivables are actually charged off in this report period.
4) Other period-end receivables from corporate shareholders that hold over 5% (including 5%) share with
voting rights of the Company.
Period-end balance Period-beginning balance
Name of company Bad debt provision Bad debt provision
Book balance accrued Book balance accrued
Shenzhen SEG Group 80,000.00 - 80,000.00 -
Total 80,000.00 - 80,000.00 -
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
5) Top five of other accounts receivable
Relationship Percentage in the total
Name of company with the Amount Duration amount of other Nature or content
Company accounts receivable
No.1: Yangjiang Business related Debt restructuring
Yuntong Grease Co., organization 8,530,276.35 Over 5 years 14.70 of SEG Orient
Ltd
Within one
Bao’an Jingyang Business related 6,000,000.00 year 10.34 Hotel rent
Hotel organization (including
one year)
Creditor’s right Debt restructuring
transferred in by Business related 5,904,271.52 Over 5 years 10.18 of SEG
SEG organization Communications
Communications
Shenzhen Lianjing Business related 5,697,287.51 Over 5 years 9.82 Debt restructuring
Trade Co., Ltd. organization of SEG Orient
Shenzhen Top Business related 3,281,387.96 Over 5 years 5.66 Debt restructuring
Industry Co., Ltd. organization of SEG Orient
Total 29,413,223.34 50.69
6) For details on the accounts receivable from related parties, please refer to Section VI (V) in the Notes.
7) There are no other receivables whose confirmation is terminated in this report period.
8) There are no other receivables taken as objects for securitization in this report period.
(16) Inventory
1) Types
Period-end balance Period-beginning balance
Item Provision for Net book Provision for Net book
Book balance inventory value Book balance inventory value
price drop price drop
Raw materials 74,804.09 74,804.09
Low-cost 278,409.32 278,409.32 151,585.44 151,585.44
consumables
Finished products 652,640.44 652,640.44 3,979,497.02 3,979,497.02
(Inventories)
Total 931,049.76 931,049.76 4,205,886.55 4,205,886.55
Among which, there is no inventory as guaranty in the period-end balance.
There is no inventory whose ownership is restricted in the period-end balance
(17) Financial assets available for sale
1) Financial assets available for sale
Item Period-end sound value Period-beginning sound value
(1) Bonds available for sale -
(2) Equity instruments available for
743,973.58 808,297.56
sale Including:
3 Others -
Total 743,973.58 808,297.56
(18) Investment in joint ventures and associated enterprises
Unit: RMB ten thousand Yuan
Total
Name of the Voting ratio in Total liabilities Total net assets Net profits of
Shareholding Total assets at operating
invested the invested at the period at the period this report
radio the period end income of this
company company end end period
report period
I.
Shenzhen SEG
Samsung Co., 22.45 22.45 430,635,382.11 188,173,691.37 242,461,690.74 -25,247,958.21
Ltd.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Shenzhen SEG
Orient
Industrial 20.00 20.00 495,120.18 783,822.01 -288,701.83 232,178.13 -55,877.57
Development
Co., Ltd.
Shanghai SEG
Electronics 35.00 35.00 47,081,620.08 19,770,143.05 27,311,477.03 17,078,144.57 3,191,679.98
Market Co., Ltd
(19) Long-term equity investment
1) Particulars of long-term equity investment
Notes on
the
occasion
Share- where the
holdin Ratio proportion
g of of the
propo votin shares of Impairme Cash
rtion g the nt dividen
Invested Accounting Investment Period-begin Increase or Period-end in the right invested Impairment provision ds of
organization method cost ning balance decrease balance invest in the organizati provision accrued in this
ed inves on, held this report report
organi ted by the period period
zation comp Company,
(%) any is not
consistent
with the
voting
right
Shanghai SEG the equity
Electronics method 1,750,000.00 8,441,558.09 1,117,087.99 9,558,646.08 35 35
Market Co., Ltd.
Shenzhen SEG the equity 215,645,740.5 118,990,783.20
Samsung Co., method 6 -5,669,357.38 113,321,425.82 22.45 22.45
Ltd.
Shenzhen SEG
Orient Industrial the equity 400,000.00 -- 0.00 20 20
Development method
Co., Ltd.
Subtotal by the 127,432,341.29 -4,552,269.39 122,880,071.90
equity method
Nanjing the cost
Shangsha Co., method 280,000.00 280,000.00 280,000.00 0.68 0.68
Ltd.
Shenzhen Tianji
Optoelectronic the cost
Technology method 105,000.00 105,000.00 105,000.00 105,000.00
Industrial Co.,
Ltd.
Anshan Yibai the cost 15,000.00 15,000.00 15,000.00
Co., Ltd method
Shenzhen SEG
GPS Scientific the cost 8,275,321.43 13,515,392.83 13,515,392.83 12.5 12.5
Navigations Co., method
Ltd
Shenzhen SEG
Telecom the cost 3,679,217.22 3,679,217.22 3,679,217.22 99.17 99.17 3,679,217.22
Equipment Co., method
Ltd
Subtotal by the 17,594,610.05 17,594,610.05 3,784,217.22
cost method
Total 145,026,951.34 140,474,681.95 3,784,217.22
(20) Investment property
Period-beginning Increase in this Decrease in this
Item Period-end balance
balance report period report period
1. Total original book value 777,742,904.19 0.00 - 777,742,904.19
(1) Houses and buildings 757,293,290.86 0.00 - 757,293,290.86
(2) Land use right 20,449,613.33 0.00 - 20,449,613.33
2. Accumulated depreciation or
accumulated amortization in 190,350,802.84 10,424,541.93 - 200,775,344.77
total
(1) Houses and buildings 185,395,874.57 10,253,728.10 195,649,602.67
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
(2) Land use right 4,954,928.27 170,813.83 - 5,125,742.10
3. Total net value of investment
587,392,101.35 -10,424,541.93 - 576,967,559.42
properties
(1) Houses and buildings 571,897,416.29 -10,253,728.10 - 561,643,688.19
(2) Land use right 15,494,685.06 -170,813.83 - 15,323,871.23
4. Total accumulated
impairment provision for 3,117,633.12 0.00 3,117,633.12
investment properties
(1) Houses and buildings 0.00 0.00
(2) Land use right 3,117,633.12 0.00 3,117,633.12
5. Total book value of
584,274,468.23 -10,424,541.93 573,849,926.30
investment properties
(1) Houses and buildings 571,897,416.29 -10,253,728.10 561,643,688.19
(2) Land use right 12,377,051.94 -170,813.83 12,206,238.11
The amount of depreciation and amortization in this report period is RMB 10,424,541.93 Yuan.
No impairment provision needs to be accrued for investment properties in this report period.
(21) Original price and accumulated depreciation of fixed assets
1) Information on fixed assets
Period-end book Increase in this report Decrease in this report Period-end book
Item
balance period period balance
1. Total original book
159,828,083.77 3,532,028.61 2,672,527.31 101,220,899.02
value
Thereinto: Houses and
52,917,224.57 14,000.00 95,017.30 25,256,913.05
buildings
Machinery equipment 35,437,884.88 2,009,011.40 2,532,010.01 29,081,188.23
Electronic equipment 29,991,820.16 785,615.26 13,500.00 18,101,768.51
Transportation
38,895,678.73 708,380.00 32,000.00 27,297,969.48
equipment
Other equipment 2,585,475.43 15,021.95 0.00 1,483,059.75
Period-end book Increase in this Accrual in this Decrease in this Period-end book
Item
balance report period report period report period balance
2. Total
accumulated 100,361,397.72 4,304,921.07 2,301,309.01 61,470,298.11
depreciation:
Thereinto: Houses
25,337,930.35 1,039,875.34 0.00 28,619,169.56
and buildings
Machinery
29,604,186.84 1,022,037.74 2,277,729.01 4,578,006.77
equipment
Electronic
17,329,653.25 558,720.66 13,500.00 13,207,387.57
equipment
Transportation
26,621,589.48 1,559,428.19 10,080.00 13,823,437.44
equipment
Other equipment 1,468,037.80 124,859.14 0.00 1,242,296.77
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Period-end book Increase in this report Decrease in this report Period-end book
Item
balance period period balance
1. Total original book
59,466,686.05 -772,892.46 371,218.30 39,750,600.91
value
Thereinto: Houses and
27,579,294.22 -1,025,875.34 95,017.30 -3,362,256.51
buildings
Machinery equipment 5,833,698.04 986,973.66 254,281.00 24,503,181.46
Electronic equipment 12,662,166.91 226,894.60 0.00 4,894,380.94
Transportation
12,274,089.25 -851,048.19 21,920.00 13,474,532.04
equipment
Other equipment 1,117,437.63 -109,837.19 0.00 240,762.98
Period-end book Increase in this report Decrease in this report Period-end book
Item
balance period period balance
1. Total impairment
584,618.74 584,618.74
provision
Thereinto: Houses and
584,618.74 584,618.74
buildings
Machinery equipment
Electronic equipment
Transportation
equipment
Other equipment
Period-end book Increase in this report Decrease in this report Period-end book
Item
balance period period balance
1. Total book value of
58,882,067.31 -772,892.46 371,218.30 57,737,956.55
fixed assets
Thereinto: Houses and
26,994,675.48 -1,025,875.34 95,017.30 25,873,782.84
buildings
Machinery equipment 5,833,698.04 986,973.66 254,281.00 6,566,390.70
Electronic equipment 12,662,166.91 226,894.60 0.00 12,889,061.51
Transportation
12,274,089.25 -851,048.19 21,920.00 11,401,121.06
equipment
Other equipment 1,117,437.63 -109,837.19 0.00 1,007,600.44
The depreciation amount accrued in this report period is RMB 4,304,921.07 Yuan.
No fixed assets are transferred from construction in progress in this report period.
2) There are no fixed assets that are temporarily idle at the end of the period.
3) There are no fixed assets obtained through financing lease at the end of the period.
4) There are no fixed assets obtained through operating lease at the end of the period.
5) There are no fixed assets that are held for sale at the end of the period.
6) Period-end fixed assets not gaining the property right certificate
Reason for not gaining the property Anticipated time to gain the
Item Book value
right certificate property right certificate
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
They are built with funds collected by
Houses and buildings 3,157,715.07 buyers, for which not all proceedings
are dealt with
Machinery equipment
Transportation equipment
Electronic equipment
Total
(22) Construction in progress
Period-end balance Period-beginning balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Elevator refitting 342,600.00 - 342,600.00
Fulin Building
6,785,410.06 - 6,785,410.06
Renovation Project
Nanjing SEG
1,865,001.30 1,865,001.30
Decoration Project
Total 1,865,001.30 1,865,001.30 7,128,010.06 - 7,128,010.06
1) Changes on projects of major construction in progress
Prop Including:
ortio Interest
Accumula
Trans n of Accumula ted capitali
Period- Increase in ferre ted zation
cost amount of
Other amount of rate in Source of Period-end
Project name Budget beginning this report d into in Progress interest
decrease interest this capital balance
balance period fixed the capitalizat
assets capitalizat report
bud ion in this
ion period
get report
(%) (%)
period
Fulin Building Self-
6,785,410.06 471,755.22 7,257,165.28 Completed
Renovation prepared
Nanjing SEG
Self-
Decoration 15,000,000.00 1,865,001.30 12.43 45.00 1,865,001.30
prepared
Project
Total 6,785,410.06 2,336,756.52 7,257,165.28 1,865,001.30
(23) Intangible assets
1) Intangible assets
Period-end book Increase in this Decrease in this Period-end book
Item
balance report period report period balance
1. Total original book value 2,004,739.24 19,800.00 2,024,539.24
(1) UFIDA Software 494,480.00 19,800.00 514,280.00
(2) KOA Software 1,280,500.00 1,280,500.00
(3) Money collection software 70,000.00 70,000.00
(4) Land use right 159,759.24 159,759.24
2. Total accumulated amortization 1,373,374.31 94,779.80 1,468,154.11
(1) UFIDA Software 448,125.7 73,179.96 521,305.66
(2) KOA Software 817,215.88 10,048.02 827,263.90
(3) Money collection software 65,333.17 10,168.83 75,502.00
(4) Land use right 42,699.56 1,382.99 44,082.55
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
3.Net book value of intangible
631,364.93 -74,979.80 556,385.13
assets
(1) UFIDA Software 46,354.30 -53,379.96 -7,025.66
(2) KOA Software 463,284.12 -10,048.02 453,236.10
(3) Money collection software 4,666.83 -10,168.83 -5,502.00
(4) Land use right 117,059.68 -1,382.99 115,676.69
4. Total impairment provision -
(1) UFIDA Software -
(2) KOA Software -
(3) Money collection software -
(4) Land use right -
5.Total book value of intangible
631,364.93 -74,979.80 556,385.13
assets
(1) UFIDA Software 46,354.30 -53,379.96 -7,025.66
(2) KOA Software 463,284.12 -10,048.02 453,236.10
(3) Money collection software 4,666.83 -10,168.83 -5,502.00
(4) Land use right 117,059.68 -1,382.99 115,676.69
The amortization amount of this report period is RMB 94,779.80 Yuan.
No intangible assets are used as mortgage or loan security at the end of the period.
(24) Goodwill
Name of the invested organization Increase in Period-end
Period-beginni Decrease in this Period-end
or the item contributing to a this report impairment
ng balance report period balance
goodwill period provision
Changsha SEG Development Co.,
10,328,927.82 -- -- 10,328,927.82 --
Ltd
Total 10,328,927.82 -- -- 10,328,927.82 --
Item Amount
Investment cost 69,000,000.00
Book value of the net assets of the invested organization 57,508,384.14
Estimated increment of net assets 93,383,233.24
Deferred income tax liabilities incurred by the estimated increment of net assets -23,345,808.30
Sound value of the net assets of the invested organization 127,545,809.08
Share-holding proportion in the invested organization 46.00%
The difference caused when the investment cost is more than the recognizable net assets
10,328,927.82
of the invested organization, which should be enjoyed at the time of acquisition
The Company purchased 46% of the equity of Changsha SEG Development Co., Ltd with the price of RMB
69,000,000 Yuan in March 2009. The net assets in book value of Changsha SEG Development Co., Ltd was
RMB 57,508,384.14 Yuan in the current month while the net assets in sound value of Changsha SEG
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Development Co., Ltd after the evaluation for the added value was carried out. Thus, a goodwill amounting to
RMB 10,328,927.82 Yuan was formed.
(25) Long-term expenses to be apportioned
Amortization
Period-beginni Increase in this Period-end Reason for
Item amount in this Other decrease
ng balance report period balance other decrease
report period
Expense on
equipment 3,659,161.33 8,594,451.24 1,318,343.89 10,935,268.68 --
improvement
Firefighting
203,435.62 0.00 28,135.35 175,300.27 --
renovation
Land price of
Tower B and
supporting 464,221.01 1,129,822.00 558,372.84 1,035,670.17 --
facilities fee for
market
Other
long-term
9,650,979.55 494,451.79 1,658,942.02 8,486,489.32 --
expenses to be
apportioned
Total 13,977,797.51 10,218,725.03 3,563,794.10 20,632,728.44 --
(26) Deferred income tax assets and liabilities
1) Deferred income tax assets and liabilities that have been confirmed
Period-beginning
Item Period-end amount
amount
Deferred income tax assets
Bad debt provision 6,944,056.05 6,944,056.05
Provision for inventory price drop
Impairment provision for long-term equity investment 869,012.14 869,012.14
Impairment provision for fixed assets 140,308.50 140,308.50
Impairment provision for investment properties 748,231.95 748,231.95
Impairment provision for intangible assets
Difference in amortization of rent cost 265,921.33 265,921.33
Temporary difference formed by prepaid rent received 163,408.80 1,151,008.15
Total 9,130,938.77 10,118,538.12
Deferred income tax liabilities
Changes on the sound value of financial assets available for sale, which is accrued
156,856.45 172,294.20
as capital public reserve
Change of the sound value of houses and buildings due to mergers (by evaluating
20,850,725.04 21,405,187.99
the increase in value)
Total 21,007,581.49 21,577,482.19
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
2) Amount of temporary difference caused by assets or liabilities incurring the difference
Item Amount of temporary difference
(1) Bad debt provision for accounts receivable 28,875,201.67
(2) Provision for inventory price drop -
(3) Depreciation provision for long-term equity investments 3,679,217.22
(4) Impairment provision for fixed assets 584,618.74
(5) Financial assets available for sale (中文编了两个 5。英文已调整。) 653,568.54
(6) Changes on the sound value of houses and buildings 83,402,900.16
(7) Impairment provision for investment properties 3,117,633.12
Total 120,313,139.45
3) The deferred income tax assets not confirmed
Item Balance
(1) Bad debt provision for accounts receivable 17,375,714.63
(2) Depreciation provision for long-term equity investments 105,000.00
Total 17,480,714.63
(27) Asset impairment provision
Decrease in this
Increase in this report period
report period
Period-beginning
Item Accrual in Period-end balance
balance Write Write
this report Other transfer-in
back off
period
Bad debt provision 46,250,916.30 46,250,916.30
Impairment provision
for long-term equity 3,784,217.22 3,784,217.22
investment
Impairment provision
for investment 3,117,633.12 3,117,633.12
properties
Impairment provision
584,618.74 584,618.74
for fixed assets
Total 53,737,385.38 53,737,385.38
(28) Accounts payable
Item Period-end balance Period-beginning balance
Less than 1 year 6,033,492.11 12,477,050.78
1-2 years 2,482,051.65 846,539.61
2-3 years 734,303.92
Over 3 years 125,191.00 71,362.00
Total 8,640,734.76 14,129,256.31
1) Among the period-end balance, no accounts are payable to the shareholders that hold over 5% (including
5%) shares with voting right of the Company.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
2) Among the period-end balance, no accounts are payable to related parties.
3) The accounts payable with the account-age more than 1 year is the deposit payable.
(29) Advances from customers
Item Period-end balance Period-beginning balance
Less than 1 year 107,871,078.42 119,985,646.63
1-2 years 6,000,589.66 1,989.66
2-3 years 500,000.00
Over 3 years 102,748.56
Total 113,871,668.08 120,590,384.85
1) Among the period-end balance, no advances are receivable from corporate shareholders that hold over 5%
(including 5%) shares with voting right of the Company.
2) Among the period-end balance, no advances are receivable from related parties.
(30) Wages payable
Period-beginning Increase in this report Decrease in this
Item Period-end balance
balance period report period
(1) Wages, bonuses,
6,386,989.74 12,409,651.06 14,429,286.72 4,367,354.08
allowances and subsidies
(2) Benefits of employees 689,517.72 637,526.98 51,990.74
(3) Social insurance
8,739.18 984,472.30 984,807.30 8,404.18
premiums
(4) Housing fund 3,042,449.25 -9,847.48 748,666.00 2,283,935.77
(5) Labor union expenditures
146,063.93 250,886.67 226,507.05 170,443.55
and education expenditure
(6) Compensation due to
50,000.00 50,000.00 0.00
termination of labor contracts
(7) Others 680,042.57 84,898.60 684,898.60 80,042.57
Total 10,264,284.67 14,459,578.87 17,761,692.65 6,962,170.89
There are no arrears among the wages payable to employees.
(31) Taxes and fees payable
Taxes and fees Period-end balance Period-beginning balance
Operating tax -1,594,712.58 -1,228,826.70
Value-added tax -6,111,940.79 369,013.45
Enterprise income tax 12,253,536.60 13,819,583.41
Housing property tax 608,218.12 1,045,080.06
Urban maintenance and construction tax 51,744.97 -8,596.42
Education surtax 79,764.99 47,941.35
Withholding and paying of individual
806,386.55 558,396.46
income tax
Stamp tax and water fund 13,626.46 15,410.60
Others 63,561.20 -580,881.22
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Total 6,170,185.52 14,037,120.99
(32) Dividends payable
Reason for not making
Name of company Period-end balance Period-beginning balance
payment exceeding one year
Shenzhen SEG Computers
305,910.00 258,390.00
Co., Ltd.
Nanjing Shangsha Co., Ltd. 285,120.00 237,600.00
Individual shares 204,079.74 167,727.08
A shares 3,881.48 3,881.48
B shares 45,698.54 45,698.54
Others 70,223.27 103,823.27
Shenzhen SEG Group
225,720.00 178,200.00
Service Co., Ltd.
China Electronic Appliance
392,040.00 297,000.00
(Shenzhen) Co., Ltd.
Total 1,532,673.03 1,292,320.37
(33) Other payables
Item Period-end balance Period-beginning balance
Less than 1 year 72,266,430.62 59,808,040.39
1-2 years 18,119,057.42 17,526,559.04
2-3 years 13,323,431.30 11,660,526.40
Over 3 years 21,293,025.93 21,800,444.63
Total 125,001,945.27 110,795,570.46
1) Among the period-end balance, no accounts are payable to the shareholders that hold over 5% (including
5%) shares with voting right of the Company.
2) Among the period-end balance, no accounts are payable to related parties.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
(34) Share capital
Increase/Decrease of the period
Period-beginning
Item New share Capitalization of Period-end balance
balance Bonus share Others Total
offering public reserve
1. Restricted shares (1)State-held shares
(1) State-owned shares
(2) State-owned legal person’s shares
(3) Other shares held by domestic capital 35,464.00 35,464.00
Including:
Shares held by foreign legal persons
Shares held by domestic natural persons 35,464.00 35,464.00
(4)Shares held by foreign capital
Including:
Shares held by foreign legal persons
Shares held by foreign natural persons
Total of restricted shares 35,464.00 35,464.00
2.Non-restricted shares
(1)RMB common shares (A Share) 538,302,228.00 538,302,228.00
(2) Domestically listed foreign shares (B
246,461,318.00 246,461,318.00
Share)
(3) Overseas listed foreign shares (H Share)
(4)Others
Total of non-restricted shares 784,763,546.00 784,763,546.00
Total 784,799,010.00 784,799,010.00
The aforementioned capital has been audited in the capital verification report (XIN DE YAN ZI ZI [2006] No. 018 (2006) issued by Shenzhen Tianjian
Xinde Certified Public Accountants.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
(35) Capital public reserve
Period-beginning Increase in this Decrease in this
Item Period-end balance
balance report period report period
1. Capital premium (share premium)
(1) Capital by investors 325,329,854.26 325,329,854.3
(2) Influence of the merger of the
enterprises under the control of the
same entity
Subtotal 325,329,854.26 325,329,854.26
2. Other capital public reserve
(1) Other changes on owners’ equity of
the invested organization except net 81,396,966.96 81,396,966.96
gains and losses
(2) Profit or loss from change of the
sound value of financial assets available 363,259.38 32,548.45 330,710.93
for sale
(3) Others 594,638.96 594,638.96
Subtotal 82,354,865.30 32,548.45 82,322,316.85
Total 407,684,719.56 32,548.45 407,652,171.11
(36) Surplus reserve
Period-beginning Increase in this Decrease in this
Item Period-end balance
balance report period report period
Statutory surplus reserve 102,912,835.67 102,912,835.67
Free surplus reserve
Reserve fund
Enterprise development fund
Others
Total 102,912,835.67 102,912,835.67
(37) Retained profits
Accrual/Distribution
Item Amount
Rate
Before adjustment Retained profits of the end of the previous period -211,002,081.30
After adjustment Total period-beginning retained profits (+ for increase, - for
decrease)
After adjustment Period-beginning retained Profit -211,002,081.30
Plus: Net profits attributable to owners of the parent company 26,332,388.35
Less: Accrual of statutory surplus reserve
Accrual of free surplus reserve
Accrual of reserve fund
Accrual of enterprise development fund
Accrual of welfare and bonuses of employees
Accrual of general risk provision
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Accrual/Distribution
Item Amount
Rate
Ordinary share dividends payable
Ordinary share dividends converted to share capital
Retained Profit at the End of the period -184,669,692.95
(38) Operating income and cost
1) Operating income
Amount of the current Amount of the
Item
year previous year
Main operating income 189,952,023.78 168,134,279.97
Other business income 13,453,197.71 10,163,148.23
Main operating cost 139,677,519.73 115,458,375.39
Other business cost 72,866.19 75,072.22
2) Main operating businesses (classified by industries)
Amount of the current year Amount of the previous year
Name of company
Operating revenue Operating cost Operating revenue Operating cost
Electronics market and
114,234,723.15 67,755,024.25 107,224,982.31 63,069,786.57
property operation
Storage and
33,871,997.01 28,060,720.22 35,455,889.46 28,654,742.42
transportation
Trade 37,196,194.67 36,711,465.42 21,127,837.80 20,667,191.37
Hotel 4,625,408.95 3,874,273.06 4,325,570.40 3,066,655.03
E-commerce 23,700.00 3,276,036.78
Total 189,952,023.78 139,677,519.73 168,134,279.97 115,458,375.39
3) Main operating businesses (classified by districts)
Name of Amount of the current year Amount of the previous year
district Operating revenue Operating cost Operating revenue Operating cost
Shenzhen 137,062,863.46 91,184,974.30 116,730,503.94 70,412,867.28
Xi’an 12,221,935.55 10,499,340.73 10,944,666.35 9,559,865.30
Suzhou 16,949,208.82 14,072,223.94 14,500,484.40 12,363,360.64
Changsha 10,904,646.27 8,856,665.68 10,364,165.27 8,034,371.46
Nanjing 0.00 2,165,406.61 0.00 0.00
Overseas 12,813,369.68 12,898,908.47 15,594,460.01 15,087,910.71
Total 189,952,023.78 139,677,519.73 168,134,279.97 115,458,375.39
4) Operating income of top five customers of the Company
Proportion in the total operating
Name of customer Total operating income
income of the Company (%)
Shenzhen Runneng Digital Co., Ltd 16,786,634.70 8.84
Nippon Express (HK) Co., Lyd. 6,513,382.83 3.43
Ricoh Express (Shenzhen) Warehouse Ltd. 4,402,725.96 2.32
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Proportion in the total operating
Name of customer Total operating income
income of the Company (%)
Shenzhen SED Electronics Sales Corporation 3,444,444.44 1.81
Shenzhen Hongxuda Communications Technology
3,170,940.17 1.67
Co., Ltd.
Total 34,318,128.10 18.07
(39) Operating tax and surcharges
Amount happened in this Amount happened in the
Item
year previous year
Operating tax 7,475,756.19 6,909,259.43
Urban construction tax 339,988.63 157,038.33
Education surtax 218,717.68 189,478.75
Others 38,359.51 10,026.14
Total 8,072,822.01 7,265,802.65
(40) Financial expenses
Amount happened in this Amount happened in the
Category
year previous year
Interest expenses Less:
Less: Interest income 5,390,036.91 2,804,525.63
Gains and losses on exchange 405,016.18 228,416.59
Bank commission fee 119,493.17 71,432.86
Others
Total -4,865,527.56 -2,504,676.18
(41) Investment income
1) Statement of investment income
Amount happened in this Amount happened in the
Item
year previous year
Long-term equity investment income by the cost method
Long-term equity investment income by the equity method -4,552,269.39 -5,812,038.56
Income from disposal of long-term equity investments
Income during the time of holding transaction financial assets
Income from held-to-maturity investments
Income during the time of holding financial assets available for sale
Income from disposal of transaction financial assets
Income from held-to-maturity investments
Income from financial assets available for sale 2,947,815.81
Others
Total -4,552,269.39 -2,864,222.75
2) Income from long-term equity investment by the equity method
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Reason for increase or
Amount happened in this Amount happened in the
Invested organization decrease compared to the
year previous year
previous year
Shenzhen SEG Samsung Co., Ltd. -5,669,357.38 -7,192,975.88
Shanghai SEG Electronics Market Co.,
1,117,087.99
Ltd 1,380,937.32
Total -4,552,269.39 -5,812,038.56
3) Notes on investment income
There is no major restriction on the repatriation of the investment income.
(42) Non-operating income
Amount recorded into
Amount happened in this Amount happened in the non-recurring gains and
Item
year previous year losses of the current
period
Total profit from disposal of non-current
100,000.00 252,264.72 100,000.00
assets
Including: Profit from disposal of fixed
39,993.35 252,264.72 39,993.35
assets
Profit from disposal of intangible assets
Reward for having no work injuries in
the year
Income from donations
Income from penal sum
Accounts not required to be paid 163,531.41
Income from lawsuits
Others 262,863.65 176,207.97 262,863.65
Total 362,863.65 592,004.10 362,863.65
(43) Non-operating expenses
Amount recorded into
Amount happened in this Amount happened in the non-recurring gains and
Item
year previous year losses of the current
period
Total disposal loss of non-current assets
22,683.12 98,576.31 22,683.12
Including:
Disposal loss of fixed assets 22,683.12 98,576.31 22,683.12
Disposal loss of intangible assets
3.Loss from debt restructuring
2.Loss from transfer of non-monetary
assets
Donation expenses 320,000.00
Charitable donation expenses
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Amount recorded into
Amount happened in this Amount happened in the non-recurring gains and
Item
year previous year losses of the current
period
Abnormal loss
Others 16,177.74 53,178.13 16,177.74
Total 38,860.86 471,754.44 38,860.86
(44) Income tax
Amount happened in Amount happened in
Item
this year the previous year
Income tax of this report period calculated according to tax laws and
12,050,328.17 10,469,434.80
relevant regulations
Deferred income tax 417,698.65 -554,462.94
Total 12,468,026.82 9,914,971.86
(45) Calculation process for basic EPS and diluted EPS
Amount happened in Amount happened in
Item
this year the previous year
Net profit attributable to common shareholders of the Company (P1) 26,332,388.35 26,896,844.71
Non-recurring gains and losses 188,334.57 2,328,770.02
Net profit attributable to common shareholders of the Company after
26,139,965.79 24,568,074.69
deduction of -recurring losses and gains (P2)
Period-beginning shares in total (S0) 784,799,010.00 784,799,010.00
Shares increased because the capital public reserve is transferred as share
capital or share dividends are distributed (S1)
Shares increased because new shares are issued or liabilities are transferred
as shares (Si)
Shares decreased due to repurchases (Sj)
Shares merged (Sk)
Month No. of this report period (M0)
Month No. from the next month after shares are increased to the end of this
report period (Mi)
Month No. from the next month after shares are decreased to the end of this
report period (Mj)
Weighted average of common shares
784,799,010.00 784,799,010.00
(S1=S0+S1+Si×Mi÷M0-Sj×Mj÷M0-Sk)
Net profit attributable to common shareholders of
0.03355 0.0343
the Company （=P1÷S1）
Basic earnings per
Net profit attributable to common shareholders of
share
the Company after deduction of the non-recurring 0.0333 0.0313
losses and gains （=P2÷S1）
Diluted earnings
per share Net profit attributable to common shareholders of 0.03355 0.0343
the Company (=[P1+( Interests of the diluted latent
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Amount happened in Amount happened in
Item
this year the previous year
common shares confirmed as expenses – Conversion
expenses)×(1—Income tax
rate)]/(S0+S1+Si×Mi÷M0—Sk+ Weighted average
of common shares increased by share warrants,
share options and convertible bonds))
Net profit attributable to common shareholders of
the Company after deduction of non-recurring gains
and losses(=[P2+( Interests of the diluted latent
common shares confirmed as expenses—Conversion
0.0333 0.0313
expenses)×(1—income tax
rate )]/(S0+S1+Si×Mi÷M0—Sk+ Weighted average
of common shares increased by share warrants,
share options and convertible bonds))
(46) Other comprehensive income
Amount happened in Amount happened in
Item
this year the previous year
1. Gains (losses) from financial assets available for sale -64,323.98 84,349.37
Less: Influence of income tax incurred from financial assets available for
18,556.86
sale -15,437.76
Net gains and losses recorded into other consolidated income in the
1,939,809.3300
previous period and transferred back in this report period
Subtotal -48,886.22 -1,874,016.82
2. Enjoyed shares of other consolidated income of invested organizations
by the equity method
Less: Influence on income tax by enjoyed shares of other consolidated
income of invested organizations by the equity method
Net gains and losses recorded into other consolidated income in the
previous period and transferred back in this report period
Subtotal - 0.00
3. Profit (or loss) from arbitrage tools of cash flows
Less: Influence on income tax by arbitrage tools of cash flows
Net gains and losses recorded into other consolidated income in the
previous period and transferred back in this report period
Adjustment of the initial confirmed amount transferred as arbitraged items
Subtotal - 0.00
4. Translation difference of the financial statements in foreign currency 89,449.29 42,759.60
Less: Net gains and losses transferred in from disposal of overseas assets in
this report period
Subtotal 89,449.29 42,759.60
5. Others 12,572,000.00
Less:Influence on income tax by others recorded into other consolidated
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
income
Net amount of others recorded into other consolidated income in the
previous period and transferred back in this report period
Subtotal 12,572,000.00
Total 40,563.07 10,740,742.78
(47) Supplementary materials for the cash flow statement
1) Supplementary materials for the cash flow statement
Amount of the previous
Item Amount of this year
year
1. Reconciliation of net Profit to cash flows of operating activities
Net profit 28,021,679.64 29,291,301.57
Plus: Asset impairment provision -
Depreciation of fixed assets, oil & gas assets and consumable biological
14,729,463.00 14,750,550.85
assets
Amortization of intangible assets 94,779.80 154,488.52
Amortization of long-term expenses to be apportioned 3,563,794.10 3,184,295.96
Loss on disposal of fixed assets, intangible assets, and other long-term
-45,316.88 -153,688.41
assets (Profit will be marked with "-")
Loss on discard of fixed asset (Profit will be marked with "-") - -
Loss on change of sound value (Profit will be marked with "-") -
Financial expenses (Profit will be marked with "-")
Loss on investment (Profit will be marked with "-") 4,552,269.39 2,864,222.75
Decrease of deferred income tax assets (Profit will be marked with "-") 987,599.35
Increase of deferred income tax liabilities (Decrease will be marked with
-569,900.70 -1,083,031.79
"-")
Decrease of inventories (Increase will be marked with "-") 3,274,836.79 2,567,128.02
Decrease of operating accounts receivable (Increase will be marked with
-25,559,760.22 -8,759,981.86
"-")
Increase of operating accounts payable (Decrease will be marked with "-") -6,609,233.68 -15,200,948.47
Others 585,722.03 634,575.86
Net cash flow from operating activities 23,025,932.62 28,248,913.00
2. Investment and financing activities not Involving cash receipts and
payments
Conversion of debt into capital
Convertible bonds due within one year
Fixed assets acquired by financing lease
Net change in cash and cash equivalents
3. Cash at the end of the period 595,142,900.27 506,807,397.50
Less: cash at the beginning of the period 572,818,178.75 485,135,270.94
Plus: cash equivalents at the end of the period
Less: Cash equivalents at beginning of the period
Net increase in cash and cash equivalents 22,324,721.52 21,672,126.56
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
2) Composition of cash and cash equivalents:
Period-beginning
Item Period-end balance
balance
I. Cash 595,142,900.27 572,818,178.75
Including: Cash on hand 676,495.49 506,807,397.50
Bank deposits available for payment at any time 594,463,729.78 695,995.26
Other monetary capital available for payment at any time 2,675.00
Accounts in the central bank available for payment
Accounts deposited in the enterprises of the same industry
Accounts borrowed from the enterprises of the same industry
II. Cash equivalents
Including: Bond investments due within 3 months
III. Period-end balance of cash and cash equivalents 595,142,900.27 572,818,178.75
vi. Related parties and relevant transactions
(48) Information on the parent company of the Company Amount unit: RMB Ten Thousand Yuan
Voting right
Share-holding The ultimate
Name of proportion
Type of Place of Legal Nature of Registered proportion over controlling Organization
parent Relationship over the
enterprise registration representative business capital the Company party of the code
company Company
(%) Company
(%)
Shenzhen Limited
The largest Sun
SEG liability Shenzhen State-owned 135,542.00 30.24 30.24 19218093-0
shareholder Shengdiian
Group company
(49) Information on subsidiaries of the Company: Unit:
Amount unit: RMB ten thousand Yuan
Voting
Share-holding
Type of Type of Place of Legal Nature of Registered right Organization
Full name of subsidiary proportion
subsidiary enterprise registration representative business capital proportion code
(%)
(%)
Limited
Xi’an SEG Electronics Share-controlled Service
liability Xi’an Li Zhenhua 3,000 650.00 650.00 742830724
Market Co., Ltd subsidiary industry
company
Shenzhen SEG Limited
Share-controlled Service
Electronics Market liability Shenzhen Liu Zhijun 3,000 700.00 700.00 774131178
subsidiary industry
Management Co., Ltd company
Limited
Suzhou SEG Electronics Share-controlled Service
liability Su Zhou Zheng Dan 3,000 450.00 450.00 78205845X
Market Co., Ltd subsidiary industry
company
Shenzhen SEG Baohua Share-controlled Company Service
Shenzhen Zhang Weimin 30,808.80 665.80 665.80 19219334-4
Enterprise Development subsidiary limited by industry
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Voting
Share-holding
Type of Type of Place of Legal Nature of Registered right Organization
Full name of subsidiary proportion
subsidiary enterprise registration representative business capital proportion code
(%)
(%)
Co., Ltd. shares
Shenzhen SEG Storage Limited
Share-controlled Service
and Transportation Co., liability Shenzhen Wang Kou 66,000 995.90 995.90 192177694
subsidiary industry
Ltd. company
Limited
Shenzhen SEG Industry Share-controlled Service
liability Shenzhen Li Lifu 25,500 917.90 917,90 19219150-9
Investment Co., Ltd subsidiary industry
company
Limited
Changsha SEG Share-controlled Service
liability Changsha Zhu Longqing 35,000 460 510 616600581
Development Co., Ltd subsidiary industry
company
Limited
Shenzhen SEG Share-controlled E-commer
liability Shenzhen Liu Zhijun 48,000 510 510 56854637-2
E-Commerce Co., Ltd subsidiary ce
company
Shenzhen SEG Limited
Share-controlled Service
Electronics Market liability Nanjing Zhu Longqing 20,000 1,000 1,000 571581021
subsidiary industry
Management Co., Ltd company
Shenzhen Chengguo Limited
Share-controlled Service
Business Hotel liability Shenzhen Bo Hongxi 10,000 665.80 665.80 69556368-5
subsidiary industry
Management Co., Ltd company
Shenzhen SEG Orient Foreign
Share-controlled
Industrial Development investment Shenzhen Kang Le Storage HK$16,600 995.90 995.90 618820094
subsidiary
Co., Ltd. enterprise
SEG (Hong Kong) Share-controlled Overseas Transporta 190134720000
Hong Kong Kang Le HK$500 995.90 995.90
Company Limited subsidiary subsidiary tion 4104
(50) Information on the joint ventures and associated enterprises of the Company
Legal
Name of the invested Type of Place of person Nature of Registered Shareholding Voting ratio in the Name of
company enterprise registration representa business capital radio invested company company
tive
Shenzhen SEG Samsung Company Associated
Shenzhen Manufacturing 89,667.15 22.45 22.45
Co., Ltd. limited by shares enterprise
Shanghai SEG
Limited liability Associated
Electronics Market Shanghai Service industry 500.00 35 35
company enterprise
Management Co., Ltd
Shenzhen SEG Orient
Limited liability Associated
Industrial Development Shenzhen Service industry 200.00 20 20
company enterprise
Co., Ltd.
(51) Information on other related parties
- 92 -
Shenzhen SEG Co., Ltd Semi-annual Report 2011
Relationship between other related parties and the
Name of the related party
Company
Shenzhen SEG Square Investment & Development Co., Ltd. Subsidiary of the first majority shareholder
Shenzhen SEG Property Development Co., Ltd. Subsidiary of the first majority shareholder
Shenzhen SEG Group Service Co., Ltd Subsidiary of the first majority shareholder
Shenzhen SEG Computers Co., Ltd Subsidiary of the first majority shareholder
Shenzhen SEG Hi-tech Industrial Co., Ltd Subsidiary of the first majority shareholder
(52) Transactions with related parties
1) The transactions among the subsidiaries that have controlling relationship with the Company and have been
included in the consolidation scope as well as the transactions between the subsidiaries and the parent
company have been offset.
2) Information on leases between the Company and related parties
Lease taking
Basis for
Lease Lease Influence of
Name of Name of Information on leased Rent confirmation
beginning ending rent charge on
lessor lessee assets amount of rent
date date the Company
charge
The warehouse with its
Shenzhen Shenzhen
area of 809.26 square The lease
SEG Group SEG Co., th
2011.4.1 2013.3.31 516,000 Minor
meters on the 8 floor of contract
Co., Ltd. Ltd.
SEG Plaza
3) Information on entrusted operation
Beginning Influence of
Information Ending date Entrusted Basis for
Name of Name of date of rent charge
on leased of entrusted operation fee confirmation
trustor trustee entrusted on the
assets operation and benefits of rent charge
operation Company
SEG Entrusted
Shenzhen Shenzhen Communicati operation fee Entrusted
SEG Group SEG Co., ons Market in 2011.2.1 2015.1.31 of RMB operation Minor
Co., Ltd. Ltd Huaqiang 200,000 contract
Road (N) Yuan+royalties
The Company received an entrusted operation fee of RMB 200,000 Yuan for the year 2011 in this report period.
Accounts receivable from and payable to related parties
(1) Accounts receivable from and payable to related parties
Item Related party: Period-end balance Period-beginning balance
Other
receivables
Shenzhen SEG Property Development Co., Ltd. 2,000.00 2,000.00
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Item Related party: Period-end balance Period-beginning balance
Shenzhen SEG Orient Industrial Development
443,910.00 443,910.00
Co., Ltd.
Shenzhen SEG Group 80,000.00 80,000.00
vii. Contingency
The Company has no contingency items that need to be disclosed.
viii. Matters Occurring after the Issuance of the Balance Sheet
There are no matters occurring in the Company after the balance sheet date.
ix. Notes on other important matters
(53) Major dispute arising from sales
Guangzhou Jiajie Technology Co., Ltd. (hereinafter referred to as Guangzhou Jiajie) signed the SYBASE
Purchase Contract with Shenzhen SEG Industry Investment Co., Ltd. (hereinafter referred to as SEG Industry), a
subsidiary of the Company, on June 25, 2010 and Guangzhou Jiajie purchased the SYBASE software from SEG
Industry for sale. Due to the difference of the representation of the payment terms in the Purchase Contract
separately held by SEG Industry and Guangzhou Jiajie, the two parties had a dispute on the issue of payment.
Two optional payment terms were included in the Purchase Contract: the first term provided that the Seller shall
issue a VAT invoice of the full amount of the contract to the Buyer within 60 days after the goods arrive at the
place of delivery and are qualified upon inspection and acceptance through power-on operation (i.e., before
August 30, 2010) and the Buyer shall make full payment for the goods; the second term provided that the Seller
shall issue a value-added tax invoice for the full amount to the Buyer and the Buyer shall make the payment
within 7 days after receiving the full amount of the payment from users. Both of the terms in the Purchase
Contract held by SEG Industry were marked with “√” while only the second term in the Purchase Contract held
by Guangzhou Jiajie was marked with “√”. Guangzhou Jiajie sold the SYBASE software to Guangzhou Yushi
Information Technology Co., Ltd (hereinafter referred to as Guangzhou Yushi) that sold the software to end users.
Because Guangzhou Yushi has not made payment to Guangzhou Jiajie, the latter filed a lawsuit against the
former. The legal person of Guangzhou Yushi had migrated to another country. By analyzing the Purchase
Contract held by Guangzhou Jiajie, the prerequisite for the payment by Guangzhou Jiajie is that Guangzhou
Jiajie received the payment from Guangzhou Yushi. According to the lawyer’s opinion, it is very likely that the
payment cannot be recovered. The amount of the contract object is RMB 3,052,571.00 Yuan, for which RMB
2,747,313.90 Yuan, 90% of the amount, was accrued as bad debt provision at the end of 2010. The Company has
filed a lawsuit in the court, and the court has accepted the case and will hold a hearing on a certain date.
(54) Suspension
The Company was notified on February 28, 2011 by the majority shareholder that the latter was planning
important events, so the shares of the Company were delisted from March 1, 2011 in order to prevent abnormal
price changes and protect the interests of investors.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
x. Notes on main items in the financial statements of the parent company
(55) Accounts receivable
1) Accounts receivable
Period-end amount Period-beginning amount
Book balance Bad debt provision Book balance Bad debt provision
Type
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts
receivable with
a significant
amount
individually, for 5,503,030.33 89.09 5,503,030.33 100.00 5,503,030.33 89.09 5,503,030.33 100.00
which bad debt
provision is
separately
accrued
Accounts receivable for which bad debt provision is accrued according to different combinations
Combination 1
Combination 2
Subtotal of
combinations
Accounts
receivable with
an insignificant
amount
individually, for 674,141.46 10.91 274,141.46 40.67 674,141.46 10.91 274,141.46 40.67
which bad debt
provision is
separately
accrued
Total 6,177,171.79 100.00 5,777,171.79 93.52 6,177,171.79 100.00 5,777,171.79 93.52
2) Bad debt provision accrued at the end of the period for the accounts receivable with a significant amount
individually, for which impairment tests are separately carried out.
Amount of bad Percentage of
Name of company Book balance Reason
debt provision provision
The account cannot be recovered
Li Zhenhua 5,503,030.33 5,503,030.33 100 because the duration is long.
Total 5,503,030.33 5,503,030.33 100 -
3) There is no occasion that an account receivable was charged off in this report period.
4) Among the period-end accounts receivable, no accounts are receivable from corporate shareholders that
hold over 5% (including 5%) shares with voting right of the Company.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
5) Organizations of top five accounts receivable
Relationship with the Percentage in the total amount of
Name of company Amount Duration
Company accounts receivable
Li Zhenhua Customer 5,503,030.33 Over 3 years 89.09
Zhang Xiuying Customer 400,000.00 1-2 years 6.48
Jiang Weibin Customer 126,925.35 Over 3 years 2.05
Gu Chengyu Customer 65,559.01 Over 3 years 1.06
Dongguan Qiangxiong
52,528.00 Over 3 years
Company Customer 0.85
Total 6,148,042.69 99.53
6) There are no receivable accounts not meeting the conditions for termination of confirmation in this report
period.
7) There are no accounts receivable which are taken as objects for securitization.
(56) Other receivables
1) Other receivables
Period-end amount Period-beginning amount
Book balance Bad debt provision Book balance Bad debt provision
Type
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
Other receivables
with a significant
amount individually,
52,097,597.81 76.16 17,508,951.82 33.61 59,149,762.81 79.37 17,508,951.82 29.60
for which bad debt
provision is
separately accrued
Other receivables for which bad debt provision is accrued according to different combinations
Combination 1 6,562,920.96 9.59 6,562,920.96 100.00 6,562,920.96 8.81 6,562,920.96 100.00
Subtotal of
6,562,920.96 9.59 6,562,920.96 100.00 6,562,920.96 8.81 6,562,920.96 100.00
combinations
Other receivables
with an insignificant
amount individually,
9,744,586.68 14.25 4,760,354.83 48.85 8,809,227.24 11.82 4,760,354.83 54.04
for which bad debt
provision is
separately accrued
Total 68,405,105.45 100.00 28,832,227.61 42.15 74,521,911.01 100.00 28,832,227.61 38.69
Notes on types of other receivables:
(1) Other receivables in the combination, for which bad debt provision is accrued by the aging analysis method
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Period-end balance Period-beginning balance
Book balance Book balance
Duration of the accounts Bad debt Bad debt
Proportion Proportion
Amount provision Amount provision
(%) (%)
Less than 1 year - - -
Subtotal of the accounts
with a duration of less - - -
than 1 year
1-2 years - - -
2-3 years
Over 3 years 6,562,920.96 100.00 6,562,920.96 6,562,920.96 100.00 6,562,920.96
Total 6,562,920.96 100.00 6,562,920.96 6,562,920.96 100.00 6,562,920.96
2) Accrual of bad debt provision for other receivables with a significant amount individually, for which
separate impairment tests are carried out
Amount of bad Percentage of
Name of company Book balance Reason
debt provision provision
Changsha SEG
34,588,645.99 -
Development Co., Ltd
No.1: Yangjiang Yuntong The account cannot be recovered
8,530,276.35 8,530,276.35 100.
Grease Co., Ltd because the duration is long.
Shenzhen Lianjing Trade The account cannot be recovered
5,697,287.51 5,697,287.51 100
Co., Ltd. because the duration is long.
Shenzhen Top Industry The account cannot be recovered
3,281,387.96 3,281,387.96 100
Co., Ltd. because the duration is long.
Total 52,097,597.81 17,508,951.82 33.61 -
3) No other receivables are written off in this report period.
4) Other period-end receivables from corporate shareholders that hold over 5% (including 5%) shares with
voting right of the Company.
Period-end balance Period-beginning balance
Name of company Bad debt provision Bad debt provision
Book balance Book balance
accrued accrued
Shenzhen SEG Group Co., Ltd. 80,000.00 - 80,000.00 -
Total 80,000.00 - 80,000.00 -
5) Top five organizations of other receivables
Percentage in the total
Relationship with Nature or
Name of company Amount Duration amount of other accounts
the Company Content
receivable
Changsha SEG Share-controlled
Loan 34,588,645.99 1-2 years 50.56
Development Co., Ltd subsidiary
No.1: Yangjiang Yuntong Business related
8,530,276.35 Over 3 years 12.47
Grease Co., Ltd organization
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Percentage in the total
Relationship with Nature or
Name of company Amount Duration amount of other accounts
the Company Content
receivable
Shenzhen Lianjing Trade Business related
5,697,287.51 Over 3 years 8.33
Co., Ltd. organization
Shenzhen Top Industry Business related
3,281,387.96 Over 3 years 4.80
Co., Ltd. organization
Business related
Yunsen Trading Company 1,668,343.74 Over 3 years 2.44
organization
Total 52,097,597.81 78.60
6) Other receivables from related parties
Percentage in the total
Name of company Relationship with the Company Amount amount of other accounts
receivable
Changsha SEG Development Co., Ltd Share-controlled subsidiary 34,588,645.99 50.56
Shenzhen SEG Orient Industrial
Associated enterprise 443,910.00 0.65
Development Co., Ltd.
7) No other accounts receivable, which did not meet the conditions for termination of confirmation, are
transferred in this report period.
8) There are no other receivables taken as objects for securitization.
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
(57) Long-term equity investment
Unit: RMB Yuan
Notes on the occasion
Share-holding
proportion in Ratio of voting where the proportion of
the shares of the
Impairment
provision
Invested organization Accounting Investment cost Period-beginnin Increase or Period-end the invested right in the invested organization, Impairment dividends
accrued in Cashreport periodin
method g balance decrease balance organization invested held by the Company, provision this report this
(%) company is not consistent with period
the voting right
Shenzhen SEG
Orient Industrial Equity 400,000.00 -- -- -- 20 20
Development Co., method
Ltd.
Shenzhen SEG Equity 215,645,740.56 118,990,783.20 -5,669,357.38 113,321,425.82 22.45 22.45
Samsung Co., Ltd. method
Shanghai SEG Equity
Electronics Market method 1,750,000.00 8,441,558.09 1,117,087.99 9,558,646.08 35 35
Co., Ltd
Subtotal by the 217,795,740.56 127,432,341.29 -4,552,269.39 122,880,071.90
equity method
Shenzhen SEG
Baohua Enterprise Cost method 18,742,808.93 20,512,499.04 20,512,499.04 66.58 66.58 4,923,072.00
Development Co.,
Ltd
Shenzhen SEG
Storage and Cost method 62,700,000.00 62,700,000.00 62,700,000.00 95 95
Transportation Co.,
Ltd.
Shenzhen SEG
Industrial Investment Cost method 23,780,000.00 23,780,000.00 23,780,000.00 91.79 91.79
Co., Ltd
Shenzhen SEG
Telecom Equipment Cost method 2,979,217.22 2,979,217.22 2,979,217.22 90 90 2,979,217.22
Co., Ltd
Shenzhen SEG GPS
Scientific Cost method 8,275,321.43 13,515,392.83 13,515,392.83 12.5 12.5
Navigations Co., Ltd
Changsha SEG
Development Co., Cost method 69,000,000.00 69,000,000.00 69,000,000.00 46 51
Ltd
Shenzhen SEG
Electronics Market Cost method 2,100,000.00 2,100,000.00 2,100,000.00 70 70
Management Co.,
Ltd
Suzhou SEG
Electronics Market Cost method 1,350,000.00 1,350,000.00 1,350,000.00 45 45 900,000.00
Co., Ltd
Xi’an SEG
Electronics Market Cost method 1,950,000.00 1,950,000.00 1,950,000.00 65 65 1,742,000.00
Co., Ltd
Shenzhen SEG
E-Commerce Co., Cost method 15,300,000.00 15,300,000.00 15,300,000.00 51 51
Ltd
Shenzhen SEG
Electronics Market the cost 20,000,000.00 20,000,000.00 20,000,000.00 100 100
Management Co., method
Ltd
Subtotal by the cost 190,877,347.58 197,887,109.09 35,300,000.00 233,187,109.09 2,979,217.22 - 7,565,072.00
method
Total 443,973,088.14 325,319,450.38 30,747,730.61 356,067,180.99 2,979,217.22 0.00 7,565,072.00
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
(58) Operating revenue and operating cost
1) Operating income
Item Amount happened in this report period Amount happened in the previous year
Main businesses 49,131,510.09 49,528,638.52
Other businesses 10,073,406.79 6,687,183.86
Operating cost 19,328,330.04 19,408,492.15
2) Main operating businesses (by industries)
Amount happened in this report period Amount happened in the previous year
Item
Operating revenue Operating cost Operating revenue Operating cost
Electronics market and
49,131,510.09 10,073,406.79 49,528,638.52 6,687,183.86
property operation
Total 49,131,510.09 10,073,406.79 49,528,638.52 6,687,183.86
(59) Investment Income
Details on investment income
Amount happened Amount happened in
Item
in this report period the previous year
Long-term equity investment income by the cost method 7,565,072.00 9,382,642.44
Long-term equity investment income by the equity method -4,552,269.39 -5,812,038.56
Income from disposal of long-term equity investments
Income during the time of holding transaction financial assets
Income from held-to-maturity investments
Income during the time of holding financial assets available for sale
Income from disposal of financial assets available for sale
Income from held-to-maturity investments
Income from financial assets available for sale 2,947,815.81
Others
Total 3,012,802.61 6,518,419.69
(60) Supplementary information on the cash flow statement
Amount of the
Item Amount of this year
previous year
1. Reconciliation of net Profit to cash flows of operating activities
Net profit 28,869,372.30 28,563,853.84
Plus: Asset impairment provision -
Depreciation of fixed assets, oil & gas assets and consumable biological assets 6,384,153.18 8,153,815.59
Amortization of intangible assets 82,567.98 79,218.64
Amortization of long-term expenses to be apportioned 299,105.22 292,968.73
Loss on disposal of fixed assets, intangible assets, and other long-term assets
-178,098.62
(Profit will be marked with "-")
Loss on discard of fixed asset (Profit will be marked with "-") - -
Loss on change of sound value (Profit will be marked with "-") - -
Financial expenses (Profit will be marked with "-") -
Loss on investment (Profit will be marked with "-") -3,012,802.61 -6,518,419.69
Decrease of deferred income tax assets (Profit will be marked with "-")
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Amount of the
Item Amount of this year
previous year
Increase of deferred income tax liabilities (Decrease will be marked with "-") - -547,125.71
Decrease of inventories (Increase will be marked with "-") -
Decrease of operating accounts receivable (Increase will be marked with "-") 6,990,097.52 10,519,979.35
Increase of operating accounts payable (Decrease will be marked with "-") -16,931,322.85 -26,848,661.67
Others -1,421,309.57 -2,475,987.69
Net cash flow from operating activities 21,259,861.17 11,041,542.77
2. Investment and financing activities not Involving cash receipts and payments
Conversion of debt into capital
Convertible bonds due within one year
Fixed assets acquired by financing lease
3. Net change in cash and cash equivalents
Cash at the end of the period 447,193,424.50 399,739,271.43
Less: cash at the beginning of the period 451,763,240.33 375,350,393.53
Plus: cash equivalents at the end of the period
Less: Cash equivalents at beginning of the period
Net increase in cash and cash equivalents -4,569,815.83 24,388,877.90
xi. Supplementary materials
(61) Details on non-recurring gains and losses
Item Amount Note:
Gains and losses from disposal of non-current assets 45,316.88
Tax refund, reduction or exemption upon approval exceeding authorized limits
or without formal documents
Government subsidiaries recorded into the gains and losses of this report period
(except those closely related with the Company, which are enjoyed by quotas
according to uniform standards of the State)
Fund appropriation charges for non-financial entities recorded into the gains and
losses of this report period
Profit from the difference caused by the case that the investment cost of the
Company for acquisition of subsidiaries, joint ventures and associated
enterprises is less than the recognizable sound value of net assets of invested
units, which can be enjoyed at the time of acquisition
Loss from transfer of non-monetary assets
Gains and losses from exchange of non-monetary assets
Gains and losses from entrustment of others to make investments or manage
assets
Provision for assets impairment withheld for Force Majeure
Gains and losses from debt restructurings
Expenditures for corporate restructuring, such as expenses for relocation of
employees and for integration
Gains and losses from unfairly priced transactions in which the transaction value
exceeds the sound value
Net gains and losses of this report period of a subsidiary from the period
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Item Amount Note:
beginning to the date of merger, formed due to the merger of the enterprises
under the control of the same entity
Gains and losses from contingency items irrelevant with normal operating
businesses of the Company
Gains and losses from contingency items irrelevant with normal operating
businesses of the Company Gains and losses from sound value changes by
holding of transaction financial assets and liabilities, except effective hedging
business related to normal businesses of the Company, and investment income
from disposal of transaction financial assets and liabilities as well as financial
assets available for sale
Transferred-back impairment provision for accounts receivable, for which
separate impairment tests are carried out
Gains and losses for external entrusted loans
Gains and losses from sound value changes of investment properties, whose
subsequent measurement is carried out by the sound value mode
Influence on the gains and losses of this report period by one-off adjustment
according to tax and accounting laws and regulations
Trustee fee from entrusted operation
Other non-operating income and expenses except the above-mentioned items 289,834.65
Other gains and losses fitting the definition of non-recurring gains and losses
Amount of influence of income tax -48,421.69
Amount of influence of minority shareholders’ equity (after tax) -98,395.27
Total 188,334.57
(62) ROE and EPS
Earnings per share
Profit in report period Weighted average ROE Basic earnings per Diluted earnings per
share share
Net profit attributable to common shareholders
of the Company 2.40 0.03355 0.03355
Net profit attributable to common shareholders
of the Company after deduction of recurring
losses and gains 2.38 0.0333 0.0333
xii. Approval and disclosure of the Financial Statements
The Financial Statements were approved for disclosure by all directors of the Company on August 16,
2011.
Shenzhen SEG Co., Ltd.
(Stamped by Company Official Seal)
August 16, 2011
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Shenzhen SEG Co., Ltd Semi-annual Report 2011
Chapter 7 Documents Available for Inspection
(1) Full context of semi-annual report autographed by the President of the company;
(2) Financial statements sealed and signed by the legal representative, chief financial officer and financial
supervisor;
(3) The original copies of all the files or the manuscripts of public announcements of the Company which
were disclosed on the newspapers specified by CSRC in this report period.
The Board of Directors of Shenzhen SEG Co., Ltd
President (Signature): Wang Chu
August 16, 2011
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