Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Shenzhen SEG Co., Ltd.
2014 Annual Report
March 2015
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 1 Important Notice, Contents, and Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and senior
executives guarantee that this annual report is authentic, accurate, and complete and
that it has no false records, misleading statements or major omissions and they
commit to the individual and joint and several legal liabilities.
All the directors except the one(s) mentioned below have attended the board meeting
reviewing the annual report.
Post of director not
Name of director not attending Cause of not attending
attending the meeting Name of the entrustee
the meeting personally the meeting personally
personally
Li Luoli Independent director Travel for business Zhou Hanjun
Shenzhen SEG Co., Ltd. plans not to distribute cash dividends and bonus shares or
convert reserved funds into share capital.
Chairman of the Board Wang Li, the Person in charge of accounting Liu Zhijun and
the responsible person of the accounting institution (Accountant in charge) Ying
Huadong hereby declare that the Financial Statements enclosed in this annual report
are true, accurate and complete.
The forward-looking statements including future plans, development strategies and so
on involved in the annual report do not constitute substantial commitment to
investors. So, investors should pay attention to investment risks.
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
CONTENTS
2014 Annual Report ................................................................................................................................................. 1
Chapter 1 Important Notice, Contents, and Definitions ...................................................................................... 2
Chapter 2 Company Profile .................................................................................................................................... 6
Chapter 3 Summary of Accounting Data and Financial Indexes ........................................................................ 9
Chapter 4 Report of the Board of Directors ........................................................................................................ 12
Chapter 5 Important Matters ............................................................................................................................... 47
Chapter 6 Changes in Share Capital and Information on Shareholders .......................................................... 57
Chapter 7 Preferred Stock Description ............................................................................................................... 63
Chapter 8 Information on Directors, Supervisors, Senior Executives and Employees ................................... 63
Chapter 9 Corporate Governance ........................................................................................................................ 75
Chapter 10 Internal Control ................................................................................................................................. 89
Chapter 11 Financial Statements ........................................................................................................................ 92
Chapter 12 Documents Available for Reference ............................................................................................... 196
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Definitions
Definition Refers to Description
This Company, the Company Refers to Shenzhen SEG Co., Ltd.
Shenzhen SEG Group Co., Ltd. Refers to Shenzhen SEG Group Co., Ltd.
Huakong SEG Refers to Shenzhen Huakong SEG Co., Ltd.
SEG Baohua Refers to Shenzhen SEG Baohua Enterprise Development Co., Ltd.
Xi'an SEG Refers to Xi'an SEG Electronics Market Co., Ltd.
Suzhou SEG Refers to Suzhou SEG Electronics Market Co., Ltd.
Xi'an Hairong SEG Refers to Xi'an Hairong SEG Electronics Market Co., Ltd.
Nanjing SEG Refers to Shenzhen SEG Electronics Market Management Co., Ltd.
Shanghai SEG Electronics Market Operation Management Co.,
Shanghai SEG Refers to
Ltd.
Nantong SEG Refers to Nantong SEG Times Square Management Co., Ltd.
Changsha SEG Refers to Changsha SEG Development Co., Ltd.
Shenzhen Mellow Orange Business Hotel Management Co.,
Mellow Orange Hotel Refers to
Ltd.
Longgang SEG Refers to Shenzhen SEG Electronics Market Management Co., Ltd.
SEG Industry Refers to Shenzhen SEG Industrial Investment Co., Ltd.
SEG E-Commerce Refers to Shenzhen SEG E-Commerce Co., Ltd.
SEG Credit Refers to Shenzhen SEG Credit Co., Ltd.
SEG Navigations Refers to Shenzhen SEG GPS Scientific Navigations Co., Ltd.
Wujiang SEG Refers to Wujiang SEG Electronics Market Management Co., Ltd.
Shunde SEG Refers to Fushan Shunde SEG Electronics Market Management Co., Ltd
Wuxi SEG Refers to Wuxi SEG Electronics Market Co., Ltd
Nanning SEG Refers to Nanning SEG Digital Plaza Management Co., Ltd.
Yantai SEG Refers to Yantai SEG Times Square Development Co., Ltd.
Suzhou SEG Digital Refers to Suzhou SEG Digital Life Plaza Management Co., Ltd.
Zhengzhou SEG Refers to Zhengzhou SEG Digital Plaza Management Co., Ltd.
Xi'an Fengdong New Town SEG Times Square Properties Co.,
Xi'an Fengdong SEG Refers to
Ltd.
Nantong SEG Operation
Refers to Nantong SEG Commercial Operation Management Co., Ltd.
Company
SEG Logistics Refers to Shenzhen SEG Logistics Co., Ltd.
An integrated information platform for market management
SEG Universal Refers to
with the functions of access control management,
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Definition Refers to Description
micro-payment, query system and information distribution and
so on.
State-owned Assets Supervision and Administration
Shenzhen SASAC Refers to
Commission of Shenzhen Municipality
CSRC Refers to China Securities Regulatory Commission
Shenzhen Securities Regulatory Shenzhen Securities Regulatory Bureau of China Securities
Refers to
Bureau Regulatory Commission
The Articles of Association Refers to The Articles of Association of Shenzhen SEG Co., Ltd.
Unless otherwise specified, the
Refers to Amount in RMB
amount referred to in the report
Prompts for Major Risks
The forward-looking statements including the future plans, development strategies and so on involved in
the annual report do not constitute substantial commitment to investors. So, investors should pay attention
to investment risks.
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 2 Company Profile
I. Basic Information
Stock abbreviation SHEN SEG, SHEN SEG B Stock code 000058, 200058
Changed stock
None
abbreviation (if any)
Listed on Shenzhen Stock Exchange
Company name in
深圳赛格股份有限公司
Chinese
Abbreviated Company
深赛格
name in Chinese
Company name in
SHENZHEN SEG CO., LTD.
English (if any)
Abbreviated Company
None
name in English (if any)
Registered address 31/F, Tower A, Qunxing Plaza, Huaqiang Road (N), Futian District, Shenzhen
Post code 518028
Office address 31/F, Tower A, Qunxing Plaza, Huaqiang Road (N), Futian District, Shenzhen
Post code 518028
Website http://www.segcl.com.cn
E-mail segcl@segcl.com.cn
II. Contact Information
Secretary of the Board of Directors Securities affairs representative
Name Zheng Dan Zhang Xin
31/F, Tower A, Qunxing Plaza, Huaqiang 31/F, Tower A, Qunxing Plaza,Huaqiang
Contact address
Road (N), Futian District, Shenzhen Road (N), Futian District, Shenzhen
Phone 0755-83747939 0755-83747939
Fax 0755-83975237 0755-83975237
E-mail segcl@segcl.com.cn segcl@segcl.com.cn
III. Information Disclosure and Filing Site
Newspaper selected by the Company for China Securities Journal, Securities Times, Securities Daily and
information disclosure Hong Kong Commercial Daily
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Website selected by CSRC for publishing the
http://www.cninfo.com.cn (Cninfo Website)
annual report
The place where the annual report is prepared Secretary's Office of Board of Directors, 31/F, Tower A, Qunxing
and kept Plaza, Huaqiang Road (N), Futian District, Shenzhen
IV. Changes of Registration Information
Registered number
Organizing
Registration of the corporation Tax registration
Registered address institution
date legal person's No.
code
business license
16/F, Baohua
Technology Building,
First
July 16, 1996 Huaqiang Road (N), 440301103573251 440301279253776 27925377-6
registration
Futian District,
Shenzhen
31/F, Tower A,
Registration
Qunxing Plaza,
at the end
April 1, 2014 Huaqiang Road (N), 440301103573251 440300279253776 27925377-6
of reporting
Futian District,
period
Shenzhen
Changes to business scope on July 6, 2005: Domestic commerce, goods supply
and sale (excluding commodities under special operation, control and sale),
Changes of main business
industrial investment (licenses for specific projects shall be subject to application
since the Company's listing
on a case-by-case basis), economic information consultancy, property lease, real
(if any)
estate agency, and operation of SEG special electronics markets (the license for the
special market shall be specially applied for).
Changes of controlling
No change.
shareholders (if any)
V. Other Relevant Information of the Company
The accounting firm employed by the Company:
Name of the accounting firm BDO Dahua CPA Co., Ltd. (special general partnership)
Address of the accounting
Room 1101, 11/F, Tower 7, No. 16 Xisihuan Road (M), Haidian District, Beijing
firm
Name of the certified public
Yang Xi Xin Junliang
accountant
The sponsor firm employed by the Company for fulfilling the duties of continuous supervision in the reporting
period:
□ Applicable √ Not applicable
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The financial advisor employed by the Company for fulfilling the duties of continuous supervision in the reporting
period:
□ Applicable √ Not applicable
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Chapter 3 Summary of Accounting Data and Financial Indexes
I. Major Accounting Data and Financial Indexes
Are retrospective adjustments made to previous financial statements due to accounting policy changes or
accounting errors?
□ Yes √ No
2013 2013 Year-on-year 2012 (retroactive
2014 increase/decrease adjustment not
Before adjustment After adjustment (%) involved)
Operating revenue
681,343,920.99 597,358,257.82 597,358,257.82 14.06% 463,807,500.77
(Yuan)
Net profit
attributable to
shareholders of the 48,380,294.05 54,338,735.35 54,338,735.35 -10.97% 45,587,138.06
listed company
(Yuan)
Net profit
attributable to
shareholders of the
listed company after 45,920,252.23 48,912,658.58 48,912,658.58 -6.12% 45,369,864.10
deduction of
non-recurring gains
and losses (Yuan)
Net cash flow arising
from operating -427,933620.94 -122,530,546.70 -122,530,546.70 -249.25% -45,987,512.97
activities (Yuan)
Basic EPS
0.0616 0.0692 0.0692 -10.98% 0.0581
(Yuan/Share)
Diluted EPS
0.0616 0.0692 0.0692 -10.98% 0.0581
(Yuan/Share)
Weighted average 3.80% -0.64%
4.44% 4.44% 3.88%
ROE (%)
2013 2013 Year-on-year
End of 2014 increase/decrease End of 2012
Before adjustment After adjustment (%)
Total assets (Yuan) 2,659,717,718.28 2,134,940,597.85 2,134,940,597.85 24.58% 1,740,697,285.20
Net assets
attributable to
shareholders of the 1,298,970,719.85 1,250,224,375.08 1,250,224,375.08 3.90% 1,195,672,946.25
listed company
(Yuan)
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II. Differences in Accounting Data under Chinese and Overseas Accounting Standards
1. The differences of net profit and net assets in this financial report disclosed based on international and
Chinese accounting standards
Unit: YUAN
Net profit attributable to shareholders of the Net assets attributable to shareholders of
listed company the listed company
Amount at the
Amount in the Amount in the Amount at the end
beginning of the
current period previous period of the period
period
Based on Chinese 48,380,294.05 1,298,970,719.85
54,338,735.35 1,250,224,375.08
accounting standards
Adjusted items and amounts based on international accounting standards:
Based on international 48,380,294.05 1,298,970,719.85
54,338,735.35 1,250,224,375.08
accounting standards
2. The differences of net profit and net assets in this financial report disclosed based on overseas and
Chinese accounting standards
Unit: YUAN
Net profit attributable to shareholders of the Net assets attributable to shareholders of
listed company the listed company
Amount at the
Amount in the Amount in the Amount at the end
beginning of the
current period previous period of the period
period
Based on Chinese
47,403,384.49 54,338,735.35 1,297,993,810.29 1,250,224,375.08
accounting standards
Adjusted items and amounts based on overseas accounting standards:
Based on overseas
47,403,384.49 54,338,735.35 1,297,993,810.29 1,250,224,375.08
accounting standards
III. Items and amount of non-recurring gains and losses:
Unit: YUAN
Amount of Amount of Amount of
Item Remarks
2014 2013 2012
Gains and losses from disposal of
non-current assets (including the Gains on disposal of fixed
6,475.34 1,810,628.46 -3,492.79
write-off of asset impairment assets
reserves)
Won the special subsidies
Government subsidies recorded
issued by Futian District
into current gains and losses
(except those closely related with 1,554,585.78 1,117,834.72 870,280.00 Bureau of Science and
Technology Innovation of
corporate business and enjoyed
Shenzhen, and won the special
according to national unified
subsidies issued by Shenzhen
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Amount of Amount of Amount of
Item Remarks
2014 2013 2012
standard quota or ration) Economic, Trade and
Informatization Commission.
Fund appropriation charges for
non-financial entities recorded 700,000.00 581,000.00 581,000.00
into current gains and losses
Expenditures for corporate
restructuring, such as expenses
for relocation of employees and
for integration
Won the case with Guangzhou
Transferred-back impairment
ECS and recovered the
provision for accounts receivable,
3,022,045.29 payment for goods, which
for which separate impairment
reversed the bad-debt provision
tests are carried out
previously accrued.
Trustee fee from entrusted
200,000.00 200,000.00 200,000.00
operation
Other non-operating revenue and Liquidated damages from
expenses except the 498,440.96 1,212,506.81 -1,392,736.58 defaulting tenants collected
above-mentioned items and so on
Less: Amount of affected income
-216,991.94 -1,617,611.87 -397,102.02
tax
Amount of influence on
minority shareholders' equity -282,468.32 -900,326.64 359,325.35
(after tax)
Total 2,460,041.82 5,426,076.77 217,273.96 --
An explanation shall be made with regard to the Company's considerations for defining non-recurring profit and
loss according to the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public — Non-recurring Profit and Loss and the reason for classifying the non-recurring profit
and loss listed in this announcement as recurring.
□ Applicable √ Not applicable
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Chapter 4 Report of the Board of Directors
I. Overview
The Company stepped into the fourth year of its "12th Five-Year" Strategic Plan implementation in 2014. Under
the pressure of slowing domestic macro economic growth, the Company adhered to the management concept of
"securing the foothold, focusing on key points, and shifting the business direction", continued to strengthen its
independent innovation, and vigorously expanded its business. With the joint effort of the Company and the
invested enterprises, the performance of the Company is growing steadily. Therein, Nantong SEG Times Square
Project was officially capped on December 12, 2014; the business of existed electronics markets grew steadily and
continued to develop stably; the small loan business entered a stage of benign development; and the e-commerce
business started to achieve turning losses into gains.
During the reporting period, the Company achieved a total operating revenue of 752,410,000 Yuan, with a 17.48%
increase over the previous year, mainly due to: (1) substantial increase in the income of the small loan business; (2)
substantial increase in the income of the e-business; and (3) growth in the income of property rental and hotel
business.
During the reporting period, the Company achieved a total profit of 111,76 million Yuan, with a 6.19% increase
over the previous year, mainly due to: (1) increase in the income and profit of the small loan business; (2) growth
in the income from financial products investment.
II. Analysis of Main Businesses
1. Overview
Main business of the Company includes development and operation of specialized electronics market and its
supporting projects, property lease service, IT product channeling retail terminal service, e-commerce and
value-added small loan service.
(1) Operation of the electronics markets
In 2014, the new technical means and new business models centering on the Internet and Mobile Internet are
rewriting the traditional business rules of the electronics market industry, which changes consumers' consuming
behaviors and the whole traditional retail industry. Facing the intense market competition and the impact from
new commercial modal, the Company strategically invested more in the research of a new model for the
electronics market business and fully exerted the advantage of resources sharing in the chain markets across the
country. At the same time, the Company strived to further strengthen the innovation of electronics market
business and explore new business growth models while ensuring stable market operation.
During the reporting period, Wuxi SEG Electronics Market officially opened in March; Suzhou SEG Digital Plaza
(Park) also began trial operation in September; Taizhou SEG Electronics Market Project has established initial
intention of cooperation; and Zhengzhou SEG Digital Plaza project was approved by the Board of Directors, and
began to enter the preparatory stage.
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In 2014, facing a sluggish industry environment and severe channel competitions, the Company's business in the
electronics market maintained steady operation. Under a "zero accident" premise, the market operation and
innovation capabilities are continuously improved. New business models were developed, such as the SEG
Factory Store. A hybrid business model of "e-business + physical stores + marketing channel" was built up. The
scalable supply and marketing channels that connect downstream buyers and upstream electronics factories were
established. Direct trading with consumers was achieved through Tmall Store and physical stores. In this manner,
marketing channels were merged.
During the reporting period, the Company's electronics market business achieved the revenue of 312,300,000
Yuan, with a decrease of 1.67% from the previous year, mainly due to the decrease of Nanjing SEG's proprietary
trading business income. Mainly due to the increase of gains from use of funds, the total profit reached 77.01
million Yuan, with an increase of 4.32% over the previous year.
(2) Businesses of property leasing business
The property lease business of the Company headquarters was impeded by decline of the domestic mobile phone
business and the road enclosure and traffic control due to construction of Shenzhen Metro Line No.7, and
therefore the property occupancy rate and unit rent decreased compared with the same period of last year.
In the year of 2014, the property operation of the Company's subsidiary SEG Baohua was steady and rose. Despite
of the depressing property lease environment in Huaqiang North district and the rising vacancy rate and dramatic
rent drop of the surrounding office buildings, the Company kept the occupancy rate at 99% and above, and
maintained the highest rent among the office buildings in Huaqiang North district by improving the service quality
and taking effective business operation measures.
In the reporting period, the Company's property lease business yielded a total operation income of 66.38 million
Yuan, with a year-on-year increase of 1.16%, and achieved a total profit of 23.44 million Yuan, with a
year-on-year increase of 25.21%.
(3) Businesses of the channel retail terminal of IT products
In 2014, the IT product channel retail terminal business of SEG Industrial, a wholly owned subsidiary of the
Company, stepped into a virtuous development stage. During the reporting period, the company's channel
business obtained an income of 99.06 million Yuan, with a year-on-year increase of 186.05%, mainly due to the
revenue from the mobile phone distribution business and communications distribution business introduced in the
reporting period.
(4)Business of the electronic commerce
In the second half year of 2013, the Company redefined its e-commerce business. In 2014, SEG E-Commerce's
main business has shifted to the supply chain and segbuy.com. This platform provides tenants with all-around,
one-stop supply chain services by using the resources of physical SEG electronics markets.
In the reporting period, the Company's e-commerce business yielded a total operation income of 46.78 million
Yuan, with a year-on-year increase of 588.95%, and achieved a total profit of 1.35 million Yuan, turning losses
into profits compared with the same period last year. The company's revenue and profits in 2014 were mainly
from the supply chain related businesses.
(5) Small loan business
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In 2014, SEG's small loan business achieved a substantial growth. During the reporting period, the Company
achieved the operating revenue of 71.07 million Yuan with the small loan business, with a year-on-year increase
of 63.87%, and also made a total profit of 39,650,000 Yuan, a year-on-year increase of 61.38%.
The Company reviews the implementation progress of previously disclosed development strategies and business
plans in the reporting period.
In accordance with the 12th five-year plan, the Company disclosed its 2014 business plan in the 2013 Annual
Report. The project is funded by the capital owned by the Company and by issuing short-term financing bonds.
The following table lists the implementation progress of the 2014 business plan disclosed in the 2013 Annual
Report.
Investment Actual
plan amount
No. Project name (RMB ten Progress (RMB ten
thousand thousand
Yuan) Yuan)
(1) According to the decision made in the 12th special
meeting of the 6th Board on May 27, 2014, the Company
planned to invest into the Zhengzhou SEG Digital Plaza
project. Together with Henan Guanlian Engineering Co.,
Ltd. and Zhengzhou Coal Research Institute Ltd., the
investment totals 6 million Yuan as the registration capital.
The company planned to invest 3.06million Yuan and hold
Build new 51% of the shares. Up till the end of the reporting period,
electronics this project is still at the stage of preparation, so this
1 markets based 2,500 investment item has not happened yet. 800
on the leasing
model (2) According to the decision made in the 15th special
meeting of the 6th Board on July 29, 2014, the Company
planned to invest into the Suzhou SEG Digital Life Plaza
project. The investment totals 8 million Yuan as the
registration capital for the wholly-owned subsidiary
Suzhou SEG Digital Life Plaza Management Co., Ltd. As
of the end of the reporting period, the project has been
established, and investment fund has occurred.
(1) According to the decision made in the 28th special
meeting of the 5th Board held on January 8, 2013, the
Company planned to invest to establish Nantong SEG
Times Square Management Co., Ltd. (hereinafter referred
to as Nantong SEG) to develop the Nantong SEG Times
Square project. Nantong SEG was officially founded on
Open February 25, 2013, and the Nantong SEG Times Square
electronics
2 107,622 project was officially laid the foundation stone on 25,541
markets by
self-construction November 27, 2013; the project marketing center was
officially opened on June 28, 2014. On December 12,
2014, the ceremony for completing the major structure
capping of Nantong SEG Times Square project was held.
As of the end of the reporting period, the project is still
under construction.
(2) According to the decision made in the 7th special
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Investment Actual
plan amount
No. Project name (RMB ten Progress (RMB ten
thousand thousand
Yuan) Yuan)
meeting of the 6th Board held on February 14, 2014, the
company planned to invest 5 million Yuan as the capital
base for registration to set up Nantong SEG Commercial
Operation Management Co., Ltd. with sole proprietorship,
which mainly works on commercial operation and property
management of Nantong SEG Times Square. As of the end
of the reporting period, Nantong SEG Commercial
Operation Management Co., Ltd. has been set up, but the 5
million Yuan capital base is not paid. This investment
funds has temporarily not occurred.
(3) According to the decision made in the 10th special
meeting of the 6th Board held on April 4, 2014 and the 1st
shareholder special meeting in 2014 held on April 23,
2014, the Company planned to invest into the plot
maturation and project construction of Yantai SEG Times
Square. On April 28, 2014, the Company participated in
public auction for the plot maturation investor, but failed to
obtain the investor qualification. This competition failure
did not bring significant influence to the Company's
production and operation. In the reporting period, the
company has invested 45 million Yuan as deposit for
registration. However, due to the failure, this investment
item has been taken back within the reporting period.
(4) According to the decision made in the 14th special
meeting of the 6th Board held on July 3, 2014 and the 2nd
special shareholders meeting in 2014 held on July 21st
2014, the Company planned to invest into the project
construction of Xi'an SEG Times Square. On December 31,
2014, the Company participated in public auction of the
land, but failed to obtain the investor qualification. This
competition failure did not bring significant influence to
the Company's production and operation. In the reporting
period, the company has invested 30 million Yuan as
deposit for registration. However, due to the failure, this
investment item has been taken back in January 2015.
Reasons for the actual operating performance being more than 20% over or below the disclosed annual profit
forecast
□ Applicable √ Not applicable
Changes in main business models
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□ Applicable √ Not applicable
2. Revenue
During the reporting period, the Company completed a total operating revenue of 75.241 million Yuan, with a
17.48% increase over the same period of previous year, mainly due to: (1) substantial increase in the income of
the small loan business; (2) substantial increase in the e-business income; (3) increase in the income of the
property rental and hotel business.
Is the Company's goods sales revenue more than its service revenue?
□ Yes √ No
Information about major orders on hand
□ Applicable √ Not applicable
Information about significant changes or adjustments of any product or service in the reporting period
□ Applicable √ Not applicable
Information about the Company's major customers
Sales amount of top 5 customers (Yuan) 195,634,939.10
Proportion of the total sales amount of top 5
28.71%
customers in the annual sales (%)
Information about top 5 customers
√ Applicable □ Not applicable
No. Client Name Sales amount (Yuan) Proportion in the annual sales (%)
1 Shenzhen Runneng Digital Co., Ltd. 110,510,446.52 16.22%
2 Shenzhen Wodewo Trading Co., Ltd. 39,288,132.58 5.77%
Shenzhen Comnet Technology Co.,
3 21,296,350.41 3.13%
Ltd.
Shenzhen Nanfang Yunhe Technology
4 17,186,953.52 2.52%
Co., Ltd.
Beijing Ruifengli Hongqing Trading
5 7,353,056.07 1.08%
Company
Total -- 195,634,939.10 28.71%
Other information about major customers
□ Applicable √ Not applicable
3. Cost
Industry classification
Unit: Yuan
2014 2013 Year-on-year
Industry classification Proportion in Proportion in increase/decrease
Amount Amount (%)
operating cost operating cost
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2014 2013 Year-on-year
Industry classification Proportion in Proportion in increase/decrease
Amount Amount (%)
operating cost operating cost
Electronics market
operation and property 267,082,161.89 47.61% 274,749,822.68 56.49% -8.88%
leasing service
Trade 228,817,359.36 40.79% 184,085,676.90 37.85% 2.94%
Hotel 17,977,382.31 3.20% 14,862,735.64 3.06% 0.14%
E-commerce 42,202,184.74 7.52% 8,888,586.33 1.83% 5.69%
Finance 4,865,369.48 0.87% 3,824,364.20 0.79% 0.08%
Total 560,944,457.78 100.00% 486,411,185.75 100%
Information about major suppliers
Total purchase amount of top 5 suppliers (Yuan) 289,896,825.87
Proportion of the total purchase amount of top 5
59.07%
suppliers in the annual purchase (%)
Information about top 5 suppliers
√ Applicable □ Not applicable
Proportion in the annual purchase
No. Name of supplier Purchase amount (Yuan)
(%)
Nantong Huatong Construction
1 140,466,000.00 28.62%
Group Co., Ltd.
2 Shenzhen Shuojian Industry Co., Ltd 88,650,854.94 18.06%
Nanjing Yunde Investment
3 22,313,634.61 4.55%
Development Co., Ltd.
Shenzhen Yixinzhongtian
4 20,536,785.90 4.18%
Technology Co., Ltd.
Changsha Juzhengxinye Computer
5 17,929,550.43 3.65%
Technology Co., Ltd.
Total -- 289,896,825.87 59.07%
Other information about major suppliers
□ Applicable √ Not applicable
4. Expense
Increase/Decrease
No. Item 2014 (Yuan) 2013 (Yuan) Reasons for change
(%)
Sale Due to the reduction of sales promotion expenses
1 2,149,313.48 3,630,236.75 -40.79%
expenses incurred during the reporting period
Due to the increase of bank loans, issuance of
Financial
2 9,168,643.60 -10,488,089.69 -- short-term financing bonds, and increase of interest
cost
expenses during the reporting period
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
5. Research and Development (R&D) Expenditure
Proportion of R&D investment in the operating revenue in the recent three years:
2014 2013 2012
R&D investment (Yuan) 1,136,073.70 1,399,040.99 3,596,604.31
R&D investment
proportion in the
0.09% 0.11% 0.30%
Company's latest audited
net assets (%)
R&D investment
proportion in operating 0.17% 0.23% 0.78%
revenue (%)
During the reporting period, the company's R&D expenditure is mainly used for the construction, upgrade, and
maintenance of segbuy.com and SEG Universal. The investment will further help to improve the Company's
e-business platform to improve the viability and competitiveness of the Company.
6. Cash Flow
Unit: YUAN
Year-on-year
Item 2014 2013
increase/decrease (%)
Subtotal of cash inflow
2,439,133,722.87 1,363,728,760.09 78.86%
from operating activities
Subtotal of cash outflow for
2,867,067,343.81 1,486,259,306.79 92.90%
operating activities
Net cash flow from
-427,933,620.94 -122,530,546.70 -249.25%
operating activities
Subtotal of cash inflow
3,997,632,856.03 2,255,590,142.49 77.23%
from investing activities
Subtotal of cash outflow for
3,914,849,729.51 2,315,481,470.14 69.07%
investing activities
Net cash flow from
82,783,126.52 -59,891,327.65 ----
investing activities
Subtotal of cash inflow
678,352,371.12 160,000,000.00 323.97%
from financing activities
Subtotal of cash outflow for
286,738,699.97 95,116,782.77 201.46%
financing activities
Net cash flow arising from
391,613,671.15 64,883,217.23 503.57%
financing activities
Net increase in cash and
46,463,186.89 -117,538,973.37 ---
cash equivalents
Unit: YUAN
Reasons for over 30% year-on-year increase/decrease of related data
√ Applicable □ Not applicable
18
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
1. The cash inflow from operating activities has a 78.86% year-on-year increase during the reporting period,
mainly because:
(1) During the reporting period, the cash inflow from the supply chain services of SEG E-Commerce increases.
(2) The size of SEG small loan business is increased and the interest income increases over the previous year.
2. The cash outflow for operating activities has an 92.90% year-on-year increase during the reporting period,
mainly because:
(1) During the reporting period, the cash outflow of the supply chain services of SEG E-Commerce increases.
(2) During the reporting period, the cash outflow of Nantong SEG estate subsidiary increases.
(3) With the development of SEG small loan business, the loan issued increases from the previous year.
3. Net cash flow arising from operating activities decreases by 249.25% from the previous year: The net cash flow
decreases sharply because the cash outflow for operating activities during the reporting period increases due to the
above reasons and is higher than the cash inflow for operating activities in the same period.
4. Cash inflow from investing activities has a year-on-year increase of 77.23% during the reporting period due to
rapid growth of the bank financial investment in the reporting period.
5. Cash outflow for investing activities has a year-on-year increase of 69.07% during the reporting period due to
rapid growth of the scale of bank financial investment in the reporting period and the corresponding increase of
recovered investment funds.
6. Net cash flow arising from investing activities has a year-on-year increase during the reporting period because
the bank financial investment recovered is higher than the external investment size and the income received from
bank financial investment increases.
7. Cash inflow from financing activities during the reporting period has a year-on-year increase of 323.97%,
mainly due to the increase of loans obtained and issuance of short-term financing bonds during the reporting
period.
8. Cash outflow for financing activities during the reporting period has a year-on-year increase of 201.46%,
mainly due to the repayment of loan principal and interest for bank loans by the subsidiary during the reporting
period.
9. Net cash flow arising from financing activities has a year-on-year increase of 503.57% during the reporting
period, mainly due to the increase of financing scale of the Company during the reporting period.
10. Cash and cash equivalents has a year-on-year increase during the reporting period, mainly due to the combined
effects of above factors 3, 6, and 9.
Reasons for the significant difference between the cash flow arising from operating activities and the annual net
profit in the reporting period
√ Applicable □ Not applicable
19
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
III. Constitution of Main Business
Unit: YUAN
Year-on-year Year-on-year Year-on-year
Operating Gross profit increase/decrease increase/decrease increase/decrease
Operating cost
revenue margin of operating of operating cost of gross profit
revenue (%) (%) margin (%)
By industry
Electronics
market
operation and
378,687,526.55 267,082,161.89 29.47% -1.18% -2.79% 1.17%
property
leasing
service
Trade 231,763,054.54 228,817,359.36 1.27% 23.11% 24.30% -0.95%
Hotel 24,114,841.00 17,977,382.31 25.45% 14.81% 20.96% -3.79%
E-commerce 46,778,498.90 42,202,184.74 9.78% 858.37% 374.79% 91.88%
Finance 71,070,820.07 4,865,369.48 93.15% 64.99% 27.22% 2.03%
By product
Not
applicable
By Region
Shenzhen 550,831,410.15 384,466,835.22 30.20% 26.88% 24.94% 1.08%
Xi'an 54,408,611.06 40,257,634.54 26.01% 8.98% 8.68% 0.21%
Su Zhou 56,137,670.38 54,556,314.25 2.82% 11.98% 34.16% -16.06%
Changsha 32,771,338.47 27,658,233.57 15.60% 15.73% 14.87% 0.63%
Nanjing 40,176,866.63 36,739,465.36 8.56% -43.36% -45.32% 3.29%
Foshan 2,331,170.63 2,266,762.37 2.76% -18.60% -54.88% 78.20%
Nanning 10,572,085.86 9,716,037.59 8.10% 155.30% 115.27% 17.09%
Wuxi 5,185,587.88 5,283,174.88 -1.88% 3,007.56%
If the statistical rule of main business data is adjusted in the reporting period, the Company shall use the main
business data collected at the end of the reporting period after adjustment of statistical rule.
□ Applicable √ Not applicable
IV. Analysis of Assets and Liabilities
1. Major Changes in Assets
Unit: Yuan
End of 2014 End of 2013
Proportion Proportion Increase/Decrease Major Changes
Amount in total Amount in total (%)
assets (%) assets (%)
Monetary
383,056,680.70 14.40 336,593,493.81 15.77 -1.37
funds
20
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
End of 2014 End of 2013
Proportion Proportion Increase/Decrease Major Changes
Amount in total Amount in total (%)
assets (%) assets (%)
Accounts
185,866,040.16 6.99 204,086,309.32 9.56 -2.57
receivable
Inventory 278,281,586.72 10.46 98,000,921.50 4.59 5.87
Investment
462,562,882.78 17.39 481,517,481.83 22.55 -5.16
properties
Long-term
equity 82,100,197.01 3.09 112,102,810.03 5.25 -2.16
investment
Fixed assets 41,408,298.43 1.56 41,876,654.83 1.96 -0.40
Construction
in progress
2. Major Changes in Liabilities
Unit: Yuan
2014 2013
Proportio Increase
Proportion /Decreas Major Changes
n in total
Amount Amount in total e (%)
assets
assets (%)
(%)
This is because of the increase of
Short-term 189,246,687.3 70,000,000.0 bank loans obtained by the
7.12 3.28 3.84
borrowing 8 0 Company during the reporting
period.
3. Assets and Liabilities Measured at Fair Value
□ Applicable √ Not applicable
4. Main Overseas Assets
□ Applicable √ Not applicable
V. Analysis of Core Competence
Main business of the Company includes development and operation of specialized electronics market and
supporting projects, property lease service, IT product channel retail terminal service, e-commerce and
value-added small loan service.
By December 31, 2014, the Company has set up 25 entity-based SEG electronics markets (SEG Digital Squares)
in China, which forms a nationwide specialized electronics market chain covering Pearl River Delta and Yangtze
River Delta. Through 26 years of effort, SEG Electronics Market has successfully combined IT complex
self-construction, leasing and trusted management, combined market service and value-added financial service,
and combined professional market, SEG factory store and distribution channels. SEG Electronics Market stand
21
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
out as the largest specialized electronics markets in China and even in Asia covering electronic components, IT
products, and communications products and has great brand influence both at home and abroad.
In the reporting period, Shenzhen SEG Electronics Market is awarded again the title of Top 10 Flagship Market of
China's Professional Electronics Market in the 14th Annual Meeting of China's Professional Electronics Market
which is hosted by China Electronics Chamber of Commerce. Meanwhile, Liu Zhijun, the general manager of the
Company, is awarded the title of "Operation Master of China's Professional Electronics Market in 2013".
VI. Analysis of Investment
1. Foreign equity investment
(1) Forest investment
√ Applicable □ Not applicable
Investment of the Company
Investment in the reporting period
Investment of last year (Yuan) Increase/Decrease (%)
(Yuan)
218,410,000.00 157,316,000.00 38.84%
Information about the invested companies
Equity proportion of listed company
Company name Main business
in invested company (%)
Development and operation of real
Nantong SEG Times Square estate, lease and sales of self-owned
100.00%
Development Co., Ltd. house, property management, and
sales of electronic products
Suzhou SEG Digital Life Plaza Operation and management of
100.00%
Management Co., Ltd. e-market
Development and operation of real
Yantai SEG Times Square estate, lease and sales of self-owned
90.00%
Development Co., Ltd. house, property management, and
sales of electronic products
Development and operation of real
Xi'an Fengdong New Town SEG estate, lease and sales of self-owned
100.00%
Times Square Properties Co., Ltd. house, property management, and
sales of electronic products
Zhengzhou SEG Digital Plaza Operation and management of
51.00%
Management Co., Ltd. e-market
Nantong SEG Commercial Operation
Property management 100.00%
Management Co., Ltd.
(2) Equity of the financing enterprises held by the company
□ Applicable √ Not applicable
The company does not hold stock equities in financial enterprises during the reporting period.
(3) Securities investment
√ Applicable □ Not applicable
22
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Securities Initial Shares held Initial Shares held Share-holding Gains and losses in Source
Securities Securities Accounting
short investment cost at period shareholding at period proportion Ending book value the reporting of
type code item
form (Yuan) beginning proportion end (%) period shares
Financial
Youhao assets Initial
Stock 600778 90,405.00 60,683 0.04% 60,683 0.04% 554,642.62 0.00
Group available share
for sale
Long-term
Huakong Initial
Stock 000068 279,307,046.38 201,345,033 22.45% 201,345,033 22.45% 78,523,408.83 -24,324,899.21 equity
SEG share
investment
79,078,051.45 -24,324,899.21
Total 279,397,451.38 201,405,716 -- 201,405,716 -- -- --
(4) Equity of other listed companies held by the Company
□ Applicable √ Not applicable
The company does not hold stock equities of other listed enterprises during the reporting period.
2. Entrusted financing, derivatives investment, and entrusted loan
(1) Entrusted financing
√ Applicable □ Not applicable
Unit: RMB ten thousand Yuan
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
August January 10,
Bank of China None No AMZYJZT-LP13159 600 Floating income 600 10.95 10.95
27, 2013 2014
None November January 16,
Bank of China No AMZYJF 4,000 Floating income 4,000 39.45 39.45
5, 2013 2014
The Agricultural None December January 24,
No FP7215663600 800 Constant return 800 4.21 4.21
Bank of China 24, 2013 2014
None July 26, January 27, Floating income
Bank of China No AMZYPW (185 days) 1,300 1,300 32.95 32.95
2013 2014
Industrial and None Floating income
October January 28,
Commercial No QER13112 300 300 4.23 4.23
17, 2013 2014
Bank of China
None January January 31, Floating income
Bank of China No Ji Fu Zhuan Xiang 1,500 1,500 70.5 70.5
31, 2013 2014
None November February 7, Floating income
Bank of China No AMZYJZT-LP13229 5,000 5,000 66.45 66.45
1, 2013 2014
None November February 7, Floating income
Bank of China No AMZYJZT-LP13242 7,000 7,000 82.96 82.96
15, 2013 2014
China None December February Floating income
No 51385 100 100 0.74 0.74
Merchants Bank 27, 2013 10, 2014
23
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
Industrial and None Floating income
December February
Commercial No 3059BBX 2,000 2,000 19.4 19.4
20, 2013 17, 2014
Bank of China
None October February
Bank of China No AMZYJZT-LP13224 8,000 Floating income 8,000 134.1 134.1
24, 2013 21, 2014
None March 15, March 14,
Bank of China No AMZYPW 1,500 Floating income 1,500 65.82 65.82
2013 2014
None December March 20,
Bank of China No AMZYJF 1,000 Floating income 1,000 13.19 13.19
24, 2013 2014
None November May 15,
Bank of China No AMZYZH14164 400 Floating income 400 10.24 10.24
18, 2013 2014
None October June 29,
Bank of China No AMZYZH14129 1,000 Floating income 1,000 36.33 36.33
17, 2013 2014
None November July 8,
Bank of China No AMZYJF 1,000 Floating income 1000 36.92 36.92
5, 2013 2014
None November January 15,
Ping An Bank No AGS131754-001 3,000 Floating income 3,000 17.9 17.9
15, 2013 2014
Industrial and None
June 11, December
Commercial No 1001RSYH 30 Floating income 30 0.28 0.28
2014 31, 2014
Bank of China
Industrial and None
June 11, December
Commercial No 1001RSYH 30 Floating income 30 0.38 0.38
2014 31, 2014
Bank of China
Industrial and None
June 11, December
Commercial No 1001RSYH 30 Floating income 30 0.38 0.38
2014 31, 2014
Bank of China
Industrial and None
June 11, December
Commercial No 1001RSYH 30 Floating income 30 0.52 0.52
2014 31, 2014
Bank of China
Industrial and None
June 11, December
Commercial No 1001RSYH 30 Floating income 30 0.52 0.52
2014 31, 2014
Bank of China
Industrial and None
June 11, December
Commercial No 1001RSYH 30 Floating income 30 0.52 0.52
2014 31, 2014
Bank of China
Industrial and None
June 11, December
Commercial No 1001RSYH 30 Floating income 30 0.52 0.52
2014 31, 2014
Bank of China
Industrial and None
January 2, March 24,
Commercial No 3059BBX 1,500 Floating income 1,500 20.21 20.21
2014 2014
Bank of China
Industrial and None
March 5, May 19,
Commercial No 3059BBX 2,000 Floating income 2,000 23.32 23.32
2014 2014
Bank of China
24
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
Industrial and None
May 28, December
Commercial No 3059BBX 3,000 Floating income 3000 87 87
2014 10, 2014
Bank of China
Industrial and None
June 11, December
Commercial No 3059BBX 5,000 Floating income 5,000 140.84 140.84
2014 22, 2014
Bank of China
Industrial and None
January April 3,
Commercial No QER14006 800.00 Floating income 800.00 8.77 8.77
24, 2014 2014
Bank of China
Industrial and None
Ji Fu Zhuan Xiang January December
Commercial No 1,300 Floating income 1,300 69.82 69.82
(364 days) 2014041 27, 2014 31, 2014
Bank of China
Industrial and None
January March 6,
Commercial No QER14009 (36 days) 2,000 Floating income 2,000 11.24 11.24
29, 2014 2014
Bank of China
Industrial and None
March 12, September
Commercial No 4009ZSTC 2,000 Floating income 2,000 60.59 60.59
2014 22, 2014
Bank of China
None March 20, March 16,
Bank of China No AMZYPW 1,500 Floating income 83.08
2014 2015
Industrial and None
April 8, May 27,
Commercial No 4003ZSTA 1,200 Floating income 1,200 8.22 8.22
2014 2014
Bank of China
Industrial and None Financial products for
May 30, June 12,
Commercial No corporate customers 1,200 Floating income 1,200 1.52 1.52
2014 2014
Bank of China (14 days)
None July 1, June 29,
Bank of China No AMZYPW 1,100 Floating income 57.43
2014 2015
None January June 30,
Bank of China No AMZYJF 600 Floating income 600 14.8 14.8
23, 2014 2014
None May 20, October 10,
Bank of China No AMZYJZT 400 Floating income 400 7.52 7.52
2014 2014
None February February
Bank of China No YUANAQKF 1,000 Floating income 1,000 0.91 0.91
19, 2014 28, 2014
Industrial and None
June 24, December
Commercial No ZQL180 78 Floating income 77.9 2.07 2.07
2014 24, 2014
Bank of China
Industrial and None
March 17, April 28,
Commercial No 3059BBX 500 Floating income 500 2.24 2.24
2014 2014
Bank of China
Industrial and None
May 6, June 16,
Commercial No FP7218438200 500 Floating income 500 2.07 2.07
2014 2014
Bank of China
Industrial and None June 25, August 4,
No 4024BBXA 500 Floating income 500 1.97 1.97
Commercial 2014 2014
25
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
Bank of China
China None
QianYuan financial May 16, June 20,
Construction No 120 Floating income 120 0.48 0.48
products 2014 2014
Bank
China None January March 11,
No LJSY54031 590 Floating income 590 5.14 5.14
Merchants Bank 10, 2014 2014
China None February April 15,
No LJSY51392 100 Floating income 100 0.82 0.82
Merchants Bank 14, 2014 2014
None Guaranteed
China March 13, June 17,
No 52072 80 minimum 80 1.12 1.12
Merchants Bank 2014 2014
income
None Guaranteed
China March 27, June 23,
No 52078 1,000 minimum 1,000 11.3 11.3
Merchants Bank 2014 2014
income
None Guaranteed
China April 17, July 2,
No 52093 350 minimum 350 3.43 3.43
Merchants Bank 2014 2014
income
China None
QianYuan financial March 11, May 12,
Construction No 100 Floating income 100 0.82 0.82
products 2014 2014
Bank
None March 7, May 6,
Bank of China No AMZYPWHQ 500 Floating income 500 4.23 4.23
2014 2014
None May 9, September
Bank of China No AMZYJZT-LPA14126 500 Floating income 500 7.31 7.31
2014 2, 2014
None June 6, August 8,
Bank of China No AMZYJZT-LPA14165 1,200 Floating income 1200 9.94 9.94
2014 2014
None June 13, July 15,
Bank of China No AMZYJZT-LPA14173 100 Floating income 100 0.4 0.4
2014 2014
None April 11, July 4,
Bank of China No AMZYPWHQ 500 Floating income 500 5.75 5.75
2014 2014
None June 9, September
Bank of China No AMZYPWHQ 300 Floating income 300 3.7 3.7
2014 9, 2014
None June 27, September
Bank of China No AMZYPWHQ 300 Floating income 300 3.69 3.69
2014 23, 2014
None March 11, April 10,
Bank of China No YUANAQKF 100 Floating income 100 0.28 0.28
2014 2014
None January March 10,
Bank of China No AMZYPWHQ 1,800 Floating income 1,800 14.64 14.64
13, 2014 2014
None January March 20,
Bank of China No AMZYPWHQ 4,000 Floating income 4,000 34.27 34.27
20, 2014 2014
None January March 20,
Bank of China No AMZYPWHQ 2,000 Floating income 2,000 16.26 16.26
23, 2014 2014
None January March 3,
Bank of China No AMZYPWHQ 1,000 Floating income 1,000 5.03 5.03
27, 2014 2014
26
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
None February March 24,
Bank of China No AMZYPWHQ 12,000 Floating income 12,000 57.53 57.53
17, 2014 2014
None February April 4,
Bank of China No AMZYPWHQ 8,000 Floating income 8,000 43.31 43.31
25, 2014 2014
None March 25, April 15,
Bank of China No YUANAQKF 12,000 Floating income 12,000 23.2 23.2
2014 2014
None April 3, April 30,
Bank of China No YUANAQKF 6,000 Floating income 6,000 17.04 17.04
2014 2014
None April 4, April 21,
Bank of China No GSRJYL01 4,500 Floating income 4,500 5.87 5.87
2014 2014
None April 4, April 25,
Bank of China No GSRJYL01 1,500 Floating income 1,500 2.42 2.42
2014 2014
None April 4, May 5,
Bank of China No GSRJYL01 8,000 Floating income 8,000 18.41 18.41
2014 2014
None April 16, April 30,
Bank of China No YUANAQKF 12,000 Floating income 12,000 13.62 13.62
2014 2014
None April 30, May 5,
Bank of China No GSRJYL01 13,500 Floating income 13,500 5.18 5.18
2014 2014
None May 5, June 10,
Bank of China No AMZYJZT 21,000 Floating income 21,000 86.59 86.59
2014 2014
None May 21, June 30,
Bank of China No GSRJYL01 16,800 Floating income 16,800 50.26 50.26
2014 2014
None May 23, June 30,
Bank of China No GSRJYL01 2,800 Floating income 2,800 8.16 8.16
2014 2014
Bank of None May 26, June 9,
No FP7215513700 500 Floating income 500 0.48 0.48
Communications 2014 2014
Bank of None May 26, November
No FP7215513700 2,000 Floating income 1622.1 53.72 53.72
Communications 2014 17, 2014
Shanghai None
Pudong June 12, July 17,
No 14HH111 8,000 Floating income 8000 42.96 42.96
Development 2014 2014
Bank
None June 12, June 30,
Bank of China No GSRJYL01 6,500 Floating income 6,500 23.93 23.93
2014 2014
None June 12, December
Bank of Beijing No GUB1408003 13,000 Floating income 13000 338.93 338.93
2014 12, 2014
The Agricultural None June 13, June 30,
No BFDG 5,000 Floating income 5,000 11.18 11.18
Bank of China 2014 2014
The Agricultural None June 18, June 30,
No BFDG 3,100 Floating income 3,100 4.89 4.89
Bank of China 2014 2014
None June 25, June 30,
Bank of China No GSRJYL01 2,400 Floating income 2,400 0.92 0.92
2014 2014
Bank of China None No AMZYJZT 750 August November Floating income 750 8.58 8.58
27
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
12, 2014 7, 2014
None Feifan asset August February
Minsheng Bank No 300 Floating income 7.83
management 25, 2014 26, 2015
Industrial and None
July 17, December
Commercial No ZXFG 8,000 Floating income 8,000 178.82 178.82
2014 10, 2014
Bank of China
The Agricultural None July 14, September
No Beilifeng 850 Floating income 850 7.09 7.09
Bank of China 2014 22, 2014
China None July 11, September
No 52086 500 Floating income 500 5.24 5.24
Merchants Bank 2014 29, 2014
China None
July 23, August 29,
Construction No ZH0102 80 Floating income 80 0.33 0.33
2014 2014
Bank
Industrial and None
August September
Commercial No Li Cai Gong Ying 400 Floating income 400 1.58 1.58
20, 2014 28, 2014
Bank of China
None July 1 July 12,
Bank of China No GSRJYL01 28,500 Floating income 28,500 24.05 24.05
2014 2014
Shanghai None
Pudong July 8, August 7,
No Cai Fu Ban Che 3,000 Floating income 3,000 13.8 13.8
Development 2014 2014
Bank
Shanghai None
Pudong July 9, August 8,
No Cai Fu Ban Che 18,000 Floating income 18,000 82.85 82.85
Development 2014 2014
Bank
None July 11, August 12,
Bank of China No AMZYJZT 10,800 Floating income 10,800 42.61 42.61
2014 2014
None July 21, August 6,
Bank of China No GSRJYL01 1,100 Float ingincome 1,100 1.35 1.35
2014 2014
Shanghai None
Pudong August September
No Cai Fu Ban Che 18,000 Floating income 18,000 82.85 82.85
Development 14, 2014 13, 2014
Bank
None August August 27,
Bank of China No GSRJYL01 9,000 Floating income 9,000 10.36 10.36
22, 2014 2014
None August October 8,
Industrial Bank No Jin Xue Qiu 5,000 Floating income 5,000 30.89 30.89
28, 2014 2014
None July 14, July 13,
Bank of China No AMZYZH 1,000 Floating income 52.85
2014 2014
None Feifan asset August 8, November
Minsheng Bank No 700 Floating income 700 9.19 9.19
management 2014 10, 2014
None July 4, January 9,
Bank of China No AMZYJZT 600 Floating income 15.53
2014 2015
28
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
Shanghai None
Pudong September October 18,
No Cai Fu Ban Che 13,000 Floating income 13,000 63.82 63.82
Development 18, 2014 2014
Bank
Shanghai None
Pudong September October 23,
No Li Duo Duo 5,000 Floating income 5,000 23.01 23.01
Development 23, 2014 2014
Bank
China Citic None Xincheng Cash September December
No 3,000 Floating income 3,000 36.69 36.69
Bank Management 26, 2014 9, 2014
None September November
Bank of China No GSRJYL01 1,000 Floating income 1,000 3.38 3.38
30, 2014 13, 2014
Shanghai None
Pudong October November
No Li Duo Duo 1,000 Floating income 1,000 4.76 4.76
Development 17, 2014 16, 2014
Bank
Shanghai None
Pudong October November
No Li Duo Duo 13,000 Floating income 13,000 62.11 62.11
Development 23, 2014 22, 2014
Bank
Shanghai None
Pudong November December
No Li Duo Duo 10,900 Floating income 10,900 50.45 50.45
Development 28, 2014 28, 2014
Bank
None Rolling
type
China Citic Xincheng Cash December
No 3,000 product, no Floating income
Bank Management 22, 2014
fixed end
date
Shanghai None
Pudong December January 22,
No Li Duo Duo 6,400 Floating income 29.46
Development 23, 2014 2015
Bank
None December February 5,
Bank of China No AMZYZH 500 Floating income 2.84
30, 2014 2015
None Rolling
Shanghai type
Pudong December product,
No Li Duo Duo 3,000 Floating income
Development 30, 2014 without
Bank fixed end
date
Shanghai None
Pudong December January 29,
No Li Duo Duo 5,800 Floating income 26.7
Development 30, 2014 2015
Bank
Bank of China None No AMZYZH 2,000 September September Floating income 107.59
29
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
29, 2015 21, 2015
Industrial and None
December February
Commercial No ZXFG 500 Floating income 3.53
15, 2014 12, 2015
Bank of China
None October November
Bank of China No AMZYZH 1,400 Floating income 1,400 6.04 6.04
11, 2014 17, 2014
None November December
Bank of China No AMZYZH 1,400 Floating income 1,400 5.37 5.37
20, 2014 25, 2014
Industrial and None
December December
Commercial No 1001RSYH 30 Floating income 30 0.05 0.05
6, 2014 29, 2014
Bank of China
Industrial and None
December December
Commercial No 1001RSYH 30 Floating income 30 0.05 0.05
6, 2014 29, 2014
Bank of China
Industrial and None
December December
Commercial No 1001RSYH 30 Floating income 30 0.05 0.05
6, 2014 29, 2014
Bank of China
Industrial and None
December December
Commercial No 1001RSYH 30 Floating income 30 0.05 0.05
6, 2014 29, 2014
Bank of China
Industrial and None
October November
Commercial No 3059BBX 390 Floating income 390 1.58 1.58
15, 2014 24, 2014
Bank of China
Industrial and None
December January 8,
Commercial No ZXFG 240 Floating income 0.83
5, 2014 2015
Bank of China
The Agricultural None September November
No Beilifeng 1,000 Floating income 1,000 4.08 4.08
Bank of China 29, 2014 30, 2014
China None October October 27,
No Periodic financing 485 Floating income 485 0.47 0.47
Merchants Bank 20, 2014 2014
China None October October 29,
No Periodic financing 15 Floating income 15 0.02 0.02
Merchants Bank 20, 2014 2014
None November December
Ping An Bank No TTL 1,700 Floating income 1,700 2.68 2.68
26, 2014 20, 2014
None Rolling
type
December product,
Ping An Bank No TTL 3,300 Floating income
31, 2014 without
fixed end
date
None November February
Bank of China No AMZYJZT 500 Floating income 6.31
11, 2014 17, 2015
None December March 24,
Bank of China No AMZYJZT 300 Floating income 3.81
23, 2014 2015
Minsheng Bank None No Feifan asset 300 August February Floating income 7.83
30
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Principal
Actual loss
amount
Connected Amount of Remuneration and gain
Associated returned in Projected
Name of trustee transaction Product Type entrusted Start Date End Date confirmation amount in
relationship the income
or not financing method the reporting
reporting
period
period
management 25, 2014 26, 2015
The Agricultural None October December
No Beilifeng 900 Floating income 900 6.04 6.04
Bank of China 14, 2014 10, 2014
China None October January 19,
No 52086 500 Floating income 6.29
Merchants Bank 16, 2014 2015
Industrial and None
December February 2,
Commercial No Structured Deposit 650 Floating income 2.11
31, 2014 2015
Bank of China
None October April 13,
Bank of China No Zhi Hui 400 Floating income 10
16, 2014 2015
Total 426,407.90 -- -- -- 394,140.00 3,244.09 2820.07
(2) Investment of derivatives
□ Applicable √ Not applicable
Derivatives investment does not exist during the reporting period.
(3) Entrusted loaning
□ Applicable √ Not applicable
Entrusted loaning does not exist during the reporting period.
3. Use of the raised capital
□ Applicable √ Not applicable
4. Analysis of the main subsidiaries and shareholding companies
√ Applicable □ Not applicable
List of major subsidiaries and shareholding companies
Unit: YUAN
Company Ownership Major products Registered Operating Operating
Industry Total assets Net assets Net profit
name type or services capital revenue profit
Operation and
management of
Electronics
Wujiang SEG Subsidiary professional 3,000,000.00 21,056,573.04 4,012,953.08 14,370,125.01 1,602,009.97 906,209.09
market
electronics
market
Operation and
management of
Electronics
Wuxi SEG Subsidiary professional 3,000,000.00 15,435,488.57 2,691,012.81 5,185,587.88 -143,338.73 -149,430.59
market
electronics
market
Nantong SEG Subsidiary Development Development 30,000,000.00 305,158,345.89 27,389,736.86 -495,673.54 2,855.92
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Company Ownership Major products Registered Operating Operating
Industry Total assets Net assets Net profit
name type or services capital revenue profit
and operation and operation of
of real estate real estate
Development Development
Yantai SEG Subsidiary and operation and operation of 45,000,000.00 432.18 432.18 432.18 432.18
of real estate real estate
Operation and
management of
Electronics
Nanning SEG Subsidiary professional 8,000,000.00 13,192,637.98 7,786,154.93 10,572,085.86 698,050.19 769,306.36
market
electronics
market
Operation and
management of
Electronics
Shunde SEG Subsidiary professional 6,000,000.00 5,920,582.08 3,115,306.41 2,331,170.63 -46,860.95 68,400.49
market
electronics
market
SEG
Subsidiary E-commerce E-commerce 48,000,000.00 401,004,927.54 7,863,098.04 49,887,932.86 978,998.25 1,542,584.03
E-Commerce
SEG Credit Subsidiary Finance Micro-credit 150,000,000.00 495,626,540.05 181,744,351.97 62,998,793.90 39,654,505.94 29,712,107.16
Property
Property operation and
SEG Baohua Subsidiary 30,808,800.00 141,198,909.33 96,342,425.66 81,708,199.76 33,081,617.13 24,911,642.59
management management and
hotel business
Channel retail
terminal of
Electronic
electronic
product
SEG Industry Subsidiary products and 25,500,000.00 84,386,518.70 31,748,178.04 232,728,130.64 3,351,934.24 3,285,760.88
channel
property
business
operation and
management
Operation and
management of
Electronics
Xi'an SEG Subsidiary professional 3,000,000.00 46,151,216.96 15,834,397.85 36,921,012.56 10,860,224.21 10,352,288.78
market
electronics
market
Operation and
management of
Longgang Electronics
Subsidiary professional 3,000,000.00 20,914,312.50 7,614,283.11 10,834,930.38 2,679,272.00 2,016,637.36
SEG market
electronics
market
Operation and
management of
Electronics
Suzhou SEG Subsidiary professional 3,000,000.00 39,411,552.58 8,170,852.49 40,775,694.55 5,420,471.59 3,225,653.77
market
electronics
market
Operation and
management of
Changsha Electronics
Subsidiary professional 35,000,000.00 75,884,353.79 58,407,317.29 21,651,924.25 5,233,242.10 3,807,186.43
SEG market
electronics
market
Xi'an Electronics Operation and
Subsidiary 3,000,000.00 25,207,092.62 3,670,424.17 17,487,598.50 1,655,987.42 1,634,038.45
Hairong SEG market management of
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Company Ownership Major products Registered Operating Operating
Industry Total assets Net assets Net profit
name type or services capital revenue profit
professional
electronics
market
Operation and
management of
Electronics
Nanjing SEG Subsidiary professional 20,000,000.00 28,183,951.14 11,858,971.83 40,176,866.63 1,498,117.13 2,022,297.60
market
electronics
market
Operation and
management of
Suzhou SEG Electronics
Subsidiary professional 8,000,000.00 17,013,807.05 1,453,289.57 991,850.82 -6,546,710.43 -6,546,710.43
Digital market
electronics
market
Xi'an Development Development
Fengdong Subsidiary and operation and operation of 30,000,000.00 60,000,040.00 30,000,000.00 0.00 0.00 0.00
SEG of real estate real estate
Nantong SEG
Property Property
Business Subsidiary 5,000,000.00 18,327.38 -66.84 0.00 -66.84 -66.84
management management
Operation
Manufacturing
and operation of
Manufacturing
Huakong Shareholding color picture
of electronic 896,671,464.00 420,734,829.16 116,437,355.90 67,194,613.97 -106,180,314.39 -105,387,168.32
SEG company tube (CPT), CPT
components
materials, and
glass apparatus
Operation and
management of
Shanghai Shareholding Electronics
professional 5,000,000.00 30,688,607.79 10,293,666.63 21,463,752.09 791,610.45 898,454.72
SEG company market
electronics
market
Production and
SEG Shareholding Information operation
60,000,000.00 380,296,943.71 179,182,784.99 250,490,854.20 -2,094,956.06 8,090,215.49
Navigations company industry network service
of China GPS
Operation and achievement of major subsidiaries and shareholding companies
1. During the reporting period, the operating revenue of Nanjing SEG decreased by 43.36% from the previous
year, mainly because centralized cashier and unified billing were canceled in the phase-4 market since January 16,
2014, hence the decrease of sales income of 5.5 months compared with the same period of the last year. From
June 27, 2014, the cooperation model of the phase-4 market was changed again. Nanjing SEG and China Telecom
Nanjing branch canceled their agreement and completed the transfer formalities on October 30, 2014. Nanjing
SEG is no longer responsible for the operation of the Tianyi Square.
2. During the reporting period, compared with last year, the operating revenue of Nanning SEG had a 155.30%
increase, mainly because 12 months were counted in 2014 while only three months were counted in 2013 since
Nanning SEG Market opened in September 2013.
3. During the reporting period, the total profit of Suzhou SEG fell by 39.64%, mainly due to the early termination
of Suzhou Metro Boutique Museum and the loss caused by Zhangjiagang Digital Boutique Museum.
33
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
4. During the reporting period, the total profit of Xi'an Hairong SEG had a 101.13% increase, compared with the
last year, mainly because the market gradually becomes mature, the rent of some commercial spaces increased,
and the income from financial product investment also increased. Therefore, the total profit of Xi'an Hairong SEG
had a significant increase compared with the last year.
5. During the reporting period, compared with last year, the income of Wujiang SEG had a 35.90% increase and
the total profit had a 96.35% increase, mainly because 4 quarters were counted in 2014 while only three quarters
were counted in 2013 since Wujiang SEG opened in March 2013. The increases of operating revenue and income
from financial products investment also made the total profit significantly increase compared with the last year.
6. During the reporting period, the operating revenue of SEG e-business also had a 634.85% increase over the
previous year, mainly because the new supply chain business entered a stage of stable development and achieved
some success, thereby making the year 2014 achieve profitability with a net profit of 1,543,600 Yuan.
7. During the reporting period, the total profit of SEG Baohua had a 33.47% increase over the previous year,
mainly because the Company cut costs amid the overall poor performance in the Huaqiang North property rental
market in an effort to keep the property occupancy rate and rent level at a high level and meanwhile, the Orange
Hotel achieved growth in business performance.
8. During the reporting period, the operating revenue and total profit of SEG Credit had a 45.25% increase and a
63.95% increase respectively over the last year. This is mainly because, during the reporting period, in addition to
full investment of capital funds, SEG Credit increased loans through bank financing and issuance of short-term
financial instruments, which increased the business scale and significantly improved income and profits.
Information about the acquisition and disposal of subsidiaries in the reporting period
√ Applicable □ Not applicable
Purpose of acquisition and Ways of acquisition and Impact on the overall
Company name disposal of subsidiaries in disposal of subsidiaries in production and
the reporting period the reporting period performance
Focus on major business Increased the net profit by
Yantai SEG Times Square Invested and
according to strategies of RMB 400 Yuan during the
Development Co., Ltd. newly-deployed
the Company reporting period.
Nantong SEG Commercial Focus on major business Reduced the net profit by
Invested and
Operation Management according to strategies of RMB 70 Yuan in the
newly-deployed
Co., Ltd. the Company reporting period.
Focus on major business Reduced the net profit by
Suzhou SEG Digital Plaza Invested and
according to strategies of RMB 6,546,700 Yuan in the
Management Co., Ltd. newly-deployed
the Company reporting period.
Xi'an Fengdong New Town Focus on major business
Invested and No impact on the net profit
SEG Times Square according to strategies of
newly-deployed during the reporting period.
Properties Co., Ltd. the Company
5. Major projects invested not by raised capital
√ Applicable □ Not applicable
34
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Unit: RMB ten thousand Yuan
Actual
Planned Amount invested accumulated
Project name investment during the current amount invested Progress Profit
amount reporting period till the end of the
reporting period
Net profit
increased by
Nantong SEG Under
62,500 18,041 28,579 RMB 2900 Yuan
Times Square construction
during the
reporting period.
Investment funds Net profit
have been increased by
Yantai SEG Times
80,100 4,500 0 recovered during RMB 400 Yuan
Square
the reporting during the
period reporting period.
Investment funds
Xi'an Fengdong
have been
New Town SEG 60,000 3,000 3,000 No net profit
recovered in
Time Square
January 2015
Total 202,600 25,541 31,579 -- --
VII. Estimation of the Business Performance from January to March in 2015
Warning of and reasons for forecasts on loss or sharp year-on-year change in the accumulated net profit from the
year beginning to the end of next period
□ Applicable √ Not applicable
VIII. Entities for Special Purpose Controlled by the Company
□ Applicable √ Not applicable
IX. Outlook for future development of the Company
1. Competition situation and development trend
(1) External macro environment
In future, China's macro economy will enter the new normal. Essentially, the economic development will evolve
from the traditional extensive and high-speed growth phase to a high-efficiency, low-cost, medium to high-speed
and sustainable growth phase.
In another aspect, with the booming economic development of Internet, China's total online retail trade accounted
for 7.8% of the total retail sales of social consumer goods in 2013, up from 1.2% in 2008. In the first half in 2014,
online retail market transactions reached about 1.1 trillion Yuan, accounting for 8.4% of the total retail sales of
social consumer goods, with an increase of 33.4% over the same period of last year. China has become the world's
largest online retail market.
(2) Industry situation
35
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
New technologies bring new consumption habits, new business models and new services business. The entity
electronic market based on the traditional business model and service model is in recession in this round of
technological change.
With the development of the Internet in recent years, the rapid development and popularization of mobile Internet
and terminal services have had a profound impact on people's way of thinking, behavior, shopping, consumption
habits, and brought even subversive challenges in certain fields. Meanwhile, with the rapid development of
Internet finance, the acquisition and application of big data, Internet of Things, cloud computing, the oligopoly of
e-business platforms, as well as vertical market segments, have brought various new business models, which
change the consumption habits. Traditional stall-based business model cannot meet the requirements for business
models and channel types of the modern service industry, and falls behind the growing consumption demand. The
entity electronic market based on the traditional business model and service model is in recession in this round of
technological change. The entity electronic markets in tier-1 and tier-2 cities of China have shown a trend of
contraction and recession.
Flourish development of e-business and mobile Internet cause huge impacts on the channels and customer
resources of the entity electronic market, particularly in the following aspects: 1) with the changes in the
consumption habits of consumers, the entity electronic market suffers a serious loss of consumers; 2) with the
change of product channels in the Internet economy, the support of electronic products manufacturers to the entity
electronic market has a large decline.
(3) Analysis of internal business environment
1) Facing enormous challenges in the main business, the Company urgently needs to implement transformation
and upgrading and to seek new strategic business and profit growth opportunities; at the same time, the Company
continues innovation and development, and actively explores new electronic market business models. Seizing the
opportunity of the "SEG Factory Store", the Company actively explores the O2O entry points for electronic
market business and e-business under the Internet business model. From the aspects of e-business platform
construction, wholesale channel expansion, and entity store sales, the Company carries out a cross-border hybrid
business model integrating entity, e-business and channel. The Company also adjusts the market layout. By
introducing a composite business format, the Company improves the market occupancy rates, improves the risk
tolerance capabilities of stores, and ensures market operating revenue.
2) The Company has rich commercial tenant resources and mature market operation management experience. At
present, the Company has formed a professional electronic market chain system nationwide, covering the Pearl
River Delta and Yangtze River Delta areas. After years of efforts, SEG Electronics Market has rich customer
resources and market operation management experience, and enjoys high brand awareness both at home and
abroad.
3) The Company has a reasonable asset structure and strong financing capacity.
2. Future development strategies of the Company
In future, the Company will actively make innovation and progress while maintaining stability, deeply develop
customer value based on in-depth analysis of customer demands, establish a multi-channel profit model, and
become an integrated platform operator and service provider.
36
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
3. Operation plan in 2015
In this year, the Company's operating guideline is "transformation, innovation and development". Under the
premise of maintaining steady development of the existing business, the Company will actively explore new
business, and create the multi-channel profit model driven by the capital and resources; meanwhile, the Company
will properly prepare for sales and operations of the Nantong SEG Project.
4. Investment plan in 2015
The annual investment plan for 2015 focuses on the Company's main business, including the investments on the
continued construction and land reserves of the entity electronic stores and Nantong SEG Times Square project,
with a total expected investment of 594.01 million Yuan.
Investment plan
No. Project name (RMB ten thousand Remarks
Yuan)
Build new electronics
1 2,000 Used for rental
markets
In 2015, according to the plan, the main
structure capping of Nantong SEG Times
Square project and decorative works will
Nantong SEG Times be basically completed, and external
2 27,401
Square property sales targets will be achieved.
The expected investment is 349.3 million
Yuan, which will be loaned by Nantong
SEG from the joint-stock company.
Land reserve for
Used for reserve lands for commercial
4 commercial real estate 30,000
real estate projects
projects
Total 59,401
5. Possible risks confronting the Company and countermeasures
(1) Main risks faced by the Company
1) The competitive pressure in traditional industry continues to increase. Meanwhile, the e-business platform
further changes the consumption habits. The support from manufacturers suffers a larger decline, which increases
the market operating risks.
2) According to the macro environment of the real estate industry, there is a certain risk in sales and operation of
the Nantong SEG Project.
3) Restricted by the funding constraints and declining interest rate in the market, the development of small loan
business is slow. Meanwhile, affected by the slowdown in the real economy, the small loan business faces issues
such as weak growth and falling yield.
4) Resources in the Company's talent pool are insufficient.
(2) Main countermeasures:
37
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
1) Accelerate the Company's strategic business transformation and upgrading. Through the transformation and
upgrading, the Company will seek new strategic business and profit growth opportunities, to constantly improve
the company's risk tolerance.
2) With respect to the Nantong SEG Project, the Company will exploit the strengths and selling points, strengthen
the promotion, expand the market space, and continuously adjust and improve the business planning and
positioning for attracting differentiated investments.
3) The Company will fully use all kinds of resources, to achieve effective integration and sharing of resources,
obtain an amplified effect of integration, and ensure the achievement of strategic business objectives.
4) The Company will fully employ the HR management capability, deeply study the incentive mechanism and
personnel training programs, introduce practical talents and prospective talents; meanwhile, work out scientific
and practical talent training programs for talent reservation.
5) The Company will ceaselessly improve HRM level, and formulate the motivation mechanism and medium and
long term training plan, and actively introduce inward actual combat-type talents and prospective research talents.
X. Explanations of the Board of Directors and Board of Supervisors to the Non-standard
Audit Report made by the accounting firm in the reporting period
□ Applicable √ Not applicable
XI. Information on changes in accounting policies, accounting estimates and accounting
methods compared with the financial reports of 2013
√ Applicable □ Not applicable
1. Changes of main accounting policies and accounting estimates
(1) Changes of accounting policies
Explanation of changes of accounting policies
In 2014, the Ministry of Finance has promulgated or revised a series of corporate accounting policies. The
Company has implemented new corporate accounting policies from July 1, 2014 and has adjusted the comparative
financial statements in accordance with the provisions of the new guidelines. The impacts on the comparative
financial statements caused by the new corporate accounting policies are as follows:
1) Long-term equity investment
1) According to the revised Long-Term Equity Investment Policies, the accounting of the long-term equity
investment that does not involve the control, joint control, or significant influence on the invested
organizations are incorporated in the available-for-sale financial assets. For the equity investment that does
not have price quotations in the active market, whose fair value cannot be reliably measured, subsequent
measurement is implemented according to the costs; for other equity investments, subsequent measurement is
implemented according to the fair value. The above changes in accounting policies retrospectively affect the
following items:
38
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
January 31, 2013
Share-h
olding
Invested organization Financial assets Shareholders' equity
proporti Long-term equity
available for sale attributable to the parent
on investment (+/-)
(+/-) company (+/-)
Nanjing Shangsha Co.,
0.68 -280,000.00 280,000.00 ---
Ltd
Anshan Yibai Co., Ltd --- --- --- ---
Shenzhen SEG GPS
Scientific Navigations 12.50 -13,515,392.83 13,515,392.83 ---
Co., Ltd.
Total --- -13,795,392.83 13,795,392.83 ---
December 31, 2013
Share-h
olding
Invested organization Shareholders' equity
proporti Long-term equity Financial assets
attributable to the parent
on (%) investment (+/-) available for sale (+/-)
company (+/-)
Nanjing Shangsha Co.,
0.68 -280,000.00 280,000.00 ---
Ltd
Anshan Yibai Co., Ltd --- --- --- ---
Shenzhen SEG GPS
Scientific Navigations 12.50 -13,515,392.83 13,515,392.83 ---
Co., Ltd.
Kasggar Shenzhen City
3.03 -20,000,000.00 20,000,000.00 ---
Co., Ltd.
合计 --- -33,795,392.83 33,795,392.83 ---
2) Impacts on the Consolidated Financial Statements:
a) According to the revised Accounting Standard for Business Enterprise No. 30 - Presentation of Financial
Statements, the Company has adjusted the part of the original capital reserve attributable to other comprehensive
income to be presented as other comprehensive income items, and adjusted the presentation of the opening
39
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
amount of the year by using the retroactive adjustment method. The impacts of retroactive adjustment are as
follows:
January 1, 2013 December 31, 2013
Item
Before adjustment After adjustment Before adjustment After adjustment
Capital reserve 404,380,330.57 322,015,117.44 404,593,024.05 322,272,354.94
Other comprehensive income 82,365,213.13 82,320,669.11
Total 404,380,330.57 404,380,330.57 404,593,024.05 404,593,024.05
b) According to the revised Accounting Standard for Business Enterprises No. 30 - Presentation of Financial
Statements, the Company has separately presented the deferred income and adjusted the presentation of the
opening amount of the year by using the retroactive adjustment method. The impacts of retroactive adjustment are
as follows:
January 1, 2013 December 31, 2013
Item
Before adjustment After adjustment Before adjustment After adjustment
Deferred income 320,080.91 762,246.19
Other non-current liabilities 320,080.91 762,246.19
Total 320,080.91 320,080.91 762,246.19 762,246.19
(2) Changes of accounting estimates
No change was made to the main accounting estimates in the reporting period.
XII. Information on retroactive restatements in corrections of major accounting errors in the
reporting period
□ Applicable √ Not applicable
There is not retrospective restatement due to corrections on significant accounting errors in the reporting period.
XIII. Information on changes in the scope of consolidation compared with the financial report
of 2013
√ Applicable □ Not applicable
(1) Subsidiaries, special-purpose entities and operating entities whose controlling right is formed through trustee
operation or lessee, which are included in the consolidation scope for the first time in this period.
Year-end net assets Net profits of the
Name Reasons for change (in 10 thousand current period (in 10
Yuan) thousand Yuan)
Yantai SEG Times Square Development New controlled
0.04 0.04
Co., Ltd. subsidiary
Nantong SEG Commercial Operation New controlled
-6.68 0.007
Management Co., Ltd. subsidiary
Suzhou SEG Digital Plaza Management New controlled
145.33 -654.67
Co., Ltd. subsidiary
40
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Year-end net assets Net profits of the
Name Reasons for change (in 10 thousand current period (in 10
Yuan) thousand Yuan)
Xi'an Fengdong New Town SEG Time New controlled
3000.00 -
Square Properties Co., Ltd. subsidiary
(2) Subsidiaries, special-purpose entities and operating entities whose controlling right is formed through trusted
operation or lease taking, which are excluded from the consolidation scope in the current year
XIV. Information about the profit and dividend distribution of the Company
The formulation, implementation, and adjustments of profit distribution policies during reporting period
√ Applicable □ Not applicable
1. The formulation, implementation, and adjustments of profit distribution policies during reporting period
1) In 2012, to improve and improve the Company's dividend distribution and monitoring mechanisms, further
improve the transparency of profit distribution policies and effectively protect the legitimate rights and interests of
all shareholders, in accordance with the relevant regulations and requirements, the Company established the
Shareholder Return Plan for the Upcoming Three Years (2012 to 2014), and amended pertinent profit distribution
clauses in the Articles of Association. The preceding agenda has been reviewed and approved in the first
Extraordinary General Meeting of Shareholders held in 2012.
In 2014, according to the Company Law implemented since March 1, 2014 and the Listed Company Supervision
Guidelines No. 3 - Cash Dividends of Listed Companies issued by China Securities Regulatory Commission,
combined with the actual situation of the Company, the Company revised the terms of profit distribution in the
Articles of Association. The revised terms clearly define the principles of profit distribution, profit distribution
forms, cash dividend proportion and conditions, and decision-making procedures for profit distribution. This
agenda has been approved in the third Extraordinary General Meeting of Shareholders held in 2014.
2) During the reporting period, the profit distribution proposal and the proposal for transfer of capital reserve into
share capital of 2013 complied with related regulations in the Articles of Association and Return Plan, and the
deliberation procedure accorded with related regulations. There were no circumstances that could damage the
interests of the Company and shareholders. The independent directors expressed the independent opinion.
Cash Dividend Policies
Whether comply with the provisions of the Articles of
Yes
Association or the resolutions of shareholders' meeting
Whether the dividends standards and proportions are
Yes
clear and explicit
Whether the decision-making procedures and
Yes
mechanisms are complete
Whether independent directors perform their duties
Yes
responsibly and play their roles
Whether minority shareholders have sufficient
opportunities to express their views and aspirations,
Yes
whether their legitimate rights and interests have been
fully protected
41
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Whether the conditions and procedures for cash
dividend policy adjustments or changes are compliant Yes
with regulations and are transparent
2. Information about the profit distribution proposal and the proposal for transfer of capital reserve into
share capital in the years of 2012, 2013 and 2014 (the reporting period):
Pursuant to Accounting Standard for Business Enterprise 2014, the investment in subsidiaries by the Company
was calculated on the basis of cost method, and there is a large difference between the profit of parent company
and the consolidated profit. According to relevant provisions of the Company Law, profits shall be distributed by
the parent company. Therefore, the profit distribution of the Company in 2014, 2013, and 2012 was implemented
depending on the distributable profit of the parent company.
1) Profit distribution proposal and the proposal for transfer of capital reserve into share capital in 2014: The
auditing by Da Hua Certified Public Accountants Co., Ltd. found that the net profit attributable to the listed
company realized by the parent company in 2014 amounted to RMB 32,887,973.01Yuan; the profit distributable
to shareholders this time, which was calculated by adding the undistributed profit at the beginning of the year,
RMB -55,097,962.63 Yuan to the former, was RMB-22,209,989.62 Yuan. No profit distribution would be made
for the current year. The Company decided not to transfer capital reserve into share capital.
2) Profit distribution proposal and the proposal for transfer of capital reserve into share capital in 2013: The
auditing by Da Hua Certified Public Accountants Co., Ltd. found that the net profit attributable to the listed
company realized by the parent company in 2013 amounted to RMB 51,015,079.16 Yuan; the profit distributable
to shareholders this time, which was calculated by adding the undistributed profit at the beginning of the year,
RMB -106,113,041.79 Yuan to the former, was RMB -55,097,962.63 Yuan. No profit distribution would be made
for the current year. The Company decided not to transfer capital reserve into share capital.
3) Profit distribution proposal and the proposal for transfer of capital reserve into share capital in 2012: The
auditing by Da Hua Certified Public Accountants Co., Ltd. found that the net profit attributable to the listed
company realized by the parent company in 2012 amounted to RMB 39,043,691.65 Yuan; the profit distributable
to shareholders this time, which was calculated by adding the undistributed profit at the beginning of the year,
RMB -145,156,733.44 Yuan to the former, was RMB -106,113,041.79 Yuan. No profit distribution would be
made for the current year. The Company decided not to transfer capital reserve into share capital.
Table of distribution of cash dividends by the Company in the last three years
Unit: YUAN
Net profit Proportion of net
Amount of share Proportion of
attributable to profit attributable
Amount of cash funds repurchased share funds
Year for dividends shareholders of to shareholders of
dividends (incl. in cash repurchased in
distribution listed company in listed company in
tax) incorporated in cash incorporated
consolidated consolidated
cash dividends in cash dividends
statement statement (%)
2014 0.00 48,380,294.05 0.00% 0.00 0.00%
2013 0.00 54,338,735.35 0.00% 0.00 0.00%
2012 0.00 45,587,138.06 0.00% 0.00 0.00%
The net profit of the Company was positive and the undistributed profit of the parent company was also positive,
but the proposal for distribution of cash dividends was not put forward.
42
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
□ Applicable √ Not applicable
XV. Plan of profit distribution and transferring the capital reserve to shares in the reporting
period
□ Applicable √ Not applicable
In this year, the Company plans not to distribute cash dividend or shares, nor transfer the capital reserve to shares.
XVI. Social responsibilities
□ Applicable √ Not applicable
XVII. Registration form for investigations, communication and interviews in the reporting
period
√ Applicable □ Not applicable
Main content of discussion and
Time Place Means Type Object
the materials provided
Inquired profit situation of the
Company in 2013. Inquired loss
or gain of the Company in 2013
At the and why the share price did not
January 10, 2014 Phone call Individual Investor
Company rise. The company provided no
documents. The investors can read
the annual report 2013 disclosed
on March 20, 2014.
Inquired situation of China GPS
whose 12.5% shares are held by
the Company and what are the
At the
January 14, 2014 Phone call Individual Investor main businesses of the Company.
Company
The company provided basic
documents of China GPS and the
Company.
Inquired profit situation of the
Company in 2013. The company
February 10, At the provided no documents. The
Phone call Individual Investor
2014 Company investors can read the annual
report 2013 disclosed on March
20, 2014.
Inquired why the share of the
Company is not appreciated. The
February 11, At the
Phone call Individual Investor Company provided the basic
2014 Company
information and regularly
disclosed reports of the Company.
Inquired what are the main
businesses of the Company The
February 17, At the
Phone call Individual Investor Company provided the basic
2014 Company
information and regularly
disclosed reports of the Company.
43
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Main content of discussion and
Time Place Means Type Object
the materials provided
Inquired whether the Company
is operated normally. The
February 20, At the
Phone call Individual Investor company provided the basic
2014 Company
introduction to the Company and
the latest regular report.
Inquired the time for disclosing
February 21, At the the annual report. The Company
Phone call Individual Investor
2014 Company informed that the annual report is
disclosed on March 30, 2014.
Inquired the reason for temporary
At the suspension. The company
March 10, 2014 Phone call Individual Investor
Company informed the resumption on the
day.
Inquired why the Company gave
At the up the control over Huakong
March 10, 2014 Phone call Individual Investor
Company SEG. The company replied based
on the notice contents.
Inquired why the Company gave
up the control power over
At the
March 11, 2014 Phone call Individual Investor Huakong SEG. The company
Company
replied based on the notice
contents.
Inquired why the Company gave
At the up the control over Huakong
March 12, 2014 Phone call Individual Investor
Company SEG. The company replied based
on the notice contents.
Inquired the detailed operation
situation of the Company in the
At the first quarter. The company
March 19, 2014 Phone call Individual Investor
Company informed that the report for the
first quarter in 2014 will be
disclosed soon.
Inquired the investment on Yantai
At the project. The Company informed
April 21, 2014 Phone call Individual Investor
Company the related disclosed
announcement.
Inquired the specific company
At the address to attend the shareholders'
April 22, 2014 Phone call Individual Investor
Company meetings. The Company informed
the specific address.
Inquired the detailed operation
situation of the Company in the
At the second quarter. The company
June 27, 2014 Phone call Individual Investor
Company informed that the semi-annual
report of 2014 will be disclosed
soon.
The company introduced the
At the Spot Guotai Junan company service model and basic
July 11, 2014 Institution
Company investigation Securities operation conditions, property
assets, and entity stores.
44
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Main content of discussion and
Time Place Means Type Object
the materials provided
Inquired the future development
direction and the current market
At the
July 12, 2014 Phone call Individual Investor situation, provided suggestions to
Company
the Company's management and
development.
Inquired the time for disclosing
the semi-annual report of 2014.
At the
July 14, 2014 Phone call Individual Investor The company informed that the
Company
semi-annual report of 2014 is
disclosed on August 29, 2014.
Inquired the specific operation
situation of the first half year in
At the
August 25, 2014 Phone call Individual Investor 2014. The company informed that
Company
the semi-annual report of 2014
will be disclosed soon.
Inquired the suspension cause and
At the Investors (11
August 28, 2014 Phone call Individual resumption time. The Company
Company persons)
replied accordingly.
Inquired the suspension cause and
September 1, At the Investors (10
Phone call Individual resumption time. The Company
2014 Company persons)
replied accordingly.
Inquired the suspension cause and
September 2, At the Investors (8
Phone call Individual resumption time. The Company
2014 Company persons)
replied accordingly.
Inquired the suspension cause and
September 3, At the Investors (5
Phone call Individual resumption time. The Company
2014 Company persons)
replied accordingly.
Inquired the suspension cause and
September 4, At the Investors (4
Phone call Individual resumption time. The Company
2014 Company persons)
replied accordingly.
Inquired the accounting methods
September 5, At the Investors (4
Phone call Individual of Huakong SEG's stock equity.
2014 Company persons)
The Company replied accordingly.
Inquired the accounting methods
September 9, At the
Phone call Individual Investor of Huakong SEG's stock equity.
2014 Company
The Company replied accordingly.
Inquired the time for disclosing
the third quarterly report in 2014.
September 15, At the
Phone call Individual Investor The Company informed that the
2014 Company
report is disclosed on October 31,
2014.
Inquired the time for disclosing
the third quarterly report in 2014.
September 22, At the
Phone call Individual Investor The Company informed that the
2014 Company
report is disclosed on October 31,
2014.
Inquired the future development
September 23, At the direction and the current market
Phone call Individual Investor
2014 Company situation, provided suggestions to
the Company's management and
45
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Main content of discussion and
Time Place Means Type Object
the materials provided
development.
Inquired the detailed operation
situation of the Company in the
September 24, At the third quarter. The Company
Phone call Individual Investor
2014 Company informed that the report for the
third quarter in 2014 will be
disclosed soon.
Inquired the detailed operation
situation of the Company in the
At the third quarter. The Company
October 9, 2014 Phone call Individual Investor
Company informed that the report for the
third quarter in 2014 will be
disclosed soon.
Inquired the detailed operation
situation of the Company in the
At the third quarter. The company
October 13, 2014 Phone call Individual Investor
Company informed that the report for the
third quarter in 2014 will be
disclosed soon.
Inquired the detailed operation
situation of the Company in the
Shanghai
At the Spot third quarter. The company
October 20, 2014 Institution Dintian
Company investigation informed that the report for the
Investment
third quarter in 2014 will be
disclosed soon.
Asked whether the company has a
plan for an owned enterprise
reform program. The Company
November 24, At the
Phone call Individual Investor replied that currently the
2014 Company
Company has not yet received
formal written notice from the
parent unit.
Asked whether the Company has
a plan for an owned enterprise
reform program. The Company
November 25, At the
Phone call Individual Investor replied that currently the
2014 Company
Company has not yet received
formal written notice from the
parent unit.
Asked whether the Company has
a plan for an owned enterprise
reform program. The Company
December 1, At the
Phone call Individual Investor replied that currently the
2014 Company
Company has not yet received
formal written notice from the
parent unit.
Inquired the detailed operation
situation of the Company in 2014.
December 16, At the
Phone call Individual Investor The Company informed that the
2014 Company
annual report of 2014 will be
disclosed soon.
46
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 5 Important Matters
I. Major lawsuits and arbitration
□ Applicable √ Not applicable
No major lawsuits and arbitration occurred during the reporting period
II. Matters questioned by media
□ Applicable √ Not applicable
The Company did not have any matter commonly questioned by media in the reporting period.
III. Non-operating capital of the listed company occupied by controlling shareholders and
related parties
□ Applicable √ Not applicable
The non-operating capital of the listed company occupied by controlling shareholders and related parties was not
involved during the reporting period.
IV. Bankruptcy and reorganization matters
□ Applicable √ Not applicable
No bankruptcy and reorganization matters were involved during the reporting period.
V. Transaction in assets
1. Information on asset acquisition
□ Applicable √ Not applicable
No asset acquisition was involved during the reporting period.
2. Asset sales
□ Applicable √ Not applicable
No asset sales matter was involved during the reporting period.
3. Business merger
□ Applicable √ Not applicable
No business merger matter was involved during the reporting period.
47
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
VI. Implementation and impact of stock ownership incentive
□ Applicable √ Not applicable
No stock incentive plan and implementation were involved during the reporting period.
VII. Major relevant transactions
1. Associated transactions concerning routine operation
√ Applicable □ Not applicable
Amount
Transaction
proportion in
amount Transaction
Associated Associated Transaction Associated Pricing the Disclosure Disclosure
(RMB ten settlement
party relationship type transaction principle transactions of date index
thousand form
the same kind
Yuan)
(%)
The company
Shenzhen leases the SEG
Determine http://www
SEG Controlling Property Plaza property Based on the March 20,
d by the 108.91 0.19% .cninfo.co
Group Co., shareholder lease owned by the agreement 2014
market m.cn
Ltd. controlling
shareholders
The controlling
shareholder
commissions
Shenzhen
Entrusted the Company Determine http://www
SEG Controlling Based on the March 20,
with the to operate and d by the 20 0.04% .cninfo.co
Group Co., shareholder agreement 2014
operation manage the market m.cn
Ltd.
invested SEG
communicatio
ns market
Total -- 128.91 -- -- -- --
2. Associated transactions related to asset acquisition and sales
□ Applicable √ Not applicable
3. Associated transactions due to joint external investment
□ Applicable √ Not applicable
4. Creditor's rights and liabilities with related parties
□ Applicable √ Not applicable
5. 5. Other associated transactions
□ Applicable √ Not applicable
48
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
VIII. Important contracts and their fulfillment
1. Trusteeship, contracting and leasing
(1) Trusteeship issues
√ Applicable □ Not applicable
Explanations of trusteeship
The controlling shareholders of Shenzhen SEG Group Co., Ltd. entrusted the management of SEG
communications market to the Company, and the Company received the trusteeship revenue of 200,000
Yuan according to the trusteeship agreement during the reporting period.
Projects which bring losses or gains that take up 10% of the profit amount of the Company in the reporting period.
□ Applicable √ Not applicable
In the reporting period, the Company had no entrusted projects which bring losses or gains that take up 10% of the
profit amount of the Company in the reporting period.
(2) Contracting issues
□ Applicable √ Not applicable
Projects which bring losses or gains that take up 10% of the profit amount of the Company in the reporting period.
□ Applicable √ Not applicable
In the reporting period, the Company had no contracting projects which bring losses or gains that take up 10% of
the profit amount of the Company in the reporting period.
(3) Leasing issues
√ Applicable □ Not applicable
Leasing issues:
For details, see the section Associated transactions concerning routine operation.
Projects which bring losses or gains that take up 10% of the profit amount of the Company in the reporting period.
□ Applicable √ Not applicable
In the reporting period, the Company had no leasing projects which bring losses or gains that take up 10% of the
profit amount of the Company in the reporting period.
2. Guarantee issues
√ Applicable □ Not applicable
Unit: RMB ten thousand Yuan
Guarantees for holding subsidiaries
Announcement Date of Whether the Whether
Actual
Name of the and disclosure Guaranteed occurrence Type of Term of performance guarantee
amount
guaranteed date of the amount (agreement guarantee guarantee is for
guaranteed
guarantee signing completed related
49
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
date) party
October 11, October 25, Joint
SEG Credit 7500 5000 1 year No No
2014 2014 liability
Total amount of the
Total guarantee amount for
actual guarantee to the
subsidiaries approved in the 7500 5000
subsidiaries in the
reporting period (B1)
reporting period (B2)
Total amount of the
Total guarantee amount for guarantee balance to
subsidiaries approved by the 7500 the subsidiaries by the 5000
end of the reporting period (B3) end of the reporting
period (B4)
Total guarantee amount (the sum of the two major items above)
Total guarantee amount Total amount of actual
approved in the reporting period 7500 guarantees in the 5000
(A1+B1) reporting period
Total balance of
Total guarantee amount
actual guarantees by
approved by the end of the 7500 5000
the end of the
reporting period (A3+B3)
reporting period (A)
Proportion of total guarantees (A4+B4) in net assets 3.85%
3. Other important contracts
√ Applicable □ Not applicable
Transaction
price (Unit: Associated
Pricing Associated Execution by the end of the reporting
Lender Borrower RMB ten transaction
principle relationship period
thousand or not
Yuan)
On October 14, 2013, the 3rd special
meeting of the 6th Board of Directors
discussed and approved the Proposal about
Offering Shenzhen SEG E-Commerce Co.,
Ltd. with Financial Assistance. The
company offers the 51% holding SEG
E-Commerce with the financial assistance
of 60 million Yuan for one year (from
September 15, 2013 to September 14,
2014) and pays based on the requirements
Shenzhen
Shenzhen of the e-commerce businesses. SEG
SEG Fair Not
SEG Co., 6,000 No E-Commerce pays expenses for using the
E-Commerce price applicable
Ltd. funds to the Company based on its actual
Co., Ltd.
loan amount and period. The expenses for
using the funds is charged based on the
benchmarking interest rate of the one-year
bank loan in the same period and should be
paid on the due date.
On December 5, 2014, the 5th special
meeting of the 6th Board of Directors
discussed and approved the Proposal about
Offering Shenzhen SEG E-Commerce Co.,
Ltd. with 60 million Yuan Financial
50
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Transaction
price (Unit: Associated
Pricing Associated Execution by the end of the reporting
Lender Borrower RMB ten transaction
principle relationship period
thousand or not
Yuan)
Assistance. This is a renewal loan, with the
term being one year. SEG E-Commerce
pays expenses for using the funds to the
shareholders based on its actual loan
amount and period. The funds occupancy
rate is 6.5%.
On July 29, 2014, the 15th special meeting
of the 6th Board of Directors discussed and
approved the Proposal about Offering
Shenzhen Shenzhen SEG Industrial Investment Co.,
Shenzhen SEG Ltd. with 10 million, Yuan Liquidity
No Not
SEG Co., Industrial 4,200 No Assistance. The Company offers 10 million
interest applicable
Ltd. Investment Yuan liquidity to the Shenzhen SEG
Co., Ltd. Industrial Investment, which is 100% held
by the Company. So far SEG Industrial
Investment has borrowed 42 million Yuan
in total from the Company with no interest.
The 6th interim meeting of the 6th Board of
Directors held on October 25, 2013
reviewed and approved the Proposal on A
Renewal Loan of RMB 7 million Yuan to
Changsha SEG Development Co., Ltd. The
Board of Directors of the Company agreed
to offer a renewal loan of RMB 7 million
Changsha Yuan to Changsha SEG (46% held by the
Shenzhen
SEG Fair Not Company), the term being a year (from
SEG Co., 700 No
Development price applicable September 25, 2013 to September 24,
Ltd.
Co., Ltd. 2014) and the interest rate being 6.00%
(bank loan interest rate over the same
period), for which Changsha Xinxing
Grand Hotel owned by Changsha SEG was
again used as collateral to the Company. By
the end of the reporting period, Changsha
SEG had repaid all principal and interest on
these borrowings.
4. Other important transactions
□ Applicable √ Not applicable
IX. Fulfillment of commitments
1. Commitments made by the Company or the shareholders holding more than 5% shares, which were
made in or lasted into the reporting period
√ Applicable □ Not applicable
51
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Commitment Commitment
Commitments Promisor Content Fulfillment
date term
Commitment for share Not
reform applicable
Commitments in the
Acquisition Report or Not
the Equity Change applicable
Report
Commitments made at
Not
the time of asset
applicable
restructuring
In accordance with Article 5 of
Equity Transfer Agreement signed
between the Company and SEG
Group, SEG Group agrees: the
Company and its affiliates and joint
ventures can use the eight
Commitments
Shenzhen trademarks of SEG Group
Commitment made at were fulfilled
SEG registered in China Trademark
the time of initial public July 1, 1996 Long-term in the
Group Office; the Company can use the
offerings or refinancing reporting
Co., Ltd. above-mentioned trademarks and
period.
similar marks as the Company's
marks and can use them in
operating activities; the Company
does not need to pay SEG Group
for use of the above-mentioned
trademarks or marks.
To address the issue that there is
competition in the same trade
between the Company and SEG
Group indicated in spot inspection
by Shenzhen Securities
Supervisory Bureau, the Company
received a written Commitment
Letter from SEG Group on
Commitments
September 14, 2007 and the content
were fulfilled
was as follows: our Group has September
Long-term in the
similar business in Shenzhen 14, 2007
reporting
electronic market with Shenzhen
period.
Shenzhen SEG Co., Ltd. (Shenzhen SEG),
Other commitments and the business was resulted by
SEG
(including additional history and has objective market
Group
commitments)
Co., Ltd. development background. Our
Group hereby promises that we will
not independently operate a market
in the same city whose business is
similar with that of Shenzhen SEG.
In order to solve the issue of
horizontal competition between the February 1, Commitments
Company and its controlling 2011 to were fulfilled
shareholder, SEG Group, the 6th January 26,
January 31, in the
special meeting of the 6th Board of 2011 2015, totally reporting
Directors held on January 26, 2011 5 years period.
reviewed and approved the
Proposal for Solving the Horizontal
52
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Commitment Commitment
Commitments Promisor Content Fulfillment
date term
Competition between the Company
and Its Controlling Shareholder.
After friendly consultation, SEG
Group agreed to entrust the
Company to operate and manage
with full authority SEG
Communications Market under
direct management of SEG Group.
Therefore, the two parties have
signed the entrustment operation
and management contract. The
SEG Group pays 200,000 Yuan
annually as entrusted management
fees to the Company.
Other commitments
made to the small and Not
medium shareholders of applicable
the Company
Whether commitments
Yes
were fulfilled on time
Reason for not fulfilling
the commitments and N/A
future plan (if any)
2. Attainment of profit forecasts for the assets or projects of the Company within the reporting period and
the description of the reasons
□ Applicable √ Not applicable
X. Engagement and dismissal of the accounting firm
Engaged accounting firm
Name of accounting firm engaged from China BDO Dahua CPA Co., Ltd. (special general partnership)
Remuneration for the accounting firm engaged from
45
China (RMB ten thousand Yuan)
Continuous years of service from the accounting firm
12 years
engaged from China
Name of certified public accountants from the
To be confirmed
accounting firm engaged from China
Whether to engage another accounting firm in current period
□ Yes √ No
Engagement of internal control audit accounting firm, financial adviser or sponsor
□ Applicable √ Not applicable
53
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
XI. Explanations of the Supervisory Board and independent directors (if applicable) on the
Non-standard Audit Report made by the accounting firm in the reporting period
□ Applicable √ Not applicable
XII. Penalties and corrections
□ Applicable √ Not applicable
No penalties and corrections were involved during the reporting period.
XIII. Listing suspension or termination after the annual report is disclosed
□ Applicable √ Not applicable
XIV. Notes on other important matters
√ Applicable □ Not applicable
Inquiry index for the websites
Overview of important events Disclosure date
disclosing the temporary reports
1. Temporary stock suspension
Because the Company has not disclosed related
information that may affect the Company's stock price, The company disclosed the
in order to prevent the company's stock transaction and March 10, 2014 Temporary Suspension Notice at
protect the interests of investors, the Company applies http://www.cninfo.com.cn.
for temporary suspension from the market opening on
March 10, 2014, according to the relevant provisions of
the Shenzhen Stock Exchange.
2. Stock resumption The company disclosed the
The 9th special meeting of the 6th Board of Directors of Resumption Notice, Resolution
the Company was held in way of communication voting Notice of the 9th Special Meeting of
on March 10, 2014. The meeting examined and adopted the 6th Board of Directors of the
March 12, 2014
the Motion for Signing the Agreement for Controlling Company, and Notice for Relinquish
Rights Arrangement of Shenzhen Huakong SEG Co., Ltd. in Control of Shenzhen Huakong
Upon application, the company's stock trading is SEG Co., Ltd. at
resumed on March 12, 2014 from the market opening. http://www.cninfo.com.cn.
The company disclosed the Notice
for Registration Acceptance of the
January 3, 2014
Issuance of Short-term Bonds at
3. Progress of the issuance of short-term bonds http://www.cninfo.com.cn.
During the reporting period, the Company has received
the [2013] No. CP499 Notice for Registration The company disclosed the Notice
Acceptance issued by the Dealers Association. for the Issuance of First Tranche of
2014 Short-term Bonds at
On May 14, 2014, the Company successfully issued the
May 16, 2014 http://www.cninfo.com.cn.
first tranche of 2014 short-term bonds.
For details about the notices, access
the websites of China Money and
Shanghai Clearing House.
4. Short-term financing vouchers for a maximum June 11, 2014 The company disclosed the Notice of
amount of 0.3 billion Yuan issued by the SEG Credit in the 13th Special Meeting of the 6th
54
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Inquiry index for the websites
Overview of important events Disclosure date
disclosing the temporary reports
Qianhai Equity Trading Center or Shenzhen Stock Board of Directors of the Company,
Exchange, and the Company's intention of full Notice for Holding Subsidiary
subscription. Issuing Short-term Financing
Vouchers, and Notice for
Subscribing the Short-term
Financing Vouchers Issued by
Holding Subsidiary at
http://www.cninfo.com.cn.
The company disclosed the Notice
for Resolution of the 14th Special
5. Use of idle funds to purchase financial products Meeting of the 6th Board of Directors
To improve the efficiency in the fund use of the of Shenzhen SEG Co., Ltd. and
July 5, 2014
Company and the holding subsidiaries, without affecting Notice for the Use of Idle Funds to
the normal operation, the Company rationally uses the Purchase Financial Products of
idle funds for investment and financing, to increase the Shenzhen SEG Co., Ltd at
capital income and seek a better return for the Company http://www.cninfo.com.cn.
and shareholders. The Company and the subsidiaries The company disclosed the Notice
plan to use no more than 1 billion Yuan of the idle funds for Resolution of the 2nd
for financing investment. The funds can be used extraordinary general meeting of
repeatedly within the above limit. July 22, 2014
shareholders in 2014 of Shenzhen
SEG Co., Ltd at
http://www.cninfo.com.cn.
7. Temporary stock suspension The company disclosed the
Because the matters under discussion may affect the Temporary Suspension Notice of
August 28, 2014
Company's stock price, in order to prevent the Shenzhen SEG Co., Ltd. at
company's stock transaction and protect the interests of http://www.cninfo.com.cn.
investors, the Company applies for temporary
suspension from the market opening on August 28, The company disclosed the
2014, according to the relevant provisions of the Temporary Suspension Progress
September 4, 2014
Shenzhen Stock Exchange. (Securities short name: Shen Notice of Shenzhen SEG Co., Ltd. at
Saige, Shensaige B, security code: 000058 and 200058) http://www.cninfo.com.cn.
8. Stock resumption
On September 4, 2014, the 18th special meeting of the The company disclosed the Notice
6th Board of Directors of the Company was held in way for the 18th Special Meeting of the 6th
of communication voting. The meeting approved the Board of Directors, Notice for Stock
Determination of the Equity Accounting Methods of Resumption of Shenzhen SEG Co.,
September 5, 2014
Shenzhen SEG Co., Ltd. The Company has finally Ltd, Notice for Determining the
determined the equity accounting methods used for the equity accounting methods used for
holding Shenzhen Huakong SEG Co., Ltd. Upon the holding Shenzhen Huakong SEG
application, the company's stock trading is resumed on Co., Ltd at http://www.cninfo.com.cn.
September 5, 2014 from the market opening.
XV. Important matters of subsidiaries
√ Applicable □ Not applicable
Inquiry index for the websites
Overview of important events Disclosure date
disclosing the temporary reports
1. Completion of main structure of the Nantong SEG The company disclosed the Notice
Times Square project December 17, 2014 for Completion of Main Structure of
The holding Nantong SEG Times Square project the Nantong SEG Times Square
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officially laid the foundation stone on November 27, Project of Shenzhen SEG Co., Ltd at
2013, and the marketing center of this project was http://www.cninfo.com.cn.
officially opened on June 28, 2014.
On December 12, 2014, the ceremony for completing
the major structure capping of Nantong SEG Times
Square project was held.
2. The subsidiary has acquired operating assets of The company disclosed the Notice
Changsha Jubilee Hotel and started Changsha Orange for the 14th Special Meeting of the 6th
Hotel Xingsha branch. Board of Directors of Shenzhen SEG
Co., Ltd, Notice for the Acquisition
Shenzhen SEG Baohua Enterprise (66.58% held by the July 5, 2014 of the Operating Assets of Changsha
Company) has acquired the operating assets of Jubilee Hotel by a Subsidiary and
Changsha Jubilee Hotel in Changsha Technological Opening of Changsha Orange Hotel
Development Zone, with a price of 7 million Yuan and Xingsha Branch at
opened the Changsha Orange Hotel Xingsha branch. http://www.cninfo.com.cn.
XVI. Issuance of corporate bonds
□ Applicable √ Not applicable
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Chapter 6 CHANGES IN SHARE CAPITAL AND INFORMATION
ON SHAREHOLDERS
I. Information on changes in share capital
1. Information on changes in share capital
Unit: Share
Before the change Increase/Decrease (+) After the change
New Capitalization
Bonus
Quantity Proportion share of public Others Subtotal Quantity Proportion
share
offering reserve
I. Restricted
35,464 0.00% 0 0 0 -8,775 -8,775 26,689 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
35,464 0.00% 0 0 0 -8,775 -8,775 26,689 0.00%
shares
Including: Shares
held by domestic 0 0.00% 0 0 0 0 0 0 0.00%
legal persons
Shares held by
domestic natural 35,464 0.00% 0 0 0 -8,775 -8,775 26,689 0.00%
persons
4. Foreign shares 0 0.00% 0 0 0 0 0 0 0.00%
Including: Shares
held by overseas 0 0.00% 0 0 0 0 0 0 0.00%
legal persons
Shares held by
foreign natural 0 0.00% 0 0 0 0 0 0 0.00%
persons
II. Unrestricted
784,763,546 100.00% 0 0 0 8,775 8,775 784,772,321 100.00%
shares
1. RMB ordinary
538,302,228 68.59% 0 0 0 8,775 8,775 538,311,003 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%
Reasons for change
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□ Applicable √ Not applicable
Approval of changes in share capital
□ Applicable √ Not applicable
Share transfer
□ Applicable √ Not applicable
Impact of changes in share capital on such financial indicators as basic EPS, diluted EPS, and net asset per share
attributable to common shareholders of the Company in the last year and previous reporting period
□ Applicable √ Not applicable
Other contents as deemed necessary by the Company or required by the securities regulatory authority to be
disclosed
□ Applicable √ Not applicable
2. Information on changes in restricted shares
√ Applicable □ Not applicable
Unit: Share
Restricted shares Restricted shares Restricted shares Restricted shares
Name of Reason for
at the beginning released in this increased in this at the end of the
shareholder restricted trade
of the period period period period
Shares held by
Zheng Dan 35,464 8,775 0 25,586
Senior Executives
Total 35,464 8,775 0 25,586 --
II. Issuance and listing of shares
1. Previous issuance of shares in the last three years of the reporting period
□ Applicable √ Not applicable
2. Explanations on changes in total shares and the shareholder structure as well as the changes in the assets
and liabilities structure of the company
□ Applicable √ Not applicable
3. Information of existing staff shares
□ Applicable √ Not applicable
III. Information on Shareholders and Actual Controllers
1. Information on the number of shareholders and their shareholding status
Unit: Share
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Total number of
preferred
Total number of Total number of ordinary
shareholders with
ordinary shareholders on the fifth
voting rights
shareholders at 55,987 trading day before the 51,394 none
restored by the end
the end of the disclosure of the reporting
of the reporting
reporting period period
period (if any) (see
Note 8)
Shareholders holding over 5% shares or top 10 shareholders
Quantity Information on pledged or
Shares held Share
of Quantity of frozen shares
Name of Type of Shareholding by the end increase/decrease
restricted unrestricted
shareholder shareholder proportion of reporting in the reporting
shares shares held Share status Quantity
period period
held
Shenzhen SEG State-owned
30.24% 237,359,666 0 0 237,359,666 Frozen 83,679,833
Group Co., Ltd. legal person
Domestic
Zeng Ying 1.02% 8,040,826 1,850,139 0 8,040,826 0 0
natural person
Phillip
Securities Overseas legal
0.86% 6,716,223 6,716,223 0 6,716,223 0 0
(Hong Kong) person
Group
Domestic
Liu Guocheng 0.70% 5,495,595 2,998,135 0 5,495,595 0 0
natural person
Overseas
Gong Qianhua 0.68% 5,311,520 0 0 5,311,520 0 0
natural person
Domestic
Wang Jian 0.38% 3,000,000 3,000,000 0 3,000,000 0 0
natural person
Domestic
Liu Guohong 0.31% 2,454,941 2,454,941 0 2,454,941 0 0
natural person
Yunnan
International
Trust Co. Ltd.–
Others 0.31% 2,437,347 2,437,347 0 2,437,347 0 0
Ruihui 2
Capital Trust
Plan
UBS AG
Overseas legal
LONDON 0.30% 2,339,805 2,339,805 0 2,339,805 0 0
person
BRANCH
LI LEON Overseas
0.30% 2,334,900 2,334,900 0 2,334,900 0 0
ZHAN WEI natural person
Strategic investors or general
legal entities who became one
of the top ten shareholders by N/A
participating in rights issue (if
any) (See Note 3)
Explanations on the association Shenzhen SEG Group Co., Ltd has no associated relationship with other shareholders, nor it is a
relationship or concerted action concerted action unit as described by the Management Methods for Disclosure of Information on
among the above-mentioned Changes of Shareholding Status of Shareholders of Listed Companies It is unknown whether other
shareholders shareholders have an associated relationship or are concerted action units or not.
Information on top ten shareholders of unrestricted shares
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Type of shares
Name of shareholder Unrestricted shares held at the period end
Type of shares Quantity
Shenzhen SEG Group Co., Ltd. 237,359,666 RMB ordinary shares 237,359,666
Domestically listed
Zeng Ying 8,040,826 8,040,826
foreign shares
Phillip Securities (Hong Kong) Domestically listed
6,716,223 6,716,223
Group foreign shares
Domestically listed
Liu Guocheng 5,495,595 5,495,595
foreign shares
Domestically listed
Gong Qianhua 5,311,520 5,311,520
foreign shares
Wang Jian 3,000,000 RMB ordinary shares 3,000,000
Domestically listed
Liu Guohong 2,454,941 2,454,941
foreign shares
Yunnan International Trust Co.
Ltd.– Ruihui 2 Capital Trust 2,437,347 RMB ordinary shares 2,437,347
Plan
Domestically listed
UBS AG LONDON BRANCH 2,339,805 2,339,805
foreign shares
Domestically listed
LI LEON ZHAN WEI 2,334,900 2,334,900
foreign shares
Explanations on the association
relationship or concerted action
Shenzhen SEG Group Co., Ltd has no associated relationship with other shareholders, nor it is a
among the top ten shareholders
concerted action unit as described by the Management Methods for Disclosure of Information on
of unrestricted shares, and
Changes of Shareholding Status of Shareholders of Listed Companies It is unknown whether other
between the top ten shareholders
shareholders have an associated relationship or are concerted action units or not.
of unrestricted shares and the
top ten shareholders
Top ten common shareholders
involved in securities financing None
(if any)
Whether top ten common shareholders and top ten shareholders of unrestricted shares have agreed repurchase
trading within the reporting period
□ Yes √ No
The top ten common shareholders and top ten shareholders of unrestricted shares do not have any agreed
repurchase trading within the reporting period
2. Information about controlling shareholders of the Company
Legal representative
Legal
Name of
representative/ Date of Organization Registered
controlling Main business
Person in incorporation code Capital
shareholder
charge
Shenzhen SEG Business scope: Production and
Sun August 23,
Group Co., 19218093-0 1,355,420,000 research of electronic products,
Shengdian 1984 household appliances, toys,
Ltd.
electronic and telecom equipment,
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instruments and meters, motor
equipment, computers and
accessories, OA equipment and
articles and electronic chemical
projects (the license of the
production site should be specially
applied for); acceptance of various
electronic system projects; operation
of specialized electronic and
communications markets; talent
training; real estate development (it
is made on the land plots for which
the land use right has been legally
obtained); real estate agency;
shipping agency; logistics &
warehousing; high-rise sightseeing
at SEG Plaza and supporting
catering, shopping and exhibition
services; technical development and
maintenance of network and
information projects; import and
export.
Development strategy of SEG Group: Uphold the development strategy that focuses on two core
Future businesses, that is, energy-saving semiconductor manufacturing and professional electronics
development markets, explore the realms of high and new technologies and new products, and promote both
strategy physical electronics markets that focus primarily on self-owned property and e-commerce (that is,
Shenzhen SEG Co., Ltd.) to build comprehensive and competitive strengths of SEG Group.
The consolidated operating revenue (not audited) of SEG Group in 2014 was 2,646.91 million
Operating
Yuan, the total profit was 510 million Yuan, and the net profit was 405.31 million Yuan; the total
results,
assets of SEG Group was 8,338.01 million Yuan, the owner's equity was 3,475.14 million Yuan,
financial
the asset/liability ratio was 58.72%, and the return on equity was 15.87%; net cash flow from
condition, and
operating activities was -720.84 million Yuan, net cash flow from investment activities was
cash flow
-609.81 million Yuan, and net cash flow from financing activities was 1,370.67 million Yuan.
Equity of other overseas listed companies in which the controlling shareholders have a controlling share and hold
shares
Shareholding
Abbreviations of held stock Number of shares
No. Company name proportion
and securities code held (Share)
(%)
Shenzhen SEG Group
1 Huakong SEG 000068 68,392,697 7.63
Co., Ltd.
SEG (HONGKONG)
2 Shen Huafa B200020 16,569,560 5.85
Company Limited
GOOD HOPE
3 CORNER Shen Huafa 200020 13,900,000 4.91
INVESTMENTS LTD
SEG (HONGKONG)
4 NewOcean Energy 0342 100,000 0.01
Company Limited
Changes of the controlling shareholders in the reporting period
□ Applicable √ Not applicable
In the reporting period, the controlling shareholders of the Company were not changed.
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3. Actual controller of the Company
Legal representative
Legal
Name of actual Date of Organization Registered
representative/Person Main business
controller incorporation code Capital
in charge
Shenzhen
State-owned Assets
Not
Supervision and Zhang Xiaoli Not applicable Not applicable
applicable
Administration
Commission
Future development
Not applicable
strategy
Operating results,
financial condition, Not applicable
and cash flow
Changes of the actual controllers in the reporting period
□ Applicable √ Not applicable
In the reporting period, the actual controllers of the Company are not changed.
Block diagram of the property rights and controlling relationship between the Company and its actual controller
Administration China Huarong China Orient China Great Wall
Commission of Asset Asset Asset
Shenzhen Municipal Management Co., Management Management
People's Government Ltd. Corporation Corporation
Shenzhen SEG Group Co.,
Ltd.
Shenzhen SEG Co., Ltd.
China Huarong Asset Management Co., Ltd. publicly listed the 29.51% equities of SEG Group in Shenzhen
Qianhai Stock Exchange on December 30, 2014 to transfer the equities at the listing price of 1.79 billion Yuan.
Within the valid listing period, only SZ CAPITAL CO., LTD (hereinafter referred to as SZ CAPITAL) is a
qualified transferee with intention. According to the related provisions in the Asset Disposal Management
Approach for Financial Asset Management Company and Transfer of State-Owned Financial Assets Management
Approach issued by the Ministry of Finance, after the listing period of SEG Group's equities expires, the transfer
will be carried out based on an agreement if only one qualified transferee with intention is available. Therefore,
the listed 29.51% of the SEG Group equities will be transferred to SZ CAPITAL based on an agreement.
SZ CAPITAL was incorporated in June 2007 by SASAC. As the wholly-owned subsidiary of SASAC, it is the
professional platform company operated by SASAC as well as its person acting in concert. After the completion
of this equity transfer, SASAC will directly and indirectly hold 76.03% of the stocks of SEG, and become the first
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major shareholder and actual controller of SEG. The Company‘s controlling shareholder and actual controller
have no change. The matter will not result in important influence to the Company‘s operation.
By the disclosure day of this report, Huarong Asset and SZ CAPITAL have signed an Equity Transfer contract,
and Huarong Asset has transferred the 29.51% equities of the SEG Group to SZ CAPITAL. Currently, the equity
transfer matters have done.
The actual controllers control the Company by trust or other asset management methods.
□ Applicable √ Not applicable
4. Other legal-person shareholders who hold more than 10% shares
□ Applicable √ Not applicable
IV. Share purchase plans proposed or implemented by shareholders and persons acting in
concert during the reporting period
□ Applicable √ Not applicable
As known by the Company, no shareholders or persons acting in concert proposed share purchase plans during the
reporting period.
Chapter 7 Preferred Stock Description
□ Applicable √ Not applicable
No preferred stock is involved during the reporting period.
Chapter 8 Information on Directors, Supervisors, Senior Executives
and Employees
I. Changes in shares held by directors, supervisors and senior executives
Increase Decrease
Shares of shares of shares Shares
Beginning
Employment Ending date held at held in held in held at
Name Title Gender Age date of office
status of office term period the the period
term
beginning reporting reporting end
period period
Wang Li Chairman Incumbent Male 53 June 17, 2013 June 16, 2016 0 0 0 0
Zhang
Director Incumbent Male 52 June 17, 2013 June 16, 2016 0 0 0 0
Guangliu
Ye Jun Director Incumbent Male 53 June 17, 2013 June 16, 2016 0 0 0 0
Liu Director/ General
Incumbent Male 46 June 17, 2013 June 16, 2016 0 0 0 0
Zhijun Manager
Zheng Director/Vice Incumbent Female 49 June 17, 2013 June 16, 2016 35,586 0 0 35,586
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Increase Decrease
Shares of shares of shares Shares
Beginning
Employment Ending date held at held in held in held at
Name Title Gender Age date of office
status of office term period the the period
term
beginning reporting reporting end
period period
Dan General
Manager/Secretary
of the Board of
Directors
Zhu Director/ Vice
Incumbent Male 53 June 17, 2013 June 16, 2016 0 0 0 0
Longqing General Manager
Song Independent
Incumbent Female 47 June 17, 2013 June 16, 2016 0 0 0 0
Pingping Director
Independent
Li Luoli Incumbent Male 67 June 17, 2013 June 16, 2016 0 0 0 0
Director
Zhou Independent
Incumbent Male 45 June 17, 2013 June 16, 2016 0 0 0 0
Hanjun Director
Zhao
Supervisor Left the post Male 60 June 17, 2013 June 16, 2016 0 0 0 0
Xingxue
Xu Ning Supervisor Incumbent Male 50 June 17, 2013 June 16, 2016 0 0 0 0
Tang
Supervisor Incumbent Male 54 June 17, 2013 June 16, 2016 0 0 0 0
Chongyin
Peng
Supervisor Incumbent Male 41 June 17, 2013 June 16, 2016 0 0 0 0
Aiyun
Tian
Supervisor Incumbent Male 48 June 17, 2013 June 16, 2016 0 0 0 0
Jiliang
Ying
Supervisor Incumbent Male 45 June 17, 2013 June 16, 2016 0 0 0 0
Huadong
Bo Vice General
Incumbent Male 57 July 24, 2013 June 16, 2016 0 0 0 0
Hongxi Manager
Jiang Independent
Left the post Male 55 May 21, 2010 June 17, 2013 11,700 0 11,700 0
Yigang Director
Total -- -- -- -- -- -- 47,286 0 11,700 35,586
II. Information on Directors, Supervisors and Senior Executives Serving in Shareholders'
Units or Other Units
Work experience of incumbent directors, supervisors, and senior executives in the last five years
1. Members of the Board of Directors
1) Wang Li, male and born in 1961, holds a master's degree. He now serves as the Director of Company, General
Manager of SEG Group, Vice Secretary of Party Committee, Director of SEG Credit, and Director of Shenzhen
STS Microelectronics. He served as the Vice President of SEG Group, Deputy General Manager (in charge),
President of Shenzhen SEG Hi-tech Investment Co., Ltd, and Director of Shenzhen SEG Property Development
Company Limited.
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2) Zhang Guangliu, male and born in 1962, holds a master's degree. He now serves as the Company director,
Deputy General Manager of SEG Group, Director of Shenzhen Kangle Enterprise Development Co., Ltd, and
Chairman of the Supervisory Board of Shenzhen SI Semiconductors Co., Ltd. He served as the Chairman of the
Supervisory Board of Huakong SEG and SEG (Hongkong) Limited.
3) Liu Zhijun, male and born in 1968, holds a Master of Engineering degree. He now serves as Director and
General Manager of the Company and Secretary of the Party Committee, He also serves as the Chairman of
Nantong SEG, Chairman of Longgang SEG, Chairman of Xi'an SEG, Chairman of Xi'an Hairong SEG, Chairman
of SEG E-Commerce, Chairman of SEG Credit, and Supervisor of Kashgar Shenzhen City Limited. He served as
the Vice Secretary of Party Committee, Chairman of SEG E-Commerce, Chairman of Shanghai SEG, and
Manager of the Operating Department of SEG Group.
4) Zheng Dan, female and born in 1965, is a senior economist and holds a Master of Science degree. She now
serves as the Director of the Company, Vice Secretary of Party Committee, Discipline Inspection Commission
Secretary, Vice-general Manager, Secretary of the Board, and she also serves as the Chairman of Suzhou SEG,
Chairman of Wujiang SEG, Chairman of SEG Baohua, Director of SEG Credit, Director of Nantong SEG,
Chairman of the Supervisory Board of Changsha SEG, Chairman of the Supervisory Board of SEG E-Commerce,
and Chairman of the Supervisory Board of Huakong SEG. She served as the Director of SEG E-Commerce,
Director of Huakong SEG, Chairman of the Supervisory Board of SEG Baohua, Chairman of the Supervisory
Board of SEG Logistics, and Supervisor of SEG GPS.
5) Zhu Longqing, male and born in 1961, holds an MBA degree. He now serves as Director and Vice General
Manager of the Company. He concurrently serves as the Chairman of SEG Industry, Chairman of Changsha SEG,
Chairman of Nanjing SEG, Chairman of Wuxi SEG, Chairman of Nanning SEG, Chairman of Shanghai SEG,
Chairman of Nantong SEG, Chairman of SEG E-Commerce, Chairman of SEG GPS, and Chairman of the
Supervisory Board of SEG Baohua. He served as the Chairman of SEG Logistics, Chairman of the Supervisory
Board, Director of SEG Baohua, Director and General Manager of SEG Industry.
6) Ye Jun, male and born in 1960, holds a bachelor's degree and is a senior accountant. He now serves as the
Director of the Company, Director and President of SEG Credit, and Director of Shenzhen SEG Square
Investment & Development Co., Ltd. He served as the Finance Minister of SEG Group, Chairman of Shenzhen
SEG Property Investment, Director of Huakong SEG, Director of Shenzhen SI Semiconductors Co., Ltd, and
Director of Shijiazhuang SEG Plaza Investment.
7) Zhou Hanjun, male and born in 1969, is a CPA and a CTA. He now serves as an Independent Director of the
Company, partner of Shenzhen Asia-Pacific (Group) Certified Public Accountants Co., Ltd., and Independent
Director of Shenzhen Success Electronics Co., Ltd.
8) Liu Zhijun, male and born in 1947, holds a master's degree in economics. Currently, he is a professor and
doctoral supervisor of Nankai University. He now serves as the Vice President of Development Institute
(Shenzhen, China), Vice President of China Society of Economic Reform, and Director of Shenzhen Mahon
Economic Research Development Foundation and so on. He served as Deputy Director of Nankai Institute of
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Economics, Deputy Director of State Administration of Prices Institute, Deputy Director of the Shenzhen
Municipal People's Government Office, Director of Shenzhen Information Center, Deputy Secretary of Shenzhen
Municipal Committee of CPC and Director of Front Office, Deputy Director of Shenzhen Development Institute
and Secretary General, and Chief of China Opening Herald.
9) Song Pingping, female, was born in March 1967 and holds a Master of Laws degree. She now serves as the
partner of Shenzhen Oriental Fortune Capital Management Limited, Secretary General of Risk Control Committee
of Shenzhen SZ CAPITAL Fuhai Investment Management Limited, Arbitrator of South China International
Economic and Trade Arbitration Commission, and Independent Director of Shenzhen Yantian Port Limited. She
served as the partner of Beijing King & Wood Law Firm and so on.
2. Members of the Board of Supervisors
1) Xu Ning, male and born in 1965, holds a bachelor's degree. He now serves as the Chairman of the Board of
Supervisors, Vice Secretary of Party Committee of SEG Group, Secretary of the Discipline Inspection
Commission, Chairman of the labor union and Director of SEG Talent Training Center. He served as the
Safeguard Stability Commissioner (at department level) of State-owned Assets Supervision and Administration
Commission of Shenzhen Municipal People's Government, and Safeguard Stability Commissioner (at department
level) of Shenzhen State-owned Assets Supervision and Administration.
2) Tang Chongyin, male and born in 1960, holds a PhD degree. He now serves as the supervisor of the Company,
Minister Assets Department of SEG Group, Chairman of Shenzhen Dynamic Electronics Limited, Chairman of
Shenzhen SEG Hi-tech Investment Co., Ltd, Chairman of Shenzhen SI Semiconductors Co., Ltd, Chairman of
Tianjin SEG Haijing Co., Ltd, and Chairman of the Supervisory Board of SEG Credit. He served as the Director
of SEG E-Commerce and Vice Chairman of Shenzhen Zhongheng Huafa Co., Ltd.
3) Peng Aiyun, male and born in 1973, holds a bachelor's degree. He now serves as the supervisor of the
Company, and concurrently serves as the Vice Minister of Business Development of SEG Group, Director of
Shenzhen SEG Real Estate Investment Co., Ltd, and supervisor of the Shijiazhuang SEG Square Investment
Limited. He served as the Vice Manager of Electronic Market and Property Operation Department of SEG Group.
4) Tian Jiliang, male and born in 1966, holds a bachelor's degree. He now serves as the Supervisor of the Board of
Supervisors and Minister of Human Resources and concurrently serves as the Director of SEG Baohua, Director
of Shunde SEG, Chairman of the Supervisory Board of Xi'an SEG, Chairman of the Supervisory Board of
Longgang SEG, and Supervisor of Xi'an Hairong SEG. He served as the Director of Suzhou SEG and the
Supervisor of Wuxi SEG.
5) Ying Huadong, male and born in 1969, holds a bachelor's degree and is a senior accountant. He now serves as
Supervisor (Supervisor from staff) of the Company and Manager of the Financial Department and concurrently as
Director of Changsha SEG, Supervisor of Nanjing SEG, and Supervisor of Nantong SEG. He served as the
Supervisor of Changsha SEG.
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6) Zhao Xingxue, male and born in 1954, graduated from college and has retired in August 2014. He served as the
Chairman of the Board of Supervisors of the Company, Chairman of SEG Group Labor Union, Director of SEG
Talent Training Center, Deputy Secretary of Party Committee & Secretary of Discipline Committee of SEG
Group, and Chairman of the Board of Supervisors of Huakong SEG.
3. Senior executives
1) Liu Zhijun is the General Manager and the relevant information is available in the above introduction to
directors.
2) Zheng Dan is the Deputy General Manager and the relevant information is available in the above introduction
to directors.
3) Zhong Longqing is Vice General Manager and the relevant information is available in the above introduction to
directors.
4) Bo Hongxi, male, born in 1958, undergraduate, senior accountant, serves as the Deputy General Manager of the
Company, Director and General Manager of SEG Baohua.
Information about directors, supervisors and senior executives serving in shareholders' units
√ Applicable □ Not applicable
Receiving
remuneration
Name of Position in Beginning date of Ending date of
Name from
shareholders' units shareholders' units office term office term
shareholders'
units or not
Shenzhen SEG
Vice General Manager December 1, 2006 January 18, 2010
Group Co., Ltd.
Shenzhen SEG Deputy General
January 19, 2010 January 3, 2011
Wang Li Group Co., Ltd. Manager (in charge) Yes
General Manager,
Shenzhen SEG
Deputy Party January 4, 2011 October 30, 2015
Group Co., Ltd.
Secretary
Zhang Shenzhen SEG
Vice General Manager March 10, 2003 October 30, 2015 Yes
Guangliu Group Co., Ltd.
Manager of the
Shenzhen SEG Operation and
Liu Zhijun July 1, 2008 May 1, 2010 No
Group Co., Ltd. Management
Department
Shenzhen SEG
Zheng Dan None No
Group Co., Ltd.
Zhu Shenzhen SEG
None No
Longqing Group Co., Ltd.
Shenzhen SEG Minister of Finance
Ye Jun April 1, 2003 May 1, 2013 No
Group Co., Ltd. Department
Shenzhen SEG Deputy Secretary of
Xu Ning Party Committee, October 1, 2012 October 30, 2015 Yes
Group Co., Ltd.
Secretary of
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Receiving
remuneration
Name of Position in Beginning date of Ending date of
Name from
shareholders' units shareholders' units office term office term
shareholders'
units or not
Discipline Committee,
and Labor Union
President
Tang Shenzhen SEG Minister of Assets
April 17, 2003 October 30, 2015 Yes
Chongyin Group Co., Ltd. Department
Vice Manager of
Electronic Market and
Shenzhen SEG
Property Operation July 2, 2008 August 28, 2011
Group Co., Ltd.
Peng Department of SEG
Group Yes
Aiyun
Vice Minister of
Shenzhen SEG
Business August 29, 2011 October 30, 2015
Group Co., Ltd.
Development
Tian Shenzhen SEG
None No
Jiliang Group Co., Ltd.
Ying Shenzhen SEG
None No
Huadong Group Co., Ltd.
Shenzhen SEG
Bo Hongxi None No
Group Co., Ltd.
Information about directors, supervisors and senior executives serving in other units
√ Applicable □ Not applicable
Receiving
Position in Beginning date of Ending date of remuneration
Name Name of other units
other units office term office term from other units
or not
SEG Credit Chairman November 1, 2011 November 1, 2017
Shenzhen STS
Director September 1, 2003 December 1, 2016
Microelectronics
Shenzhen Huaqiang
North Electronic
Wang Li Director December 1, 2007 December 1, 2016 No
Market Price Index
Ltd.
Shenzhen SEG
Property
Chairman July 1, 2008 May 1, 2011
Development Co.,
Ltd.
Shenzhen Kangle
Enterprise
Chairman August 1, 2011 July 1, 2015
Development Co.,
Zhang Ltd.
No
Guangliu Shenzhen SI Chairman of
Semiconductors Co., Board of July 1, 2010 December 1, 2016
Ltd. Supervisors
Huakong SEG Chairman of February 1, 2013 February 1, 2014
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Receiving
Position in Beginning date of Ending date of remuneration
Name Name of other units
other units office term office term from other units
or not
Board of
Supervisors
SEG (HONGKONG)
Chairman August 1, 2007 August 1, 2012
Company Limited
Longgang SEG Chairman June 1, 2010 Till now
SEG E-Commerce Chairman January 1, 2011 January 1, 2014
Shanghai SEG Chairman May 1, 2011 June 1, 2014
SEG Credit Director September 1, 2011 Till now
Kashgar Shenzhen
Liu Zhijun Supervisor October 1, 2012 Till now No
City Co., Ltd.
Nantong SEG Chairman January 1, 2013 Till now
Xi'an SEG Chairman May 1, 2013 Till now
Xi'an Hairong SEG Chairman May 1, 2013 Till now
SEG E-Commerce Director January 1, 2014 Till now
Chairman of
Changsha SEG Board of March 1, 2009 Till now
Supervisors
Chairman of
SEG Baohua Board of March 1, 2009 April 1, 2013
Supervisors
Chairman of
SEG Logistics Board of June 1, 2010 December 1, 2011
Supervisors
SEG E-Commerce Director January 1, 2011 May 1, 2013
SEG Credit Director September 1, 2011 Till now
Zheng Dan Suzhou SEG Chairman September 1, 2011 Till now No
Wujiang SEG Chairman June 1, 2012 Till now
Nantong SEG Director January 1, 2013 Till now
Huakong SEG Director March 1, 2013 March 1, 2014
SEG Baohua Chairman April 1, 2013 Till now
Chairman of
SEG E-Commerce Board of May 1, 2013 Till now
Supervisors
Chairman of
Huakong SEG Board of March 1, 2014 Till now
Supervisors
SEG Industry Director March 1, 2009 May 1, 2013
General
SEG Industry March 1, 2009 January 1, 2010
Manager
Zhu
SEG Baohua Director January 1, 2010 April 1, 2013 No
Longqing
Chairman of
SEG Logistics Board of January 1, 2002 June 1, 2010
Supervisors
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Receiving
Position in Beginning date of Ending date of remuneration
Name Name of other units
other units office term office term from other units
or not
SEG Logistics Chairman June 1, 2010 December 1, 2011
Changsha SEG Chairman June 1, 2010 Till now
SEG E-Commerce Director January 1, 2011 Till now
Nanjing SEG Chairman April 1, 2011 Till now
SEG Navigations Director February 1, 2012 Till now
Wuxi SEG Chairman August 1, 2012 Till now
Nantong SEG Director January 1, 2013 Till now
Chairman of
SEG Baohua Board of April 1, 2013 Till now
Supervisors
Nanning SEG Chairman April 1, 2013 Till now
SEG Industry Chairman May 1, 2013 Till now
Shanghai SEG Chairman June 1, 2014 Till now
Huakong SEG Director September 1, 2010 March 1, 2013
Shenzhen SI
Semiconductors Co., Director July 1, 2010 December 1, 2013
Ltd.
Shenzhen SEG Real
Estate Investment Chairman March 1, 2012 May 1, 2013
Co., Ltd.
No
Shenzhen SEG
Ye Jun
Square Investment &
Director August 1, 2011 June 1, 2016
Development Co.,
Ltd.
Shijiazhuang SEG
Square Investment Director August 1, 2011 December 1, 2013
Co., Ltd.
SEG Credit Director June 1, 2013 Till now
Yes
SEG Credit President June 1, 2013 Till now
SEG Talent Training
Xu Ning Director July 1, 2014 July 1, 2017 No
Center
Shenzhen SEG
Hi-tech Industrial Director July 1, 2006 January 1, 2017
Co., Ltd.
Shenzhen SI
Semiconductors Co., Director December 1, 2010 December 1, 2016
Ltd.
Tang
Tianjin SEG Haijing No
Chongyin Director December 1, 2006 January 1, 2016
Co., Ltd.
Shenzhen Dynamic
Chairman July 1, 2006 December 1, 2016
Electronics Co., Ltd.
Chairman of
SEG Credit Board of May 1, 2014 November 1, 2017
Supervisors
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Receiving
Position in Beginning date of Ending date of remuneration
Name Name of other units
other units office term office term from other units
or not
SEG E-Commerce Director January 1, 2011 May 1, 2013
Shenzhen Zhongheng
Vice Chairman July 1, 2006 July 1, 2013
Huafa Co., Ltd.
Shenzhen SEG Real
Estate Investment Director May 1, 2013 January 1, 2017
Co., Ltd.
Peng Aiyun No
Shijiazhuang SEG
Square Investment Supervisor August 1, 2011 November 1, 2017
Co., Ltd.
Suzhou SEG Director February 1, 2009 September 1, 2011
SEG Baohua Director March 1, 2009 Till now
Chairman of
Xi'an SEG Board of November 1, 2008 Till now
Supervisors
Chairman of
Tian Jiliang No
Longgang SEG Board of May 1, 2011 Till now
Supervisors
Board of
Xi'an Hairong SEG July 1, 2011 Till now
Supervisors
Wuxi SEG Supervisor August 1, 2012 May 1, 2014
Shunde SEG Director November 1, 2012 Till now
Changsha SEG Supervisor January 1, 2010 June 1, 2010
Ying Changsha SEG Director June 1, 2010 Till now
No
Huadong Nanjing SEG Supervisor April 1, 2011 Till now
Nantong SEG Supervisor January 1, 2013 Till now
General
SEG Baohua March 2005 Till now
Bo Hongxi Manager Yes
SEG Baohua Director March 1999 Till now
III. Information about Remuneration of Directors, Supervisors and Senior Executives
Decision-making procedure and establishment criteria for the remuneration to the directors, supervisors and senior
executives, and actual payment
The Company implements the position-based wage system. The annual remuneration of senior executives
comprises three parts, namely, the wage (the position-based wage and allowance), year-end bonus, and legal
welfare. The wage is decided and monthly paid by the Board of Directors in accordance with the functions of a
position and the position-based wage system of the Company; the year-end bonus is decided based on the
completing of annual operation targets and work tasks approved by the General Meeting of Shareholders, and is
implemented after being approved by the Board of Directors.
According to The Articles of Association, the remuneration of directors and supervisors is determined by the
General Meeting of Shareholders, but, at present, the Company has not implemented the remuneration system for
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
non-independent directors and supervisors except for independent directors. The directors and supervisors of the
Company only receive the wages corresponding to their administrative positions. Eight directors (including
independent directors) and supervisors of the Company received a total remuneration of RMB 3,702,000 Yuan
(pre-tax) in the reporting period. According to the resolution at the 17th General Meeting of Shareholders (2011)
on April 20, 2012, independent directors of the Company will receive monthly allowances for independent
directors totaling RMB 100,000 Yuan each year (pre-tax). The travel and accommodation expenses of
independent directors due to attendance of the meetings of the Board and the General Meeting of Shareholders as
well as the expenses incurred by Independent Directors due to exercising of their powers are reimbursed by the
Company according to the actual expenses.
Remuneration for directors, supervisors and senior executives in the reporting period
Unit: RMB ten thousand Yuan
Actual
Total
Total remuneration
remuneration
Employment remuneration obtained at
Name Title Gender Age from the
status from the the end of
shareholder's
Company reporting
company
period
Wang Li Chairman Male 53 Incumbent 90.2 90.2
Zhang
Director Male 52 Incumbent 74.82 74.82
Guangliu
Director/ General
Liu Zhijun Male 46 Incumbent 87.99 87.99
Manager
Director/Vice
General
Zheng Dan Manager/Secretary Female 49 Incumbent 75.48 75.48
of the Board of
Directors
Zhu Director/ General
Male 53 Incumbent 73.02 73.02
Longqing Manager
Ye Jun Director Male 54 Incumbent
Zhou Independent
Male 45 Incumbent 10 10
Hanjun Director
Independent
Li Luoli Male 67 Incumbent 10 10
Director
Song Independent
Female 47 Incumbent 10 10
Pingping Director
Chairman of
Xu Ning Male 49 Incumbent 74.82 74.82
Supervisory Board
Tang
Supervisor Male 54 Incumbent 57.99 57.99
Chongyin
Peng Aiyun Supervisor Male 41 Incumbent 37.93 37.93
Tian Jiliang Supervisor Male 48 Incumbent 53.68 53.68
Ying
Supervisor Male 45 Incumbent 50.03 50.03
Huadong
Zhao Chairman of
Male 60 Left the post 49.88 49.88
Xingxue Supervisory Board
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Actual
Total
Total remuneration
remuneration
Employment remuneration obtained at
Name Title Gender Age from the
status from the the end of
shareholder's
Company reporting
company
period
Vice General
Bo Hongxi Male 56 Incumbent
Manager
Total -- -- -- -- 370.2 385.64 755.84
Information on equity incentives bestowed to directors, supervisors and senior executives during the reporting
period
□ Applicable √ Not applicable
IV. Staff Changes of Directors, Supervisors and Senior Executives
Name Post Type Date Cause
Chairman of
Xu Ning Supervisory elected August 27, 2014 Appointment and dismissal
Board
Chairman of
Left the
Zhao Xingxue Supervisory August 27, 2014 Retired
post
Board
V. Changes of core technical team or key technical personnel (non-directors, supervisors and
senior managers) during the reporting period
None
VI. Information about employees of the company
At the end of the reporting period, the Company had 407 on-the-job employees and 71 retirees. The pension and
medical insurance of the retirees are social pooling as a whole.
(1) The profession composition and education background of on-the-job employees:
(Unit: Person)
Profession Administrative Financial staff Technical staff Sales staff Production staff
composition staff
Number 110 31 12 63 191
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Administrative staff
Financial staff
Technical staff
Sales staff
Production staff
Secondary High school
Education
Master Bachelor College student (technical school) (vocational) and
background
student below
Number 26 122 137 29 93
Master
Bachelor
College student
Secondary (technical
school) student
High school (vocational)
(2) Remuneration principles
Priority to benefits: The remuneration structure and levels are associated with the operating performance,
reflecting the priority of benefit. According to the position values, combined with the individual performance and
service capabilities, the system sets reasonable salary gaps. It gives proper preferential treatment to core positions
and employees who have taken more responsibilities and made great contributions, and therefore reflecting the
incentive salary system.
Reward based on achievements: According to the employee performance and service capabilities, combined with
the organizational performance, the system adjusts the remuneration, and associates the remuneration level with
the organizational performance, employee performance, and employee capabilities, and therefore reflecting the
organizational and personal values.
Remuneration changes with positions: The remuneration system supports the development of employees' career.
The remuneration must strictly comply with the positions. Therefore, the remuneration varies with the positions.
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Dynamic adjustment: According to the development strategies of the Company and the operating strategies of
each investment and holding enterprise, combined with dynamic development trends of the industry, the
organization and position responsibilities are changed when the business model and organization structure are
significantly changed. The remuneration structure and salary level must be adjusted dynamically to meet the
service development requirements.
Chapter 9 Corporate Governance
I. Basic information on corporate governance
1. Basic information on corporate governance
During the reporting period, the Company continuously improved the governance structure and promotes the
internal management and control system in accordance with the Company Law, the Securities Law, the Code of
Corporate Governance for Listed Companies in China, Shenzhen Stock Exchange Listing Rules, and laws and
regulations on corporate governance of listed companies. In the meantime, the Company implements special
activities for perfecting the corporate governance structure and standardization of internal control system. The
company continuously strengthens information disclosure and actively improves investor relations management.
By the end of the reporting period, the actual governance status of the Company is basically in line with the
corporate governance requirements for listed enterprises issued by China Securities Regulatory Commission. The
corporate governance status is as follows:
1) The Company and controlling shareholders:
The Company strictly regulates behaviors of shareholders according to the Code of Corporate Governance for
Listed Companies in China, Shenzhen Stock Exchange Listing Rules, and Articles of Association. The shareholders
exercise the shareholder rights through general meeting of stockholders. Interventions on the Company's operating
and decision-making beyond the general meeting of stockholders and the Board of Directors did not occur. The
Company has independent business and operating autonomy. The Company is independent from the controlling
shareholders, Board of Directors, Board of Supervisors and internal organizations in terms of business, assets,
personnel, organization, and finance.
2) Shareholders and general meeting of stockholders
The Company convenes and holds general meeting of stockholders in strict accordance with the Articles of
Association and Rules of Procedure of Shareholders' Meeting. Within the reporting period, the situation in which
shareholders individually or jointly hold more than 10% of the Company's voting shares request for an
extraordinary general meeting did not occur, and no general meeting of stockholders proposed by the Board of
Supervisors was held. During the reporting period, the Company's decisions are reviewed and decided by the
general meeting of stockholders in accordance with the provisions of Company Law and Articles of Association.
The situation in which decisions are made without the general meeting of stockholders involved or decisions are
implemented before being reviewed did not occur.
3) Directors and Board of Directors
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
The Company elects directors in strict accordance with the provisions of Articles of Association. The Board of
Directors includes nine directors and three independent directors. The number of directors and the composition of
the Board of Directors comply with the laws and regulations. The Board of Directors consists of three specialized
committees. The Board of Directors implement works in strict accordance with the relevant provisions of the
Articles of Association, Working System of Independent Directors, and Rules of Procedure of Board of Directors.
All the directors of the Company attend the Board meeting and general meeting of stockholders seriously and
actively participate the related training to learn relevant laws and regulations. The independent directors
independently perform their duties, maintain the overall interests of the Company, prefect legitimate interests of
minority shareholders from being damaged, and give independent opinions on major issues.
4) Supervisors and the Board of Supervisors
The Company elects supervisors in strict accordance with the Company Law and Articles of Association. The
number of supervisors and the composition of the Board of Supervisors comply with the laws and regulations. The
Company has developed the Rules of Procedure of the Board of Supervisors. The qualification, appointment and
dismissal of the supervisors meet the related requirements. The supervisors attend the Board of Supervisors
meeting seriously. The supervisors review periodic reports drafted by the Board of Directors and provide written
examination opinions by means of attending the general meeting of stockholders, attending the Board of Directors
meeting, and holding Board of Supervisors meeting. The supervisors effectively supervise the major issues,
related party transactions, financial situation, as well as the job validity and compliance of the company directors
and senior management personnel.
5) Information disclosure and transparency
In strict accordance with the Information Disclosure Management Methods and Investor Relations Management
System, the Company has designated the Office of the Secretary of the Board of Directors to perform information
disclosure and handle the visits and consultation of shareholders. The Company has also nominated "China
Securities News", "Securities Times", "Securities Daily", ―Hong Kong Commercial Daily‖ newspapers and
CNINFO as the media for the company information disclosure. The information disclosed is truthful, accurate,
timely and complete, thereby ensuring that all investors can equitable access to the company information. The
Company will further strengthen ties and communication with supervision departments, and report company
matters in a timely and proactive manner. The Company will continue to understand the information disclosure
requirements in an accurate way.
Is there any discrepancy between corporate governance practices and related regulations as set in the Company
Law and as required by China Securities Regulatory Commission?
√ Yes □ No
2. Non-normative governance
During the reporting period, the Company improved the governance structure and promoted the internal
management and control system in accordance with the Company Law, the Securities Law, and the Code of
Corporate Governance for Listed Companies in China and other laws and regulations on corporate governance of
listed companies. However, the Company still encounters the following issues:
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 corporation in Shenzhen and Shenzhen
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Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
State-owned Assets Supervision and Administration Bureau is the controlling shareholder of SEG Group. It must
implement the Property Right Representatives Report System for state-owned assets management according to the
management methods of Shenzhen for state-owned assets.
2) In respect of assessment on human resources, the Company's controlling shareholder SEG Group implements
the annual performance assessment on Senior Executives according to the completing of annual operation
indicators and other indicators stipulated by SEG Group.
The company reports the non-public information to the major shareholders and the actual controllers.
The company reports the non-public information to the major shareholders and the actual controls based on the
property right representative reporting system and requirements of the national statistical departments. In
accordance with the requirements of state-owned assets supervision department, the Company has been
submitting monthly flash reports to the majority shareholder and the actual controller and reporting important
issues to the majority shareholder and the actual controller before they are disclosed. The Company submitted the
Undisclosed Information Provided by Listed Companies for the Majority Shareholder or Actual Controller and
Letter of Commitment to Shenzhen Securities Regulatory Bureau on October 18, 2007. SEG Group offered the
Letter of Commitment on Strengthening Management of Undisclosed Information to Shenzhen Securities
Regulatory Bureau. Meanwhile, the Company has established and implemented the Non-public Information
Insider Reporting System and the Confidentiality System of Shenzhen SEG Co., Ltd for Insiders of Non-public
Information and has monthly reported to Shenzhen Securities Regulatory Bureau about its reports of unpublicized
information. Senior executives and all employees at the headquarters signed a Confidentiality Agreement with the
Company on July 15, 2009. The Confidentiality Agreement clearly stipulates that all employees are obligated to
hold confidential the business secrets and undisclosed information of the Company.
The nonpublic information the Company offered to the Company's majority shareholder and actual controller in
the reporting period is as follows:
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
The invested
corporation of the
The document
Company and the
Notice about
financial staff at the
Formulation of the
Headquarters
The flash Monthly Flash
prepare the report
report of main Report of The Board
and consolidate the
Shenzhen Controlling financial Enterprises of
statements, which
1 SEG Group shareholder indicators of Monthly Supervised by Directors
are reviewed by the
Co., Ltd. (30.24%) the Company Stated-owned Assets agrees to
leadership of the
registered in Supervision and report
Financial
Shenzhen Administration
Department and
Commission of the
reported through the
State Council
State-owned Asset
(SASAC [2003]23)
Management
Information System.
2 Shenzhen Controlling Summary sheet The invested Monthly The document The Board
77
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
SEG Group shareholder of corporation of the Notice about of
Co., Ltd. (30.24%) implementation Company and the Formulation of the Directors
of monthly financial staff at the Monthly Flash agrees to
expense budget Headquarters Report of report
prepare the sheet and Enterprises
consolidate the Supervised by
statements, which Stated-owned Assets
are reported through Supervision and
the State-owned Administration
Asset Management Commission of the
Information System. State Council
(SASAC [2003]23)
The document
The invested
Notice about
corporation of the
Formulation of the
Company and the
Monthly Flash
financial staff at the
Report of The Board
Headquarters
Shenzhen Controlling Summary sheet Enterprises of
prepare the sheet and
3 SEG Group shareholder of monthly Monthly Supervised by Directors
consolidate the
Co., Ltd. (30.24%) cash flow Stated-owned Assets agrees to
statements, which
Supervision and report
are reported through
Administration
the State-owned
Commission of the
Asset Management
State Council
Information System.
(SASAC [2003]23)
The document
Notice about
Formulation of the
The financial
Monthly Flash
personnel at the
Summary sheet Report of The Board
Headquarters
Shenzhen Controlling of deposits, Enterprises of
prepare the sheet that
4 SEG Group shareholder financing, and Quarterly Supervised by Directors
is reported through
Co., Ltd. (30.24%) loans of the Stated-owned Assets agrees to
the State-owned
Headquarters Supervision and report
Asset Management
Administration
Information System.
Commission of the
State Council
(SASAC [2003]23)
The invested The document
corporation of the Notice about
Summary sheet Company and the Formulation of the
of quarterly financial staff at the Monthly Flash The Board
non-operating Headquarters Report of
Shenzhen Controlling of
gains and prepare the sheet and
5 SEG Group shareholder Quarterly Enterprises Directors
losses of the consolidate the Supervised by
Co., Ltd. (30.24%) agrees to
Company statements, which Stated-owned Assets report
registered in are reported through Supervision and
Shenzhen the State-owned Administration
Asset Management Commission of the
Information System. State Council
78
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
(SASAC [2003]23)
It began to be
reported since June The document
2009. Notice about
The invested Formulation of the
Summary sheet
corporation of the Monthly Flash
of quarterly
Company and the Report of The Board
information on
Shenzhen Controlling financial staff at the Enterprises of
investment
6 SEG Group shareholder Headquarters Quarterly Supervised by Directors
properties of
Co., Ltd. (30.24%) Stated-owned Assets agrees to
the Company prepare the sheet and
consolidate the Supervision and report
registered in
statements, which Administration
Shenzhen
are reported through Commission of the
the State-owned State Council
Asset Management (SASAC [2003]23)
Information System.
Monthly
consolidated They should be
statements reported every
(including the month after being
Balance Sheet, printed, signed and
the Profit sealed and reported The Notice of The Board
Shenzhen Controlling Statement, the every quarter Shenzhen SEG of
7 SEG Group shareholder Cash Flow through the Monthly Group Co., Ltd on Directors
Co., Ltd. (30.24%) Statement, the State-owned Asset Submitting of agrees to
Notes to Management Monthly Statements report
Preparation of Information System.
the Statements They began to be
and the reported on line from
Financial July 2008.
Statements)
Shenzhen Controlling It was provided by
SEG Group shareholder Article Three of the
Co., Ltd. (30.24%) Statistics Law of the
People's Republic of
Statistical China that state
survey on the organs, social
statements or organizations,
corporations, public The Board
monthly and
Monthly institutions and of
annual reports Sealed by the
8 privately or Directors
Shenzhen of the Company and
Government production of individually owned agrees to
Statistics annually report
branch electronics businesses, on
Bureau which statistical
information
industry survey is
implemented, must
comply with the
Statistics Law and
the regulations of
the state and provide
79
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
statistical data
faithfully but not
make a false report,
conceal data, refuse
to report, delay the
report, or fabricate
or falsify data.
Self-governing mass
organizations at the
grass roots level and
citizens have the
obligation to provide
truthfully the
information required
by the statistical
survey of the state.
The document
Notice about
Formulation of the
Monthly Flash
Report of The Board
Shenzhen Controlling Summary sheet Enterprises of
Sealed by the
9 SEG Group shareholder of quarterly Quarterly Supervised by Directors
Company
Co., Ltd. (30.24%) financial assets Stated-owned Assets agrees to
Supervision and report
Administration
Commission of the
State Council
(SASAC [2003]23)
The hard copy of the
List of top 100 The requirements
official website of The Board
shareholders of from 2014 Shenzhen
Shenzhen Branch of of
Shenzhen Actual A-shares and state-owned
10 China Securities Quarterly Directors
SASAC controller B-shares in enterprise capital
Depository and agrees to
each quarter of operation
Clearing Corporation report
2014 conference
Limited
3. Implementation of the corporate governance activities and the establishment and implementation of
insider information and insider registration management system
(1) Implementation of corporate governance activities
To implement the Basic Standard for Enterprise Internal Control and related guidelines, according to the
requirements of China Securities Regulatory Commission and Shenzhen Securities Regulatory Bureau, the
Company has officially launched the basic norms of internal control compliance program (hereinafter referred to
as the "Internal Control Project "). During the reporting period, the Company has hired Grant Thornton Public
Accountants Co., Ltd (special general partner) to independently audit the company's internal controls. During the
reporting period, the Company has established internal control for the business and issues that are incorporated
80
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
into the evaluation scope. The internal control has been implemented effectively to achieve the objectives. There
are no major defects. Since the base date for the internal control evaluation report till the publishing of the internal
control evaluation report, no major changes of the internal control that significantly affects the evaluation
conclusions occurred.
During the reporting period, the Company has organized the directors, supervisors, and senior management
personnel to attend the "Shenzhen Second Insider Trading Alerts Education Fair" organized by Shenzhen
Securities Regulatory Bureau on November 7, 2014. The staffs learned the laws and regulations against the insider
trading and the related cases, and clarified specific requirements for preventing insider trading. Based on the
Internal Check Reference Manual for Listed Company released on August 22, 2014 by Shenzhen Securities
Regulatory Bureau, the Company positively perfected the internal control check system and reviewed and
organized the internal control system. The Company fully promoted and fulfilled special works under the spirit of
Shenzhen Securities Regulatory Bureau, to effectively protect the legitimate rights and interests of investors. By
means of the above works, the Company has improved the normative consciousness.
(2) Implementation of the insider information and insider management system
According to the requirements of China Securities Regulatory Commission and Shenzhen Securities Regulatory
Bureau, the seventh meeting of the Fifth Board of Directors, held on October 28, 2009, approved the Insider
Information and Insider Management System of Shenzhen SEG Co., Ltd. For details, refer to the notice
released on http://www.cninfo.com.cn on October 30, 2009. During the reporting period, the Company controls
the scope of insiders in strict accordance with the Insider Information and Insider Management System, and
registers the insiders and their personal information in a timely manner. In this year, issues in which insiders use
internal information to trade the company's shares before the Company releases major sensitive information that
affects the stock price did not occur, or the issues in which improper implementation of the insider registration
regulations or suspicious insider information trading were punished by the supervisory department with
supervision measures occurred.
During the reporting period, the directors, supervisors and senior management personnel did not illegally trade the
Company‘s stock.
II. Annual meeting of shareholders and interim meeting of shareholders held in the reporting
period
1. Annual meeting of shareholders in the reporting period
Resolution Disclosure
Meeting No. Date Resolution name Disclosure index
status date
11. 2013 Work Report of the Board
of Directors; 2. 2013 Work Report
of the Board of Supervisors; 3. Final
The 19th Account Report 2013 of the All
Meeting of Company; 4. Annual Budget Report resolutions April 12, http://www.cninf
April 11, 2014 2014 of the Company; 5. Plan on
Shareholders were 2014 o.com.cn
(2013) Profit Distribution and Transfer of approved.
Capital reserve into Share Capital in
2013; 6. 2013 Annual Report and
Report Summary of the Company;
7. Proposal on Auditor Engagement
81
Full text of 2014 Annual Report of Shenzhen SEG Co., Ltd.
for the 2014 Annual Report and
Payment of Audit Fee 2014; 8.
Proposal on Engagement of Internal
Control Auditor for the 2014 Annual
Report and Payment of Internal
Control Audit Fee; 9. The
Resolution on Requesting the
General Meeting of Shareholders to
Amend the Proposal on
Procurement of Investment Products
with Self-owned Idle Funds of the
Company approved in the Second
Extraordinary General Meeting in
2013; 10. The Proposal on Applying
for General Credit Limit of RMB 1.3
Billion Yuan From Agricultural
Bank of China.
2. Interim meeting of shareholders held in the reporting period
Resolution Disclosure Disclosure
Meeting No. Date Resolution name
status date index
First Interim
Proposal for plot maturation
Meeting of All resolutions April 24, http://www.cn
April 23, 2014 and project construction of
Shareholders in were approved. 2014 info.com.cn
Yantai SEG Times Square
2014
1. Proposal for investing into
the public land auction and
project construction of Xi'an
SEG Times Square; 2. Proposal
Second Interim
for revising the Articles of
Meeting of All resolutions http://www.cn
July 21, 2014 Association; 3. Proposal for July 22, 2014
Shareholders in were approved. info.com.cn
revising the Rules of Procedure
2014
of Shareholders' Meeting; 4.
Proposal for Procurement of
Investment Products with
Self-owned Idle Funds
1. Proposal for electing
company supervisors; 2.
Third Interim Proposal for revising the
Meeting of Articles of Association; 3. All resolutions August 28, http://www.cn
August 27, 2014
Shareholders in Proposal for revising the Rules were approved. 2014 info.com.cn
2014 of Procedure of the Board of
Supervisors of Shenzhen SEG
Co., Ltd.
Fourth Interim Proposal about Offering
Meeting of December 23, Shenzhen SEG E-Commerce All resolutions December 24, http://www.cn
Shareholders in 2014 Co., Ltd. with 60 Million Yuan were approved. 2014 info.com.cn
2014 Financial Assistance
3. Preferred shareholders with voting rights restored requesting for holding Interim Meeting of
Shareholders
□ Applicable √ Not applicable
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III. Performance of independent directors in the reporting period
1. Attendance of independent directors in meetings of the Board of Directors and the general meeting of
shareholders
Attendance of independent directors in meetings of the Board of Directors of the Company
Failure to
Number of
attend the
Name of meetings to be Times of Attendances Times of
Times of meeting in
independent attended in the personal through entrusted
absence person in two
director reporting presence communication presence
consecutive
period
times
Zhou Hanjun 17 4 13 0 0 No
Li Luoli 17 3 13 1 0 No
Song Pingping 17 4 13 0 0 No
Times for independent directors to
attend the general meeting of 5
shareholders
Reasons for failure to attend the meeting in person in two consecutive times
2. Objections raised by independent directors against relevant matters of the Company
Whether independent directors raised objections against relevant matters of the Company
□ Yes √ No
The independent directors did not raise any objection against relevant matters of the Company in the reporting
period.
3. Other descriptions about the performance of independent directors
Whether the independent directors accepted proposals of the Company
√ Yes □ No
Description about independent directors accepting or rejecting proposals of the Company
During the reporting period, independent directors fully exercise the powers conferred by the Articles of
Association. With their professional expertise, they work with a reasonable caution and diligence attitude to
promote scientific decision-making and related procedures and to protect overall interests of the Company,
especially legitimate rights and interests of minority shareholders.
1) The independent directors participate in board meetings in a timely manner and actively fulfill duties of
independent directors. The independent directors have carried out in-depth understanding and careful study on
various proposals made by the Board of Directors. The independent directors actively participate in the
discussions and put forward reasonable proposals. Besides general duties of directors, the independent directors at
the same time always concern about the significant events occurring, independently perform duties beyond the
influence from the Company's controlling shareholder, actual controller or units or personals having stake in the
Company's decision-making. The independent directors review the related transactions, external guarantees,
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internal control self-assessment and other important matters in an objective and careful manner. They issue
separate opinions and fulfill the supervision duties.
2) The independent directors actively participate in the work of the Professional Committee of the Board of
Directors. The independent directors also have positions in the Strategic Development Committee, the Audit
Committee, and Remuneration Committee of the Board of Directors. The independent directors are actively
involved in the daily work of the professional committee to provide professional advice and suggestions in terms
of the Company's development plans, feasibility of major projects, and issuance of short-term financing bonds, in
accordance with the Working Rules of the professional committee. The independent directors support the Board
of Directors to make scientific and prudent decisions.
3) The independent directors focus on the Company's internal control system construction. The independent
directors communicate with the management and personnel in related departments regarding to the construction
and evaluation of the internal control system for multiple times, and provide professional suggestions based on
their experience. They play a supervisory role of independent directors to oversee and promote the company
continue to improve corporate governance structure, establish a sound internal control system, continue to carry
out activities to improve the company's standardized operation.
4) The independent directors in-depth understand the Company's situation. In 2014, the independent directors
have paid on-site visits to the Company and the investment companies, to understand the Company's daily
operations and project construction in a deeply manner. Meanwhile, the independent directors are in close contact
with other directors, senior management personnel, and other related staff by phone calls and emails, so as to learn
the impacts caused by external environment and market changes on the Company and the progress of the
Company's major issues in a timely manner. In addition, the independent directors continue to focus on
information disclosure, and effectively monitor and verify information disclosure. In this manner, the independent
directors ensure that a timely and fair disclosure of corporate information, so that the public shareholders can keep
abreast of the latest development of the company.
Proposals raised by independent directors and the adoption of proposals
Adoption
Proposal raised by Proposal content Form
status
Zhou Hanjun, Song Pingping, Li Proposal for developing the electronics market using
Oral Adopted
Luoli the Company's self-built property
Zhou Hanjun, Song Pingping, Li
Proposal for business transformation and upgrading Oral Adopted
Luoli
Proposal for improving the company internal control
Zhou Hanjun, Song Pingping, Li
system and working out a comprehensive risk Oral Adopted
Luoli
management program
Proposal for available capital works
Song Pingping, Zhou Hanjun Proposal for increased focus on new investment Oral Adopted
patterns and the development of emerging industries
Proposal for the company organizational restructuring
Zhou Hanjun, Li Luoli Oral Adopted
and establishment of department assessment indicators
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Proposal for strengthening the building of enterprise
Li Luoli, Song Pingping Oral Adopted
culture and improving staff cohesion
IV. Performance of duties by special committees of the Board of Directors
During the reporting period, the Audit Committee, Remuneration Committee, and Strategic Development
Committee under the Board of Directors fully play their duties in a serious way according to the powers and
duties conferred by the Code of Corporate Governance for Listed Companies in China, Articles of Association,
and Rules of Procedure of the Board of Directors.
1. Performance of duties by the Audit Committee of the Board of Directors
In accordance with the requirements of the Working Rules of the Audit Committee of Shenzhen SEG Co., Ltd and
the Working Procedures of the Audit Committee of Shenzhen SEG Co., Ltd for the Annual Report, the Audit
Committee, in the reporting period, performed its duty in a serious way, implemented supervision and inspection
on the establishment and improvement of the internal control system of the Company and a comprehensive
inspection on the annual financial auditing.
1) The review opinion of the Audit Committee on the 2014 Financial Statements of the Company.
In the reporting period, the Audit Committee reviewed the annual financial statements and issued opinions for
twice in accordance with relevant provisions of CSRC.
(1) Before the entrance of the certified public accountant for annual auditing, the Audit Committee reviewed the
financial statements to be audited and issued the first opinion in writing. The Audit Committee believed that the
Company formulated reasonable accounting policies and appropriate accounting estimates in accordance with
relevant requirements of the new accounting standard and based on the actual conditions of the Company; the
financial statements prepared by the Company truthfully reflected the financial status of the Company as of
December, 2014 and the operating results and cash flow of the Company in 2013. The Committee approved the
use of these financial statements as the basis for implementation of the audit work for 2013.
(2) After the completing of the first draft by the CPA, the Audit Committee read the draft in time and
communicated with the CPA. There was no dispute on the important issues mentioned by the 2014 Financial
Statements between the Committee and the CPA. The financial statements comply with the provisions of the
Accounting Standard for Business Enterprises and relevant laws and regulations. The Audit Committee approved
the use of these financial statements as the basis for the preparation of the 2014 Annual Report and Report
Summary.
2) Supervision on and impelling over the audit work of the accounting firm
After consultation with Beijing Da Hua Certified Public Accountants Co., Ltd, the auditing institution of 2014, the
arrangement for the 2014 auditing was decided by the Company in December 2014, which was reported to the
Audit Committee in time. After communication with the auditing institution, the Audit Committee believed that
the Company had made preparations in advance based on the actual situation and its time arrangement for the
annual auditing was appropriate. The Audit Committee approved the annual audit plan formulated by the auditing
institution. After the entrance of the auditing institution, the Audit Committee communicated with the relevant
personnel including the main responsible person of the project, the CPA whose signature was provided, got
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known about the progress of the audit and the issues concerned about by the CPA, and reported the progress and
the issues to relevant department of the Company in time.
3) The work summary of the Audit Committee for the 2014 auditing conducted by Beijing Da Hua Certified
Public Accountants Co., Ltd.
In order to implement a timely, accurate, true and complete auditing on the annual financial status of the Company,
the accounting institution had implemented initial investigations and arranged the pre-audit in December 2014,
and made technical preparations for adjustments to various accounting items in advance in accordance with
requirements of the Accounting Standard.
During the annual audit, the Audit Committee communicated with the CPA and reviewed the first draft of the
annual report. The Audit Committee believed that the CPA could perform his duty in strict accordance with
auditing laws, regulations and principles, focused on understanding the Company and its operating environment,
understood the establishment, improvement and implementation of the internal control system of the Company,
had a strong awareness of risks, and could finish the audit work in time in accordance with the arranged schedule.
The Audit Committee believed that the CPA was independent and discreet, well finished the auditing on the
Financial Statements of the Company for the Year 2014, and issued a true, objective and fair audit report.
4) The Audit Committee implemented supervision and inspection on the establishment and improvement of
the internal control system and the defect rectification status, and listened to the report about the establishment
of the internal control standardization system.
5) Three meetings were held in the reporting period by the Audit Committee of the Board of Directors and the
details were as follows:
(1) The Audit Committee of the Company held the first meeting of 2014 on March 9, 2014 in way of
communication. The meeting reviewed and approved the Opinions on the Company's 2013 Annual Financial
Report of the Audit Committee, the work summary the 2013 annual auditing conducted by Beijing Da Hua
Certified Public Accountants Co., Ltd, Proposal on Auditor Engagement for the 2014 Annual Report and Payment
of Audit Fee, and Proposal on Engagement of Internal Control Auditor for the 2014 Internal Control and Payment
of Internal Control Audit Fee.
(2) The Audit Committee of the Company held the second meeting of 2014 on July 21, 2014 in way of
communication. The meeting reviewed and approved the Comprehensive Risk Management Approach and
Internal Control Deficiencies Identification Criteria.
(3) The Audit Committee of the Company held the third meeting of 2014 on December 23, 2014 in the conference
room of the Company. The meeting reviewed and approved the Shenzhen SEG Communication Co., Ltd. 2014
Annual Audit Work Plan and Communication Report of the Audit Committee.
2. Performance of duties by the Wage and Assessment Committee of the Board of Directors
The opinion of the Remuneration Committee on the disclosed remuneration of the Directors, Supervisors and
Senior Executives of the Company: Managing Director and Chief Financial Officer Liu Zhijun, Director and Vice
General Manager and Secretary of the Board Zheng Dan, Director and Vice General Manager Zhu Longqing,
Supervisor Tian Jiliang and Supervisor Ying Huadong only received the wages corresponding to their respective
administrative posts; Independent Directors Zhou Hanjun, Li Luoli, and Song Pingping received allowances for
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independent directors; other directors and supervisors did not receive wages from the Company. The Company
had not implemented the non-independent director and supervisor remuneration system yet.
Two meetings were held in the reporting period by the Remuneration Committee of the Board of Directors and the
details were as follows:
1) The Remuneration Committee of the Company held the first meeting of 2014 on February 25, 2014 in way of
communication. The meeting reviewed and approved the Shenzhen SEG Co., Ltd. Proposal for the Company's
Organization Restructuring.
2) The Remuneration Committee of the Company held the second meeting of 2014 on December 23, 2014 in the
conference room of the Company. The meeting reviewed and approved the Shenzhen SEG Co., Ltd. Report on
the Development of Innovative Employees.
3. Performance of duties by the Development Strategy Committee of the Board of Directors
Two meetings were held in the reporting period by the Development Strategy Committee of the Board of
Directors and the details were as follows:
1) The Development Strategy Committee of the Company held the first meeting of 2014 on December 23, 2014 in
the conference room of the Company. The meeting reviewed and approved the Shenzhen SEG Co., Ltd.
Evaluation Report on the 12th Five-Year Strategic Plan in the Electronics Market.
2) The Development Strategy Committee of the Company held the second meeting of 2014 on December 31,
2014 in way of communication. The meeting reviewed and approved the Company Annual Rolling Business Plan
2015-2017.
V. Performance of the Board of Supervisors
Whether the Board of Supervisors found any risk in the Company during supervision in the reporting period
□ Yes √ No
The Board of Supervisors raised no objections against the supervised matters in the reporting period.
VI. Description about the Company's independence from controlling shareholders in terms of
business, personnel, asset, organization and finance
1. In the aspect of business, Shenzhen Securities Regulatory Bureau pointed out that "There is an issue of
horizontal competition in the business of electronics markets between the Company and SEG Group" during the
spot inspection in 2007; the Company received the Letter of Commitment in writing from SEG Group on
September14, 2007, which said that "SEG Group and Shenzhen SEG Co., Ltd. have similar business in electronics
markets in Shenzhen (Shenzhen SEG) due to historic reasons and the objective background of market
development; our Group hereby promises that we will not individually operate a market in a same city whose
business is similar with that of Shenzhen SEG. The aforesaid matter was disclosed on the Securities Times, the
China Securities Journal and the Hong Kong Wen Wei Po and the Cninfo Website on September 18, 2007. In
order to solve the issue of horizontal competition between the Company and its controlling shareholder, SEG
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Group, due to historical reasons, the 6th temporary meeting of the 5th Board of Directors held on January 26, 2011
reviewed and approved the Proposal of Solving the Horizontal Competition between the Company and Its
Controlling Shareholder. After friendly consultation, SEG Group agreed to entrust the Company to operate and
manage with full authority SEG Communications Market under direct management of SEG Group. Therefore, the
two parties have signed the entrustment operation and management contract:
1) SEG Group has the ownership and the right to gains of SEG Communication Market and assumes all creditor's
rights and liabilities occurring during the operation of SEG Communications Market. (2) The management
representative from the Company shall operate and management SEG Communications Market during the period
of entrustment operation and management, who has a sufficient authority in operation and management of SEG
Communications Market. (3) In accordance with the provisions of the Company on entrustment management of
the electronics market and with full consideration to the maturity of the entrusted market and whether the market
is located in a primary business area, the Company shall collect from SEG Group the management fee and profit
fee as follows based on the market sound value: the total income of SEG Communications Market in 2010, RMB
20 million Yuan, shall be regarded as the base number; the Company shall collect a management fee of RMB
200,000 Yuan should the total income of the market in the current year is equal to or less than RMB 20 million
Yuan; the Company shall take 20% from the part beyond the base number apart from the management fee that is
RMB 200,000 Yuan should the total income in the current year exceeds RMB 20 million Yuan. The detailed
information about the above-mentioned matter may be referred to in the Public Notice on Shenzhen SEG Co., Ltd
on the Related Transaction for the Purpose of Solving the Issue of Horizontal Competition between the Company
and the Controlling Shareholder that was disclosed on the China Securities Journal, the Securities Times, the
Hong Kong Commercial Daily and the Cninfo Website on January 28, 2011. Till the date of disclosure of this
report, the Company had received the timely payment of the management fee of 2011 to 2014, RMB 200,000
Yuan, from SEG Group. Therefore, there is no longer the issue of horizontal competition between the Company
and SEG Group.
2. In respect of personnel, the Company's Senior Executives including General Manager, Vice General Manager
and Secretary of the Board of Directors take full-time posts; they receive wages from the Company and do not
take concurrent posts in the Company's first majority shareholder enterprise; the Company has a complete
management system for labor, human resources and wages, which can keep the independence of the personnel.
3. In respect of assets, at the beginning of the Company's establishment, the equity of the eight enterprises
separated from SEG Group to the Company was already audited and evaluated by domestic and overseas
accounting firms, which was acknowledged by the state-owned assets management departments of the state and
Shenzhen Municipality. The controlling shareholder of the eight enterprises was changed from SEG Group to the
Company, which was registered at the Industrial and Commercial Administration. The Company independently
makes registration, establishes accounts, and implements accounting and management so as to maintain the
completeness and independence of the assets. According to the Article Five of the Equity Transfer Agreement
signed by the Company with SEG Group when the Company was listed, SEG Group agreed that the Company and
its subsidiaries and associated companies to use the eight trademarks registered by SEG Group at the National
Trademark Bureau; SEG Group agreed that the Company used the aforesaid trademarks or similar signs as the
Company's logo and used the trademarks and signs during its operation; the Company needn't pay any fee to SEG
Group for using the aforesaid trademarks or signs.
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4. In respect of organization, the Company can set up organizations and arrange corresponding personnel fully in
accordance with its own demand of operation and management; its production and administrative departments are
totally independent from the majority shareholder.
5. In respect of finance, as a legal entity that implements independent operation and accounting and assumes sole
responsibility for its profits and losses, the Company has set up an independent financial and auditing department,
an independent accounting system and an financial management system, has its independent bank account, pays
taxes independently according to law, and keeps absolute independence in its financial work.
VII. Horizontal competition
□ Applicable √ Not applicable
VIII. Assessment and incentive system for senior executives
Performance management principles for senior management personnel
1) Target management principles: In accordance with the annual business objectives and business management
requirements, the performance of senior management personnel is managed based on the objectives.
2) Classified assessment principles: Based on the industry characteristics of the industry, the performance is
assessed based on classification.
3) Incentive and restraint combined principles: Based on the completion of annual objectives, incentives or
punishment on the senior management personnel are implemented in a combination way.
Chapter 10 Internal Control
I. Establishment of the Internal Control System
In 2014, on the basis of the internal control system built up in the previous year, the Company closely associates
the risk management and the internal control system. By re-evaluating the changes of major operating risks, the
Company further improves the internal control system, and focuses on the assessment of comprehensive risk
management and internal control system. The internal risk control and evaluation team has completed a
self-evaluation of the organization and its affiliated investment enterprises in 2014. The team members are
required to avoid the evaluation for the respective departments, to ensure the independence of the internal control
evaluation. The Company has established the internal risk control team and completed the risk evaluation. The
Company plans to carry out risk identification and evaluation again in 2015, establish a risk event library, stipulate
risk monitoring and early-warning indicators, work out coping plans, and improve the internal control system.
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1. The present architecture of internal risk control system of the Company
Comprehensive risk control
management and internal
control team
Internal risk control evaluation Internal risk control team
team
Internal risk Internal risk Internal risk
control team of control team of control team of
subsidiary or subsidiary or …… subsidiary or
branch A branch B branch N
Person in charge Person in charge Person in charge Person in charge
of risk control of of risk control of of risk control of of risk control of
the department the department the department …… the department
(Person in charge (Person in charge (Person in charge (Person in charge
of the department) of the department) of the department) of the department)
Risk control Risk control Risk control Risk control
commissioner commissioner commissioner commissioner
(Department (Department (Department …… (Department
backbone) backbone) backbone) backbone)
2. Internal Control Promotion Progress in the Reporting Period
In 2014, the Company has established the internal control systems for the last three units in the fourth batch
according to the annual internal control work plan, namely, Shunde SEG, Wuxi SEG, and Nanning SEG. The
process organizing, testing, and internal control defect rectification are completed. In addition, the Company has
inspected the internal control works of 10 holding subsidiaries in the on-site inspection manner. The inspection
focused on Nantong SEG, Wujiang SEG, Shunde SEG, Wuxi SEG, and Nanning SEG. The internal risk control
team has completed the self-evaluation of the internal control system for the Company and the investment
enterprise, including the organization of enterprise system process, quantitative sampling tests on certain units,
and rectification of existed internal control defects.
3. External auditors hired for internal control in 2014
The Company has hired Beijing Da Hua Certified Public Accountants Co., Ltd (special general partner) to audit
the company's internal controls. No major internal control defects are found during the auditing. For several
general defects, the Company has required the internal risk control team to complete the rectification.
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II. Statement of the Board of Directors on Internal Control Responsibilities
The Board of Directors and all shareholders of the Company 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 authenticity, accuracy and completeness of the report.
Establishing a sound internal control system and implementing effective internal control are the responsibilities of
the Board of Directors. The Board of Supervisors shall supervise internal control implementation of the Board of
Directors. The management shall organize and lead internal control in daily work.
The internal control objectives of the Company are: to guarantee business compliance with laws and regulations,
protect assets safety, ensure the authenticity and integrity of financial statements and relevant information,
improve operation efficiency and effect, and promote implementation of development strategies. Due to its
inherent limits, internal control can provide proper guarantee only for the objectives above.
III. Basis for Establishing an Internal Control System for Financial Statements
On the basis of daily and special supervision of internal control, the Company aims to assess the effectiveness of
design and operation of the internal control system by the end of 31.12.14, in accordance with The Basic Standard
for Enterprise Internal Control and The Guidelines for Enterprise Internal Control Assessment formulated by the
Ministry of Finance together with relevant government authorities, and Internal Control Application Manual for Internal
Control System Building of Shenzhen SEG Co., Ltd. and Internal Control Assessment Manual for Internal Control System
Building of Shenzhen SEG Co., Ltd.
IV. Internal Control Assessment Report
Information about the major defects discovered in the reporting period in the internal control assessment report
No major defect in internal control was discovered in the reporting period.
Disclosure date of the internal
March 28, 2015
control evaluation report
Index of the internal control
http://www.cninfo.com.cn
evaluation report
V. Internal Control Audit Report
Opinion paragraph in the internal control audit report
The Beijing Da Hua Certified Public Accountants Co., Ltd considers that: On December 31, 2014, Shenzhen SEG
Co., Ltd has implemented effective internal control for the financial reports in all major aspects according to the
Basic Standard for Enterprise Internal Control and relevant provisions.
Disclosure date of the internal
March 28, 2015
control audit report
Disclosure index of the internal
http://www.cninfo.com.cn
control audit report
Note: The disclosure index can include the number and name of the disclosed announcement and the website on
which the announcement has been disclosed.
Does the accounting firm provide the internal control audit report with a modified opinion?
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□ Yes √ No
Is the internal control audit report issued by the accounting firm consistent with the self-assessment report
provided by the Board of Directors?
√ Yes □ No
VI. Establishment and Execution of the Accountability System for Major Errors in Annual
Report Information Disclosure
According to the requirements of China Securities Regulatory Commission, Shenzhen Stock Exchange and other
regulatory authorities, the Company has stipulated the Shenzhen SEG Co., Ltd. Accountability System for Major
Errors in Disclosed Annual Report Information, which was approved by the 15th meeting of the 4th Board of
Directors on April 20, 2010, and implements the accountability system for major errors in the disclosed periodic
report information.
During the reporting period, the Company did not encounter the issues such as correction of major accounting
errors, supplement of serious information omissions, and correction of performance forecast. No major errors
related to the disclosure of periodic reports occurred.
Chapter 11 Financial Report
I. Audit report
Audit opinion type Standard unqualified audit opinion
Signing date of audit report March 26. 2015
Name of auditing institution Da Hua CPA Co., Ltd. (special general partnership)
Name of the certified public accountant Yang Xi and Xin Junliang
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Shenzhen SEG Co., Ltd.
Audit Report and Financial Statements
(From January 1, 2014to December 31, 2014)
CONTENTS
Ⅰ Audit Report
Ⅱ Audited Financial Statements
Consolidated Balance Sheet
Consolidated Profit Statement
Consolidated Cash Flow Statement
Consolidated Statement on Changes of Owner's Equity
Balance Sheet of the Parent Company
Profit Statement of the Parent Company
Cash Flow Statement of the Parent Company
Statement on Changes of Owners' Equity of the Parent
Company
Notes to the Financial Statements
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I Auditor's Report
DA HUA SHEN ZI [2015] No. 3793
To: All shareholders of Shenzhen SEG Co., Ltd.,
We have audited the accompanying financial statements of Shenzhen SEG Co., Ltd.
(hereinafter referred to as "SEG Company"), which comprise the Consolidated
Balance Sheet and the Balance Sheet of the Parent Company as on December 31,
2014, and the Consolidated Income Statement, the Income Statement of the Parent
Company, the Consolidated Statement of Cash Flows, the Statement of Cash Flows
of the Parent Company, the Consolidated Statement of Changes in Owners' Equity,
the Statement of Changes in Owners' Equity of the Parent Company for the year then
ended, and the Notes to Financial Statements.
1. Responsibilities of the management for financial statements
The Management of SEG Company is responsible for the preparation and fair
presentation of these financial statements. This responsibility includes: (1) preparing
the financial statements in accordance with the provisions of Accounting Standards
for Business Enterprises to achieve a fair presentation; (2) designing, implementing
and maintaining internal control that is necessary to ensure that the financial
statements are free from material misstatements, whether due to fraud or error..
2. Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on out
audit. We conducted our audit in accordance with Auditing Standards for Certified
Public Accountants in China. Those standards require that we comply with
professional and ethical requirements of Chinese certified public accountants, and
plan and perform the audit to obtain reasonable assurance as to whether the financial
statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The selection of the auditing procedure
depends on the judgment of the CPA, including the estimation of the risks on material
misstatements in the financial statements resulted from fraud and malpractice or
mistakes and errors. We took into account the internal control related to the
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preparation and fair presentation of the financial statements so as to design an
appropriate auditing procedure. The audit also comprises assessing the
appropriateness of the accounting policies used and the reasonableness of the
accounting estimates made by the management, as well as evaluating the overall
presentation of the financial statements.
We believe that we have obtained sufficient and appropriate auditing evidences to
provide a reasonable basis for the issuance of auditing opinions.
3. Auditor's opinion
We believe that the Financial Statements of SEG Company have been prepared in
accordance with the provisions of the Accounting Standard for Business Enterprises
in all major aspects, which fairly reflect the consolidated and the parent company's
financial position as on December 31, 2014, and the consolidated and the parent
company's operating results and cash flows for the year then ended.
Da Hua CPA Co., Ltd. (special general
Chinese Certified Public Accountant
partnership)
Beijing, China Chinese Certified Public Accountant
March 26, 2015
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II. Financial Statements
1. Consolidated balance sheet Dec. 31, 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit: RMB Yuan
Assets See Note 6 Closing Balance Opening Balance
Current assets:
Monetary capital Note 1 383,056,680.70 336,593,493.81
Financial assets measured at fair value and with changes included into
current profit and loss
Derivative financial assets
Loans to banks and other financial institutions Note 2 30,000,000.00
Notes receivable Note 3 84,618.08
Account receivable Note 4 185,866,040.16 204,086,309.32
Advance payment Note 5 94,633,317.07 74,002,910.35
Interest receivable -
Dividends receivable
Other receivables Note 6 95,366,156.27 25,033,354.72
Stock Note 7 278,281,586.72 98,000,921.50
Assets on hand for sale
Non-current assets maturing within a year
Other current assets Note 8 443,543,013.49 419,925,176.02
Subtotal of current assets 1,510,831,412.49 1,157,642,165.72
Non-current assets:
Loan and cash advance Note 9 452,517,072.06 243,871,438.72
Financial assets available for sale Note 10 34,350,035.45 34,357,924.24
Held-to-maturity investments
Long-term receivables
Long-term equity investment Note 11 82,100,197.01 112,102,810.03
Investment property Note 12 462,562,882.78 481,517,481.83
Fixed assets Note 13 41,408,298.43 41,876,654.83
Projects under construction
Project material
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets Note 14 655,587.54 886,901.46
Development expenses
Goodwill Note 15 10,328,927.82 10,328,927.82
Long-term unamortized expenses Note 16 49,768,678.00 44,178,804.04
Deferred income tax assets Note 17 10,539,563.16 8,177,489.16
Other non-current assets Note 18 4,655,063.54
Subtotal of non-current assets 1,148,886,305.79 977,298,432.13
Total assets 2,659,717,718.28 2,134,940,597.85
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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Consolidated balance sheet（continued）Dec. 31, 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit: RMB
Yuan
Liabilities and shareholders' equity See Note 6 Closing Balance Opening Balance
Current liabilities
Short-term loans Note 19 189,246,687.38 70,000,000.00
Financial liabilities measured at fair value and with changes included
into current profit and loss
Derivative financial liabilities
Notes payable
Account payable Note 20 200,129,651.92 181,751,142.48
Account collected in advance Note 21 183,059,311.31 208,684,489.90
Employee compensation payable Note 22 18,858,843.33 17,065,382.28
Taxes and levies payable Note 23 39,445,696.47 37,164,892.21
Interests payable Note 24 10,295,250.65
Dividends payable Note 25 1,717,882.74 1,317,296.42
Other payables Note 26 244,804,403.06 164,189,818.81
Liabilities on hand for sale
Non-current liabilities maturing within a year
Other current liabilities Note 27 250,000,000.00
Subtotal of current liabilities 1,137,557,726.86 680,173,022.10
Non-current liabilities
Long-term loans
Bonds payable
Including: preferred stock
Perpetual capital securities
Long-term payables
Long-term employee compensations payable
Special accounts payable
Anticipated liabilities
Deferred income Note 28 9,705,371.01 762,246.19
Deferred income tax liabilities Note 17 17,085,543.80 18,196,441.90
Other non-current liabilities
Subtotal of non-current liabilities 26,790,914.81 18,958,688.09
Total liabilities 1,164,348,641.67 699,131,710.19
Shareholders' equity
Equity capital Note 29 784,799,010.00 784,799,010.00
Other equity instruments
Including: preferred stocks
Perpetual capital securities
Capital reserve Note 30 404,727,257.72 404,357,267.73
Minus: treasury stock
Other comprehensive income Note 31 231,817.05 235,756.32
Special reserves
Surplus reserves Note 32 102,912,835.67 102,912,835.67
Undistributed profits Note 33 6,299,799.41 -42,080,494.64
Subtotal of shareholders' equity attributable to shareholders of the
1,298,970,719.85 1,250,224,375.08
parent company
Minority shareholders' equity 196,398,356.76 185,584,512.58
Subtotal of shareholders' equity 1,495,369,076.61 1,435,808,887.66
Total of liabilities and shareholders' equity 2,659,717,718.28 2,134,940,597.85
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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2. Consolidated profit statement The Year 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit: RMB Yuan
Item See Note 6 Current period Previous period
I. Total operation income 752,414,741.06 640,435,067.17
Including: operation income Note 34 681,343,920.99 597,358,257.82
Interest income 61,496,910.07 40,429,967.84
Fee and commission income 9,573,910.00 2,646,841.51
II. Total operation costs 649,917,541.74 550,540,401.81
Including: operation cost Note 34 560,944,457.78 486,411,185.75
Interest cost 3,344,972.23 1,714,995.54
Business tax and surcharges Note 35 26,612,635.13 23,667,538.69
Sales expense 2,149,313.48 3,630,236.75
Management expense 45,406,128.22 46,740,709.39
Financial expense Note 36 9,168,643.60 -10,488,089.69
Assets impairment loss Note 37 2,291,391.30 -1,136,174.62
Plus: revenue change measured at fair value
Returns on investments Note 38 7,204,943.01 13,077,808.59
Including: returns from investments in associated and joint
-24,010,440.06 -3,857,446.81
ventures
III. Operation profits 109,702,142.33 102,972,473.95
Plus: non-operating income Note 39 3,135,256.00 2,526,306.70
Including: gains from non-current assets disposal 21,274.83 44,307.25
Minus: non-operating expenses Note 40 1,075,753.92 246,074.21
Including: losses from non-current assets disposal 14,799.49 94,416.29
IV. Total profits 111,761,644.41 105,252,706.44
Minus: income tax expense Note 41 33,087,414.03 32,453,760.89
V. Net profits 78,674,230.38 72,798,945.55
Net profit attributable to owners of the parent company 48,380,294.05 54,338,735.35
Minority interest income 30,293,936.33 18,460,210.20
VI. Post-tax net value of other comprehensive income -5,916.59 -66,903.01
Post-tax net value of other comprehensive income attributable to
-3,939.27 -44,544.02
owners of the parent company
(I) Other comprehensive income that can't be reclassified into
- -
profit and loss
1. Change of net liabilities or net assets after recalculating
defined benefit plan.
2. Shares of other comprehensive incomes that cannot be
reclassified into profit and loss and are attributable to the
investment enterprise according to equity method.
(II) Other comprehensive income that can be reclassified into
-3,939.27 -44,544.02
profit and loss
1. Shares of other comprehensive income that will be reclassified
into profit and loss and are attributable to the investment
enterprise according to equity method
2. Change of financial assets available for sale measured at fair
-3,939.27 -44,544.02
value
3. Held-to-maturity investment reclassified as available for sale
financial assets
4. Valid part of cash flow hedging gains and losses
5. Foreign currency conversion difference in financial statement
6. Investment returns from package disposal of subsidiary's equity
investment before losing control right
Post-tax net value of other comprehensive income attributable to
-1,977.32 -22,358.99
minority shareholders
VII. Total comprehensive income 78,668,313.79 72,732,042.54
Total comprehensive income attributable to owners of the parent
48,376,354.78 54,551,428.83
company
Total comprehensive income attributable to minority shareholders 30,291,959.01 18,180,613.71
VIII. Earnings per share
(I) Basic earning per share 0.06 0.07
(II) Diluted earning per share 0.06 0.07
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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3. Consolidated cash flow statement The Year 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit:
RMB Yuan
Item See Note 6 Current period Previous period
I. Cash flow generated by operation activities
Cash generated by goods sales and service delivery 1,939,331,584.78 935,318,635.23
Cash in the forms of interest, fee and commission 72,018,080.07 41,726,001.54
Refunds of taxes and levies 89,775,871.83
Other cash related to operation activities Note 42 338,008,186.19 386,684,123.32
Subtotal of cash inflow from operation activities 2,439,133,722.87 1,363,728,760.09
Cash paid for goods and service delivered 1,992,374,811.35 790,633,172.09
Net decrease by lending to other financial institutions 30,000,000.00
Net increase of clients' loans and advance payments 210,971,045.00 109,688,255.66
Cash paid for interests, fees and commissions 3,287,222.24 1,714,995.54
Cash paid to and for the employees 95,611,490.67 79,999,122.52
Various taxes and levies paid 141,705,938.09 122,678,895.52
Other cash paid for operation activities Note 42 393,116,836.46 381,544,865.46
Subtotal of cash outflow from operation activities 2,867,067,343.81 1,486,259,306.79
Net cash flow generated by operation activities -427,933,620.94 -122,530,546.70
II. Cash flow generated by investment activities
Cash received by recouping the capital outlay 3,950,900,000.00 2,236,986,402.78
Cash received from returns on investments 37,207,556.03 18,559,032.46
Net cash received from the disposal of fixed assets, intangible
25,300.00 44,707.25
assets and other long term assets;
Net cash received from the disposal of subsidiaries and other - -
Other cash received relating to investment activities Note 42 9,500,000.00 -
Cash inflow from investment activities 3,932,632,856.03 2,255,590,142.49
Cash paid for the purchase and construction of fixed assets,
26,270,729.51 17,651,151.32
intangible assets and other long term assets
Cash payment for investments 3,888,579,000.00 2,295,786,000.00
Net cash paid for the acquisition of subsidiaries and other
Other cash payments relating to investment activities. 2,044,318.82
Cash outflow for investment activities 3,849,849,729.51 2,315,481,470.14
Net cash flow generated by investment activities 82,783,126.52 -59,891,327.65
III. Cash flow from financing activities
Cash received by attracting investments - -
Including: cash received by affiliated companies from absorbing
- -
minority shareholders' investments
Cash received by obtaining loan 355,400,000.00 135,000,000.00
Cash received by issuing bonds 250,000,000.00
Cash received relating to other financing activities. Note 42 72,952,371.12 25,000,000.00
Subtotal of cash inflow from financing activities 678,352,371.12 160,000,000.00
Cash paid for repayment of debts 236,153,312.62 65,000,000.00
Cash paid for distribution of dividends or profits, or cash 29,547,818.85 9,026,919.76
Including: dividends and profits paid by the affiliated companies
19,156,907.18 9,026,919.76
to minority shareholders
Cash payments relating to other financing activities Note 42 21,037,568.50 21,089,863.01
Subtotal of cash outflow for financing activities 286,738,699.97 95,116,782.77
Net cash flow generated by financing activities 391,613,671.15 64,883,217.23
IV. Influence of exchange rate change on cash and cash
10.16 -316.25
equivalents
V. Net increase of cash and cash equivalents 46,463,186.89 -117,538,973.37
Plus: year beginning balance of cash and cash equivalents 335,593,493.81 453,132,467.18
VI. Closing balance of cash and cash equivalents 382,056,680.70 335,593,493.81
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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4. Consolidated statement of changes in owners' equity The Year 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit: RMB Yuan
Item See Amount of current period
Note 6
Shareholders' equity attributable to shareholders of the parent company
Other equity Minus: treasury Other comprehensive Special Minority Total shareholders'
Capital stock Capital reserve Surplus reserve Undistributed profits
instruments stock income reserves shareholders' equity equity
I. Closing balance of previous year 784,799,010.00 404,357,267.73 235,756.32 102,912,835.67 -42,080,494.64 185,584,512.58 1,435,808,887.66
Plus: changes in accounting policies
Preliminary errors correction
Enterprise merger under same parent company
Other
II. Current year opening value 784,799,010.00 404,357,267.73 235,756.32 102,912,835.67 -42,080,494.64 185,584,512.58 1,435,808,887.66
III. Current year increase/decrease change 369,989.99 -3,939.27 48,380,294.05 10,813,844.18 59,560,188.95
(I) Total comprehensive income -3,939.27 48,380,294.05 30,291,959.01 78,668,313.79
(II) Shareholders' investments and capital reduction 67,618.87 79,378.67 146,997.54
1. Common stocks of shareholders
2. Capital investments of other equity instrument holders
3. Amount of stock payment included into shareholder
equity
4. Other 67,618.87 79,378.67 146,997.54
(III) Profit distribution -19,557,493.50 -19,557,493.50
1. Withdrawal of surplus reserve
2. Distribution for the shareholders -19,557,493.50 -19,557,493.50
3. Other
(IV) Shareholder equity internal carrying forward
1. Capital reserve converted into stock capital increase
2. Surplus reserve converted into stock capital increase
3. Surplus reserve to offset losses
4.Change of carrying forward and re-calculating net
liabilities or net assets in defined benefit plan
5. Other
(V) Special reserves
1. Withdrawal in current period
2. Use in current period
(VI) Others 302,371.12 302,371.12
IV. Closing balance of current year 784,799,010.00 404,727,257.72 231,817.05 102,912,835.67 6,299,799.41 196,398,356.76 1,495,369,076.61
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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Consolidated statement of changes in owners' equity (continued) The Year 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit: RMB Yuan
Item Amount of previous period
Shareholders' equity attributable to the parent company
Other equity Minus: Other comprehensive Special Undistributed Minority Total shareholders'
Capital stock Capital reserve Surplus reserve
instruments treasury stock income reserves profits shareholders' equity equity
I. Closing balance of previous year 784,799,010.00 404,100,030.23 280,300.34 102,912,835.67 -96,419,229.99 176,705,783.81 1,372,378,730.06
Plus: changes in accounting policies
Preliminary errors correction
Enterprise merger under same parent company
Other
II. Current year opening value 784,799,010.00 404,100,030.23 280,300.34 102,912,835.67 -96,419,229.99 176,705,783.81 1,372,378,730.06
III. Current year increase/decrease change 257,237.50 -44,544.02 54,338,735.35 8,878,728.77 63,430,157.60
(I) Total comprehensive income -44,544.02 54,338,735.35 18,437,851.21 72,732,042.54
(II) Shareholders' investments and capital reduction 257,237.50 -489,722.44 -232,484.94
1. Common stocks of shareholders
2. Capital investments of other equity instrument
3. Amount of stock payment included into
shareholder equity
4. Other 257,237.50 -489,722.44 -232,484.94
(III) Profit distribution -9,069,400.00 -9,069,400.00
1. Withdrawal of surplus reserve
2. Distribution for the shareholders -9,069,400.00 -9,069,400.00
3. Other
(IV) Shareholder equity internal carrying forward
1. Capital reserve converted into stock capital
2. Surplus reserve converted into stock capital
3. Surplus reserve to offset losses
4.Change of carrying forward and re-calculating net
liabilities or net assets in defined benefit plan
5. Other
(V) Special reserves
1. Withdrawal in current period
2. Use in current period
(VI) Others
IV. Closing balance of current year 784,799,010.00 404,357,267.73 235,756.32 102,912,835.67 -42,080,494.64 185,584,512.58 1,435,808,887.66
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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5. Balance Sheet of the Parent Company Dec. 31, 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit:
RMB Yuan
Assets See Note 14 Closing Balance Opening Balance
Current assets:
Monetary capital 204,395,253.65 173,141,378.64
Financial assets measured at fair value and with
changes included into current profit and loss
Derivative financial assets
Notes receivable
Account receivable Note 1
Advance payment - 142,310.00
Interest receivable 897,225.78
Dividends receivable
Other receivables Note 2 410,453,048.03 200,493,973.07
Stock 786,589.00
Assets on hand for sale
Non-current assets maturing within a year
Other current assets 463,590,246.68 301,248,167.86
Subtotal of current assets 1,080,122,363.14 675,025,829.57
Non-current assets:
Financial assets available for sale 33,515,392.83 33,515,392.83
Held-to-maturity investments
Long-term receivables
Long-term equity investment Note 3 382,083,723.25 374,086,336.27
Investment property 294,918,970.98 305,731,220.77
Fixed assets 19,583,422.45 19,959,818.75
Projects under construction
Project material
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 271,067.06 401,813.18
Development expenses
Goodwill
Long-term unamortized expenses 4,589,158.00 4,025,337.44
Deferred income tax assets 8,354,062.87 5,992,016.37
Other non-current assets 1,313,063.54
Subtotal of non-current assets 744,628,860.98 743,711,935.61
Total assets 1,824,751,224.12 1,418,737,765.18
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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Balance Sheet of the Parent Company(continued) Dec. 31, 2014 Prepared by: Shenzhen SEG Co., Ltd.
Unit: RMB Yuan
Liabilities and shareholders' equity See Note 14 Closing Balance Opening Balance
Current liabilities
Short-term loans 100,000,000.00
Financial liabilities measured at fair value and with
changes included into current profit and loss
Derivative financial liabilities
Notes payable
Account payable 1,500.00 375,000.00
Account collected in advance 65,628,441.87 76,806,434.67
Employee compensation payable 9,907,467.00 7,727,646.55
Taxes and levies payable 20,697,003.64 24,258,147.48
Interests payable 10,237,500.66
Dividends payable 119,803.29 119,803.29
Other payables 87,202,387.17 71,183,956.83
Liabilities on hand for sale
Non-current liabilities maturing within a year
Other current liabilities 250,000,000.00
Subtotal of current liabilities 543,794,103.63 180,470,988.82
Non-current liabilities
Long-term loans
Bonds payable
Including: preferred stock
Perpetual capital securities
Long-term payables
Long-term employee compensations payable
Special accounts payable
Anticipated liabilities
Deferred income 9,500,000.00
Deferred income tax liabilities
Other non-current liabilities
Subtotal o f non-current liabilities 9,500,000.00 -
Total liabilities 553,294,103.63 180,470,988.82
Shareholders' equity
Equity capital 784,799,010.00 784,799,010.00
Other equity instruments
Including: preferred stocks
Perpetual capital securities
Capital reserve 405,955,264.44 405,652,893.32
Minus: treasury stock
Other comprehensive income 82,084,912.79 82,084,912.79
Special reserves
Surplus reserves 102,912,835.67 102,912,835.67
Undistributed profits -22,209,989.62 -55,097,962.63
Subtotal of shareholders' equity 1,271,457,120.49 1,238,266,776.36
Total of liabilities and shareholders' equity 1,824,751,224.12 1,418,737,765.18
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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6. Profit Statement of the Parent Company The Year 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit:
RMB Yuan
Item See Note 14 Current period Previous Period
I. Total operation income Note 4 125,724,062.61 125,223,812.70
Minus: operation cost Note 4 76,758,875.18 75,283,936.52
Business tax and surcharges 7,389,606.24 6,996,763.83
Sales expense
Management expense 22,468,321.28 19,946,625.28
Financial expense 7,413,635.27 -16,856,983.54
Assets impairment loss -51,814.00 297,476.00
Plus: revenue change measured at fair value
Returns on investments Note 5 31,358,353.59 25,580,047.21
Including: returns from investments in associated and joint
-24,010,440.06 -3,857,446.81
ventures
II. Operation profits 43,103,792.23 65,136,041.82
Plus: non-operating income 721,464.41 275,392.00
Including: gains from non-current assets disposal 1,975.00
Minus: non-operating expenses 132,950.00 32,822.95
Including: loss from disposal of non-current assets 1,270.00 12,822.95
III. Total profits 43,692,306.64 65,378,610.87
Minus: income tax expense 10,804,333.63 14,363,531.71
IV. Net profit 32,887,973.01 51,015,079.16
V. Post-tax net value of other comprehensive income - -
(I) Other comprehensive income that can't be reclassified
- -
into profit and loss
1. Change of net liabilities or net assets after recalculating
defined benefit plan.
2. Shares of other comprehensive incomes that cannot be
reclassified into profit and loss and are attributable to the
investment enterprise according to equity method.
……
(II) Other comprehensive income that can be reclassified
- -
into profit and loss
1. Shares of other comprehensive income that will be
reclassified into profit and loss and are attributable to the
investment enterprise according to equity method
2. Change of financial assets available for sale measured
at fair value
3. Held-to-maturity investment reclassified as available
for sale financial assets
4. Valid part of cash flow hedging gains and losses
5. Foreign currency conversion difference in financial
statement
6. Investment returns from package disposal of
subsidiary's equity investment before losing control right
……
VI. Total comprehensive income 32,887,973.01 51,015,079.16
VII. Earnings per share
(I) Basic earning per share
(II) Diluted earning per share
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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7. Cash Flow Statement of the Parent Company The Year 2014 Prepared by: Shenzhen SEG Co., Ltd.
Unit: RMB Yuan
Item See Note 14 Current period Previous period
I. Cash flow generated by operation activities
Cash generated by goods sales and service delivery 114,802,727.21 123,434,262.28
Refunds of taxes and levies
Other cash related to operation activities 395,074,870.68 277,120,095.33
Subtotal of cash inflow from operation activities 509,877,597.89 400,554,357.61
Cash paid for goods and service delivered 34,329,122.58 34,813,265.05
Cash paid to and for the employees 37,875,519.23 32,813,599.53
Various taxes and levies paid 98,652,745.40 86,501,019.37
Other cash paid for operation activities 515,490,539.56 336,845,568.35
Subtotal of cash outflow from operation activities 686,347,926.77 490,973,452.30
Net cash flow generated by operation activities -176,470,328.88 -90,419,094.69
II. Cash flow generated by investment activities
Cash received by recouping the capital outlay 3,581,000,000.00 1,760,166,000.00
Cash received from returns on investments 60,463,740.83 30,237,260.02
Net cash received from the disposal of fixed assets, intangible
5,420.00 400.00
assets and other long term assets;
Net cash received from the disposal of subsidiaries and other
business entities
Other cash received relating to investment activities 9,500,000.00
Cash inflow from investment activities 3,650,969,160.83 1,790,403,660.02
Cash paid for the purchase and construction of fixed assets,
3,672,148.03 2,648,110.10
intangible assets and other long term assets
Cash payment for investments 3,782,000,000.00 1,820,686,000.00
Net cash paid for the acquisition of subsidiaries and other
business entities
Other cash payments relating to investment activities.
Cash outflow for investment activities 3,785,672,148.03 1,823,334,110.10
Net cash flow generated by investment activities -134,702,987.20 -32,930,450.08
III. Cash flow from financing activities
Cash received by attracting investments - -
Cash received by obtaining loan 180,000,000.00
Cash received by issuing bonds 250,000,000.00
Cash received relating to other financing activities. 302,371.12
Subtotal of cash inflow from financing activities 430,302,371.12 -
Cash paid for repayment of debts 80,000,000.00
Cash paid for distribution of dividends or profits, or cash
7,132,693.34
payments for interests
Cash payments relating to other financing activities 742,500.00
Subtotal of cash outflow for financing activities 87,875,193.34 -
Net cash flow generated by financing activities 342,427,177.78
IV. Influence of exchange rate change on cash and cash
13.31 -318.01
equivalents
V. Net increase of cash and cash equivalents 31,253,875.01 -123,349,862.78
Plus: year beginning balance of cash and cash equivalents 173,141,378.64 296,491,241.42
VI. Closing balance of cash and cash equivalents 204,395,253.65 173,141,378.64
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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8.Statement on Changes of Owners' Equity of the Parent Company The Year 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit: RMB Yuan
See Note
Item Amount of current period
14
Other equity Minus: treasury Other comprehensive Special Minority shareholders'
Capital stock Capital reserve Surplus reserve Undistributed profits
instruments stock income reserves equity
I. Closing balance of previous year 784,799,010.00 405,652,893.32 102,912,835.67 -55,097,962.63 1,238,266,776.36
Plus: changes in accounting policies
Preliminary errors correction
Other
II. Current year opening value 784,799,010.00 405,652,893.32 102,912,835.67 -55,097,962.63 1,238,266,776.36
III. Current year increase/decrease change 302,371.12 32,887,973.01 33,190,344.13
(I) Total comprehensive income 32,887,973.01 32,887,973.01
(II) Shareholders' investments and capital
reduction
1. Common stocks of shareholders
2. Capital investments of other equity instrument
holders
3. Amount of stock payment included into
shareholder equity
Other
(III) Profit distribution
1. Withdrawal of surplus reserve
2. Distribution for the shareholders
3. Other
(IV) Shareholder equity internal carrying forward
1. Capital reserve converted into stock capital
increase
2. Surplus reserve converted into stock capital
increase
3. Surplus reserve to offset losses
4.Change of carrying forward and re-calculating
net liabilities or net assets in defined benefit plan
5. Other
(V) Special reserves
1. Withdrawal in current period
2. Use in current period
(VI) Others 302,371.12 302,371.12
IV. Closing balance of current year 784,799,010.00 405,955,264.44 102,912,835.67 -22,209,989.62 1,271,457,120.49
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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Statement on Changes of Owners' Equity of the Parent Company(continued) The Year 2014 Prepared by: Shenzhen SEG Co., Ltd. Unit: RMB Yuan
Item Amount of previous period
Other equity Minus: treasury Other comprehensive Total shareholders'
Capital stock Capital reserve Special reserves Surplus reserve Undistributed profits
instruments stock income equity
I. Closing balance of previous year 784,799,010.00 405,652,893.32 102,912,835.67 -106,113,041.79 1,187,251,697.20
Plus: changes in accounting policies
Preliminary errors correction
Other
II. Current year opening value 784,799,010.00 405,652,893.32 102,912,835.67 -106,113,041.79 1,187,251,697.20
III. Current year increase/decrease change 51,015,079.16 51,015,079.16
(I) Total comprehensive income 51,015,079.16 51,015,079.16
(II) Shareholders' investments and capital
reduction
1. Common stocks of shareholders
2. Capital investments of other equity instrument
holders
3. Amount of stock payment included into
shareholder equity
Other
(III) Profit distribution
1. Withdrawal of surplus reserve
2. Distribution for the shareholders
3. Other
(IV) Shareholder equity internal carrying forward
1. Capital reserve converted into stock capital
increase
2. Surplus reserve converted into stock capital
increase
3. Surplus reserve to offset losses
4.Change of carrying forward and re-calculating
net liabilities or net assets in defined benefit plan
5. Other
(V) Special reserves
1. Withdrawal in current period
2. Use in current period
(VI) Others
IV. Closing balance of current year 784,799,010.00 405,652,893.32 102,912,835.67 -55,097,962.63 1,238,266,776.36
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
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Notes to the Financial Statements 2014
III 错误！未找到引用源。
Notes to the Financial Statements 2014
I. Company profile
(1) Registered domicile, organization structure and headquarters address of the Company
Shenzhen SEG Co., Ltd. (hereinafter referred to as "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 (SHEN SI ZI No. N16886) with a registration number (440301103573251). Upon the approval of the
securities administration departments of Shenzhen Municipality and the State, the Company's B shares and A
shares started to be listed and traded on Shenzhen Stock Exchange respectively in July and December, 1996.
On June 7, 2006, a resolution was adopted at the general meeting of shareholders on the share structure reform of
the Company. According to the plan on the conversion of capital reserve into capital shares, the Company
distributed such converted and increased capital shares to the tradable A share shareholders. Such shareholders
obtained 4.6445 shares of converted and increased capital shares for each 10 shares, which totaled 40,233,322
shares of converted and increased capital shares. As a result, relevant non-tradable A shares were authorized to be
listed and circulated. Among the converted and increased capital shares 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.
Up to December 31, 2014, the total capital shares of the company amounted to 784,799,010 shares, including
26,689 restricted shares and 784,772,321 unrestricted shares. The registered capital of the Company is RMB
784,799,010, and its registered domicile is 31/F, Tower A, Qunxing Plaza, North Huaqiang Road, Futian District,
Shenzhen. The parent company of the Company is Shenzhen SEG Group Co., Ltd. and the final controller of the
group is Shenzhen Municipal People's Government State-owned Assets Supervision and Administration
Commission.
(2) Business scope
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 (the license for
the special markets shall be specially applied for).
(3) Company business type and main operation activities
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The company belongs to the commercial service industry. It major products or services include the operation and
management of the special electronics markets, lease business and other services in the tertiary industry.
(4) Approval and disclosure of the financial statements
The Financial Statements were approved for disclosure by all directors of the Company on March 26, 2015.
II. Scope of the consolidated financial statements
There are 20 entities covered in the scope of the consolidated financial statements, including:
Type of Shareholding Voting right
Subsidiary name Level
subsidiary proportion (%) proportion (%)
Shenzhen SEG Baohua Enterprise Development Co., Share-controlled
Ⅰ 66.58 66.58
Ltd. subsidiary
Shenzhen Mellow Orange Business Hotel Share-controlled
Ⅱ -- 66.58
Management Co., Ltd. subsidiary
Wholly-owned
Shenzhen SEG Industrial Investment Co., Ltd. Ⅰ 100.00 100.00
subsidiary
Shareholding
Changsha SEG Development Co., Ltd. Ⅰ 46.00 51.00
company
Shenzhen SEG Electronics Market Management Co., Share-controlled
Ⅰ 70.00 70.00
Ltd. subsidiary
Suzhou SEG Electronics Market Management Co., Share-controlled
Ⅰ 45.00 45.00
Ltd. subsidiary
Share-controlled
Xi'an SEG Electronics Market Co., Ltd. Ⅰ 65.00 65.00
subsidiary
Share-controlled
Shenzhen SEG Credit Co., Ltd. Ⅰ 53.02 53.02
subsidiary
Share-controlled
Shenzhen SEG E-Commerce Co., Ltd. Ⅰ 51.00 51.00
subsidiary
Shenzhen SEG Nanjing Electronics Market Wholly-owned
Ⅰ 100.00 100.00
Management Co., Ltd. subsidiary
Share-controlled
Xi'an Hairong SEG Electronics Market Co., Ltd. Ⅰ 51.00 51.00
subsidiary
Wujiang SEG Electronics Market Management Co., Share-controlled
Ⅰ 51.00 51.00
Ltd. subsidiary
Share-controlled
Wuxi SEG Electronics Market Co., Ltd Ⅰ 51.00 51.00
subsidiary
Shunde SEG Electronics Market Management Co., Wholly-owned
Ⅰ 100.00 100.00
Ltd subsidiary
Nanning SEG Electronics Market Management Co., Wholly-owned
Ⅰ 100.00 100.00
Ltd. subsidiary
Wholly-owned
Nantong SEG Times Square Development Co., Ltd. Ⅰ 100.00 100.00
subsidiary
Share-controlled
Yantai SEG Times Square Development Co., Ltd. Ⅰ 90.00 90.00
subsidiary
Nantong SEG Commercial Operation Management Wholly-owned
Ⅰ 100.00 100.00
Co., Ltd. subsidiary
Wholly-owned
Suzhou SEG Digital Plaza Management Co., Ltd. Ⅰ 100.00 100.00
subsidiary
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Notes to the Financial Statements 2014
Type of Shareholding Voting right
Subsidiary name Level
subsidiary proportion (%) proportion (%)
Xi'an Fengdong New Town SEG Times Square Wholly-owned
Ⅰ 100.00 100.00
Properties Co., Ltd. subsidiary
For some subsidiaries, the reason for the differences between shareholding proportion and voting right proportion
and the basis for the Company to control the subsidiary when its voting right proportion is below 50% are
described in Notes to the Financial Statement – Section 8 Rights and Benefits in Other Entities – (1) Rights and
Benefits in Subsidiaries.
Compared with the entities covered in the scope of the Consolidated Financial Statements in the last period, there
are four newly added entities as follows:
1. Subsidiaries, special-purpose entities and operating entities whose share-controlling right is formed through
trustee operation or lessee, which are included in the consolidation scope in the current period
Name Reason for change
Yantai SEG Times Square Development Co., Ltd. Newly invested and created
Nantong SEG Commercial Operation Management
Newly invested and created
Co., Ltd.
Suzhou SEG Digital Plaza Management Co., Ltd. Newly invested and created
Xi'an Fengdong New Town SEG Times Square
Newly invested and created
Properties Co., Ltd.
2. Subsidiaries, special-purpose entities and operating entities whose share-controlling right is lost through trusted
operation or lease taking, which are excluded from the consolidation scope in the current period
There are no subsidiaries, special-purpose entities and operating entities whose share-controlling right is lost
through trusted operation or lease taking, which are excluded from the consolidation scope in the current period.
III. Basis of preparation of the financial statements
(1) Basis of preparation of the financial statements
The Company has conducted confirmation and measurement based on the continuous operation principle and the
transactions and events that have actually occurred and in accordance with the Accounting Standards for Business
Enterprises (ASBE) which comprises a basic standard and specific standards, the application guide of ASBE, the
interpretation of ASBE, and other relevant regulations (hereinafter collectively called "the ASBE"), the No. 15
Preparation Conventions of Information Disclosure by Companies Offering Securities to the Public - General
Regulations on Financial Report (amended in 2014) released by the China Securities Regulatory Commission
(CSRC), and then prepared the financial statements on this basis.
(2) Continuous operation
Within 12 months after the end of the reporting period, the Company has no events or conditions that may
generate major doubts about the continuous operation ability of the Company.
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IV. Important accounting policies and accounting estimates
(3) Statement on compliance with ASBE
The financial statements prepared by the Company comply with the requirements of the Accounting Standard for
Business Enterprises and truthfully and completely reflect relevant information on the financial position,
operating results, and cash flows of the Company.
(4) Accounting period
A fiscal year lasts from January 1 to December 31 of the Gregorian calendar.
(5) Recording currency
Renminbi is the recording currency of the financial statements of the Company.
(6) Accounting methods for the enterprises merger under or not under common control
1. Gradual realization of the terms, conditions and economic influences for each transaction during the enterprises
merger process is compliant with one or more of the following circumstances, and the multiple transaction events
are treated in accounting as a basket of transactions:
1) These transactions are executed when or after their mutual influences are considered;
2) These transactions can only achieve a complete commercial outcome after they are integrated;
3) The occurrence of a transaction depends on the occurrence of at least one other transaction;
4) Although one transaction is independently uneconomical, it is economical when it is being considered with
other transactions.
2. Enterprises merger under common control
5) Individual financial statement
If the Company pays cash, transfers non-monetary assets or bears debts, or 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 reserve is
adjusted for the difference between the initial investment cost of the long-term equity investment and the merger
consideration, and the retained profits are adjusted if the capital reserve is not sufficient for off-setting. If there is
any contingent consideration and the estimated liabilities or assets need to be recognized, the capital reserve
(capital premium or share premium) is adjusted for the difference between the amount of the estimated liabilities
or assets and the amount of the contingent consideration, and the retained profits are adjusted if the capital reserve
is not sufficient.
For the enterprises merger that is finally realized through multiple transactions, if such transactions belong to a
basket of transactions, each transaction is treated in accounting as if the transaction is a transaction that obtains the
controlling right. If such transactions do not belong to a basket of transactions, on the date of obtaining the
controlled right, the capital reserve is adjusted for the difference between the initial investment cost of the
long-term equity investment and the book value of the long-term equity investment before the merger plus the
book value of the newly obtained share consideration on the date of the merger, and the retained profits are
adjusted if the capital reserve is not sufficient for off-setting. For the equity investment held before the date of
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Notes to the Financial Statements 2014
merger, the accounting treatment is temporarily not conducted for other comprehensive incomes recognized
through the calculation in the equity method or through the calculation in the recognition and measurement
principles for financial instruments, until when disposing of the item of investment, the accounting treatment is
performed on the same basis as that for the invested entity to directly dispose of the related assets or liabilities.
The accounting treatment is temporarily not conducted for the other changes in the owner's equity except the net
profits/losses, other comprehensive incomes and profits distribution in the net assets of the invested entity
recognized through the calculation in the equity method, until they are included into the profits and losses of the
current period upon disposal of this item of investment.
All the direct and related expenses incurred by the merger, including the audit fees, evaluation expenses, legal
service fees, are included into the profits and losses of the current period upon their incurrence. The capital public
reserve is offset for the trading expenses directly relating to the merger consideration that is represented by the
issued equity instruments. If the capital reserve is not sufficient for offsetting, offset the surplus reserve and
undistributed profits in sequence. The trading expenses directly related to the merger consideration represented by
the issued debt instruments are included as the initial recognition amount of such debt instruments.
If the merged party has consolidated financial statements, the initial investment cost of long-term equity
investment shall be determined based on the owners' equity attributable to the parent company in the consolidated
financial statements on the date of merger.
6) Consolidated financial statement
The assets and liabilities obtained by the merging party in the enterprises merger are measured by the book value
of the owners' equity of the merged party in the consolidated financial statements of the final controller on the
date of merger.
For the enterprises merger that is finally realized through multiple transactions, if such transactions belong to a
basket of transactions, each transaction is treated in accounting as if the transaction is a transaction that obtains the
controlling right. If such transactions do not belong to a basket of transactions, for the long-term equity
investment held by the merging party before the merger, the changes in the related profits/losses, other
comprehensive incomes and other owners' equity that are recognized between the date of obtainment or the date
on which both the merging party and merged party are under the final control of the same party (whichever is later)
and the date of merger shall be respectively offset by the opening retained incomes of the period or the profits and
losses of the current period.
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 Accounting Standard for Business Enterprises.
3. Enterprises merger not under common control
The cost for the enterprises merger not under common control is the fair value of the assets paid, the liabilities
incurred or assumed, and the equity instruments or debt instruments issued by the Company for acquiring the
control right of the merged party on the date of acquisition. 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 date of acquisition 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.
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Notes to the Financial Statements 2014
The auditing, legal, appraisal and consulting, and other management fees paid by the Company during the
enterprises merger shall be included in profits and losses of the current period in which they are incurred. The
transaction expenses paid by the Company for the equity instruments or debt instruments issued as the merger
consideration shall be included in the initial recognition amount of equity instruments or debt instruments.
If the Company's cost for the enterprises merger is more than the Company's interest in the fair value of the
identifiable net assets of the purchased party, the difference is recognized as goodwill. If the Company's cost on
enterprises merger is less than the Company's interest in the fair value of the identifiable net assets of the
purchased party, and after confirmation such condition still exists, the difference between the aforesaid two
amounts is included in the profits and losses of the current period.
For the enterprises merger not under common control that is gradually realized through multiple exchange
transactions, if such transactions belong to a basket of transactions, each transaction is treated in accounting as if
the transaction is a transaction that obtains the controlling right. If such transactions do not belong to a basket of
transactions, the relevant accounting treatment is performed for individual financial statements and consolidated
financial statements respectively.
7) In the individual financial statements, if the equity investment held before the date of merger is calculated in
the equity method, the initial investment cost of this item of investment is the sum of the book value of the equity
investment of the purchased party held before the date of acquisition and the cost of the newly added investment
on the date of acquisition. For the other comprehensive incomes of the equity investment held before the date of
acquisition recognized based on the calculation in the equity method, the accounting treatment shall be performed
on the same basis as that for the invested entity to directly dispose of the relevant assets or liabilities.
If the equity investment held before the date of merger is calculated in accordance with the financial instruments
recognition and calculation rules, the initial investment cost is the sum of the fair value of the equity investment
on the date of merger and the cost of the newly added investment. The difference between the fair value and the
book value of the originally held equity as well as the accumulated fair value changes that are originally included
into other comprehensive incomes shall all be transferred into the investment incomes of the period in which the
merger occurs.
8) In consolidated financial statements, the equity of the merged party held before the date of acquisition shall be
re-measured at the equity's fair value at the date of acquisition, and the difference between the fair value and the
book value of the equity shall be included into current investment income. If the equity of the merged party held
before the date of acquisition involves other comprehensive income, the involved income shall be included in the
investment income of the period when the acquisition occurs.
(7) Preparation method of the consolidated financial statements
The scope of the consolidated financial statements of the Company is determined based on controlling status, and
all subsidiaries (including the independent entities controlled by the parent company) are included in the scope.
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 the financial statements of the
Company and its subsidiaries and other relevant information.
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Notes to the Financial Statements 2014
During the consolidation, the influence on the consolidated balance sheet, the consolidated income statement, the
consolidated statement of cash flows and the consolidated statement of changes in 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
occupied 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.
The opening amount of the consolidated balance sheet is adjusted if a subsidiary and its business are increased in
the report period through the merger of enterprises under the control of a same entity. The income, expenses and
profits of the subsidiary and its business during the period when it was merged are included in the Consolidated
Income Statement. The cash flow of the subsidiary and its business during the period when it was merged is
included in the Consolidated Statement of Cash Flows.
The opening amount of the consolidated balance sheet is not adjusted if a subsidiary and its business are increased
in the report period through the merger of enterprises not under the control of a same entity. The income, expenses
and profits of the subsidiary and its business from the date of acquisition to the end of the report period are
included in the Consolidated Income Statement. The cash flow of the subsidiary and its business from the date of
acquisition to the end of the report period is included in the Consolidated Statement of Cash Flows.
If the Company disposes of a subsidiary and its business in the report period, the income, expenses and profits of
the subsidiary and its business from the period beginning to the disposal date are included in the Consolidated
Income Statement and the cash flow of the subsidiary and its business in the same period is included in the
Consolidated Statement of Cash Flows.
If the Company loses control of its subsidiary due to disposal of part of equity investment or other reasons, the
remaining equity in the Consolidated Financial Statements shall be re-measured at fair value on the day when the
Company loses control of the subsidiary. (Consideration received in connection with equity disposal + Fair value
of remaining equity – Net assets that are calculated based on the original shareholding proportion since the day of
acquisition) shall be included in the investment income in the period when the Company loses control of the
subsidiary. Other comprehensive income in connection with the subsidiary's equity investment shall be transferred
into the current investment income when the Company loses control of the subsidiary.
(8) Joint venture arrangements classification and joint operation accounting treatment
1. Joint venture arrangements classification
The Company divides joint venture arrangements into joint operation and joint ventures in accordance with the
structure, legal form, and agreed terms of joint venture arrangements, as well as other relevant facts and situations.
Joint venture arrangements reached not through independent entities are classified as joint operation; joint venture
arrangements reached through independent entities are usually classified as joint ventures; however, if there is
concrete evidence indicating that the joint venture arrangements meet any one of following conditions and comply
with relevant laws and regulations, the joint venture arrangements are classified as joint operation:
1) The legal form of joint venture arrangements indicates that parties in joint ventures enjoy rights and assume
obligation separately for relevant assets and liabilities in said arrangements.
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Notes to the Financial Statements 2014
2) Contract terms of joint venture arrangements prescribe that the parties in joint ventures enjoy rights and assume
obligations separately for relevant assets and liabilities in said arrangements.
3) Other relevant facts and situations indicate that the parties enjoy rights and assume obligations separately for
relevant assets and liabilities in said arrangements; for example, parties enjoy almost all output relating to joint
venture arrangements, and the settlement of liabilities in said arrangements continuously depends on the support
from parties in joint ventures.
2. Accounting treatment method for joint operation
Among following items, the Company recognizes those relating to the Company's interests in joint operation, and
those items are treated in accounting according to stipulations of accounting standards for business enterprises:
4) Assets held independently are recognized, and assets held jointly are recognized based on the proportion of
Company's interest;
5) Liabilities assumed independently are recognized, and liabilities assumed jointly are recognized based on the
proportion of Company's interest;
6) Revenue from selling joint operation output enjoyed by the Company is recognized;
7) Revenue from selling joint operation output is recognized based on the proportion of Company's interest;
8) Expenses incurred independently are recognized, and expenses from joint operation are recognized based on
the proportion of Company's interest.
If the Company invests in or sells assets of joint operation (other than assets that constitute business), before the
assets are sold to a third party by the joint operation, only the part of profits and losses from the transaction
attributable to other parties in joint operation is recognized. For assets impairment losses incurred according to
stipulations of Accounting Standards for Busines Enterprises No. 8 - Impairment of Assets in the assets invested or
sold, the Company recognizes the losses in full amount.
If the Company acquires assets from joint operation (other than assets that constitute business), before the assets
are sold to a third party, only the part of profits and losses attributable to other parties in joint operation is
recognized. For assets impairment losses incurred according to stipulations of Accounting Standards Business
Enterprises No. 8 - Impairment of Assets in acquired assets, the Company recognizes the part of losses in
accordance with the proportion assumed by it.
The Company does not enjoy joint control for joint operation, and if the Company enjoys relevant assets and
assumes relevant liabilities of the joint operation, accounting treatment is performed according to said principles;
otherwise accounting treatment shall be performed according to relevant ASBE stipulations.
(9) 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 recognized as cash. The investments that meet the four conditions of shorter
term (to be mature within 3 months from the date of acquisition), strong liquidity, easiness in being converted into
known amount of cash, very small risk of value fluctuation are recognized as cash equivalents.
(10) Foreign currency business and translation of the financial statements in foreign currency
1. Foreign currency businesses
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Notes to the Financial Statements 2014
In the initial recognition, foreign currency transactions are recorded into accounts after relevant amounts are
translated into RMB according to the spot exchange rate on the transaction date.
On the balance sheet date, the balance of the monetary items in foreign currency is translated according to the spot
exchange rate on the balance sheet date while the translation difference caused is all recorded into current gains
and losses, except the difference from the special foreign currency loans related to the assets whose 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 spot 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 fair value are translated according to the spot exchange
rate on the determination date of the fair value while the translation difference caused is recorded into current
gains and losses as the gains or losses caused by the fair value changes. For the non-monetary items in foreign
currency available for sale, the translation difference is recorded into other comprehensive incomes.
2. Translation of the financial statements in foreign currency
The assets and liabilities items in the balance sheet are translated according to the spot exchange rate on the
balance sheet date. The owners' equity items (excluding undistributed profits) are translated according to the spot
exchange rate on the occurrence of the items. The income and expense items in the Income Statement are
translated according to the spot exchange rate on the occurrence date of the transactions. The translation
difference in the financial statements in foreign currency caused by the aforesaid translation is recorded into other
comprehensive incomes.
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 other comprehensive incomes in the balance sheet, is
transferred from other comprehensive incomes to current gains and losses 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 current gains and losses of the period when the disposal is
carried out.
(11) Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
1. Classification of financial instruments
Based on the economic nature (not merely the legal forms) and contractual clauses of the financial instruments
issued by the management of the Company, as well as the targets for obtaining and holding financial assets and
bearing financial liabilities, the financial assets and financial liabilities are classified into the following categories:
the financial assets (or liabilities) measured at fair value through profit and loss, held-to-mature investments,
accounts receivable, financial assets available for sale, and other financial liabilities.
2. Recognition basis and measurement method of financial instruments
1) Financial assets (liabilities) measured at fair value through profit and loss
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Notes to the Financial Statements 2014
Financial assets or financial liabilities measured at fair value through profit and loss include the financial assets or
financial liabilities held for trading, and the financial assets or financial liabilities that are directly designated as
the financial assets or financial liabilities at fair value through profit and loss.
Financial assets or financial liabilities held for trading refer to the financial assets or financial liabilities that meet
one of the following conditions:
a) The purpose of acquiring the said financial assets or undertaking the financial liabilities is mainly for selling or
repurchasing or redeeming them in the near future;
b) Forming a part of the identifiable portfolio of financial instruments which are managed in a centralized way and
for which there are objective evidences proving that the Company may manage the portfolio by way of short-term
profit making in the near future;
c) Being derivative financial instruments, excluding the designated derivative instruments which are effective
hedging instruments, or derivative instruments belonging to financial guarantee contracts, and the derivative
instruments which are connected with the equity instrument investments for which there is no quoted price in the
active market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said
equity instruments.
Only the financial assets or financial liabilities meeting any of the following requirements can be designated,
when they are initially measured, as financial assets or financial liabilities as measured at its fair value and of
which the variation is included in the profits and losses:
a) The designation is able to eliminate or obviously reduce the discrepancies in the recognition or measurement of
relevant profits or losses arising from the different basis of measurement of the financial assets or financial
liabilities;
b) The official written documents on risk management or investment strategies have recorded that the portfolio of
said financial assets, the portfolio of said financial liabilities, or the portfolio of said financial assets and financial
liabilities are managed and evaluated on the basis of their fair values and are reported to key management
personnel.
c) Mixed instruments including one or more embedded derivative instruments, unless embedded derivative
instruments do not significantly change the cash flow of mixed instruments, or the embedded derivative
instruments shall not be separated from relevant mixed instruments;
d) Mixed instruments including embedded derivatives which are needed to be separated but cannot be measured
independently at the time of acquiring or the following balance sheet date.
For financial assets or financial liabilities measured at fair value through current profits and losses, the fair value
(deducting declared but not issued cash dividends or bond interests which have met the date of interest payment
but have not been paid) is deemed as initial recognition amount, and relevant transaction expenses are included in
current profits and losses. The interests and cash dividends obtained during the time of holding are recognized as
investment income. At the period-end, the fair value changes are recorded into current gains and losses. At the
time of disposal, the difference between the fair value and the initial recorded amount in the account is recognized
as investment income and the gains and losses from changes of fair value are adjusted at the same time.
2) Accounts receivable
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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 and other accounts receivable, the price money in contracts or agreements of the purchaser is
taken as the initial recognized amount. For those of a financing nature, the current value is taken as the initial
recognized 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 current gains and losses.
3) Held-to-maturity investments
Held-to-maturity investments refer to the non-derivative financial assets with fixed recoverable or determinable
amounts, which have fixed maturity dates and for which the Company has clear intent and ability to hold them to
maturity.
For the held-to-maturity investments of the Company, at the time of acquisition, the sum of the fair value
(deducting bond interests which have met the date of interest payment but have not been paid) and relevant
transaction expenses are taken as the initial recognized amount. During the period of holding, the interest income
is calculated and recognized in accordance with the remaining amortized costs 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 holding 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.
If the amount of any held-to-maturity investment disposed of or reclassified as other categories of financial assets
is relatively large compared with all held-to-maturity investments of the Company before such selling or
reclassification, the remaining held-to-maturity investments shall be reclassified as the financial assets available
for sale immediately after the aforesaid disposal or reclassification. On the date of reclassification, the difference
between the book value of the investment and its fair value is included into other comprehensive income, and
shall be transferred to the current gains and losses when the financial assets available for sale have depreciated or
are terminated for recognition, except in the following circumstances:
a) The date of selling or reclassification is close to the date of maturity or redemption of the investment (for
example, within three months before the date of maturity), and the market interest rate has no obvious influence
on the fair value of the investment.
b) The enterprise has recovered nearly all the initial principal of the investment according to the repayment
method as specified in the contract.
c) The selling or reclassification is caused by independent events that are uncontrollable for the enterprise,
unrepeatable according to estimation, and difficult to forecast reasonably.
4) Financial assets available for sale
Financial assets available for sale refer to the non-derivative financial assets that are determined as available to
sale at the initial recognition, and the financial assets except other financial assets.
For the financial assets available for sale of the Company, the sum of the fair 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 initial recognized amount at the time of obtainment.
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Notes to the Financial Statements 2014
The interests or cash dividends obtained during the time of holding are recognized as investment income. The
gains or losses caused by the fair value changes of the financial assets available for sale, except the depreciation
losses and the exchange difference caused by foreign currency financial assets, are all included into other
comprehensive incomes. At the time of disposal of financial assets available for sale, 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 fair value of other comprehensive incomes is transferred and recorded into investment gains and
losses.
For the equity instrument investments that have no quotation in active markets and of which the fair value cannot
be reliably measured, as well as the derivative financial assets that are correlated to the equity instrument and can
only be settled through the delivery of the equity instrument, they are measured based on their costs by the
Company.
5) Other financial liabilities
The sum of the fair value of such assets and relevant transaction expenses is taken as the initial recognized amount.
The amortized cost is adopted in the subsequent measurement.
3. Recognition basis and measurement method for 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 recognition of such financial assets is
terminated, and if almost all the risks and returns in the ownership rights of such financial assets are retained, the
recognition of such financial assets is not terminated.
In the judgment whether a financial asset transfer meets the above conditions for termination of its recognition,
the principle of attaching more importance to substance than form is adopted. The Company divides financial
assets transfer into the complete and the partial transfer. Where the complete transfer of financial assets meets the
conditions for termination of recognition, the difference of the following two amounts is recorded into current
gains and losses.
6) The book value of the transferred financial assets;
7) The sum of the consideration received due to transfer and the accumulated amount of the changes in fair 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 recognition, the part with its
recognition terminated and that with its recognition not terminated, among the book value of all the transferred
financial assets, are apportioned separately according to their relevant fair value while the difference between the
following two amounts is recorded into current gains and losses.
The book value of the part with its recognition terminated;
The sum of the consideration of the part with its recognition terminated and the part of the accumulated amount of
the changes in fair value originally recorded in owners' equity corresponding to the part with its recognition
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 recognition, the recognition of
such financial assets is continued. The received consideration is recognized as a financial liability.
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4. Conditions for the termination of the recognition of financial liabilities
If all or part of current obligations of a financial liability is discharged, the recognition 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 recognition of the existing financial liability is terminated and the new financial liability is
recognized in the meantime.
If material alteration has been made to all or a part of contract terms of the existing financial liability, the
recognition of the existing liability or part of it is terminated and, in the meantime, the liability after the alteration
is made is recognized as a new financial liability.
If the recognition of all or a part of a financial liability is terminated, the difference between the book value of the
liability with its recognition terminated and the consideration (including non-cash assets transferred or the new
liability assumed) is recorded into current gains and losses.
If the Company repurchases a part of a financial liability, the total book value of the liability is allocated on the
repurchasing date according to the respective relative fair value of the part with its recognition continued and that
with its recognition terminated. The difference between the book value allocated to the part with its recognition
terminated and the consideration (including non-cash assets or the new liability assumed) is recorded into current
gains and losses.
5. Methods for the determination of the fair value of financial assets and liabilities
For the financial assets and financial liabilities that exist in an active market, the Company determines their fair
value based on the quotation in the active market. For those that do not exist in an active market, the Company
estimates their fair value using valuation techniques, such as referring to the prices applied in recent transactions
which are conducted by well-informed and willing parties or the current fair value of other financial instruments
of the same nature, or adopting the discounted cash flow (DCF) technique and the option pricing model. For those
initially acquired or raw financial assets and financial liabilities, the Company determines their fair value based on
the market price.
6. Accrual of impairment provision for financial assets (excluding accounts receivable and loans)
The Company shall check on the balance sheet date the book value of the financial assets except those measured
at fair value and with changes included in current profit and loss. If there is any objective evidence indicating that
a loss has occurred in these financial assets, impairment provision shall be made.
The objective evidences of impairment in financial assets include but are not limited to:
8) The issuer or the debtor encounters serious financial difficulties;
9) The debtor violates contract terms, such as breach or late payment of interests or principal;
10) The creditor makes a concession for the debtor who encounters financial difficulties for economic or legal
considerations;
11) The debtor is likely to go bankrupt or conduct other financial restructuring;
12) The financial assets cannot continue to be traded in the active market as the issuer encounters serious financial
difficulties;
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13) It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial
assets has decreased or not. But after making an overall appraisal on the public data, it is found that the predicted
future cash flow of the said combination of financial assets has indeed decreased since it was initially recognized
and such decrease can be measured; for example, the paying ability of the debtor of the said combination of
financial assets worsens gradually, or the unemployment rate of the country or region where the debtor is situated
increases, or the prices of the region where the guaranty is situated are obviously dropping, or the industrial sector
concerned is in slump, etc.;
14) Any seriously adverse change has occurred in technical, market, economic or legal environment, etc. wherein
the debtor operates its business, which makes the investor of an equity instrument unable to take back its cost of
investment;
15) The fair value of the equity instrument investment decreases significantly or non-transiently;
Specific impairment methods for financial assets are as follows:
16) Impairment provision for financial assets available for sale:
The Company assesses impairment losses on various available-for-sale financial assets by individual affirmation
on the balance sheet date, wherein the objective evidences of impairment in available-for-sale equity instruments
investment include that the fair value of equity instrument decreases significantly or non-transiently, and the
specific quantitative criterion is that if the decrement of the fair value of the equity instrument is 50% or more
than the cost on the balance sheet date, or the time of duration when it is lower than its cost exceeds 12 months
(including), it indicates impairment.
When impairment occurs in available-for-sale financial assets, even though the recognition of the financial assets
has not be terminated, the Company transfers out accumulated losses arising from the depreciation of fair values,
which was included in other comprehensive income originally, from other comprehensive income, and includes it
into current profits and losses. The transferred accumulated losses equal to the balance that initial acquisition costs
of available-for-sale financial assets deduct recovered principal and amortized amount, current fair values and the
impairment losses originally included in profits and losses.
For available-for-sale debt instruments with recognized impairment losses, if fair values have increased and the
increase objectively relate to events occurring after original impairment losses are recognized, original recognized
impairment losses are reversely included in current losses and profits; for impairment losses in available-for-sale
equity instruments, those are reversed through equity when the value of equity instruments increases; however,
equity instruments investments which have no quoted price in the active market and whose fair values cannot be
reliably measured, or impairment losses in derivative financial assets which are connected with the equity
instrument investments, and which shall be settled by delivering the said equity instruments, cannot be reversed.
17) Impairment provision for held-to-maturity investments
If there is any objective evidence indicating that a loss has occurred in the held-to-maturity investments, calculate
and recognize the impairment loss based on the difference between the book value of these investments and the
current value of the expected future cash flow. If there is any evidence indicating that the investment value has
recovered after provision, the originally recognized impairment loss can be reversed and included in the current
profit and loss. However, the reversed book value should not exceed the amortized cost of the financial assets at
the date of provision reversal if impairment provision has not been made.
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7. Offset between financial assets and financial liabilities
Financial assets and financial liabilities are separately listed in the balance sheet, and they are not offset. When the
following conditions are met simultaneously, however, the net amount after the offset of financial assets and
financial liabilities is listed in the balance sheet:
18) The Company has the legal right to offset the recognized amounts, and such legal right is enforceable at
present.
19) The Company intends to make the settlement through the net amount, or liquidates the financial assets and
repays the financial liabilities simultaneously.
(12) Accounts receivable
1. Accounts receivable with significant single amount and single bad debt provision
Recognition criteria for the accounts receivable with significant single amount and single bad debt provision:
Top five accounts receivable
The method for the bad debt provision of the accounts receivable with significant single amount: perform the
impairment test separately, make bad debt provision for the difference between the net present value of expected
future cash flow and its book value, and record it into the current profits and losses. The accounts receivable
which has no impairment shall be included in the bad debt provision made for the corresponding portfolio.
2. Accounts receivable for which bad debt provisions are made based on different portfolios:
1) Determination basis for combinations of credit risk characteristics
As for accounts receivable with insignificant single amount and those with significant single amount but without
impairment after separate test, they shall be divided into several portfolios according to the credit risk features.
The bad debt provision to be accrued shall be determined based on the actual loss rate of accounts receivable
portfolio with similar credit risk features in the previous year combining with the present situations.
Basis for portfolio determination
Perform best estimation on the provision proportion of the accounts receivable based on the
Portfolio 1. Aging analysis method previous experience of the company. As for the classification of credit risk portfolio, please
refer to the aging of account receivable.
According to the fund nature, no bad-debt provision shall be accrued, including premium for
Portfolio 2
lease and related party transactions.
2) Accrual method determined according to the portfolio of credit risk characteristics:
Bad debt provision accrued using the aging analysis method
Provision proportion of accounts Provision proportion of other accounts
Aging
receivable (%) receivable (%)
Within one year (including one year) --- ---
1-2 years 5.00 5.00
2-3 years 10.00 10.00
Over 3 years 20.00 20.00
Bad-debt provision accrued using other methods
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Provision proportion of accounts Provision proportion of other accounts
Portfolio name
receivable (%) receivable (%)
Portfolio 2 --- ---
3. Accounts receivable with insignificant single amount for which bad debt provision is separately accrued
Reason for bad-debt provision accrued separately: there are objective evidences showing that the funds cannot be
recovered by the company according to original articles of the accounts receivable.
Accrual method for bad-debt provision: it shall be accrued according to the difference between the estimated
present value of future cash flow and its book value concerning the amounts receivable.
(13) Inventory
1. Classification of inventory
Inventory refers to the finished products or commercial products held by the Company in daily activities for sale,
and the products in process, and the materials and supplies consumed in manufacturing or service delivery process.
It mainly includes the raw material, revolving material, outside processing materials, unfinished products,
self-made semi-manufactured products, finished products (commodity stocks), development cost, and
development products.
The development cost refers to the properties having not constructed and with a view to selling it; the lands to be
developed refer to lands that have been purchased and to be developed into lands with finished development
products; the development products refer to the properties having been constructed and for sale. In case of overall
development of the project, the lands to be developed are all transferred into development cost; in case of phased
development of the project, parts of the lands for phased development will be transferred into development cost,
and the undeveloped lands remain on the lands to be developed.
2. Pricing method of inventory
Inventory measurement shall be performed initially based on the cost upon acquisition, including the purchasing
cost, processing cost and other costs. The pricing of the inventory is made according to the weighted-average
System at the time of delivery.
3. Determination basis for the net realizable value of inventory and the provision method of provision for obsolete
stocks
After a complete counting and examination of the inventory at the end of the period, the provision for obsolete
stocks is accrued or adjusted according to the lower of the inventory cost and the net realizable value. The net
realizable value of the goods inventory directly for sale such as finished products, commodity stocks and materials
for sale is determined in regular production and operation according to the amount of the estimated sale price of
such inventory minus the 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 the 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.
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At the end of the period, the provision for obsolete stocks is accrued according to individual inventory items.
However, the provision for obsolete stocks 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 provision for obsolete stocks 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 originally accrued amount of provision for obsolete stocks. The
transferred amount is recorded into current profit and loss.
4. Inventory system
The perpetual inventory method is adopted.
5. Amortization method of low value consumables and packaging materials
1) For low value consumables, the one-off writing-off method is adopted.
2) For packaging materials, the one-off writing-off method is adopted
6. Accounting methods of the development land
For pure land development project, the costs thereof shall individually constitute the development cost of the land;
For projects that are developed along with the housing property, the expenses shall generally be apportioned and
recorded into the commercial housing cost according to the actual area if the expenses can be properly assigned.
7. Accounting method for cost of the public supporting facilities
Public supporting facilities that cannot be transferred with compensation: it shall be apportioned and recorded into
the commercial housing cost according to the determination criteria of benefit ratio;
Public supporting facilities that can be transferred with compensation: taking each supporting facility project as
the cost accounting objective, collect all the incurred cost,
8. Accounting method of maintenance funds
According to related provisions of the place where the development project locates, the maintenance cost refers to
the development cost that is charged to the house buyer or accrued and recorded into the development cost of
related development products by the company during selling (advance selling) of the development products,
which shall be handed over to the management department of the maintenance funds.
9. Accounting methods of quality security deposit
The quality security deposit shall be reserved from the project funds of the construction unit according to the
construction contract. The maintenance cost generated during the warranty period of the development products
can offset the quality security deposit; at the expiration of the agreed warranty period, the quality security deposit
shall be returned back to the construction unit.
(14) Loans and advances issued
1. Loan
A loan is a sum of loan in the unit of RMB Yuan granted to a small or medium-sized enterprise, individual
business and individual person according to the market rate of interest. The principal amount of the loan is taken
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as the originally recognized amount. The interest income recognized during loan holding period shall be
calculated based on the actual interest rate. The actual interest rate is determined at the time of acquisition and
remains unchanged within the anticipated existence period or a shorter period applicable.
2. Loan loss provision
At the end of each quarter, the Company classifies each single loan into five categories based on the quality of
credit assets: normal, concerned, subprime, suspicious, and loss, and include it in daily credit management for
classified supervision.
The Company shall properly estimate the possible loss incurred on loans and make a timely provision for loan loss
in accordance with the prudent accounting principle. Loan loss provisions include general provision and special
provision. General provision is made in proportion of the balance of all loans for recovering the unrecognized
possible loss. Special provision is made for recovering the special loss based on the extent of each loan loss after
loan classification in accordance with Guidelines for Risk-based Loan Classification.
The scope of loan loss provision includes risk-bearing and loss-bearing assets, such as various petty loans
(including mortgage, pledge, guarantee, and credit) and bill discount.
The Company shall make provision by quarter. The year-end balance of general provision shall not be less than 1%
of the year-end loan balance.
The Company has made quarterly special provisions based on the following proportions:
(1) Concerned loan: 1%
(2) Concerned loan: 2%
(3) Subprime loan: 25%
(4) Suspicious loan: 50%
(5) Loss loan: 100%
(15) Long-term equity investment
1. Determination of investment cost
(1) The long-term equity investment formed through business merger. Please refer to the Annotation IV/ (IV)
Accountant Arrangement Methods for Business Merger under the Same and Different Control for details.
(2) 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 initial investment cost includes the fees, taxes and other necessary expenses that have direct connections with
the long-term equity investment.
As for the long-term equity investment that is gained by issuing the equity securities, the fair value of equity
securities issuing shall be taken as the initial investment cost; as for the transaction cost that is generated when
issuing or obtaining their own equity instruments, it can be deducted from the equity concerning those that can be
directly attributable to the equity transactions.
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Under the premises that the non-monetary assets exchange is of commercial nature and that the fair value of the
assets received and given out in the exchange can be measured reliably, the initial investment cost of the long-term
equity investment received in non-monetary assets exchange is determined on the basis of the fair value of the
assets given out, unless there are definite evidences that the fair value of the received assets is more reliable. For
the non-monetary assets exchange that do not meet the above premises, the book value of the received assets and
relevant taxes payable is taken as the cost of the long-term equity investment.
The initial investment cost of the long-term equity investment obtained through debt restructuring is determined
according to its fair value.
2. Measurement after recognition and profit and loss recognition
(1) Cost method
The cost method can be adopted by the company for accounting the long-term equity investment that controlled
by the invested organizations, and then such long-term equity investment can be priced according to the initial
investment cost, and meanwhile, the cost for adjusting the long-term equity investment can be supplemented or
recovered.
Under equity method, the Company recognizes 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.
(2) Equity method
Equity method is adopted by the company for accounting the long-term equity investment of the joint venture as
well as the cooperative enterprise; as for the equity investment of associated enterprise indirectly held through
venture investment organization, mutual fund and trust company as well as the similar subjects including
unit-linked Insurance fund, the fair value measurement shall be adopted and the fluctuation thereof shall be
recorded into the profit or loss.
If the initial cost of the long-term equity investment is larger than the balance of the net identifiable assets fair
value share of the invested organizations, the initial cost thereof shall not be adjusted; if the initial cost of the
long-term equity investment is less than the above mentioned balance, it shall be recorded into the current profit
and loss.
After gaining the long-term equity investment, the company shall respectively recognize the investment income
and other comprehensive income according to the Company's proportion in the net profit and loss as well as other
comprehensive income realized by the invested organizations, and meanwhile, the book value of the long-term
equity investment shall be adjusted; the due parts that shall be enjoyed shall be calculated according to the
declared profit or cash dividends that are announced of distribution by the invested organizations, and then the
book value of the long-term equity investment shall be decreased correspondingly; as for other fluctuations
besides profit and loss, other comprehensive income and profit allocation of the invested organizations, the book
value of the long-term equity investment shall be adjusted and then be recorded into the owner's equity.
The company shall recognize its proportion in the net profit or loss of the invested organization based on fair
value of each identifiable asset of the invested organization when the investment is acquired. As for the unrealized
profit and loss from any internal transaction between the company and the joint venture as well as among the
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cooperative enterprise, it can be offset by the due part of the company, which shall be calculated according to the
rate it shall enjoy, and the profit and loss on investments can be recognized on this basis.
Where the Company recognizes 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 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 recognized 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 recognized according to the anticipated obligations to be
borne and recorded into current investment loss.
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 recognized, reduce the
book balance of the recognized 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 recognize
investment income at the same time.
3. Accounting method change for long-term equity investment
(1) From fair value measurement to equity method
For equity investments that were held originally by the Company and are treated in accounting based on the
recognition and measurement standards for financial instruments, which have no control, joint control or
significant influence on the investee, if significant influence or joint control is constituted but control is not
constituted because of additional investments, the sum of the fair value of original held equity investment and the
additional investment cost recognized based on ASBE No. 22- Financial Instruments Recognition and
Measurement is recognized as the initial investment cost for switching to the equity method.
For originally held equity investments which are classified as available-for-sale financial assets, the balance
between fair values and book values, and accumulative fair value variations of originally included other
comprehensive income are transferred into current losses and profits through accounting with equity method.
Initial investments costs accounting with equity method being lower than new shareholding ratio calculation
recognition after additional investments shall enjoy the balance between fair value shares of identifiable net assets
on additional investment date of investee, and book values of long-term equity investments are adjusted and are
included in current non-business income.
(2) From fair values measurement or equity method to the cost method
Equity investments were held originally by the Company and are performed accounting treatment upon financial
instruments recognition and measurement standards, which have no control, joint control or significant influence
on the investee, or long-term equity investments of associated enterprises or joint ventures originally held by the
Company, and if those can be controlled by the investee which is not under the same control due to additional
investments, when individual financial statement is prepared, initial investment costs of transferring cost method
accounting are the sum of the book value of originally holding equity investments plus newly increased
investments costs.
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Other comprehensive income recognized in equity method accounting upon equity investments held before the
acquisition date, when it is disposed, is performed with accounting treatment with the same basis that the investee
directly disposes relevant assets or liabilities.
Equity investments held before the acquisition date is disposed subject to relevant stipulations of ASBE No.22-
Financial Instruments Recognition and Measurement and accumulative fair values variations of originally
included other comprehensive income are transferred into current losses and profits at the time of transferring to
cost method accounting.
(3) From the equity method to fair value measurement
For the Company losing joint control or significant influence on the investee due to disposal of some equity
investments, rest equity after disposal is performed with accounting under ASBE No.22- Financial Instruments
Recognition and Measurement, and the balance of fair values and book values on the date when joint control or
significant influence is lost is included in current losses and profits.
For other comprehensive income recognized based on the equity method upon original equity investment,
accounting treatment is performed on the same basis that the investee directly disposes relevant assets or liabilities
when accounting with the equity method is terminated.
(4) From the cost method to the equity method
For the Company losing the control of the investee due to disposal of some equity investments, when individual
financial statement is prepared, and the rest equity after disposal being able to cause joint control or significant
influence on the investee, accounting is transferred to be performed with the equity method, and the adjustment is
conducted that the rest equity is deemed as accounting with the equity method since acquisition.
(5) From the cost method to fair value measurement
During formulation of certain financial statements, if the company loses control upon an invested unit because of
disposing part of its equity investment and the remaining equity after disposal cannot impose joint control or
significant effect on the invested unit shall be treated in accounting according to related provisions of Accounting
Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments. The balance
between fair value and book value on the day of losing control shall be recorded into current profit and loss.
4. The Disposal of Long-Term Equity Investment
When disposing long-term equity investment, the balance between book value and actual price shall be recorded
into current benefit and loss. Long-term equity investment adopting cost method, when disposing the investment,
shall conduct accounting treatment on the part of being included into other comprehensive income proportionately
on the same basis as that of depositing related asset or debt by invested unit.
When all trading provisions, conditions and economic effects that are disposed to equity investment of subsidy
shall satisfy one or more following conditions, multiple transactions items shall be made accounting treatment as
package deal.
(1) Those transactions are conducted at the same time or at the moment of considering mutual effects.
(2) Only the whole transactions can make up of business results.
(3) One transaction depends on another transaction at least.
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(4) It's uneconomical to consider a transaction individually. However, its economical to consider one transaction
with others at same time.
Under the circumstance that transactions, because of part of equity investment or some other reasons, lose control
power of original subsidy so as not be included to package deal, related accounting treatment shall be conducted
by differentiating individual financial statements and combined financial statement.
(1) With regard with the disposal equity in some financial statements, the balance between book value and actual
price shall be recorded into current benefit and loss. If the remaining equity after disposal imposes joint control or
significant effects on the invested unit, the remaining equity shall be calculated by the equity method and adjusted
as being calculated by the equity method since acquisition. If remaining equity after disposal cannot impose joint
control or significant effects on the invested unit, the remaining equity shall be treated in accounting in
accordance with Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of
Financial Instruments. The balance between fair value and book value on the day of losing control shall be
recorded into current profit and loss.
(2) Cost and long-term equity investment enjoys accordingly the balance between net asset shares calculated as of
purchase date or merge date on all transactions before losing the company control power in joint financial
statement. Adjust capital reserve (capital stock premium). Retained income shall be adjusted, if capital reserve is
insufficient. The remaining equity after losing control power shall be recalculated in accordance with the fair
value on the day of losing control power. (Consideration received in connection with equity disposal + Fair value
of remaining equity – Net assets that are calculated based on the original shareholding proportion since the day of
acquisition) shall be included in the investment income in the period when the Company loses control of the
subsidiary. Other comprehensive income in connection with the subsidiary's equity investment shall be transferred
the current investment income when the Company loses control of the subsidiary.
All transactions that dispose equity investment of subsidy until to lose control power shall be included to package
deals. All transaction, as disposal of company equity investment, shall conduct accounting treatment on
transactions losing control power; differentiate individual financial statement and joint financial statement to
conduct related accounting treatment:
(1) In individual financial statement, before losing control power, the balance between book values of long-term
equity investment corresponding to disposal cost and disposal equity shall be affirmed as other comprehensive
income and be moved to current benefit and loss when control power is lost.
(2) In joint financial statement, before losing control power, the balance between net asset of subsidy
corresponding to disposal cost and disposal investment shall be affirmed as other comprehensive income and be
moved to current benefit and loss when control power is lost.
5. The Identification Standard of Joint Control and Significant Influence
If company controls collectively certain arrangement in accordance with related provisions and other participants,
or gives important activity decision on arrangement that only exists when participants all agree by sharing control
power, it's seen that company and other participants collectively control certain arrangement. And the arrangement
refers to joint venture arrangement.
Joint venture arrangement is reached through individual subject. When company is identified to enjoy net asset of
individual subject in accordance with related provisions, individual subject is regarded as joint venture and
calculated by equity method. When company is identified not to enjoy net asset of individual subject in
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accordance with related provisions, individual subject is regarded as mutual operation. The Company will
recognize items related with its interest in the income from joint operation and perform accounting treatment
based relevant accounting standards.
If the investor has significant influence in the invested organization, it means that investor is entitled to take part
in the decision making of financial and operational policies in the invested organization but has no power to
control the policy making independently or jointly with other parties. The company will identify if it has
significant influence after analyzing one or more circumstances and considering all facts and conditions. (1)
assign representatives in the board of directors in the invested unit or similar authority; (2) participate in
formulating financial and operational policy of invested unit. (3) make important transitions between invested
units. (4) assign managers to invested unit; (5) provide invested unit with key technical materials.
(16) Investment properties
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.
The Company uses the cost of investment real estate as entry value. The cost of purchased investment real estate
includes the purchase price, relevant taxes, and other expenses directly relegated to the asset. The cost of a
self-built investment real estate consists of the necessary expenses for building the asset to the expected condition
for use.
The Company conducts measurement after recognition to the investment real estate using the cost pattern, and
makes accrual depreciation or amortization for buildings and land use rights based on their expected useful life
and residual value. The following table lists the expected useful life, residual value, and annual depreciation
(amortization) rate of investment real estate:
Annual depreciation
Category Expected useful life Residual value
(amortization) rate
Houses and buildings 20-40 5% 4.75%-2.38%
When the purpose of an investment real estate changes to self-use, the Company shall convert the investment real
estate to fixed or intangible assets since the day of change. When the real estate with the right to self-use is
changed for generating rents or capital appreciation, the Company shall convert fixed or intangible asset to
investment real estate since the day of change. The book value of the real estate prior to the conversion shall be
entry value after conversion.
If an investment real estate is disposed of, or if it withdraws permanently from use and if no economic benefit will
be obtained from the disposal, the recognition of it as an investment real estate shall be terminated. When an
enterprise sells or transfers or discards any investment real estate, or when any investment real estate of an
enterprise is damaged or destroyed, the enterprise shall deduct the book value of the investment real estate as well
as the relevant taxes from the disposal income, and include the amount in the current profit and loss.
(17) Fixed assets
1. Conditions on recognition of fixed assets
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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 year. The recognition of fixed
assets can be made only when all the following conditions are satisfied:
(1) Where the economic interests related to such fixed assets are likely to flow into the company;
(2) Where the cost of such fixed assets can be measured reliably.
2. Initial measurement of the fixed assets
Fixed assets of the company shall be measured initially according to the cost, of which, the cost of the outsourcing
fixed assets shall include purchasing price, import tariff and other related taxes as well as other expenses
generated before bringing the fixed asset to reach the usable conditions and can be directly attributable to the asset.
The cost of a self-constructed fixed asset shall be formed by the necessary expenses incurred for bringing the asset
to the expected conditions for use. The fixed asset input by investors can serve as the entry value according to the
value stipulated by the investment contract or agreement, and for those unfair values as stipulated thereof, they
shall be recorded at their fair values. 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. Balance of the
actual paid cost and the present value of the acquisition price shall be included in the current profit and loss during
the credit period, excluding those that shall be capitalized.
3. The subsequent measurement and disposal of fixed assets.
(1) Depreciation of fixed assets
Depreciation of fixed assets shall be accrued by subtracting the estimated net residual value from the booking
value. For fixed assets with impairment provision already accrued, the depreciation amount shall be determined in
the future based on the book value after deducting the impairment provision and the remaining useful life.
The Company determines the useful life and residual value of fixed assets based on the nature and use of the fixed
assets. The Company rechecks the useful life, residual value, and depreciation method of fixed assets at the end of
every year. In case of any discrepancy between the recheck result and estimated result, the Company makes an
adjustment correspondingly.
Depreciation method, depreciation year and annual depreciation rate of various fixed assets are as follows:
Depreciation period Residual value rate Annual depreciation
Category Depreciation method
(year) (%) rate
Houses and buildings Straight-line depreciation 20-40 5 4.75-2.38
Machinery equipment Straight-line depreciation 5-10 5 19.00-9.50
Electronic equipment Straight-line depreciation 5-10 5 19.00-9.50
Transportation equipment Straight-line depreciation 5-10 5 19.00-9.50
Other equipment Straight-line depreciation 10 5 9.50
(3) Subsequent expense of the fixed asset
As for subsequent expense related to the fixed asset satisfying the conditions for recognition of fixed assets, they
shall be recorded into cost of the fixed asset; and as for those not satisfying the conditions for recognition of fixed
assets; they shall be recorded into the current profit and loss during its occurrence.
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(4) Disposal of fixed assets.
When any fixed asset is deposed, or expected to be unable to generate economic interest through using or disposal,
the recognition thereof shall be terminated. When an enterprise sells, transfers or discards any investment real
estate, or when any investment real estate of an enterprise is damaged or destroyed, the enterprise shall deduct the
book value of the investment real estate as well as the relevant taxes from the disposal income, and include the
amount in the current profit and loss.
4. Recognition basis and pricing method of the fixed assets acquired under finance leases
The fixed assets leased by the Company shall be recognized as the fixed assets acquired under finance leases
when one or more of the following conditions are met:
(1) The ownership of the leased asset belongs to the Company when the lease expires;
(2) The Company has the option to buy the leased asset at a price which is expected to be far lower than the fair
value of the leased asset at the date when the option becomes exercisable. Thus, on the lease beginning date, it can
be reasonably determined that the option will be exercised.
(3) Even if the ownership of the asset is not transferred, the lease term covers the major part of the useful life of
the leased asset.
(4) The current value of the minimum lease payment that is paid by the Company on the lease beginning date
amounts to substantially all of the fair value of the leased asset on the lease beginning date.
(5) The leased assets are of a special nature that only the Company can use them without making major
modifications.
The leasee shall record the lower one of the fair value of the leased asset and the current value of the minimum
lease payments on the lease beginning date as the entry value in an account, recognize the amount of the minimum
lease payments as the entry in an account of long-term account payable, and treat the balance between the
recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. The
initial direct costs such as commissions, attorney's fees, traveling expenses, stamp duties directly attributable to
the leased item incurred during the process of lease negotiating and lease contract signing shall be included in the
asset value of the current period. The unrecognized financing charge shall be amortized to each period during the
lease term.
In calculating the depreciation of a leased asset, the Company adopts a depreciation policy for leased assets
consistent with that for depreciable assets which are owned by the lessee. If it is reasonably certain that the leasee
will obtain the ownership of the leased asset when the lease expires, the leased asset shall be fully depreciated
over its useful life. If it is not reasonably certain that the lessee will obtain the ownership of the leased asset at the
expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its
useful life.
(18) Construction in progress
1. Type of construction in progress
The construction in progress built by the Company shall be valued according to its actual cost which is composed
of all necessary expenses incurred for bringing the asset to the expected conditions for use, including material
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costs, labor costs, relevant taxes, borrowing costs eligible for capitalization, and indirect expenses eligible for
amortization. Cost accounting for the construction in progress of the Company shall be made based on projects.
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.
(19) Borrowing costs
1. Recognition 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 recognized as expenses according to the incurred amount at the
time of incurrence and recorded into current profit and loss.
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:
1) 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.
2) The borrowing costs have already been incurred.
3) 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.
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.
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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
recognized as current profit and loss 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.
(20) Intangible assets and development expenses
An intangible asset refers to identifiable non-monetary assets without physical substance which is possessed or
controlled by the Company, including purchased software and land use rights.
1. Initial Measurement of Intangible Assets
The cost of the intangible assets purchased from outside includes purchase price money, relevant taxes and other
expenses incurred due to putting such assets to the anticipated use that can be directly attributed to such assets.
Where the price money of the purchased intangible assets is paid on a deferred basis within a term exceeding
regular credit conditions and actually of a financing nature, the cost of the intangible assets is determined on the
basis of the current value of the price money in purchase.
The entry value in the account of the fixed assets obtained from debtors for the repayment of liabilities in debt
restructuring is determined on the basis of the fair value of the fixed assets. The difference between the book value
of debt restructuring and the fair value of the fixed assets used for the repayment of liabilities is included in
current profit and loss.
Under the premises that the non-monetary assets exchange is of commercial nature and that the fair value of the
assets received and given out in the exchange can be measured reliably, the initial investment cost of the long-term
equity investment received in non-monetary assets exchange is determined on the basis of the fair value of the
assets given out, unless there are definite evidences that the fair value of the received assets is more reliable. For
the non-monetary assets exchange that do not meet the above premises, the book value of the received assets and
relevant taxes payable is taken as the cost of the long-term equity investment.
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The recorded value in the account of the intangible assets obtained by the merger of the enterprises under the
control of a same entity is determined according to the book value of the merged party. The recorded value in the
account of the intangible assets obtained by the merger of the enterprises under the control of different entities is
determined according to the fair value.
The cost of the intangible assets formed through internal R&D activities includes: the cost of materials and labor
consumed in the development of such intangible assets, registration fee, the amortization of other patent rights and
franchises used in the development process and the interests expenses that meet the conditions of capitalization,
and other direct expenses incurred due to putting such intangible assets into the anticipated use.
2. Follow-up Measurement of Intangible Assets
When obtaining any intangible asset, the company analyzes and estimates their service life and classifies them as
intangible asset with finite or infinite service life.
1) Intangible assets with finite service life
For intangible assets with finite service life, they should be amortized using straight line method within the period
during which they bring economic benefits to the company. The estimated service life and basis of intangible
assets with finite service life are as follows:
Item Estimated service life Basis
Outsourced software 5 Benefit period
Land use right 50 Benefit period
At the end of each period, the service life and amortization method of the intangible assets with finite service life
shall be reviewed. If there's any difference with original estimation, adjustment shall be made accordingly.
At the end of this year, the useful life and amortization method of the intangible assets with finite useful lives are
the same as the last year.
3. Classification standards for research and development phases of R&D projects inside the Company
Research phase: a phase in which creative and planned investigation and research activities are carried out for the
purpose of obtaining and understanding new scientific or technological knowledge.
Development phase: a phase in which research results or other knowledge, before being produced or used for
commercial purposes, are applied in a certain plan or design for the purpose of producing materials, equipment
and products that are new or feature substantial improvement.
The expenses for inside R&D projects during the research phase are recorded into current profit and loss when the
expenses occur.
4. Standards for meeting the conditions of capitalization by research phase
The expenditure in the development stage of the research and development project can be recognized as intangible
assets only when all the following conditions are met:
2) The completion of such intangible assets makes it usable or its sale technically feasible.
3) There is an intention to complete such intangible assets and use or sell it.
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4) 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.
5) 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.
6) The expenditure attributed to the development stage of such intangible assets can be reliably measured.
The expenditure at the development stage that cannot meet the above conditions shall be recorded in the current
profit and loss. The development expenditure that was recorded in profits and losses during previous period
cannot be recognized as assets in future. The capitalized expenditure at the development stage shall be listed as
development expenditure on the balance sheet, and will be converted to intangible assets from the date when the
project attains its expected purpose.
(21) Long-term Asset Impairment
On the balance sheet date, the company shall judge if long-term asset has any sign of impairment loss. If it has, we
shall estimate recoverable amount based on single asset; if the recoverable amount is difficult to be estimated, we
shall determine the recoverable amount based on assets unit which the asset belong to.
The recoverable amount may be determined according to the higher one of the net value of the fair value of the
assets minus the disposal expenses and the current value of the anticipated future cash flow of the assets.
Measurement result of recoverable amount shows: if recoverable amount of long-term asset less than its book
value, its book value should be impaired to recoverable amount, and the impairment value should be included into
asset impairment loss and recorded into current profit and loss. At the same time, we should make allowance for
assets depreciation reserves. Once the assets impairment losses have been accrued, it cannot be turn back during
the subsequent accounting periods.
At the same time, the corresponding assets impairment provision is accrued. After the recognition of assets
impairment loss, corresponding adjustments are made in the future periods on the depreciation or amortized
expenses of the impaired assets so that the adjusted book value of such assets (with the anticipated net residual
value deducted) can be amortized systematically within the remaining service life.
For intangible assets with uncertain goodwill and service life formed through enterprise merger, impairment test
shall be conducted each year no matter whether there is any sign of impairment.
The impairment test shall be conducted on goodwill in combination with related asset groups or asset group
portfolios. When conducting impairment test upon related asset groups or asset group portfolios including
goodwill, if there is any sign of impairment, the impairment test shall be conducted first on the asset groups or
asset group portfolios excluding goodwill to calculate recoverable amount, compare with related book value, and
recognize the corresponding impairment loss. Then the test should be conducted on the asset groups or asset group
portfolios including goodwill to compare the book value (including the book value part of the apportioned
goodwill) of the asset groups or asset group portfolios with their recoverable amount. If the recoverable amount of
the asset groups or asset group portfolios containing is lower than the book value, the impairment loss of goodwill
shall be recognized.
(22) Long-term unamortized expense
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1. Amortization Method
Long-Term Unamortized Expenses refer to all expenses that company costs but bears in current account period
and following account period with more than 1 year of allocation period. Long-Term Unamortized Expenses
amortized by stages based on direct method during benefit period.
(23) Employee Compensation
Employee compensation refers to all forms of rewards and compensation that company provides for employee's
service or dissolution of labor relation. Employee compensation includes short-term payment, welfare after
dismissal; dismiss welfare and other long-term employee welfare.
1. Short-Term Payment
Short-term payment refers to the whole payment that should be paid within 12 months after employee provides
annual report of related service, excluding welfare after dismissal and dismisses welfare. The company shall
confirm short-term payment as liability during the accounting period of the employee provides service and, in
accordance with benefit object with which employee provides service, calculate related asset cost and fees.
2. Welfare after Dismissal
Welfare after dismissal refers to all forms of rewards and welfare, after employee's retirement or dissolution with
enterprise, provides by company to obtain employee's service after dismissal, except short-term payment and
dismiss welfare. The welfare after dismissal is classified into defined contribution plan and defined benefit plan.
Welfare defined contribution plans after dismissal is mainly for basic life insurance and unemployment insurance
implemented by Labor and Social Insurance Institute of various regions. Except for basic life insurance and
unemployment insurance, employees retired after retirement can voluntarily take part in the pension plan
established by its company. During the accounting period of worker providing services to the company, the
payable deposit amount calculated on the basis of defined contribution plans should be recognized as the liability,
and should be credited in current profit and loss or the relevant asset costs.
Company no longer has other payment obligation after paying money regularly in accordance with provisions and
pension plans stipulated by state.
3. Dismissal welfare
Dismissal welfare refers to discharging labor relationship with staffs before the expiration of labor contract or
giving compensation to encourage staffs to accept redundancy voluntarily. It shall be added to current benefit and
loss as incurred.
4. Other Long-Term Employee's Welfare
Other long-term employee's welfare refers to all else long-term employees' welfare except short-term payment,
welfare after dismissal and dismissal welfare.
For other long-term employee's welfare in accordance with defined contribution plans, during the accounting
period of employees providing services for the company, payable and deposit amount are recognized as liabilities,
and are included in current losses and profits or relevant assets costs; Other long-term employee's welfare, on the
balance sheet date, independent actuary make an actuary by using expected accumulative welfare unit method,
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attribute the welfare obligations produced in defined benefit plans into the period when employee provides service
and add into current benefit and loss or related asset cost.
(24) Estimated liabilities
1. Recognition standards for estimated liabilities
The obligations related to contingencies, which meet all the following conditions, are recognized by the Company
as anticipation 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 estimated liabilities
Initial measurement is carried out to anticipation liabilities of the Company according to the optimum estimation
amount of the required expense when relevant obligations are fulfilled.
When determining the optimum estimation amount, the Company considers in a comprehensive way the factors
related to contingencies like risks, uncertainties and time value of currency. Where there are great influences of
time value of currency, the optimum estimation amount is determined after discounting relevant future cash flows.
The optimum estimation amount is determined according to different situations as follows:
Where there is a continuous range (or interval) of the required expense and different results in the range have
same possibility to occur, the optimum estimation amount is determined according to the intermediate value of the
range, i.e. the average of the maximal and the minimum amounts.
Where there is no continuous range (or interval) or there is a continuous range but different results have different
possibilities to occur, if contingencies involve individual proceedings, the optimum estimation amount is the
amount most likely to occur, and if contingencies involve several proceedings, the optimum estimation amount is
determined according to various possible results and the calculation of relevant probabilities.
If all expenses or part of them, which are used by the Company for paying off anticipation liabilities, are
anticipated to be compensated by a third party and compensation amount is basically sure to be received, the
compensation amount is recognized separately as an asset, which should not exceed the book value of the
anticipation liabilities.
(25) Share-based Payment
1. Types of share-based payment
The Company provides equity-settled and cash-settled share-based payment.
2. Recognition of the fair value of equity instruments
For equity instruments such as the granted option, which exist in the active market, the fair value is recognized
according to their prices in the active market. For those not existing in the active market, their fair value is
recognized by using the option pricing model, which should be selected in consideration of the following factors:
a. option exercise price; b. option period; c. the current price of the underlying shares; d. the predicted fluctuation
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rate of the share price, e. the estimated dividend of the share; f. risk free rate in the option period; g. payment of
shares of installment options
When determining the grant-date fair value of equity instruments, the Company shall take into account the
influence of market conditions in vesting conditions and non-vesting conditions stipulated in the share-based
payment agreement. Where a share-based payment has a non-vesting condition, the Company shall recognize
receipt of the corresponding service cost if employees or other parties satisfy all the non-market conditions (for
example, service duration) in vesting conditions.
3. Basis of recognition of the best estimate of the number of vested equity instruments
On each balance sheet date in the vesting period, the Company shall make the best available estimate of the
number of equity instruments expected to vest, and shall revise that estimate if subsequent information indicates
that the number of equity instruments expected to vest differs from previous estimates. On vesting date, the
Company shall revise the estimate to equal the number of equity instruments that ultimately vested.
4. Accounting for implementation, modification and termination of share-based payment plans
The Company shall measure the equity-settled share-based payment at the fair value of the granted employee
equity instruments. If the equity instruments granted vest immediately, the Company shall include the grant-date
fair value of equity instruments into related cost or expense, with a corresponding increase in capital reserve. If
the equity instruments granted do not vest until the counterparty completes a specified period of service or
achieves a performance condition in the vesting period, the Company shall include the service obtained in the
current period into related cost or expense and capital reserved by reference to the grant-date fair value of equity
instruments based on the best estimate of the number of vested equity instruments on each balance sheet date
during the vesting period. The Company shall not adjust the recognized cost or expense and total equity amount
after the vesting date.
The case-settled share-based payment shall be measured by reference to the fair value of the Company's eligible
liabilities which is calculated based on shares or other equity instruments. If the equity instruments granted vest
immediately, the Company shall include the fair value of eligible liabilities in related cost or expense on the
vesting date, with a corresponding increase in liabilities. For the cash-settled share-based payment where the
granted options are not exercised until the counterparty completes a specified period of service or achieves a
performance condition in the vesting period, the Company shall include the service obtained in the current period
into related cost or expense and liabilities by reference to the grant-date fair value of liabilities, based on the best
estimate of the number of vested equity instruments on each balance sheet date during the vesting period. The
Company shall re-measure the fair value of its liabilities on each balance sheet date and settlement date before
settlement of related liabilities, and include liability changes in current profit and loss.
5. Modifications to the terms and conditions on which equity instruments were granted
If a grant of an equity instrument is cancelled during the vesting period, the Company shall account for the
cancellation as an acceleration of vesting, and shall therefore include immediately the amount that would
otherwise have been recognized for services received over the remainder of the vesting period in the current profit
and loss, and recognize capital reserve. If employees or other parties can but fail to satisfy non-vesting conditions
in the vesting period, the Company shall account for the failure as a cancellation of the grant of the equity
instrument.
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(26) Other Financial Instruments including Preferred Stock, Perpetual Capital Securities and so on
The company, in accordance with the provisions of financial instruments, based on contrast terms and economic
essence rather only legal forms of issued preferred stock, perpetual capital securities and other financial
instruments, combining with the definitions of financial liability and equity instruments, classified the financial
instruments or its components into financial liability or equity instruments during original confirmation:
1. Classify issued financial instruments into financial liability when one of following conditions is satisfied:
1) The contrast obligations of offering cash to other party or other financial asset;
2) The contrast obligations of exchanging financial asset with other party or other financial liability under the
adverse conditions;
3) Non-derivative instruments contrast that can be calculated by using enterprise's own equity instruments to
calculate; Enterprise's own equity instruments based on variable amount that contrast will offer;
4) Derivative instruments contrast that be calculated by using enterprise's own equity instruments to calculate;
enterprise's own equity instruments based on variable amount that contrast will offer; Apart from the cash of fixed
amount exchanged with fixed amount of enterprise's own equity instruments;
2. When following conditions are met at the same time, the financial instruments are classified into rights and
benefits instruments:
5) The financial instruments don't include paying cash or other financial assets to other parties or contrast
obligations of exchanging financial assets or financial debts with other party under the adverse conditions.
6) For financial instruments that are classified into equity instruments, its interest expense or dividend distribution
shall be regarded as profit distribution of issuing enterprises. So the such movements of buy-back and writing off
as rights and interests and the such as transaction fees as handling charges and commissions shall be deducted
from rights and interests.
3. Accounting treatment methods
The interest expense or dividend distribution for financial instruments classified as equity instruments, should be
taken as profit distribution of the issuing enterprises, and its repurchase, and cancellation, etc should be taken as
equity changes processing, then the handling charge and commission and other transaction fees should be
deducted from equity;
The interest expense or dividend distribution for financial instruments classified as financial liabilities, should be
in accordance with the principle of borrowing costs for processing, and its profit or loss, etc occurred in
repurchase or redemption should be credited in current profit and loss, then the handling charge and commission
and other transaction fees should be credited in amount of initial measurement of the issuing instruments.
(27) Income
1. Standards for recognition time of sales income
The realization of the income from the sale of commodities is recognized when the Company has already
transferred the main risks and consideration in the ownership right of the commodities to the purchaser, the
Company has not retained any further management right connected to the ownership right nor implement effective
control over the sold commodities, the amount of the revenue can be reliably measured, relevant economic
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interests are likely to flow into the enterprise, and relevant costs incurred or to be incurred can be measured
reliably.
The company is specialized in electronic market leasing business, and adopts the straight-line method to recognize
the rent received during leasing period as rental income; the income from other business should be recognized as
revenue when risk premium is transferred according to the contract.
The deferred method is used for the collection of contract or agreement amounts. If financing is involved, the fair
value of contract or agreement amounts receivable shall be recognized at as the revenue from goods sales.
2. Basis for recognition of income from transfer of asset use right
When the economic interests relating to transaction may flow into enterprise and the amount of income can be
measured reliably, the amount of income from transfer of asset use should be confirmed according to the
following conditions: （原来漏译）
(1) The amount of interest income is determined according to the time and actual interest rate of other people
using the monetary fund of the enterprise.
(2) The amount of the income from use fee is determined in accordance with the time and method of charges as
agreed in relevant contract or agreement.
3. Provide the basis and method to recognize labor service income
Where the results of the labor services provided on the balance sheet date can be estimated reliably, the income
from the provision of labor services is recognized with the percentage of completion method. The completion
progress of a labor service transaction is determined by surveying the work completed.
Service transaction result can be reliably estimated, it means the following conditions can be met simultaneously:
1) Income amount can be measured reliably;
2) Relevant economic benefits are likely to flow into the company;
3) Transaction completion schedule can be confirmed reliably;
4) The transaction costs incurred and to be incurred can be measured in a reliable way.
The total amount of the income from the provision of labor services is determined according to the price money
received or receivable of a relevant contract or agreement, unless the price money received or receivable of a
relevant contract or agreement is unfair. The labor services income of the current period is recognized on the
balance sheet date according to the resulted amount of the total amount of income from provision of labor services
times the completion percentage and deducted by the accumulative amount of the recognized income from
provision of labor services in previous accounting periods. At the same time, the labor cost of the current period is
carried forward according to the estimated total cost of the provision of labor services times the completion
percentage and deducted by the accumulative amount of the recognized labor cost in previous accounting periods.
Where the results of the provision of labor services on the balance sheet date cannot be estimated reliably, such
results are processed respectively according to the following conditions:
141
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
5) Where it is estimated that the labor services cost incurred can be compensated, the income from provision of
labor services is recognized according to the amount of the labor services cost incurred and the same amount is
transferred into the labor cost.
6) Where it is estimated that the labor services cost incurred cannot be compensated, the labor services cost
incurred is recorded into current profit and loss and no income is recognized.
When the contracts or agreements signed between the Company and other companies include commodity sales
and labor service and these two parts can be differentiated from each other and can be separately measured,
commodity sales and labor service are handled separately. If they cannot be differentiated from each other or they
can be differentiated from each other but cannot be separately measured, both parts will be handled as commodity
sales.
4. Basis and method to confirm construction contract revenue
(1) When the result of construction contract can be estimated reliably, the relevant contract revenue and costs
should be recognized with the percentage of completion method on balance sheet date. Percentage of completion
method refers to the method to recognize contract revenue and costs based on contract completion schedule.
Contract completion schedule should be confirmed according to the proportion of accumulative total contract cost
incurred in total estimated cost of contract.
The result of fixed price contract can be reliably estimated, it means the following conditions are met
simultaneously:
7) Total contract revenue can be measured reliably;
8) Relevant economic benefits are likely to flow into the company;
9) The contract costs incurred can be distinguished and measured in a reliable way;
10) Contract completion schedule and the cost to be incurred for the contract completion can be confirmed in a
reliable way.
The result of cost plus contract can be reliably estimated, it means the following conditions can be met
simultaneously:
11) Relevant economic benefits are likely to flow into the company;
12) The contract costs actually incurred can be distinguished and measured in a reliable way
On balance sheet date, the contract revenue in current period is recognized at the total contract revenue multiplied
by the completion schedule and then deducted by accumulative recognized income during the previous accounting
periods; Meanwhile, the contract cost in current period is recognized at the total estimated cost of contract
multiplied by the completion schedule and then deducted by the accumulative recognized cost during the previous
accounting periods. The change, claim for compensation and bonus of contract project shall be recorded into total
contract revenue subject to the amount that is likely to bring about income and can be calculated in a reliable way.
(2) The construction contract result cannot be estimated reliably, shall be treated as the following situation;
13) If the contract cost can be recovered, the contract revenue shall be recognized according to actual recoverable
contract cost, while the contract cost shall be recognized as cost in the current period.
142
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
14) If the contract cost cannot be recovered, it is recognized upon incurrence while no contract revenue is
recognized.
(3) If the contract cost exceeds the total contract income, the expected loss shall be recognized as the cost
immediately.
5. Transfer of the assets with repurchase conditions
If the Company signs a repurchase agreement when selling products or transferring other assets, whether the
products sold meet the conditions for income recognition is judged according to the articles of the agreement. If
the repurchase is a financing transaction, the Company does not recognize sales income when delivering products
or assets. If the repurchase price is higher than the selling price, interests are accrued for the difference during
repurchase period and recorded into financial expenses.
(2) Government subsidies
1. Type
A government subsidy means the monetary or non-monetary assets obtained free by an enterprise from the
government, but excluding the capital invested by the government as the owner of the enterprise.
According to the subsidy object specified in the relevant government documents, the government subsidy is
classified as asset-related government subsidies and income-related government subsidies.
The asset-related government subsidy refers to the government subsidy acquired by the Company or long-term
assets in other forms. The income-related government subsidy refers to the government subsidy that is exclusive
of asset-related government subsidy.
2. Recognition of the government subsidy
For relevant conditions that can prove the Company can meet the regulations of financial support policies and
expected to be able to receive financial support fund at the end of term, confirm the government subsidies based
on the receivable amount. In addition, the government subsidies are confirmed when actually received.
When the government subsidy is the monetary assets, calculate the amount based on the received or receivable
assets. For the government subsidy is the non-monetary assets; calculate the amount based on the fair value, the
fair value cannot be reliably obtained, measured at its nominal amount (1 Yuan). The government subsidy is
calculated by the nominal amount should be directly included in the current profit and loss.
3. Accounting treatment method
The government subsidies related to assets, confirmed as deferred income, are recognized as the current
non-operating income based on the asset utilization term of the formation or procurement by stages.
The government subsidies related to profits, used to compensate relevant expenses or losses in later periods, are
recognized as deferred profits when they are obtained; the subsidies, used to compensate relevant expenses or
losses having occurred, are recognized as the current non-operating income when they are obtained.
When the recognized government subsidy needs to be returned, there is the deferred income balance shall be
offset against the carrying amount of deferred income balance, the excess part shall be recognized as the current
profit and loss; if there is no related deferred income, recognized directly as the current profit and loss.
(27) Deferred income tax assets and liabilities
143
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
The deferred tax assets and deferred tax liabilities are calculated and confirmed based on the difference of tax
basis and the book value between assets and liabilities (temporary differences). At the balance sheet date, calculate
the deferred tax assets and deferred tax liabilities at the applicable tax rate during the period for the expected
recovery of assets or settlement of liabilities.
1. Basis for the recognition of deferred incomes tax assets
The company is likely to use for deducting the deductible temporary differences, limited by taxable income can
transfer the deductible losses and tax reduction, confirm the deferred tax assets generated by the deductible
temporary difference. However, the deferred tax assets generated by initial recognition of assets or liabilities with
the following characteristics shall not be recognized: (1) the transaction is not the business combination; (2) the
transaction does not affect the accounting profit, also does not affect the taxable income or deductible loss.
2. Basis for recognition of deferred income tax liabilities
The temporary difference between the tax payable not paid in the current period and that in previous periods is
recognized by the Company as deferred income tax liabilities, but excluding:
1) The temporary differences formed by initial recognition of goodwill;
2) Transactions or events formed by non-business combination, and temporary differences formed that the
transactions or events occur do not affect the accounting profit, and also do not affect the taxable profit (or
deductible loss);
3) For taxable temporary differences associated with the subsidiaries, associates investment, the transfer time of
temporary differences can be controlled and the temporary differences in the foreseeable future is unlikely to be
transferred.
3. An entity shall offset deferred tax assets and deferred tax liabilities if, and only if:
4) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
5) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities which intend either to settle current tax
liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(28) Lease
If the lease terms substantially transfer all the risks and rewards of ownership of the leased assets to the lessee, the
lease is the finance lease, and other leases are the operating lease.
1. Accounting treatment of operating lease
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.
144
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
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 recognition 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
(1) Assets acquired under financing lease: Between the fair 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
recognized.
The financing expenses yet to be recognized are apportioned by the Company by the actual interest rate method in
the lease term of the assets and recorded into accounting expenses. Assets given out under financing lease:
(2) Assets leased out under financing lease: The difference between the total residual value, without guarantee, of
the financing lease payment receivable and the current value is recognized by the Company on the
lease-beginning date as financing profits yet to be realized and as the lease income in future lease periods. The
initial direct expenses related to lease transactions are recorded into the initial calculation of financing lease
payment receivable and the amount of profits recognized in the lease term is reduced.
(29) Changes of main accounting policies and accounting estimates
1. Changes of accounting policies
Contents and reasons for changes of accounting policies Procedure of approval Remarks
Make the retrospective adjustment according to the new
The 6th meeting of the 6th Board of
accounting standards for long-term equity investments, capital
Directors of the Company
reserves and deferred income, etc.
Descriptions of the changes in accounting policies:
The Ministry of Finance promulgated or revised series of enterprise accounting standards in 2014, the Company
has implemented the new enterprise accounting standard as required in July 1, 2014, adjust the comparative
financial statements in accordance with the provisions of the new convergence guidelines. Impacts on the
implementation of the new standards on the comparative financial statements are described below:
(1) Long-term equity investment
1) The Company pursuant to the newly revised Long-term Equity Investment Criteria, incorporate the equity
investments which do not have control, joint control or significant influence on the invested entity into the
accounting available for sale financial assets based on the original cost method, in which: without the quoted price,
fair value, the equity instruments cannot be reliably measured in the active the market are calculated subsequently
based on the cost price, other equity instruments are subsequently measured at fair value. The retrospective
impacts on above changes in accounting policy are as follows:
145
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
January 1, 2013
Share-hol
ding
Invested organization Financial assets
proportio Long-term equity Shareholders' equity attributable
n available for sale
investment (+/-) to the parent company (+/-)
(+/-)
Nanjing Shangsha Co., Ltd 0.68 -280,000.00 280,000.00 ---
Anshan Yibai Co., Ltd --- --- --- ---
Shenzhen SEG GPS Scientific
12.50 -13,515,392.83 13,515,392.83 ---
Navigations Co., Ltd.
Total --- -13,795,392.83 13,795,392.83 ---
December 31, 2013
Share-hol
ding
Invested organization Shareholders' equity
proportio Long-term equity Financial assets available
n (%) attributable to the parent
investment (+/-) for sale (+/-)
company (+/-)
Nanjing Shangsha Co., Ltd 0.68 -280,000.00 280,000.00 ---
Anshan Yibai Co., Ltd --- --- --- ---
Shenzhen SEG GPS Scientific
12.50 -13,515,392.83 13,515,392.83 ---
Navigations Co., Ltd.
Kasggar Shenzhen City Co.,
3.03 -20,000,000.00 20,000,000.00 ---
Ltd.
合计 --- -33,795,392.83 33,795,392.83 ---
(2) Impact on the changes in the financial statement report for the consolidated financial statements
1) The Company pursuant to the revised Accounting Standards for Enterprises No. 30 - Presentation of Financial
Statements, adjust the part attributable to other comprehensive income in the original capital reserves, as other
comprehensive income items in accordance with the presentation requirements, adjust the presentation by the
retrospective adjustment method at the beginning of year, the retroactive adjustment impacts are as the following:
01.01.13 31.12.13
Item
Before adjustment After adjustment Before adjustment After adjustment
Capital reserve 404,380,330.57 404,100,030.23 404,593,024.05 404,357,267.73
Other comprehensive income 280,300.34 235,756.32
Total 404,380,330.57 404,380,330.57 404,593,024.05 404,593,024.05
2) Pursuant to the revised Accounting Standards for Enterprises No. 30 - Presentation of Financial Statements, the
Company shall list the deferred income separately according to the presentation requirements, and adjust the
presentation by the retrospective adjustment method at the beginning of year, the retroactive adjustment impacts
are as the following:
01.01.13 31.12.13
Item
Before adjustment After adjustment Before adjustment After adjustment
146
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
01.01.13 31.12.13
Item
Before adjustment After adjustment Before adjustment After adjustment
Deferred income 320,080.91 762,246.19
Other non-current liabilities 320,080.91 762,246.19
Total 320,080.91 320,080.91 762,246.19 762,246.19
2. Changes of accounting estimates
No change was made to the main accounting estimates in the current period.
V. Taxes
(3) Main tax types and tax rates imposed on the Company
Tax Category Basis Tax rate
Value-added tax Sales of goods 17
Business tax Revenue from rental and interest on loans 5
Urban maintenance and construction tax Turnover tax payable 7
Enterprise income tax Taxable income 25, 15
Income tax rate descriptions of different tax payer:
Except for the income tax rate of Xi'an SEG Electronics Market Co., Ltd. and Xi'an Hairong SEG Electronics
Market Co., Ltd. is 15%, the income tax rate of the Company and other subsidiaries is 25%.
(4) Preferential tax policies and basis
According to the acknowledgment letter [2014] No. 134 of Shaanxi Provincial Development and Reform
Commission, the Company's subsidiary Xi'an Hairong SEG Electronics Market Co., Ltd. engaged in the project
encouraged by the state, which complies with the preferential policies for western development enterprise income
tax, pay the enterprise income tax at 15% this year.
According to the acknowledgment letter [2014] No. 060 of Shaanxi Provincial Development and Reform
Commission, the Company's subsidiary Xi'an SEG Electronics Market Co., Ltd. engaged in the project
encouraged by the state, which complies with the preferential policies for western development enterprise income
tax, pay the enterprise income tax at 15%this year.
VI. Notes on the Main Items of the Consolidated Financial Statements
Unless specifically noted, the unit for the following amounts is RMB Yuan.
Note 1 Monetary funds
Item Closing balance Opening balance
Cash on hand 602,592.57 496,319.50
Bank deposit 381,404,611.82 335,064,832.27
Other monetary capital 1,049,476.31 1,032,342.04
Total 383,056,680.70 336,593,493.81
147
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
An amount of RMB 1 million in other monetary capital is the deposit paid for subsidiaries on credit cards.
Note 2 Loans to banks and other financial institutions
Item Closing balance Opening balance
Loans to the enterprises of the same industry 30,000,000.00
Less: impairment provision
Total 30,000,000.00
Note 3 Notes receivable
1. Types of notes receivable
Item Closing balance Opening balance
Bank's acceptance bill 84,618.08
Total 84,618.08
2. There is no pledged notes receivable by the end of this period
3. There are no notes receivable endorsed and discounted but still not expired at the end of this period
4. There are no notes converted to receivables due to nonperformance of the drawer at the end of the period.
Note 4 Accounts receivable
1. Disclosure of accounts receivable by type
Closing balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
Accounts receivable with a significant
amount individually, for which bad debt
provision is separately accrued
Accounts receivable for which bad debt
provision is accrued according to
185,866,040.16 94.08 185,866,040.16
combinations of credit risk
characteristics
Accounts receivable with an
insignificant amount individually, for
11,699,138.18 5.92 11,699,138.18 100.00 -
which bad debt provision is separately
accrued
Total 197,565,178.34 100.00 11,699,138.18 5.92 185,866,040.16
Continued from above:
Opening balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
Accounts receivable with a significant
148
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Opening balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
amount individually, for which bad debt
provision is separately accrued
Accounts receivable for which bad debt
provision is accrued according to
204,090,450.12 94.58 4,140.80 0.00 204,086,309.32
combinations of credit risk
characteristics
Accounts receivable with an
insignificant amount individually, for
11,699,138.18 5.42 11,699,138.18 100.00 -
which bad debt provision is separately
accrued
Total 215,789,588.30 100.00 11,703,278.98 5.42 204,086,309.32
Notes on types of accounts receivable:
(1) Accounts receivable with an insignificant amount individually, for which bad debt provision is separately
accrued
Closing balance
Name of debtor Percentage
Accounts receivable Bad debt provision of Reason for provision
provision
The accounts receivable are
uncollectible because they
Jiangsu Unicom 3,092,011.09 3,092,011.09 100.00
have been outstanding for
more than five years.
The accounts receivable are
Shenzhen Shuangxionghui Industrial uncollectible because they
2,160,725.63 2,160,725.63 100.00
Co., Ltd have been outstanding for
more than five years.
The accounts receivable are
Shenzhen LiYuanshun Industrial Co., uncollectible because they
1,906,865.35 1,906,865.35 100.00
Ltd. have been outstanding for
more than five years.
The accounts receivable are
Zhejiang Financial Information Co., uncollectible because they
786,000.00 786,000.00 100.00
Ltd have been outstanding for
more than five years.
The accounts receivable are
uncollectible because they
Shanghai Tianci Industrial Co., Ltd. 899,000.00 899,000.00 100.00
have been outstanding for
more than five years.
The accounts receivable are
uncollectible because they
Other units 2,854,536.11 2,854,536.11 100.00
have been outstanding too
long.
Total 11,699,138.18 11,699,138.18 100.00
149
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
(2) Among the combination, accounts receivable for which bad debt provision is accrued by the aging method:
Closing balance
Account receivable aging
Accounts receivable Bad debt provision Percentage of provision
Less than one year 185,866,040.16
1-2 years
2-3 years
Over 3 years
Total 185,866,040.16
2. Bad-debt provision accrued, collected or reversed in the current period
An amount of 4,140.80 Yuan of bad-debt provision is collected during this year.
3. No other accounts receivable are written off in the current period.
4. Top five accounts receivable collected according to the debtor
Percentage in the total
amount of accounts Provision for bad debts
Name of debtor Closing balance
receivable at the end of accrued
this period
TOP STAR COMMUNICATION LIMITED 45,082,280.95 22.82
NORIAN DIGTAL TECHNOLOGY (HK)LIMITED 22,715,010.36 11.50
Dalian Dier Computer Co., Ltd. 15,887,560.50 8.04
BORICLE INTL 12,110,255.15 6.13
Shenzhen Runneng Digital Co., Ltd. 7,003,792.89 3.55
Total 102,798,899.85 52.04
5. There are no accounts receivable whose recognition is terminated due to financial assets transfer in the current
period.
6. There are no assets and liabilities formed due to transfer of and further involvement in accounts receivable.
Note 5 Advances
1. Advances listed by aging
Closing balance Opening balance
Account receivable aging Proportion Proportion
Amount Amount
(%) (%)
Less than one year 94,633,317.07 100.00 74,002,910.35 100.00
1-2 years - - --- ---
2-3 years - - --- ---
Over 3 years - - --- ---
Total 94,633,317.07 100.00 74,002,910.35 100.00
2. Top five advances collected by the debtor
150
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Percentage in the
total amount of Time of advance
Name of debtor Period-end amount Reason for non-settlement
accounts payment
receivable
Tonmac International Electronics Prepaid park rent charge for
19,922,132.67 21.05 Less than one year
(Suzhou) Co., Ltd 2015
Shenzhen Must Power Limited 17,596,316.63 18.59 Less than one year Advance payment for goods
Xi'an Gaoke (Group) New West
Prepaid park rent charge for
China Industrial Development Co., 10,000,000.00 10.57 Less than one year
2015
Ltd
China Mobile Communication
Group Terminal Limited Company 8,026,147.00 8.48 Less than one year Advance payment for goods
Sinkiang Branch
Shenzhen Shuojian Industry Co., Ltd 7,505,951.97 7.93 Less than one year Advance payment for goods
Total 63,050,548.27 66.62
Note 6 Other accounts receivable
1. Disclosure of other accounts receivable by type
Closing balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
Other accounts receivable with a
significant amount individually, for
20,131,835.38 15.78 20,131,835.38 100.00
which bad debt provision is
separately accrued
Other receivables for which bad
debt provision is accrued according
95,371,972.98 74.74 5,816.71 0.01 95,366,156.27
to combinations of credit risk
characteristics
Combination 1 4,516,398.14 3.54 5,816.71 0.13 4,510,581.43
Combination 2 90,855,574.84 71.20 - 90,855,574.84
Other accounts receivable with an
insignificant amount individually,
12,102,714.93 9.48 12,102,714.93 100.00
for which bad debt provision is
separately accrued
Total 127,606,523.29 100.00 32,240,367.02 25.27 95,366,156.27
Continued from above:
Opening balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
Other accounts receivable with a
significant amount individually, for 20,131,835.38 35.13 20,131,835.38 100.00
which bad debt provision is
151
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Opening balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
separately accrued
Other receivables for which bad
debt provision is accrued according
25,037,340.99 43.69 3,986.27 0.02 25,033,354.72
to combinations of credit risk
characteristics
Combination 1 13,439,818.01 23.45 3,986.27 0.03 13,435,831.74
Combination 2 11,597,522.98 20.24 - - 11,597,522.98
Other accounts receivable with an
insignificant amount individually,
12,134,424.93 21.18 12,134,424.93 100.00 -
for which bad debt provision is
separately accrued
Total 57,303,601.30 100.00 32,270,246.58 56.31 25,033,354.72
Notes on types of other accounts receivable:
(1) Other accounts receivable with a significant amount individually, for which bad debt provision is separately
accrued
Closing balance
Name of debtor Percentage
Other accounts
Bad debt provision of Reason for provision
receivable
provision
The accounts receivable are
No.1: Yangjiang Yuntong Grease Co., uncollectible because they
8,530,276.35 8,530,276.35 100.00
Ltd have been outstanding for
more than five years.
The accounts receivable are
Creditor's right transferred in by SEG uncollectible because they
5,904,271.52 5,904,271.52 100.00
Communications have been outstanding for
more than five years.
The accounts receivable are
uncollectible because they
Shenzhen Lianjing Trade Co., Ltd. 5,697,287.51 5,697,287.51 100.00
have been outstanding for
more than five years.
Total 20,131,835.38 20,131,835.38 100.00
(2) Among the combinations, accounts receivable for which bad debt provision is computed by aging method:
Closing balance
Account receivable aging
Other accounts receivable Bad debt provision Percentage of provision
Less than one year 4,471,048.45 - -
1-2 years 3,469.17 173.44 5.00
2-3 years 27,337.83 2,734.73 10.00
Over 3 years 14,542.69 2,908.54 20.00
Total 4,516,398.14 5,816.71 0.13
152
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
(3) Other accounts receivable in Combination 2 include premium for lease and due from related parties.
2. Bad-debt provision accrued, collected or reversed in the current period
Bad debt provision of 21,934.44 Yuan is accrued for the current period; and 51,814.00 Yuan of bad-debt provision
is reversed for the current period.
3. No other accounts receivable are written off in the current period.
4. Types of other accounts receivable categorized by nature
Item Closing balance Opening balance
Amount for assignment of creditor's right 28,568,316.79 28,568,316.79
Revolving fund 1,733,960.46 1,991,201.91
Deposit and earnest money 90,906,485.24 14,063,040.84
Others 6,397,760.80 12,681,041.76
Total 127,606,523.29 57,303,601.30
5. Top five other accounts receivable collected by the debtor
Percentage
in the total
Account
amount of Bad debt provision
Name of debtor Nature of receivables Closing balance receivable
other Closing balance
aging
accounts
receivable
Xi'an Land Reserve Trading Less than
Deposit 60,000,000.00 47.02
Center one year
Shenzhen San Miki Electronics Less than
Deposit 10,000,000.00 7.84
Limited one year
No.1: Yangjiang Yuntong Debt restructuring of
8,530,276.35 Over 5 years 6.68 8,530,276.35
Grease Co., Ltd SEG Orient
Nantong Construction Peasant workers' wage Less than
6,200,000.00 4.86
Engineering Administration margin one year
Creditor's right transferred in Debt restructuring of
5,904,271.52 Over 5 years 4.63 5,904,271.52
by SEG Communications SEG Communications
Total 90,634,547.87 71.03 14,434,547.87
6. There are no accounts receivable involving government subsidies in the current period.
7. There are no other accounts receivable whose recognition is terminated due to financial assets transfer in the
current period.
8. There are no assets and liabilities formed due to transfer of and further involvement in other accounts
receivable.
Note 7 Inventory
1. Category of inventory
Item Closing balance Opening balance
153
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Provision for loss Provision for loss
for decline in for decline in
Book balance Book value Book balance Book value
value of value of
inventories inventories
Raw materials 80,293.26 80,293.26 90,392.46 --- 90,392.46
Low value
202,195.78 202,195.78 178,788.28 --- 178,788.28
consumables
Commodity
1,039,703.99 1,039,703.99 1,188,478.68 --- 1,188,478.68
stocks
Development
276,959,393.69 276,959,393.69 96,543,262.08 --- 96,543,262.08
cost
Total 278,281,586.72 278,281,586.72 98,000,921.50 --- 98,000,921.50
2. Description on closing inventory balance containing amount of borrowing costs capitalized
Current period decrease Capitalization rate
of capitalized
Name of inventory Opening Current period Closing
amount
items balance increase Fall in sales Others balance
recognized in
current period
Nantong SEG Times
2,885,600.89 2,885,600.89 6.30
Square
Total 2,885,600.89 2,885,600.89
3. Development cost
Expected
Commencement Expected
Project name investment Closing balance Opening balance
time completion time
amount
Nantong SEG Times
2013.5 2015.12 600,000,000.00 274,073,792.80 96,543,262.08
Square
Total 274,073,792.80 96,543,262.08
Note 8 Other current assets
Item Closing balance Opening balance
Financial products 322,679,000.00 385,000,000.00
Tax to be deducted and withheld 120,700,762.42 34,925,176.02
Others 163,251.07
Total 443,543,013.49 419,925,176.02
Note 9 Loans and advances issued
1. Loan and advances issued
Item Closing balance Opening balance
Loan principal 458,229,526.30 247,258,481.30
Advance --- ---
Less: Impairment provision for loans and
5,712,454.24 3,387,042.58
advances
Total 452,517,072.06 243,871,438.72
154
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Note 10 Financial assets available for sale
1. Financial assets available for sale
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Available-for-sale debt
instruments
Available-for-sale
equity instruments
Measured at fair value 554,642.62 554,642.62 562,531.41 562,531.41
Measured at cost 33,810,392.83 15,000.00 33,795,392.83 33,810,392.83 15,000.00 33,795,392.83
Others
Total 34,365,035.45 15,000.00 34,350,035.45 34,372,924.24 15,000.00 34,357,924.24
2. Available-for-sale financial assets measured at fair value at the end of period
Available-for-sale Available-for-sale debt
Category Others Total
equity instruments instruments
Cost of equity
instruments/amortized cost of 90,405.00 90,405.00
debt instruments
Amount changes in fair value
multiple-recorded into other 464,237.62 464,237.62
comprehensive income
Less: accrued amount of
impairment
Fair value 554,642.62 554,642.62
3. Equity instruments measured at cost at the end of period
Share-holding Book balance
proportion in
Invested organization Current period Current period
the invested Opening balance Closing balance
company (%) increase decrease
Kashgar Shenzhen City Co., Ltd. 3.03 20,000,000.00 20,000,000.00
Shenzhen SEG GPS Scientific
12.50 13,515,392.83 13,515,392.83
Navigations Co., Ltd.
Nanjing Shangsha Co., Ltd 0.68 280,000.00 280,000.00
Anshan Yibai Co., Ltd. — 15,000.00 15,000.00
Total 33,810,392.83 - - 33,810,392.83
Continued from above:
Impairment provision Cash dividends
Invested organization Current period Current period of the current
Opening balance Closing balance period
increase decrease
Kashgar Shenzhen City Co., Ltd.
Shenzhen SEG GPS Scientific
Navigations Co., Ltd.
155
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Invested organization Impairment provision Cash dividends
of the current
Nanjing Shangsha Co., Ltd
period
Anshan Yibai Co., Ltd 15,000.00 15,000.00
Total 15,000.00 15,000.00
Note 11 Long-term equity investment
Increases and decreases in the current period
Investment Adjustments in
Invested organization Opening balance Additional Negative profits or losses other
investment investment recognized by comprehensive
equity method income
I. Associates
Shanghai SEG Electronic Market
9,254,501.99 314,459.15
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. 102,848,308.04 -25,301,808.77
Total 112,102,810.03 -24,987,349.62
Continued from above:
Increases and decreases in the current period Closing
Cash dividends balance of
Invested organization Accrued Closing balance provision
Changes in or profits
provision for Others for
other equity announced for
impairment impairment
distribution
I. Associates
Shanghai SEG Electronic Market
5,992,172.96 3,576,788.18
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. 77,546,499.27
Total 5,992,172.96 - - 81,123,287.45
Note12 Investment properties
1. Investment properties
Houses and Construction in
Item Land use right Total
buildings progress
I. Original book value
1. Opening balance 705,673,301.76 5,237,512.49 710,910,814.25
2. Current period increase
Outsourcing
Inventories/fixed assets/transfer-in of
construction in progress
Enterprise merger increase
Investment by shareholder
Other transfer-in
3. Amount decrease in current period
Disposal
156
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Houses and Construction in
Item Land use right Total
buildings progress
Other transfer-out
4. Closing balance 705,673,301.76 5,237,512.49 710,910,814.25
II. Accumulated depreciation
(amortization)
1. Opening balance 227,661,739.56 1,731,592.86 229,393,332.42
2. Current period increase 18,833,965.36 120,633.69 18,954,599.05
Provision or amortization 18,833,965.36 120,633.69 18,954,599.05
Enterprise merger increase
Other transfer-in
3. Amount decreased in current period
Disposal
Other transfer-out
4. Closing balance 246,495,704.92 1,852,226.55 248,347,931.47
III. Impairment provision
1. Opening balance
2. Current period increase
Provision
Enterprise merger increase
Other transfer-in
3. Amount decreased in current period
Disposal
Other transfer-out
4. Closing balance
IV. Book value
1. Ending book value 459,177,596.84 3,385,285.94 462,562,882.78
2. Opening book value 478,011,562.20 3,505,919.63 - 481,517,481.83
2. Details of investment properties
Net value of investment
Organizations holding investment properties Projects of investment properties
properties
The second, fourth and fifth floors of SEG
Shenzhen SEG Co., Ltd. 239,632,855.59
Plaza
Shenzhen SEG Co., Ltd. Part of floors of Modern Window building 53,355,917.11
Shenzhen SEG Co., Ltd. Other houses 1,930,198.28
Shenzhen SEG Baohua Enterprise Development
Tower A, B of Baohua Building 35,081,842.59
Co., Ltd.
Shenzhen SEG Industrial Investment Co., Ltd. Part of floors of Modern Window building 2,789,780.80
Changsha SEG Development Co., Ltd. Changsha SEG 129,772,288.41
Total 462,562,882.78
157
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Note 13 Original price and accumulated depreciation of fixed assets
1. Fixed assets
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other equipment Total
vehicles
I. Total original book value
1. Opening balance 48,303,175.02 29,758,716.85 5,706,211.24 30,747,005.64 2,238,477.16 116,753,585.91
2. Current period increase 1,105,783.10 257,405.58 1,913,496.66 1,370,757.46 4,647,442.80
Acquisition 1,105,783.10 257,405.58 1,913,496.66 1,370,757.46 4,647,442.80
Transfer-in of construction in progress
Enterprise merger increase
Investment by shareholder
Financial lease
Other transfer-in - -
3. Amount decrease in current period 544,227.14 11,800.00 506,124.83 10,969.91 1,073,121.88
Disposal or scrapping 544,227.14 11,800.00 506,124.83 10,969.91 1,073,121.88
Financial lease
Other transfer-out
4. Closing balance 48,303,175.02 30,320,272.81 5,951,816.82 32,154,377.47 3,598,264.71 120,327,906.83
II. Accumulated depreciation
1. Opening balance 25,771,055.49 26,884,848.57 2,564,323.82 18,174,975.70 1,481,727.50 74,876,931.08
2. Current period increase 800,541.89 1,838,360.66 699,989.27 1,206,421.68 550,111.04 5,095,424.54
Provision 800,541.89 1,838,360.66 699,989.27 1,206,421.68 550,111.04 5,095,424.54
Enterprise merger increase
Other transfer-in
3. Amount decrease in current period 0 543,744.14 11,210.00 489,372.45 8,420.63 1,052,747.22
Disposal or scrapping 543,744.14 11,210.00 489,372.45 8,420.63 1,052,747.22
Financial lease
158
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other equipment Total
vehicles
Other transfer-out
4. Closing balance 26,571,597.38 28,179,465.09 3,253,103.09 18,892,024.93 2,023,417.91 78,919,608.40
III. Impairment provision
1. Opening balance
2. Current period increase
Provision
Enterprise merger increase
Other transfer-in
3. Amount decrease in current period
Disposal or scrapping
Financial lease
Other transfer-out
4. Closing balance
IV. Aggregate book value
1. Ending book value 21,731,577.64 2,140,807.72 2,698,713.73 13,262,352.54 1,574,846.80 41,408,298.43
2. Opening book value 22,532,119.53 2,873,868.28 3,141,887.42 12,572,029.94 756,749.66 41,876,654.83
159
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
2. There are no fixed assets that are temporarily idle at the end of the period.
3. There are no fixed assets rented by financial lease at the end of the period
4. There are no fixed assets obtained through operating lease at the year-end.
5. Period-end fixed assets not gaining the property right certificate
Item Book value Reason for not gaining the property right certificate
Houses and buildings 1,359,123.04 Qualification procedures not complete
Total 1,359,123.04
Note 14 Intangible assets
1. Intangible assets
Item Land use right Outsourced software Total
I. Total original book value
1. Opening balance 159,759.24 2,264,853.00 2,424,612.24
2. Current period increase 4,500.00 4,500.00
Acquisition 4,500.00 4,500.00
Internal R&D
Enterprise merger increase
Investment by shareholders
Other transfer-in
3. Amount decrease in current period
Disposal
Other transfer-out
4. Closing balance 159,759.24 2,269,353.00 2,429,112.24
II. Accumulated amortization
1. Opening balance 51,995.03 1,485,715.75 1,537,710.78
2. Current period increase 2,759.76 233,054.16 235,813.92
Provision 2,759.76 233,054.16 235,813.92
Enterprise merger increase
Other transfer-in
3. Amount decrease in current period
Disposal
Other transfer-out
4. Closing balance 54,754.79 1,718,769.91 1,773,524.70
III. Impairment provision
1. Opening balance
2. Current period increase
Provision
Enterprise merger increase
Other transfer-in
3. Amount decrease in current period
160
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Item Land use right Outsourced software Total
Disposal
Other transfer-out
4. Closing balance
IV. Aggregate book value
1. Ending book value 105,004.45 550,583.09 655,587.54
2. Opening book value 107,764.21 779,137.25 886,901.46
Note 15 Goodwill
1. Original book value of goodwill
Current period increase Current period decrease
Name of the invested
organization or the item Opening balance Formed by Closing balance
contributing to a goodwill enterprise …… Disposal ……
merger
Changsha SEG
10,328,927.82 10,328,927.82
Development Co., Ltd.
Total 10,328,927.82 10,328,927.82
(I) Goodwill is measured as the difference on the acquisition date between the costs of the enterprises merger not
under common control over the acquirer's interest in the fair value of the identifiable net assets.
2. The goodwill calculation process is as follows:
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
Fair value of the net assets of the invested organization 127,545,809.08
Shareholding proportion in the invested organization 46.00%
The difference caused when the investment cost is more than the recognizable net assets of
10,328,927.82
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 69,000,000
Yuan in March 2009. The net assets in book value of Changsha SEG Development Co., Ltd were 57,508,384.14
Yuan in the current month while the net assets in fair value of Changsha SEG Development Co., Ltd after the
evaluation for the added value was carried out. Thus, a goodwill amounting to 10,328,927.82 was formed.
The goodwill impairment testing was conducted at the end of the period and there was no sign of impairment, so
no provision was accrued for impairment.
Note 16 Long-term expenses to be amortized
Current period
Current period
Item Opening balance amortization Other decrease Closing balance
increase
amount
Decoration charges 43,122,826.78 20,602,625.22 14,801,974.38 48,923,477.62
Firefighting renovation 280,819.11 0.00 169,064.28 111,754.83
161
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Current period
Current period
Item Opening balance amortization Other decrease Closing balance
increase
amount
Land price of Tower B and
775,158.15 0.00 41,712.60 733,445.55
supporting facilities fee
Total 44,178,804.04 20,602,625.22 15,012,751.26 49,768,678.00
Note 17 Deferred income tax assets and liabilities
1. Deferred income tax assets not offset
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Asset impairment provision 32,658,252.58 8,164,563.16 32,709,956.58 8,177,489.16
Profit unrealized by internal
transaction
Deductible losses
Payroll payable
Technological development expense
Accrued expenses
Estimated liabilities
Government subsidies recorded into
9,500,000.00 2,375,000.00
deferred income
Total 42,158,252.58 10,539,563.16 32,709,956.58 8,177,489.16
2. Deferred income tax liabilities not offset
Closing balance Opening balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Assets assessment appreciation for
enterprise merger not under common 67,877,937.66 16,969,484.39 72,313,641.24 18,078,410.29
control
Changes in fair value of
464,237.62 116,059.41 472,126.44 118,031.61
available-for-sale financial assets
Changes in the fair value of
held-for-trading financial assets
Changes in fair value of financial
assets designated as the financial
assets at fair value through profit and
loss
Changes in fair value of investment
properties
Changes in fair value of productive
biological asset
Total 68,342,175.28 17,085,543.80 72,785,767.68 18,196,441.90
3. Deductible temporary differences of unrecognized deferred income tax assets
162
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Item Closing balance Opening balance
Asset impairment provision 11,296,252.62 11,278,568.98
Estimated liabilities
Deductible losses 39,063,382.24 43,425,688.98
Total 50,359,634.86 54,704,257.96
Note: State that the deductible temporary differences and deductible losses are not recognized because it is
uncertain to make sufficient taxable income in the future.
4. The deductible losses of deferred income tax assets that are not recognized will come due in the following
years:
Item Closing balance Opening balance Remarks
Year 2014 - 6,621,227.68
Year 2015 - ---
Year 2016 13,071,134.55 16,667,858.70
Year 2017 7,431,196.64 7,431,196.64
Year 2018 11,864,843.19 12,705,405.96
Year 2019 6,696,207.86
Total 39,063,382.24 43,425,688.98
Note 18 Other non-current assets
Type & Content Closing balance Opening balance
Advance for purchasing software 520,000.00
Advance for e-market project funds 4,135,063.54
Total 4,655,063.54
Note 19 Short-term borrowing
1. Classification of short-term borrowings
Item Closing balance Opening balance
Pledge loans 59,246,687.38
Mortgage loans 100,000,000.00
Guaranteed loans 30,000,000.00 70,000,000.00
Total 189,246,687.38 70,000,000.00
2. There are no short-term borrowings overdue and outstanding in the current period
3. Hostage for pledge loans is the export rebates of the Company's wholly-owned subsidiary Shenzhen SEG
E-Commerce Co., Ltd.
Note 20 Accounts payable
Item Closing balance Opening balance
Trade accounts payable 195,385,013.38 178,892,539.27
Others 4,744,638.54 2,858,603.21
Total 200,129,651.92 181,751,142.48
163
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Note 21 Advances from customers
1. Advances
Item Closing balance Opening balance
Brand royalty advances 9,390,743.64 8,161,586.03
Rent advances 136,482,047.49 170,489,645.95
Advances on sales 27,013,851.48 22,804,276.44
Advertisement fee advances 6,353,263.26 5,708,981.48
Others 3,819,405.44 1,520,000.00
Total 183,059,311.31 208,684,489.90
Note 22 Payroll payable
1. Payroll payables
Current period Current period
Item Opening balance Closing balance
increase decrease
Short-term remuneration 16,651,068.19 92,673,539.12 90,604,874.00 18,719,733.31
Post-employment benefits- defined
414,314.09 4,731,412.60 5,006,616.67 139,110.02
contribution plans
Total 17,065,382.28 97,404,951.72 95,611,490.67 18,858,843.33
2. Short-term remuneration
Current period Current period
Item Opening balance Closing balance
increase decrease
Wages, bonuses, allowances and
14,095,932.51 84,748,706.16 82,190,286.29 16,654,352.38
subsidies
Welfare expense of employee 2,029,590.59 2,029,590.59 -
Social insurance premiums 48,560.48 1,719,349.22 1,751,411.54 16,498.16
Including: medical insurance
45,701.76 1,518,363.58 1,553,770.80 10,294.54
premium
Including: 12,299.70 6,660.00 5,639.70
Work injury insurance 1,030.54 77,693.55 78,458.71 265.38
Maternity insurance 1,828.18 110,992.39 112,522.03 298.54
Housing fund 1,266,226.48 2,235,213.87 2,342,155.73 1,159,284.62
Labor union expenditures 695,916.72 1,400,456.84 1,478,658.14 617,715.42
Short-term accumulated
-
compensated absences
Short-term profit (bonus) -sharing
-
plan
Other short-term remunerations 544,432.00 540,222.44 812,771.71 271,882.73
Total 16,651,068.19 92,673,539.12 90,604,874.00 18,719,733.31
3. Defined contribution plans
Current period Current period
Item Opening balance Closing balance
increase decrease
164
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Current period Current period
Item Opening balance Closing balance
increase decrease
Pension insurance 51,020.63 3,415,486.65 3,457,219.20 9,288.08
Unemployment insurance premium 3,293.46 177,443.49 180,073.52 663.43
Corporate annuity payment 360,000.00 1,138,482.46 1,369,323.95 129,158.51
Total 414,314.09 4,731,412.60 5,006,616.67 139,110.02
Note 23 Taxes payable
Taxes and fees Closing balance Opening balance
Value-added tax 1,659,452.21 1,888,195.42
Business tax 1,028,150.77 1,531,012.70
Enterprise income tax 32,336,241.19 28,888,087.03
Individual income tax 1,098,931.96 1,039,647.28
Urban maintenance and construction tax 720,549.53 1,142,327.32
Education surtax 461,020.60 783,608.53
Housing property tax 1,721,703.23 1,597,968.75
Stamp tax and water fund 254,539.95 211,126.00
Others 165,107.03 82,919.18
Total 39,445,696.47 37,164,892.21
Note 24 Interest payable
Item Closing balance Opening balance
Interest payable on short-term loans 232,749.99
Short-term financing bond accrued interest payable 10,062,500.66
Total 10,295,250.65
Note 25 Dividends payable
Reason for not making
Item Closing balance Opening balance
payment for over one year
Ordinary stock dividends 1,717,882.74 1,317,296.42
Total 1,717,882.74 1,317,296.42
Note 26 Other payables
1. Other payables listed by nature of payables
Nature of payables Closing balance Opening balance
Deposit and earnest money 119,826,258.74 105,890,078.80
Maintenance cost of central air-conditioning and special
11,754,618.52 10,405,170.82
maintenance fund
Receipts under custody 13,624,148.51 12,032,973.77
Financing of related parties 57,653,186.81 5,200,000.00
Electronics market utilities and rentals payable 19,858,574.55 11,470,630.10
165
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Nature of payables Closing balance Opening balance
Others 22,087,615.93 19,190,965.32
Total 244,804,403.06 164,189,818.81
Note 27 Other current liabilities
Item Closing balance Opening balance
Short-term financing bond payable 250,000,000.00
Total 250,000,000.00
1. Increase and decrease of short-term financing bond payable
Bond name Book value Issuing date Bond term Issue amount Opening balance
Short-term financing
100.00 15.05.14 365 days 250,000,000.00
bond
Total 250,000,000.00
Continued from above:
Amortization of
Issuance in the Interests accrued at Repayment in the
Bond name premiums and Closing balance
current period book value current period
discounts
Short-term financing
250,000,000.00 10,062,500.66 250,000,000.00
bond
Total 10,062,500.66 250,000,000.00
Note 28 Deferred income
Current period Current period
Item Opening balance Closing balance Cause
increase decrease
Asset-related government
151,494.61 9,500,000.00 57,834.72 9,593,659.89
subsidy
Income-related
610,751.58 499,040.46 111,711.12
government subsidy
Total 762,246.19 9,500,000.00 556,875.18 9,705,371.01
1. Deferred income related to government subsidies
Amount
Amount of recorded in Related to
Opening
Liability items subsidies added in outside-operation Other Changes Closing balance assets/ Related
balance
the current period income in the to income
current period
Oneline SEG project Related to
151,494.61 57,834.72 93,659.89
subsidy assets
Related to
Project budget subsidies 610,751.58 499,040.46 111,711.12
income
Subsidy for the
Related to
construction of Nantong 9,500,000.00 9,500,000.00
assets
SEG Electronics Market
Total 762,246.19 9,500,000.00 556,875.18 0 9,705,371.01
166
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Note 29 Share capital
Increase/Decrease of the year
Item Opening balance Capitalization Closing balance
New share
Bonus share of public Others Subtotal
offering
reserve
Sum of shares 784,799,010.00 784,799,010.00
Note 30 Capital reserve
Current period Current period
Item Opening balance Closing balance
increase decrease
Capital stock premium 322,272,354.94 67,618.87 322,339,973.81
Other capital reserves 302,371.12 --- 82,387,283.91
82,084,912.79
Total 404,357,267.73 369,989.99 --- 404,727,257.72
Capital premium increase in this year refers to the capital stock premium of 67,618.87 Yuan recognized in the
Company's consolidated statements at the shareholding ratio of 46% after the subsidiary Changsha SEG
Development Co., Ltd records the compensation payment to shareholders of 146,997.54 Yuan into capital reserve
prior to receipt of the stock equities purchased by the Company. Increase in other capital reserves refers to the
proceeds of 302,371.12 Yuan from sales of fractional shares received from China Securities Depository and
Clearing Company Limited.
Note 31 Other comprehensive income
Amount incurred in the report period
Less: amount
recorded in
Amount other
incurred comprehensive Attributable
Opening Attributable Closing
Item before income in Less: to the
balance to minority balance
income previous Income parent
shareholders
tax in the period and tax company
after tax
current transferred in after tax
period profit and loss
in current
period
1.Other comprehensive income
cannot reclassified into profit
and loss in future
1) Changes generated by
re-measuring and redefining net
liabilities or net assets in benefit
plan
2) Proportion calculated by the
equity method in other
comprehensive income not to be
reclassified into profit and loss
in subsequent accounting
periods of invested company
2. Other comprehensive income
167
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Amount incurred in the report period
Less: amount
recorded in
Amount other
incurred comprehensive Attributable
Opening Attributable Closing
Item before income in Less: to the
balance to minority balance
income previous Income parent
shareholders
tax in the period and tax company
after tax
current transferred in after tax
period profit and loss
in current
period
to be reclassified in profit and
loss in future
Proportion calculated by the
equity method in other
comprehensive income to be
reclassified into profit and loss
upon satisfaction of specified
conditions in subsequent
accounting periods of invested
company
2. (2) Profit or loss from change
of the fair value of financial 235,756.32 -7,888.79 -1,972.20 -3,939.27 -1,977.32 231,817.05
assets available for sale
Total of other comprehensive
235,756.32 -7,888.79 -1,972.20 -3,939.27 -1,977.32 231,817.05
income
Note 32 Surplus public reserve
Current period Current period
Item Opening balance Closing balance
increase decrease
Statutory surplus reserve 102,912,835.67 102,912,835.67
Total 102,912,835.67 102,912,835.67
Note 33 Retained earnings
Item Amount Accrual/Distribution Rate
Before adjustment undistributed profits of the end of the
-42,080,494.64 —
previous period
After adjustment total period-beginning undistributed profits
—
(+ for increase, - for decrease)
After adjustment period-beginning undistributed profit -42,080,494.64 —
Plus: Plus: Net profit attributable to owners of the parent
47,403,384.49 —
company
Less: Accrual of statutory surplus reserve
Accrual of free surplus reserve
Accrual of reserve fund
Accrual of enterprise development fund
Accrual of bonus and welfare fund
Ordinary share dividends payable
168
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Item Amount Accrual/Distribution Rate
Ordinary share dividends converted to share capital
Preferred stock dividend
Other distributions to shareholders
Capital redemption
Distribution of other profits
Plus: Surplus public reserve compensating losses
Changes generated by carrying over the re-measured and
redefined net liabilities or net assets in the benefit plan
Other interior carry-over of owner's equity
Year-end undistributed profits 5,322,889.85
Note 34 Operating revenue and operating cost
1. Operating revenue and operating cost
Amount incurred in the report period Amount incurred in the previous period
Item
Income Cost Income Cost
Main businesses 662,288,806.93 555,763,805.28 578,404,784.64 480,454,501.23
Other businesses 19,055,114.06 5,180,652.50 18,953,473.18 5,956,684.52
2. Main operating businesses (by industry)
Amount incurred in the report period Amount incurred in the previous period
Name of company
Operating income Operating cost Operating income Operating cost
(1) Industry --- ---
(2) Trade 280,659,908.96 273,086,775.55 221,129,162.14 217,236,010.56
(3) Real estate --- ---
(4) Leasing and others 381,628,897.97 282,677,029.73 357,275,622.50 263,218,490.67
Total 662,288,806.93 555,763,805.28 578,404,784.64 480,454,501.23
3. Operating income of top five customers of the Company
Proportion in the total operating income of
Client Name Total operating income
the Company (%)
Shenzhen Runneng Digital Co., Ltd. 110,510,446.52 16.22
Shenzhen Wodewo Trading Co., Ltd. 39,288,132.58 5.77
Shenzhen Comnet Technology Co., Ltd. 21,296,350.41 3.13
Shenzhen Nanfang Yunhe Technology Co., Ltd. 17,186,953.52 2.52
Beijing Rephen Lihongqing Trading Co., Ltd 7,353,056.07 1.08
195,634,939.10 28.72
Note 35 Operating tax and surcharges
Item Amount incurred in the report period Amount incurred in the previous period
Business tax 23,430,459.38 20,891,719.44
Urban maintenance and construction tax 1,700,075.86 1,543,932.03
169
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Item Amount incurred in the report period Amount incurred in the previous period
Education surtax 1,265,708.52 1,092,357.09
Others 216,391.37 139,530.13
Total 26,612,635.13 23,667,538.69
Note 36 Financing cost
Amount incurred in the report Amount incurred in the previous
Category
period period
Interest expenses 17,742,811.44 89,863.01
Less: Interest income 6,804,715.70 11,256,266.41
Loss on exchange -2,273,683.31 -153,347.82
Commission 504,231.17 831,661.53
Total 9,168,643.60 -10,488,089.69
Note 37 Loss from asset impairment
Item Amount incurred in the report period Amount incurred in the previous period
Loss from bad debt -34,020.36 -2,503,617.76
Impairment losses on loans and advances 2,325,411.66 1,367,443.14
Total 2,291,391.30 -1,136,174.62
Note 38 Investment income
1. Details on investment income
Amount incurred in the report Amount incurred in the
Item
period previous period
Long-term equity investment income by the cost method 0.00 ---
Long-term equity investment income by the equity method -24,987,349.62 -3,857,446.81
Income from disposal of long-term equity investments 0.00 1,860,737.50
Income during the possession of held-for-trading financial assets 0.00 ---
Income from held-to-maturity investments 0.00 ---
Income during the possession of available-for-sale financial assets 16,991.24 20,025.39
Income from disposal of held-for-trading financial assets 0.00 ---
Income from held-to-maturity investments 0.00 ---
Income from available-for-sale financial assets 0.00 ---
Others (Financial products) 31,198,391.83 15,054,492.51
Total 6,228,033.45 13,077,808.59
Note 39 Non-operating income
Amount recorded into current
Amount incurred in the report Amount incurred in the
Item non-recurring gains and
period previous period
losses
Total gains on disposal of non-current
21,274.83 44,307.25 21,274.83
assets
Including: Profit from disposal of
21,274.83 44,307.25 21,274.83
fixed assets
170
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Profit from disposal of intangible
0 --- 0
assets
Government subsidies 1,554,585.78 1,117,834.72 1,554,585.78
Liquidated damages 1,152,807.95 479,280.43 1,152,807.95
Others 406,587.44 884,884.30 406,587.44
Total 3,135,256.00 2,526,306.70 3,135,256.00
1. Government subsidies recorded into current gains and losses
Amount incurred in the elated to assets
Subsidy projects
report period Related to income
Special industrial development fund 491,000.00 Related to income
Subsidies for online SEG projects 57,834.72 Related to assets
Project budget subsidies 499,040.46 Related to income
Funds for guiding the development of service industry 500,000.00 Related to income
Others 6,710.60 Related to income
Total 1,554,585.78
Note 40 Non-operating expenses
Amount recorded into
Amount incurred in the Amount incurred in the
Item current non-recurring gains
report period previous period
and losses
Total loss from disposal of non-current
14,799.49 94,416.29 14,799.49
assets
Including: Loss from disposal of fixed assets 14,799.49 92,848.19 14,799.49
Loss from disposal of intangible assets 0.00 1,568.10 0.00
Donation expenses 83,000.00 120,000.00 83,000.00
Abnormal loss 0 --- 0
Compensation for loss 49,382.00 --- 49,382.00
Others 928,572.43 31,657.92 928,572.43
Total 1,075,753.92 246,074.21 1,075,753.92
Note 41 Income tax
1. Income tax
Item Amount incurred in the report period Amount incurred in the previous period
Income tax of the current period 36,558,413.93 31,961,753.92
Deferred income tax -3,470,999.90 492,006.97
Total 33,087,414.03 32,453,760.89
2. Accounting profit and adjustment process of income tax expense
Item Amount incurred in the report period
Total profit 110,784,734.85
Income tax expense calculated at statutory/applicable tax rate 27,696,183.71
Impact of different tax rates adopted by subsidiaries -1,097,225.63
171
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Item Amount incurred in the report period
Impact of adjustment of income tax rates in previous period -661,917.10
Impact of nontaxable income 6,316,544.85
Impact of nondeductible cost, expenses and loss 1,628,825.02
Impact of deductible loss adopting deferred income tax assets not recognized in
-1,373,048.89
previous period
Impact of deductible temporary difference or deductible loss of deferred income tax
1,674,051.97
assets not recognized in current period
Government subsidies received (not listed in non-operating income) 2,375,000.00
Deferred income tax -3,470,999.90
Income tax 33,087,414.03
Note 42 Notes on the cash flow statement
1. Other cash received concerning operating activities
Amount incurred in the previous
Item Amount incurred in the report period
period
Incomings and outgoings 49,899,809.43 49,459,110.05
Goods payment collected from tenants 278,226,239.78 323,601,666.90
Interest income 6,804,715.70 11,256,266.41
Non-operating income 3,077,421.28 2,367,079.96
Total 338,008,186.19 386,684,123.32
2. Other cash paid concerning operating activities
Amount incurred in the previous
Item Amount incurred in the report period
period
Payment of bidding deposit of land 60,000,000.00
Incomings and outgoings 36,450,341.99 32,810,317.53
Goods payment paid for tenants 274,400,400.19 325,941,879.50
Cash expenses 21,205,139.85 22,648,592.92
Non-operating expenses 1,060,954.43 144,075.51
Total 393,116,836.46 381,544,865.46
3. Other cash received concerning investing activities
Amount incurred in the previous
Item Amount incurred in the report period
period
Asset-related government subsidy 9,500,000.00
Total 9,500,000.00
4. Other cash paid concerning investing activities
Amount incurred in the previous
Item Amount incurred in the report period
period
Net cash received from disposal of subsidiaries 2,044,318.82
Total 2,044,318.82
172
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
5. Other cash received concerning financing activities
Amount incurred in the previous
Item Amount incurred in the report period
period
Cash received from disposal of fractional shares 302,371.12
(5) Interbank financing of related parties 72,650,000.00 25,000,000.00
Total 72,952,371.12 25,000,000.00
6. Other cash paid concerning financing activities
Amount incurred in the previous
Item Amount incurred in the report period
period
(5) Interbank financing of related parties 20,000,000.00 20,000,000.00
Payment of cash deposit 1,000,000.00
Loan interests paid to related party 295,068.50 89,863.01
Payment for issuance of short-term financing bonds 742,500.00
Total 21,037,568.50 21,089,863.01
Note 43 Supplementary information to the cash flow statement
1. Supplementary information to the cash flow statement
Amount incurred in the report Amount incurred in the
Item
period previous period
1. Reconciliation of net profit to cash flows of operating activities
Net profit 77,697,320.82 72,798,945.55
Plus: Asset impairment provision 2,291,391.30 -1,136,174.62
Depreciation of fixed assets, oil & gas assets and consumable
24,050,023.59 23,567,728.20
biological assets
Amortization of intangible assets 235,813.92 281,738.76
Amortization of long-term expenses to be apportioned 15,012,751.26 12,456,564.91
Loss on disposal of fixed assets, intangible assets, and other
-6,475.34 50,109.04
long-term assets ("-" for profit)
Loss on discard of fixed asset ("-" for profit) ---
Loss on change of fair value ("-" for profit) ---
Financial expenses ("–" for income) 17,742,811.44 89,863.01
Income from investment ("-" for loss) -6,228,033.45 -13,077,808.59
Decrease in deferred tax assets ("–" for increase) -2,362,074.00 1,600,932.87
Increase in deferred tax liabilities ("–" for decrease) -1,108,925.90 -1,108,925.90
Inventory decrease ("–" for increase) -180,280,665.22 -95,285,797.96
Decrease in accounts receivable relating to operating activities ("–"
-77,682,986.62 -161,173,280.12
for increase)
Increase in accounts payable relating to operating activities ("–" for
-297,294,572.74 38,405,558.15
decrease)
Others ---
Net cash flow from operating activities -427,933,620.94 -122,530,546.70
Investment and financing activities not Involving cash receipts and ---
173
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Amount incurred in the report Amount incurred in the
Item
period previous period
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 ---
Closing balance 382,056,680.70 335,593,493.81
Less: Opening balance of cash 335,593,493.81 453,132,467.18
Plus: Period-end cash equivalents ---
Less: Opening balance of cash equivalents ---
Net increase in cash and cash equivalents 46,463,186.89 -117,538,973.37
2. Combination of cash and cash equivalents:
Item Closing balance Opening balance
1. Cash 382,056,680.70 335,593,493.81
Including: Cash on hand 602,592.57 496,319.50
Bank deposits available for payment at any time 381,404,611.82 335,064,832.27
Other monetary capital available for payment at any time 49,476.31 32,342.04
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 ---
2. Cash equivalents ---
Including: Bond investments due within 3 months ---
3. Period-end balance of cash and cash equivalents 382,056,680.70 335,593,493.81
Including: Cash and cash equivalents for which there are restrictions on
the use by the parent company and subsidiaries
Note 44 Assets of which the ownership or right to use is restricted
Item Balance Reason for restriction
Monetary funds 1,000,000.00 Security deposit for credit card payment
Investment properties 56,841,540.45 Pledge for bank loans
Fixed assets 16,450,892.58 Pledge for bank loans
Total 74,292,433.03
Note 45 Foreign currency monetary items
1. Foreign currency monetary items
Ending balance of foreign Ending balance after
Item Rate of exchange
currency conversion into RMB
Monetary funds
Including: USD 662,762.77 6.1190 4,055,453.39
HK$ 240.00 0.78887 191.14
Accounts receivable
174
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Ending balance of foreign Ending balance after
Item Rate of exchange
currency conversion into RMB
Including : USD 23,688,505.70 6.1190 144,949,966.38
VII. Change of consolidation scope
(1) Merger of the enterprises under the control of a same entity
1. Enterprises merger not under common control in the current period.
(2) Merger of the enterprises under the control of a same entity
1. No enterprises merger not under common control occurred in the current period
(5) Counter purchases in the current year
1. Counter purchase not occurred in the current period
(6) Disposal of subsidiaries
1. No disposal of subsidiaries occurred in the current period
VIII. Equity in other entities
(1) Equity in subsidiaries
1. Composition of enterprise group
Principal place Place of Nature of Share-holding proportion (%) Way of
Company name
of business registration business Directly Indirectly acquisition
Electronics Established
Xi'an SEG Electronic
Xi'an Xi'an market lease 65.00 through
Market Co., Ltd.
management investment
Shenzhen SEG Electronics Electronics Established
Market Management Co., Shenzhen Shenzhen market lease 70.00 through
Ltd. management investment
Electronics Established
Suzhou SEG Electronic
Su Zhou Su Zhou market lease 45.00 through
Market Co., Ltd.
management investment
Hotel
Shenzhen Mellow Orange management, Established
Business Hotel Shenzhen Shenzhen consultancy and --- 66.58 through
Management Co., Ltd property investment
management
Petty loan
business (pooling
public deposits is
Established
Shenzhen SEG Credit Co., prohibited)
Shenzhen Shenzhen 36.00 17.02 through
Ltd. within the
investment
administrative
region of
Shenzhen.
Shenzhen SEG Shenzhen Shenzhen E-commerce 51.00 Established
175
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Company name Principal place Place of Nature of Share-holding proportion (%) Way of
E-Commerce Co., Ltd. of business registration business acquisition
investment
Market facilities
leasing, property
Shenzhen SEG Electronics management, Established
Market Management Co., Nanjing Nanjing sales of 100.00 through
Ltd. electronic investment
products and
advertisement
Property leasing,
sales of Established
Xi'an Hairong SEG
Xi'an Xi'an electronic 51.00 through
Electronic Market Co., Ltd.
products and investment
advertisement
Electronics Established
Wujiang SEG Electronics
Wujiang Wujiang market lease 51.00 through
Market Co., Ltd.
management investment
Electronics Established
Wuxi SEG Electronics
Wuxi Wuxi market lease 51.00 through
Market Co., Ltd
management investment
Shunde SEG Electronics Electronics Established
Market Management Co., Foshan Foshan market lease 100.00 through
Ltd management investment
Nanning SEG Electronics Electronics Established
Market Management Co., Nanning Nanning market lease 100.00 through
Ltd. management investment
Established
Nantong SEG Times Square real estate
Nantong Nantong 100.00 through
Development Co., Ltd. development
investment
Merger of the
Shenzhen SEG Baohua
Property lease enterprises under
Enterprise Development Shenzhen Shenzhen 66.58
and management the control of a
Co., Ltd.
same entity
Investment in Merger of the
Shenzhen SEG Industrial industrial and enterprises under
Shenzhen Shenzhen 100.00
Investment Co., Ltd. commercial the control of a
businesses same entity
Merger of the
Changsha SEG enterprises under
Changsha Changsha Property lease 46.00
Development Co., Ltd. the control of a
same entity
Established
Yantai SEG Times Square real estate
Yantai Yantai 90.00 through
Development Co., Ltd. development
investment
Nantong SEG Commercial Established
Operation Management Co., Nantong Nantong 100.00 through
Ltd. investment
Established
Zhengzhou SEG Digital
Su Zhou Su Zhou 100.00 through
Plaza Management Co., Ltd.
investment
Xi'an Fengdong New Town real estate Established
Xi'an Xi'an 100.00
SEG Times Square development through
176
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Company name Principal place Place of Nature of Share-holding proportion (%) Way of
Properties Co., Ltd. of business registration business acquisition
(1) Reason for difference of shareholding ratio of subsidiaries and proportion of voting rights
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. Therefore, the Company has obtained the control of Changsha SEG Development
Co., Ltd.
(2) Basis for controlling the operation of invested company with 50% or below voting rights
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. Major non-wholly owned subsidiaries
Profit and loss
Equity Dividends paid to Minority
attributable to
proportion of minority shareholders' equity
Company name minority Remarks
minority shareholders in the at the end of the
shareholders in the
shareholders current period period
current period
Shenzhen SEG Credit Co., Ltd. 46.98 13,958,747.95 8,592,737.49 83,913,496.56
Changsha SEG Development Co.,
54.00 259,420.73 59,030,516.10
Ltd.
Shenzhen SEG Baohua Enterprise
33.42 8,325,200.09 5,148,000.00 32,197,638.66
Development Co., Ltd.
Total 22,543,368.77 13,740,737.49 175,141,651.32
3. Main financial information of major non-wholly owned subsidiaries
Unit: RMB ten thousand Yuan
Closing balance
Company
name Non-current Total assets in Non-current
Current assets: Current liabilities Total liabilities
assets total liabilities
Shenzhen SEG
Credit Co., 42,768,150.12 452,858,389.93 495,626,540.05 313,882,188.08 - 313,882,188.08
Ltd.
Changsha
SEG
4,480,359.54 139,281,931.91 143,762,291.45 17,477,036.50 16,969,484.39 34,446,520.89
Development
Co., Ltd.
Shenzhen SEG
Baohua
Enterprise 84,928,255.69 56,270,653.64 141,198,909.33 44,740,424.26 116,059.41 44,856,483.67
Development
Co., Ltd.
Total 132,176,765.35 648,410,975.48 780,587,740.83 376,099,648.84 17,085,543.80 393,185,192.64
177
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Continued from above:
Opening balance
Company
name Non-current Total assets in Non-current
Current assets: Current liabilities Total liabilities
assets total liabilities
Shenzhen SEG
Credit Co., 7,086,988.02 244,197,122.79 251,284,110.81 80,961,662.74 80,961,662.74
Ltd.
Changsha SEG
Development 5,605,061.09 148,109,656.20 153,714,717.29 26,947,942.73 18,078,410.29 45,026,353.02
Co., Ltd.
Shenzhen SEG
Baohua
Enterprise 76,087,881.69 53,798,420.09 129,886,301.78 42,927,170.51 118,031.61 43,045,202.12
Development
Co., Ltd.
Total 88,779,930.80 446,105,199.08 534,885,129.88 150,836,775.98 18,196,441.90 169,033,217.88
Continued from above:
Amount incurred in the report period Amount incurred in the previous period
Company name
Operating income Net profit Operating income Net profit
Shenzhen SEG Credit Co., Ltd. 62,998,793.90 29,712,107.16 43,369,903.00 18,111,251.96
Changsha SEG Development
21,651,924.25 480,408.75 20,130,070.13 207,424.49
Co., Ltd.
Shenzhen SEG Baohua
Enterprise Development Co., 81,708,199.76 24,911,642.59 75,092,904.18 18,649,187.93
Ltd.
Total 166,358,917.91 55,104,158.50 138,592,877.31 36,967,864.38
(2) Equity in joint venture arrangements or associated enterprise
1. Important joint ventures or associated enterprises
Share-holding proportion
Name of joint venture or Place of Place of Nature of Accounting
(%)
associated enterprise operation registration business treatment method
Directly Indirectly
Shenzhen Huakong SEG Co., Ltd. Shenzhen Shenzhen Manufacturing 22.45 Equity method
Shanghai SEG Electronic Market Service
Shanghai Shanghai 35.00 Equity method
Co., Ltd. industry
2. Main financial information of important joint ventures
Ending balance/amount incurred in current period
Item Shanghai SEG Electronic Market Co.,
Shenzhen Huakong SEG Co., Ltd.
Ltd.
Current assets: 162,798,951.60 30,650,791.15
Non-current assets 258,382,060.97 37,816.64
Assets in total 421,181,012.57 30,688,607.79
Current liabilities 306,029,489.78 20,289,991.11
Non-current liabilities 2,281,336.73
178
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Ending balance/amount incurred in current period
Item Shanghai SEG Electronic Market Co.,
Shenzhen Huakong SEG Co., Ltd.
Ltd.
Total liabilities 308,310,826.51 20,289,991.11
Minority shareholders' equity 29,767,592.47
Shareholders' equity attributable to the parent
83,102,593.59 10,293,666.63
company
Proportion of net assets calculated according to
18,656,532.26 3,602,783.32
shareholding ratio
Adjusting events
Goodwill
Unrealized profit in internal transaction
Others
Book value of equity investment in associated
77,546,499.27 3,576,788.18
enterprise
Fair value in equity investment of public offering 1,759,755,588.42
Operating income 65,682,231.97 21,463,752.09
Net profit -113,131,477.46 898,454.72
Net profit from terminating operation
Other comprehensive income
Total comprehensive income -113,131,477.46 898,454.72
Dividends received by the company from
5,992,172.96
associated enterprise in current period
Continued from above:
Opening balance/Amount incurred in previous period
Item Shanghai SEG Electronic Market Co.,
Shenzhen Huakong SEG Co., Ltd.
Ltd.
Current assets: 337,305,515.02 16,121,983.76
Non-current assets 254,292,914.86 35,607,483.87
Total assets in total 591,598,429.88 51,729,467.63
Current liabilities 395,336,847.19 25,286,973.74
Non-current liabilities 456,054.73 -
Total liabilities 395,792,901.92 25,286,973.74
Minority shareholders' equity -
Shareholders' equity attributable to the parent
195,805,527.96 26,442,493.89
company
Proportion of net assets calculated according to
43,958,341.03 9,254,872.86
shareholding ratio
Adjusting events
Goodwill
Unrealized profit in internal transaction
Others
Book value of equity investment in associated 102,848,308.04 9,254,501.99
179
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Opening balance/Amount incurred in previous period
Item Shanghai SEG Electronic Market Co.,
Shenzhen Huakong SEG Co., Ltd.
Ltd.
enterprise
Fair value in equity investment of public offering 1,109,411,131.83
Operating income 721,757,334.54 40,771,354.98
Net profit -37,201,394.29 12,840,760.59
Net profit from terminating operation
Other comprehensive income -
Total comprehensive income -37,201,394.29 12,840,760.59
Dividends received by the company from
3,349,766.00
associated enterprise in current period
IX. Fair value
(1) Financial instruments measured at fair value
The Company lists the book values at the three fair value levels as at December 31, 2014 of the financial asset
instruments measured at fair value. When the fair value is generally cataloged as three levels, it is based on the
lowest level of the three levels to which the important input values belong at the measurement of fair value. Such
three levels are defined as follows:
Level 1: the unadjusted price of the same assets or liabilities quoted in the active market at the date of
measurement;
Level 2: the input value directly or indirectly observable of the related asset or liability other than the input value
at Level 1
Input values at Level 2 including: 1) price of similar asset or liability quoted at the active market; 2) price of the
same or similar asset or liability quoted at inactive market; 3) Other observable input values other than the quoted
price, including the observable interest rate and yield curve, implied volatility and credit spread etc.; 4) Input
value verified at the market etc..
Level 3: non-observable input value of related asset or liability.
(2) Measurement of fair value at end of the period
1. Continuous measurement of fair value
Period-end fair value
Item
Level 1 Level 2 Level 3 Total
Financial assets available for
554,642.62 554,642.62
sale
Investment of debt
instruments
Investment of equity
554,642.62 554,642.62
instruments
Other investments
180
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
X. Related parties and associated transactions
(1) Information on subsidiaries of the Company:
Share-holding
Registered Voting right
proportion
Place of Capital proportion
Name of parent company Nature of business over the
registration (RMB ten over the
Company
thousand Yuan) Company (%)
(%)
Comprehensive
Shenzhen SEG Group Co., Ltd. Shenzhen 135,542.00 30.24 30.24
business
1. Shenzhen Municipal People's Government State-owned Assets Supervision and Administration Commission is
the final controller of the Company.
(2) For information of the Company's subsidiary, please see (1) Equity in subsidiaries in Note 7 for details
(3) Information on the joint ventures and associated enterprises of the Company
For information of important joint venture or associated enterprise of the Company, please see (2) Equity in joint
venture arrangement or associated enterprise in Note 8
(4) Information of other related parties
Name of other related parties Relationship between other related parties and the Company
Shenzhen SEG Property Development Co., Ltd. Subsidiary of shareholders
Shenzhen SEG Group Service Co., Ltd Subsidiary of shareholders
Shenzhen SEG Computers Co., Ltd Subsidiary of shareholders
Shenzhen SEG Hi-tech Industrial Co., Ltd. Subsidiary of shareholders
Shenzhen SEG Real Estate Investment Co., Ltd. Subsidiary of shareholders
Shenzhen SEG Business Operation Co., Ltd. Subsidiary of the controlling shareholder
(7) Related party transaction
1. The transactions among the subsidiaries that have controlling relationship with the Company and have been
included in the consolidation scope as well as the transactions between the subsidiaries and the parent company
have been offset.
2. Information on associate entrust
1) Entrusted management of the Company
Commencement Termination Pricing basis of Income from entrust
Type of
Name of trustor Name of trustee date of date of income from recognized in the
entrusted asset
trusteeship trusteeship entrust current period
SEG
Shenzhen SEG Shenzhen SEG Trusteeship
Communications 2011.2.1 2015.1.31 200,000.00
Group Co., Ltd. Co., Ltd. Agreement
Market
Total 200,000.00
3. Information on leases between the Company and related parties
181
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
2) The Company as the leasee
Rental fee recognized in Rental fee recognized in
Name of lessor Type of leased assets
current period previous period
The warehouse with its
area of 809.26 square
Shenzhen SEG Group Co., Ltd. 586,200.00 519,800.00
meters on the 8th floor of
SEG Plaza
Total 586,200.00 519,800.00
2) The Company’s subsidiary as the leasee
Rental fee recognized in Rental fee recognized in
Name of lessor Type of leased assets
current period previous period
The 15th floor of SEG
Shenzhen SEG Business Operation Co.,
Plaza, with an area of 502,891.20
Ltd.
687.01 square meters
Total 502,891.20
4. Information on associated guarantee
3) The Company as the guarantor
Has the
guarantee
Warrantee Amount of guarantee Starting date Ending date
been
fulfilled?
Two years from the date on which the
Shenzhen SEG Credit Co., Ltd. 50,000,000.00 No
principal creditor's right expires
Total 50,000,000.00
5. Interbank financing of related parties
4) Loans to related parties
Related party Amount of loans Starting date Repayment Date Remarks
Interests to be calculated
Shenzhen SEG Property Development
5,000,000.00 01.01.14 31.03.14 according to days actuallu
Co., Ltd.
occupied
Shenzhen SEG Property Development
5,000,000.00 20.01.14 19.04.14 Ditto
Co., Ltd.
Shenzhen SEG Property Development
5,000,000.00 01.04.14 11.06.14 Ditto
Co., Ltd.
Shenzhen SEG Property Development
5,000,000.00 20.04.14 11.06.14 Ditto
Co., Ltd.
Shenzhen SEG Group Co., Ltd. 40,000,000.00 31.12.14 06.01.15 Ditto
Shenzhen SEG Hi-tech Industrial Co.,
17,650,000.00 30.12.14 20.01.15 Ditto
Ltd.
Total 77,650,000.00
Statements on funds borrowed to related parties
182
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
As of December 31, 2014, interests at an amount of 295,068.50 Yuan was paid to Shenzhen SEG Property
Development Co., Ltd; and provision for interests at an amount of 3,186.81 Yuan payable to Shenzhen SEG Hi-tech
Industrial Co., Ltd was made.
6. Remuneration for key management （原翻译稿―6‖漏译）
Accrual of this period (Ten thousand Accrual of last period (Ten thousand
Item
Yuan) Yuan)
Remuneration of key management 340.20 310.92
7. Accounts receivable from and payable to related parties
(1) Accounts receivable from related parties
Closing balance Opening balance
Project name Related party Bad debt Bad debt
Book balance Book balance
provision provision
Other accounts
receivable
Shenzhen SEG Property
12,325.00 --- 52,000.00 ---
Development Co., Ltd.
Shenzhen SEG Group Co., Ltd. 214,491.60 --- 214,491.60 ---
(2) Accounts payable to related parties
Project name Related party Closing balance Opening balance
Dividends
payable
Shenzhen SEG Computers Co., Ltd 543,510.00 444,510.00
Other payables
Shenzhen SEG Group Co., Ltd. 40,000,000.00 200,000.00
Shenzhen SEG Property Development Co.,
5,000,000.00
Ltd.
Shenzhen SEG Hi-tech Industrial Co., Ltd. 17,653,186.81
8. Other related transactions
In 2014, the subsidiaries, i.e. Shenzhen SEG E-commerce Co., Ltd. and Shenzhen SEG High-technology
Investment Co., Ltd., carried out the cooperation in financing, and the financing income was 1,035,569.84 Yuan
this year.
XI Commitments and contingencies
(1) Major commitments
183
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
1. Signed or performing or to be performed lease contract and the minimum lease payment to be paid in
subsequent years
Xi'an
Shenzhen SEG Shenzhen SEG
Hairong
Xi'an SEG Suzhou SEG Electronics Electronics Wujiang SEG
Remaining lease SEG
Electronic Market Electronic Market Market Market Electronics
term Electronic
Co., Ltd. Co., Ltd. Management Management Co., Market Co., Ltd.
Market Co.,
Co., Ltd. Ltd.
Ltd.
Within one year
(including one 12,875,000.00 16,024,907.88 4,912,813.79 --- --- ---
year)
Above one year
but within two
13,125,000.00 16,024,907.88 5,060,198.20 --- --- ---
years (including
two years)
Above two years
but within three
13,375,000.00 16,234,383.80 5,212,004.15 --- --- ---
years (including
three years)
Over 3 years 48,750,000.00 157,211,677.96 15,137,455.15 --- --- ---
Total 88,125,000.00 205,495,877.52 30,322,471.29 Note *1 Note *2 Note *3
(Continued from above)
Nanning SEG Shunde SEG
Remaining lease Wuxi SEG Electronics Zhengzhou SEG Digital Plaza
Electronics Market Electronics Market
term Market Co., Ltd Management Co., Ltd.
Management Co., Ltd. Management Co., Ltd
Within one year
6,500,000.00 4,320,000.00 --- 13,145,482.73
(including one year)
Above one year but
within two years
8,000,000.00 4,800,000.00 --- 13,054,290.12
(including two
years)
Above two years but
within three years
8,000,000.00 5,040,000.00 --- 13,403,893.21
(including three
years)
Over 3 years 64,000,000.00 43,087,508.73 --- 82,632,739.96
Total 86,500,000.00 57,247,508.73 Note *4 122,236,406.02
Notes:
*1: According to the cooperation agreement between both parties, the annual rent is to be paid by Xi'an Hairong
SEG Electronic Market Co., Ltd in an amount equal to 70% of its profits from electronic market. Therefore, the
amount of future lease payment is uncertain.
*2: Due to adjustment of rent according to CPI, therefore, the amount of future lease payment to be paid by
Shenzhen SEG Electronics Market Management Co., Ltd is uncertain.
184
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
*3: According to the cooperation agreement between both parties, the annual housing rental fee is to be paid by
Wujiang SEG Electronics Market Co., Ltd in an amount equal to 70% of its profit before tax from electronic
market. Therefore, the amount of future lease payment is uncertain.
*4: Wuxi SEG Electronics Market Co., Ltd enjoys a rent-free period of 3 years prior to its formal opening, and
will pay the housing rental fee (rent) at 70% of its profit before tax from electronic market at the fourth year.
Therefore, the amount of future lease payment is uncertain.
Except the above commitment issues, as of December 31, 2014, the Company has no other significant undisclosed
commitment.
(2) Contingencies existing on balance sheet date
1. Contingencies formed due to providing debt guarantee to outside parties and the financial impact thereof
For debt guarantee provided to related parties, see "5) Related-Party Transaction" in Note 10 for details
XII. Events after the balance sheet date
(1) Distribution of profits
It is decided through the meeting of Board of Directors that because the profit attributable to shareholders by the
parent company, in 2014 the Company plans not to distribute to the whole shareholders, nor transfer the capital
reserve to shares.
The above plan needs to be reviewed at a meeting of shareholders.
(2) Other events after the balance sheet date:
Except the above events after the balance sheet date, as of the date of financial report, the Company has no other
significant undisclosed issues outstanding.
XIII. Notes on other important matters
(1) Purchase of financial products with idle funds
Proposal on the Company's Purchase of Financial Products With Idle Funds was deliberated and passed on the
second extraordinary general meeting of the Company on July 21, 2014, which provides that the idle funds used
by the Company for purchase of financial products cannot exceed 1 billion Yuan.
As of 31.12.14, the amount of financial products purchased by the Company and its subsidiaries is as follows:
Unit: RMB ten thousand Yuan
Wujiang SEG Shenzhen SEG Baohua Wuxi SEG Xi'an Hairong SEG
Shenzhen SEG
Company name Electronics Market Enterprise Development Co., Electronics Market Electronic Market
Co., Ltd.
Co., Ltd. Ltd. Co., Ltd Co., Ltd.
Amount 19,300.00 1,000.00 6,100.00 1,150.00 1,100.00
Continued from above:
Company name Shenzhen SEG Shenzhen SEG Credit Nanning SEG Electronics Total
185
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
E-Commerce Co., Co., Ltd. Market Management Co., Ltd.
Ltd.
Amount 3,300.00 77.90 240.00 32,267.90
XIV. Notes on main items in the financial statements of the parent company
Note 1 Accounts receivable
1. Disclosure of accounts receivable by type
Closing balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
Accounts receivable with a
significant amount individually,
7,163,876.44 77.29 7,163,876.44 100.00
for which bad debt provision is
separately accrued
Receivables for which bad debt
provision is accrued according to
combinations of credit risk
characteristics
Accounts receivable with an
insignificant amount individually,
2,105,306.44 22.71 2,105,306.44 100.00
for which bad debt provision is
separately accrued
Total 9,269,182.88 100.00 9,269,182.88 100.00
Continued from above:
Opening balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
Accounts receivable with a
significant amount individually,
7,163,876.44 77.29 7,163,876.44 100.00
for which bad debt provision is
separately accrued
Receivables for which bad debt
provision is accrued according to
combinations of credit risk
characteristics
Accounts receivable with an
insignificant amount individually,
2,105,306.44 22.71 2,105,306.44 100.00
for which bad debt provision is
separately accrued
Total 9,269,182.88 100.00 9,269,182.88 100.00
Notes on types of accounts receivable:
186
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
1) Accounts receivable with a significant amount individually, for which bad debt provision is separately accrued
at the end of period:
Closing balance
Name of debtor Percentage
Accounts receivable Bad debt provision of Reason for provision
provision
The accounts receivable are
uncollectible because they have
Jiangsu Unicom 3,092,011.09 3,092,011.09 100.00
been outstanding for more than
five years.
The accounts receivable are
Shenzhen LiYuanshun Industrial uncollectible because they have
1,906,865.35 1,906,865.35 100.00
Co., Ltd. been outstanding for more than
five years.
The accounts receivable are
uncollectible because they have
Shanghai Tianci Industrial Co., Ltd. 899,000.00 899,000.00 100.00
been outstanding for more than
five years.
The accounts receivable are
Zhejiang Finance Information uncollectible because they have
786,000.00 786,000.00 100.00
Paging Center been outstanding for more than
five years.
The accounts receivable are
Sichuan HuiYuan Electronics Co., uncollectible because they have
480,000.00 480,000.00 100.00
Ltd. been outstanding for more than
five years.
Total 7,163,876.44 7,163,876.44 100.00
2. Bad-debt provision accrued, collected or reversed in the current period
No bad-debt provision is accrued, collected or reversed in the current period.
3. No receivables are written off in the current period.
4. Top five receivables collected according to the debtor
Percentage in the total
Name of debtor Closing balance amount of accounts Bad-debt provision accrued
receivable
Jiangsu Unicom 3,092,011.09 33.36 3,092,011.09
Shenzhen LiYuanshun Industrial Co., Ltd. 1,906,865.35 20.57 1,906,865.35
Shanghai Tianci Industrial Co., Ltd. 899,000.00 9.70 899,000.00
Zhejiang Finance Information Paging Center 786,000.00 8.48 786,000.00
Sichuan HuiYuan Electronics Co., Ltd. 480,000.00 5.18 480,000.00
Total 7,163,876.44 77.29 7,163,876.44
5. There is no accounts receivable whose recognition is terminated due to financial assets transfer in the current
period.
6. There are no assets and liabilities formed due to transfer of and further involvement in accounts receivable.
187
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Note 2 Other accounts receivable
1. Disclosure of other accounts receivable by type
Closing balance
Book balance Bad debt provision
Type Percentage Book value
Proportion
Amount Amount of
(%)
provision
Other accounts receivable with a
significant amount individually, for
8,530,276.35 1.96 8,530,276.35 100.00 -
which bad debt provision is
separately accrued
Other accounts receivable for
which bad debt provision is
410,454,248.03 94.12 1,200.00 0 410,453,048.03
accrued according to combinations
of credit risk characteristics
Including: Combination 1 1,168,219.48 0.27 1,200.00 0.10 1,167,019.48
Combination 2 409,286,028.55 93.85 - 409,286,028.55
Other accounts receivable with an
insignificant amount individually,
17,118,394.49 3.92 17,118,394.49 100.00 -
for which bad debt provision is
separately accrued
Total 436,102,918.87 100.00 25,649,870.84 5.88 410,453,048.03
Continued from above:
Opening balance
Book balance Bad debt provision
Type
Percentage Book value
Proportion
Amount Amount of
(%)
provision
Other accounts receivable with a
significant amount individually,
8,530,276.35 3.77 8,530,276.35 100.00 0.00
for which bad debt provision is
separately accrued
Other accounts receivable for
which bad debt provision is
accrued according to 200,494,573.07 88.64 600.00 200,493,973.07
combinations of credit risk
characteristics
Including: Combination 1 1,011,510.14 0.45 600.00 0.06 1,010,910.14
188
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Opening balance
Book balance Bad debt provision
Type
Percentage Book value
Proportion
Amount Amount of
(%)
provision
Combination 2 199,483,062.93 88.19 --- --- 199,483,062.93
Other accounts receivable with an
insignificant amount individually,
17,170,808.49 7.59 17,170,808.49 100.00 0.00
for which bad debt provision is
separately accrued
Total 226,195,657.91 100.00 25,701,684.84 11.36 200,493,973.07
Notes on types of other accounts receivable:
5) Other accounts receivable with a significant amount individually, for which bad debt provision is separately
accrued
Closing balance
Name of debtor Percentage
Other accounts
Bad debt provision of Reason for provision
receivable
provision
The accounts receivable are
No.1: Yangjiang Yuntong Grease uncollectible because they
8,530,276.35 8,530,276.35 100.00
Co., Ltd have been outstanding for
more than five years.
Total 8,530,276.35 8,530,276.35 100.00
6) Other accounts receivable in Combination 1, for which bad debt provision is accrued by the aging analysis
method:
Closing balance
Account receivable aging
Other accounts receivable Bad debt provision Percentage of provision
Less than one year 1,162,219.48
1-2 years
2-3 years
Over 3 years 6,000.00 1,200.00 20.00
Total 1,168,219.48 1,200.00 0.10
7) Other accounts receivable in Combination 2 include premium for lease, deposit and due from related parties.
2. Bad-debt provision accrued, collected or reversed in the current period
An amount of 51,814.00 Yuan of bad-debt provision is collected for the current period
189
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
3. No other accounts receivable are written off in the current period.
4. Category of other accounts receivable by nature
Item Closing balance Opening balance
Accounts receivable from related parties 408,087,205.17 198,258,035.55
Amount for assignment of creditor's right 22,664,045.27 22,664,045.27
Spare cash 790,404.70 65,560.70
Deposit and earnest money 1,247,233.78 1,290,784.78
Others 3,314,029.95 3,917,231.61
Total 436,102,918.87 226,195,657.91
5. Top five other accounts receivable collected according to the debtor
Percentage in the Bad debt
Account
Nature of total amount of provision
Name of debtor Closing balance receivable
payables other accounts Closing
aging
receivable balance
Nantong SEG Times Square Borrowing and Less than
273,454,674.05 62.70
Development Co., Ltd. interest one year
Borrowing and Less than
Shenzhen SEG E-Commerce Co., Ltd. 60,093,698.62 13.78
interest one year
Shenzhen SEG Industrial Investment Borrowing and Less than
44,088,490.03 10.11
Co., Ltd. interest one year
Xi'an Fengdong New Town SEG Incomings and Less than
30,000,000.00 6.88
Times Square Properties Co., Ltd. outgoings one year
No.1: Yangjiang Yuntong Grease Co., Debt restructuring
8,530,276.35 Over 5 years 1.96 8,530,276.35
Ltd of SEG Orient
Total 416,167,139.05 95.43 8,530,276.35
6. There are no receivable accounts involving government subsidies in the current period.
7. There are no other receivable accounts whose recognition is terminated due to financial assets transfer in the
current period.
8. There are no assets and liabilities formed due to transfer of and further involvement in other accounts
receivable.
Note 3 Long-term equity investment
Closing balance Opening balance
Nature of payables Bad debt Bad debt
Book balance Book value Book balance Book value
provision provision
Investment to
299,983,526.24 299,983,526.24 261,983,526.24 261,983,526.24
subsidiaries
Investment in
associated
81,123,287.45 81,123,287.45 112,102,810.03 112,102,810.03
enterprise and joint
venture
Total 381,106,813.69 - 381,106,813.69 374,086,336.27 - 374,086,336.27
190
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
1. Investment to subsidiaries
Provision for
Closing
Current impairment
Invested Initial Opening Current period balance of
period Closing balance of the
organization investment cost balance increase provision for
decrease current
impairment
period
Shenzhen SEG
Baohua
Enterprise 18,742,808.93 20,512,499.04 20,512,499.04
Development
Co., Ltd.
Shenzhen SEG
Industrial
23,780,000.00 29,181,027.20 29,181,027.20
Investment Co.,
Ltd.
Changsha SEG
Development 69,000,000.00 69,000,000.00 69,000,000.00
Co., Ltd.
Shenzhen SEG
Electronics
Market 2,100,000.00 2,100,000.00 2,100,000.00
Management
Co., Ltd.
Suzhou SEG
Electronic 1,350,000.00 1,350,000.00 1,350,000.00
Market Co., Ltd.
Xi'an SEG
Electronic 1,950,000.00 1,950,000.00 1,950,000.00
Market Co., Ltd.
Shenzhen SEG
54,000,000.00 54,000,000.00 54,000,000.00
Credit Co., Ltd.
Shenzhen SEG
E-Commerce 15,300,000.00 15,300,000.00 15,300,000.00
Co., Ltd.
Shenzhen SEG
Electronics
Market 20,000,000.00 20,000,000.00 20,000,000.00
Management
Co., Ltd.
Xi'an Hairong
SEG Electronic 1,530,000.00 1,530,000.00 1,530,000.00
Market Co., Ltd.
Wujiang SEG
Electronics 1,530,000.00 1,530,000.00 1,530,000.00
Market Co., Ltd.
Wuxi SEG
Electronics 1,530,000.00 1,530,000.00 1,530,000.00
Market Co., Ltd
Shunde SEG
Electronics
6,000,000.00 6,000,000.00 6,000,000.00
Market
Management
191
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Provision for
Closing
Current impairment
Invested Initial Opening Current period balance of
period Closing balance of the
organization investment cost balance increase provision for
decrease current
impairment
period
Co., Ltd
Nanning SEG
Electronics
Market 8,000,000.00 8,000,000.00 8,000,000.00
Management
Co., Ltd.
Nantong SEG
Times Square
30,000,000.00 30,000,000.00 30,000,000.00
Development
Co., Ltd.
Zhengzhou SEG
Digital Plaza
8,000,000.00 8,000,000.00 8,000,000.00
Management
Co., Ltd.
Xi'an Fengdong
New Town SEG
Times Square 30,000,000.00 30,000,000.00 30,000,000.00
Properties Co.,
Ltd.
Total 292,812,808.93 261,983,526.24 38,000,000.00 0.00 299,983,526.24
2. Investment in associated enterprise and joint venture
Increases and decreases in the current period
investment Adjustments in
Invested organization Opening balance Additional Decrease in profits or losses other
investment investment recognized by comprehensive
equity method income
I.
Shanghai SEG Electronic Market
9,254,501.99 314,459.15
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. 102,848,308.04 -25,301,808.77
Total 112,102,810.03 -24,987,349.62
Continued from above:
Increases and decreases in the current period Closing
Cash dividends balance of
Invested organization Accrued Closing balance provision
Changes in or profits
provision for Others for
other equity announced for
impairment impairment
distribution
I.
Shanghai SEG Electronic Market
5,992,172.96 3,576,788.18
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. 77,546,499.27
Total 5,992,172.96 81,123,287.45
192
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Note 4 Operating revenue and operating cost
1. Operating revenue and operating cost
Amount incurred in the report period Amount incurred in the previous period
Item
Income Cost Income Cost
Main businesses 125,263,172.20 76,758,875.18 124,843,963.38 75,283,936.52
Other businesses 460,890.41 379,849.32 ---
2. Main operating businesses (by industry)
Amount of the current year Amount of the previous year
Item
Operating income Operating cost Operating income Operating cost
(1) Industry --- --- --- ---
(2) Trade --- --- --- ---
(3) Real estate --- --- --- ---
(4) Leasing and others 125,263,172.20 76,758,875.18 124,843,963.38 75,283,936.52
Total 125,263,172.20 76,758,875.18 124,843,963.38 75,283,936.52
Note 5 Investment income
Amount incurred in the Amount incurred in the
Item
report period previous period
Long-term equity investment income by the cost method 25,244,873.17 15,214,120.00
Long-term equity investment income by the equity method -24,987,349.62 -3,857,446.81
Income from disposal of long-term equity investments 2,684,748.56
Investment income of financial assets measured at fair value of which
the changes are recorded into current profit and loss during the holding
period
Investment income obtained from disposal of financial assets measured
at fair value of which the changes are recorded into current profit and
loss
Investment income of held-to-maturity investment during the holding
period
Investment income of available-for-sale financial assets during the
holding period
Income from held-to-maturity investments
Income from disposal of financial assets available for sale
Gains generated from residual equity remeasured at fair value after loss
of share-controlling right
Others 30,123,920.48 11,538,625.46
Total 30,381,444.03 25,580,047.21
193
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
XV. Supplementary Materials
(1) Details on non-recurring gains and losses
Item Amount Remarks
Gains and losses from disposal of non-current assets 6,475.34
Tax refund, reduction or exemption upon approval exceeding authorized limits or
without formal documents
Government subsidies recorded into current gains and losses (except those closely
related with corporate business and enjoyed according to national standards or certain 1,554,585.78
quota)
Fund appropriation charges for non-financial entities recorded into current gains and
700,000.00
losses
Gains from the margin between the investment cost of the Company for acquisition of
subsidiaries, joint ventures and joint operation enterprises and the recognizable fair
value of net assets of invested units at the time of acquisition
Loss from transfer of non-monetary assets
Gains and losses from entrusting investment or managing 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 fair value
Net current gains and losses of a subsidiary from the period Opening to the date of
merger due to the merger of enterprises under the control of a same entity
Gains and losses from contingency items irrelevant with regular operation of the
Company
Gains and losses from fair value changes by holding of transaction financial assets
and liabilities, except effective hedging business related to regular operation of the
Company, and investment income from disposal of transaction financial assets and
liabilities as well as 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 fair value changes of investment properties, whose subsequent
measurement is carried out based on the fair value mode
Influence on current gains and losses by one-off adjustment according to tax and
accounting laws and regulations
Trustee fee from entrusted operation 200,000.00
Other non-operating income and expenses except the above-mentioned items 498,440.96
Other gains and losses fitting the definition of non-recurring gains and losses
Influenced amount of income tax -216,991.94
Amount of influence of minority shareholders' equity (after tax) -282,468.32
Total 2,460,041.82
(2) ROE and EPS
194
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Weighted average Earnings per share
Profit in report period
Return on equity (ROE) (%) Basic EPS Diluted EPS
Net profit attributable to common shareholders
3.80 0.0616 0.0616
of the Company
Net profit attributable to common shareholders
of the Company after deduction of -recurring 3.60 0.0585 0.0585
losses and gains
(3) Abnormalities on main items of the financial statements of the Company and notes on reasons
Percentage
Important subjects Closing balance Opening balance Reason for change
change (%)
Loans to banks and other Increase in loans to the enterprises of the
30,000,000.00 -
financial institutions same industry in current period
Increase in rents cleared by bills in
Notes receivable 84,618.08 -
current period
Increase in security deposit paid in
Other accounts receivable 95,366,156.27 25,033,354.72 280.96
current period
Increase in development cost of Nantong
Inventory 278,281,586.72 98,000,921.50 183.96
SEG in current period
Loans and advances Increase in scale of loan of subsidiaries
452,517,072.06 243,871,438.72 85.56
issued in current period
Reclassification of prepayments to
Other non-current assets 4,655,063.54 electronic market decoration project in
current period
Short-term borrowing 189,246,687.38 70,000,000.00 170.35 Increase in bank loans during the year
Non-payment of dividends distributed
Dividends payable 1,717,882.74 1,317,296.42 30.41
by subsidiaries in current period
Increase in rental deposit from newly
opened electronic market and the
Other payables 244,804,403.06 164,189,818.81 49.10
increase in receivables from related
parties
Short-term financing bond issued in
Other current liabilities 250,000,000.00 -
current period
Increase in government subsidies
Deferred income 9,705,371.01 762,246.19 11.73
received in current period
Increase in interest income due to
Interest income 61,496,910.07 40,429,967.84 52.11 increase in the size of the loan in current
period
Increase in handling charge and
Commissions income 9,573,910.00 2,646,841.51 261.71 commission received in the current
period
Increase in borrowings in the current
Interest expenses 3,344,972.23 1,714,995.54 95.04
period
Decrease in sales promotion expenses
Sale expenses 2,149,313.48 3,630,236.75 -40.79
paid in the current period
Increase in bank loan and issuance of
Financing cost 9,168,643.60 -10,488,089.69 -187.42 short-term financing bond in the current
period
Loss from asset 2,291,391.30 -1,136,174.62 -301.68 Increase in loan loss accrued in the
195
Shenzhen SEG Co., Ltd.
Notes to the Financial Statements 2014
Percentage
Important subjects Closing balance Opening balance Reason for change
change (%)
impairment current period and the single provision
for accounts receivable in the previous
period
Decrease in investment income
Investment income 6,228,033.45 13,077,808.59 -52.38 recognized by equity method in the
current period
Increase in expenditure of liquidated
Non-operating expenses 1,075,753.92 246,074.21 337.17
damages in the current period
Shenzhen SEG Co., Ltd.
(Official seal)
March 26, 2015
Chapter 12 Documents Available for Reference
1. Financial Statements sealed and signed by the Legal Representative, Person in charge of accounting and the
responsible person of the accounting institution (Accountant in charge);
2. The original copy sealed by the accounting firm, and signed and sealed by the certified public accountant; and
3. The original copies of all the Company‘s documents ever disclosed in the newspaper assigned by CSRC and the
manuscripts of announcements.
196
