Shenzhen SEG Co., Ltd.
2016 Annual Report
2017-028
April 2017
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 1 Important Notice, Contents and Definitions
The Board of Directors, the Board of Supervisors, the directors, the supervisors and the
senior executives guarantee that the annual report is authentic, accurate, and complete, and
that it has no false records misleading statements or major omissions, and they commit to the
individual and joint legal liabilities.
Chairman of the Board of Directors Wang Li, the Chief Financial Officer Liu Zhijun and the
responsible person of the accounting institution (Accountant in charge) Ying Huadong
hereby declare that the Financial Statements enclosed in this annual report are true,
accurate and complete.
All the directors have attended this board meeting reviewing the annual report.
The future plans, development strategies, and forward-looking statements involved in the
annual report do not constitute any tangible commitment to investors. Investors should pay
attention to investment risks.
The Company plans not to distribute cash dividends or bonus shares nor transfer reserves
into share capital.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
CONTENTS
Chapter 1 Important Notice, Contents and Definitions ...........................................2
Chapter 2 Company Profile and Main Financial Indexes ........................................6
Chapter 3 Overview of Company’s Business ........................................................... 11
Chapter 4 Management Discussion and Analysis ...................................................17
Chapter 5 Important Matters ...................................................................................49
Chapter 6 Changes in Share Capital and Information on Shareholders ............ 109
Chapter 7 Preferred Shares..................................................................................... 115
Chapter 8 Information on Directors, Supervisors, Senior Executives and Employees 116
Chapter 9 Corporate Governance ..........................................................................128
Chapter 10 Corporate Bonds ..................................................................................143
Chapter 11 Financial Report ...................................................................................144
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Definitions
Definition Refers to Description
This Company, the Company, the listed
Refers to Shenzhen SEG Co., Ltd.
company, Shen SEG
Shenzhen SEG Group Co., Ltd. Refers to Shenzhen SEG Group Co., Ltd.
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 Management 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 Plaza Management Co., Ltd.
Changsha SEG Refers to Changsha SEG Development Co., Ltd.
Mellow Orange Hotel Refers to Shenzhen Mellow Orange Business Hotel Management Co., 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.
Shunde SEG Refers to 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.
Suzhou SEG Digital Refers to Suzhou SEG Digital Plaza Management Co., Ltd.
Xi'an Fengdong New Town SEG Times Plaza Properties Co.,
Xi'an Fengdong SEG Refers to
Ltd.
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Definition Refers to Description
Nantong SEG Operation Refers to Nantong SEG Commercial Operation Management Co., Ltd.
SEG Intelligent Refers to Suzhou SEG Intelligent Technology Co., Ltd.
SEG Investment Refers to Shenzhen SEG Investment Management Co., Ltd.
SEG CPARK Refers to SEG International CPARK Show Promotion Center
Shenzhen SEG Longyan New Energy Application and
Longyan Application Refers to
Development Co., Ltd.
SEG Longyan Technology Refers to Shenzhen SEG Longyan Energy Technology Co., Ltd.
SEG Real Estate Investment Refers to Shenzhen SEG Real Estate Investment Co., Ltd.
SEG Kangle Refers to Shenzhen SEG Kangle Enterprise Development Co., Ltd.
SEG Property Development Refers to Shenzhen SEG Property Development Co., Ltd.
China International Consumer Electronics Exhibition/Exchange
CEEC Refers to
Center Co., Ltd.
Wangyu Technology Refers to Shanghai Wangyu Information Technology Co., Ltd.
SegMaker Refers to Shenzhen SegMaker Co., Ltd.
Tencent Refers to Shenzhen Tencent Computer System Co., Ltd.
Fujian Babycat Refers to Fujian Babycat Animation Technology Co., Ltd.
Tmall Company Refers to Zhejiang Tmall Technology Co., Ltd.
Futian Investment Refers to Shenzhen Futian Investment Co., Ltd.
Ourgame International Refers to Ourgame International Holdings Limited
Allied eSports Refers to Tianjin Allied eSports Internet Technology Co., Ltd.
Shum Yip Land Refers to Shum Yip Land Company Limited
State-owned Assets Supervision and Administration Commission
Shenzhen SASAC Refers to
of Shenzhen Municipality
CSRC Refers to China Securities Regulatory Commission
Shenzhen Securities Regulatory Bureau of China Securities
Shenzhen Securities Regulatory Bureau Refers to
Regulatory Commission
Articles of Association Refers to Articles of Association of Shenzhen SEG Co., Ltd.
Unless otherwise specified, the amount referred
Refers to Amount in RMB
to in the report
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Chapter 2 Company Profile and Main Financial Indexes
I. Basic Information
Stock abbreviation SHEN SEG, SHEN SEG B Stock code 000058, 200058
Changed stock abbreviation (if
None
any)
Listed on Shenzhen Stock Exchange
Company name in Chinese 深圳赛格股份有限公司
Company abbreviation in
深赛格
Chinese
Company name in English (if
SHENZHEN SEG CO., LTD.
any)
Company name abbreviations
None
in English (if any)
Legal representative Wang Li
Registered address 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen
Post code 518028
Office address 31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen
Post code 518028
Website http://www.segcl.com.cn
E-mail segcl@segcl.com.cn
II. Contact Information
Secretary of the Board of Directors Securities affairs representative
Name Zheng Dan Zhang Xin
31/F, Tower A, Stars Plaza, Huaqiang Road 31/F, Tower A, Stars Plaza, Huaqiang Road
Contact address
(N), Futian District, Shenzhen (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
Media selected by the Company for information China Securities Journal, Securities Times, Securities Daily and Hong Kong
disclosure Commercial Daily
Website assigned by CSRC for publishing the annual
http://www.cninfo.com.cn (Cninfo Website)
report
The place where the annual report is prepared and Secretary's Office of Board of Directors, 31/F, Tower A, Stars Plaza,
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kept Huaqiang Road (N), Futian District, Shenzhen
IV. Changes of Registration Information
Organization code 27925377-6
Changes to business scope on July 6, 2005: Domestic commerce, goods supply and
sale (excluding commodities under special operation, control and sale), industrial
investment (licenses for specific projects shall be subject to application on a
case-by-case basis), economic information consultancy, property lease, real estate
agency, and operation of SEG professional electronics markets (the license for the
professional market shall be further applied for).
Alteration of registration information on September 28, 2016: The business scope of
the Company is changed to investment in industrial projects (specific items to be
declared separately); operation and management of electronics markets; online trade;
Internet technology development; advertising business; housing leasing; sales of
computers, software, auxiliary equipment, and electronic products; cultural and artistic
exchange activity planning (excluding performances); exhibition activities; investment
in and management of children's industrial chain projects; children's playground
Changes of main business since the
equipment leasing (excluding financial leasing activities); playground management and
Company's listing (if any)
services (limited to branch management); catering services (limited to branch
management); business management consulting; education consulting; wholesale and
retail of pre-packaged food, unpacked food, and dairy products (including infant
formula milk powder) (limited to branch management); sales of stationery, craft gifts,
toys, children's clothing, electronic products, handicrafts, and daily necessities;
photography services; technical development of new energy; EPC of photovoltaic
power generation and building integrated photovoltaic (BIPV) engineering; technical
development and services of CdTe film solar cell modules; investment in photovoltaic
power plants, contracting of BIPV curtain wall engineering; domestic trade (excluding
franchised goods, proprietary goods, and goods under special control). (Any item
subject to approval pursuant to laws can be operated only after approval.) Information
services (limited to Internet information services); sales of food; manufacturing and
sales of CdTe solar cell modules.
Changes of dominant stockholders (if any) No change.
V. Other Relevant Information of the Company
The accounting firm employed by the Company:
Name of the accounting firm Da Hua Certified Public Accountants (Special General Partnership)
Address of the accounting firm Room 1101, 11/F, Tower 7, No. 16 Block, Xisihuan Road (M), Haidian District, Beijing
Name of the certified public
Zhang Xing and Zhang Zhaocheng
accountant signing the audit report
The sponsor firm employed by the Company for fulfilling the duties of continuous supervision in the report
period:
□ Applicable √ Not applicable
The financial advisor employed by the Company for fulfilling the duties of continuous supervision in the report
period:
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□ Applicable √ Not applicable
VI. Main Accounting Data and Financial Indexes
Are retrospective adjustments made by the Company to previous financial statements due to accounting policy
changes or accounting errors?
□ Yes √ No
Year-on-year
2016 2015 2014
increase/decrease
Operating income (Yuan) 672,384,276.47 741,533,676.93 -9.33% 681,343,920.99
Net profit attributable to shareholders of
107,560,213.41 74,242,090.49 44.88% 48,380,294.05
the listed company (Yuan)
Net profit attributable to shareholders of
the listed company after deduction of 29,705,359.63 84,931,560.68 -65.02% 45,920,252.23
non-recurring gains and losses (Yuan)
Net cash flow arising from operating
-120,030,057.68 -12,453,523.82 -427,933,620.94
activities (Yuan)
Basic EPS (Yuan/Share) 0.1371 0.0946 44.93% 0.0616
Diluted EPS (Yuan/Share) 0.1371 0.0946 44.93% 0.0616
Weighted average ROE 7.11% 5.19% 1.92% 3.80%
Year-on-year
End of 2016 End of 2015 End of 2014
increase/decrease
Total assets (Yuan) 2,548,276,265.32 2,614,660,524.37 -2.54% 2,659,717,718.28
Net assets attributable to shareholders of
1,548,200,647.55 1,475,126,229.16 4.95% 1,298,970,719.85
the listed company (Yuan)
VII. Differences in Accounting Data under Chinese and Overseas Accounting Standards
1. Differences in net profits and net assets reported in the financial statements disclosed under
international accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
In the report period, the company's net profits and net assets have no differences in the financial report disclosed
based on both the international and the Chinese accounting standards.
2. Differences in net profits and net assets reported in the financial statements disclosed under
international accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
In the report period, the company's net profits and net assets have no differences in the financial report disclosed
based on both the international and the Chinese accounting standards.
VIII. Major Quarterly Financial Indexes
Unit: Yuan
Quarter 1 Quarter 2 Quarter 3 Quarter 4
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Operating income 191,126,945.65 171,546,291.20 139,478,273.85 170,232,765.77
Net profit attributable to shareholders of the
17,696,110.04 9,160,160.38 15,422,191.47 65,281,751.52
listed company
Net profit attributable to shareholders of the
listed company after deduction of 17,623,939.70 11,072,519.77 15,912,414.05 -14,903,513.89
non-recurring gains and losses
Net cash flow from operating activities -30,744,760.42 -68,569,267.98 15,886,231.75 -36,602,261.03
Are there any significant differences between the financial indexes or their totals in the preceding table and those
described in the disclosed quarterly reports or semi-annual reports?
□ Yes √ No
IX. Items and amount of non-recurring gains and losses:
√ Applicable □ Not applicable
Unit: Yuan
Amount of Amount of Amount of
Item Remarks
2016 2015 2014
Gains on reduction of holding-shares of
Gains and losses on disposal of
Huakong SEG, sales of the equity of
non-current assets (including the write-off 89,459,793.78 -257,269.63 6,475.34
SEG E-commerce, and disposal of fixed
of assets depreciation reserves)
assets
Subsidies for Nantong SEG animation
industrial base, 2015 special funds for
development of the service industry of
Wujiang District from Finance Bureau of
Wujiang District, Suzhou, special funds
for industrial development from
Government subsidies recorded into
Administrative Committee of the
current gains and losses (except those
Economic Development Zone, 2015
closely related with corporate business 9,828,264.76 980,956.24 1,554,585.78
Reward for stable and healthy economic
and enjoyed according to national
development, headquarter operation
standards or certain quota)
reward of special funds for industrial
development of Enterprise Development
Service Center, Futian District,
Shenzhen, and support project fund for
construction of Nantong SEG
Electronics Market
Fund appropriation charges for
non-financial entities recognized in 3,097,500.00 3,414,955.63 700,000.00
current profit or loss
Corporate restructuring costs, such as Employee compensation arising from
-1,439,958.00
staffing expenses and integration costs restructuring of SEG E-commerce
Transferred-back impairment provision
for accounts receivable, for which 469,871.93
separate impairment tests are carried out
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Amount of Amount of Amount of
Item Remarks
2016 2015 2014
Trustee fee from entrusted operation 188,679.24 200,000.00 200,000.00
Other non-operating income and expenses Losses from litigation compensation of
-3,068,241.76 -13,043,897.59 498,440.96
except the above-mentioned items Nanning SEG
Less: Amount of affected income tax 19,072,980.69 2,022,052.01 216,991.94
Amount of influence of minority
1,138,203.55 432,034.76 282,468.32
shareholders' equity (after tax)
Total 77,854,853.78 -10,689,470.19 2,460,041.82 --
An explanation shall be made with regard to the Company's considerations for defining non-recurring profit and
loss according to the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public - Non-recurring Profit and Loss and the reason of classifying the non-recurring profit
and loss listed in this announcement as recurring.
□ Applicable √ Not applicable
In the report period, it does not happen that the company defines the non-recurring profit and loss items defined
or listed by Interpretive Bulletin No. 1 on Information Disclosure by Companies Publicly Issuing Securities -
Non-recurring Gains and Losses as recurring profit and loss items.
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Chapter 3 Overview of Company’s Business
I. Main Business in the Report period
Should the Company abide by the disclosure requirements of special industries?
No.
(I) Main business and operation model
Main business of the Company includes development and operation of electronics market and supporting
projects, property lease service, trade and channel service, e-commerce, value-added microcredit service, and
economical hotel service and so on.
Business model: With three business operation platforms including the electronics market, commercial real
estate and SEG CPARK as the core, the Company comprehensively integrates business resources, promotes the
transformation and upgrading of the original main business, expands the business from operation of a single
business platform to the production and operation of relevant content, creates a business model combining
multiple business types, including maker ecology, culture and education, intelligent technology, sports and
entertainment, virtual experience, e-sports, and financial services and so on, and develops from a single leasing
role into diversified strategic emerging industries and high-end manufacturing and services.
(II) Current situation and tendency of industrial development and industrial position of the Company
1. Current situation of development of the electronics market is as follows:
① The industrial value chain of the electronics market is extended and the market functions are diversified.
With the improvement of modernized communication technology and information transmission approaches, the
cost for connecting transaction information between consumers and manufacturers decreases gradually, and the
functions of the electronics market in commodity gathering, distribution and transactions are being weakened. At
present, the electronics market has abandoned the earliest "vendor booth" model of operation, and is extending
vertically toward the two ends of the value chain of the electronic information industry, from only serving the
distributors to providing services in enterprise image and product image display and promotion to manufacturers,
providing sales service to distributors and providing platform comprehensive services to consumers before,
during and after sales.
Extension of the Industrial Value Chain of the Electronics Market
Manufacturer:
enterprise image Distributor: Consumers:
and product image product sales services before,
display and service during and after
promotion service sales
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At the same time, in the electronics market, facilities including water, electricity, warehousing, transportation,
packaging, security, fire control, health, settlement, information, and life services have been improved. The
functions of the electronics market have changed from traditionally unitary commodity gathering, distribution
and transaction to commodity gathering and distribution, information release, price discovery and
comprehensive services.
② Tendency of industrial integration is intensified.
Faced with the industrial reform, in order to strengthen the competitiveness, the electronics market has formed
modern integrated logistics and services that are mainly represented by overseas transportation and bonded
warehousing, foreign trade, agency sales and property leasing. Whereas the traditional electronics market has
such weaknesses as high property cost, high transportation pressure and insufficient logistics supporting
infrastructures, the new generation electronics market focuses on innovation in the traditional operation model,
provides various services to both buyers and sellers, creates advanced distribution center for electronic
components and IT terminal products, strengthens logistics service, develops service trade for electronic
manufacture industry, and builds a distribution operation center of electronic products integrating property
leasing and service, logistics and distribution, information and financial services.
③ Intelligent terminal products, especially 3C products including mobile phones and tablet devices become
main operating products.
Technical improvements brought by mobile Internet technology and touch technology have facilitated the
migration of intelligent devices from desk devices to mobile devices, represented mainly by smart phones and
tablet computers. With the construction of mobile Internet infrastructure and development and improvement of
the Internet ecological system including software and hardware, the consumption market of smart phones and
tablet computers has been fast developing. Intelligent terminal devices have gradually become the main
operating products in the electronics market, and will further facilitate the development of the latter.
④ Tendency of products expanding to emerging application fields is intensified.
In recent years, with the fast development of industries including wearable devices, intelligent household and
automotive electronics, types of products distributed in the electronics market gradually expand to the emerging
application field, meanwhile the booming development of the emerging market of electronic information
industry will strongly drive the increase of demands for electronic components.
⑤ Reform occurs in commercial property management of electronics market.
Operation of commercial properties refers to the industry that acquires long-term rental income and supporting
service income by leasing properties or providing management services. The property industry in China is
developing, improving and getting mature. As improvement of management and service concepts is advocated
now, competition of quality concept and brand concept, changes of market environment, application of high and
new technologies and updating of consumption ideas request the property operation enterprises to make relevant
reform from service concepts to service methods, from operation concepts to market positioning. Therefore, the
commercial operation of the electronics market will gradually develop from the previously traditional electronic
product transaction platform and leasing platform to diversified businesses including comprehensive maker
business, culture and education, intelligent technology, sports and entertainment, virtual experience, e-sports and
financial services.
⑥ Influences from e-commerce on operation and management of physical markets
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In recent years, the transaction volumes and the number of markets and booths in electronics markets with the
sales volume exceeding RMB 100 million have decreased mainly due to the influence from e-commerce on
physical markets. As the promotion of mobile terminal consumption, household consumption and all kinds of
life services are overheating in the online market. Therefore, it is imperative for electronics markets to transform
to both online and offline platforms operation model.
2. Analysis on industrial development tendency of nationwide electronics markets
Electronics markets play an important role in the circulation of IT products. The booming electronic information
industry has brought a huge space for growth. With the fast development of e-commerce, network devices and
logistics industry in China in recent years, physical electronics markets have been affected to a certain extent,
traditional electronics markets are facing both the opportunity and the challenge of transformation and upgrading.
During the "13th Five-year Plan" period, the electronics markets in China will develop in the following
tendencies:
① Electronics markets will focus on both physical markets and e-commerce
At present, e-commerce economy under Internet has entered into a new normal state. The slow-down of growth
has triggered the reform of channel relationship. However, because the physical electronics markets feature
production operation, supply logistics service and realistic consumption experience that are different from
e-commerce, the latter has gradually carried out cooperation with electronics markets, as an inevitable tendency
of the development of the industry.
② Integrated and interactive development of electronics markets and commercial real estate
In recent years, the profit model of electronics markets is changing. On one hand, electronics markets are
combined with commercial real estate. Through total packaging, operation and promotion of commercial real
estate, the formation of IT business circle is accelerated, and the real estate projects where the electronics
markets are located increase in value. On the other hand, the appreciation of real estate where the electronics
markets are located will further improve the brand value of the electronics markets. Therefore, more and more
merchants praise highly of the operation model of interactive development by utilizing electronics markets to
increase the value of the surrounding properties, further driving the development of the electronics markets.
The integrated and interactive development of electronics markets and commercial real estate can ensure the
long-term stable operation of the markets, and electronics markets can directly benefit from the income from real
estate appreciation brought by market operation, which facilitates the expansion of enterprises and the growth of
brands.
③ Electronics markets are facing upgrading and renovation and manufacturers of famous electronic brand are
seeking for joint development with electronics markets.
The popularization of consumable electronic products has made the electronics markets the buyer's market. The
consumers have higher requirements on the shopping environment, quality warranty and after-sale guarantee.
The operators of the electronics markets must continuously improve internal management, service, and shopping
environment, normalize the merchants' operation behaviors, and improve after-sale service guarantee system to
attract more consumers.
At the same time, the intensified competition among manufacturers of famous electronic brands will further
strengthen the integration. The control of the manufacturers over the downstream fields will be strengthened, and
they will continuously adjust agencies and the distributors, which will affect the adjustment of the electronics
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markets. At present, the electronics markets focus more and more on of manufacturer resources. By various
approaches including expanding market scale, improving shopping environment and improving service standard,
the markets focus on improving the popularity and brand influences of the market brands in the mind of the
consumers, so as to get more resources of manufacturer resources.
④ Electronics markets will remain the dominant sales channel of IT products in China.
Domestic channels of retail market of electronic products mainly include electronics markets, chain stores of
electrical household appliances, retailers with own properties, e-commerce and department stores and
supermarkets. Most retailers of electronic products carry out operation and sales in the electronics market, which
maintains large market shares by relying on such advantages as the most complete categories of products, fast
updating, large operation area and comfortable shopping environment. The retailers have chosen electronics
markets with brand popularity as their main platform for operation in order to improve the sales and coverage
width to consumers and improve the sales efficiency.
On the other hand, the electronics market is also the main product display platform for many manufacturers of
electronic products. By setting up flagship stores or experience stores in the electronics markets, manufacturers
can help consumers timely and easily know about their latest products, and display the enterprise image.
According to the investigation data from Electronics Market Committee of China Electronics Chamber of
Commerce, the electronics market will remain the main sales channel for domestic electronic products in the
future. The percentage of sales volume of electronic products including desktops, laptops, mobile phones, tablet
computers and intelligent hardware sold through electronics markets in the total domestic retail volume will
remain over 50%.
3. Industrial position of the Company
In terms of operation of electronics markets, as the founder of the electronics market operation model of China,
the Company is leading in the industry. The Company has established nearly 30 electronics markets in China by
means of direct operation, joint operation and entrusted operation, has formed a chain system of electronics
markets covering Pearl River Delta, Yangtze River Delta and radiating the whole country, and has gained high
brand influence both at home and abroad.
II. Significant Changes in Main Assets
1. Significant Changes in Main Assets
Main assets Description of Significant Changes
In the report period, the equity decreases by 0.80% year on year, mainly because
(1) In the report period, the Company reduced 10,066,700 holding-shares of Huakong
SEG and the long-term equity investment of RMB 9,086,600.
(2) In the report period, the Company contributed RMB 9,000,000 to Shenzhen
International Consumer Electronics Exchange/Exhibition Center Co., Ltd. (CEEC),
Equity
accounting for 30% of its equity.
(3) In the report period, Huakong SEG and Shanghai SEG make profits but CEEC makes
a loss based on accounting via the equity method. After the Company deducts cash
dividents of Shanghai SEG,, the Company reduced the long-term equity investment of
RMB 387,100 in total
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Fixed assets There is no significant change in the report period.
Intangible assets There is no significant change in the report period.
In the report period, the LCD screen installation project in the lobby of 1/F of SEG Plaza
Construction in progress
was completed and transferred out, resulting in decrease of this item.
In the report period, the monetary fund decreases by 33.87% year on year, mainly
Monetary fund because the Company's funds were mainly used to invest in Nantong SEG Times Plaza,
resulting in decrease of this item.
In the report period, accounts receivable decrease by 48.20% year on year, mainly
because the Company sold the equity of its subsidiary SEG E-Commerce and the balance
Accounts receivable
sheet statement of SEG E-Commerce was no longer consolidated, resulting in decrease
of this item.
In the report period, the prepayment decreases by 63.28% year on year, mainly because
the Company sold the equity of its subsidiary SEG E-Commerce and the balance sheet
Prepayment
statement of SEG E-Commerce was no longer consolidated, resulting in decrease of this
item.
In the report period, other receivables increase by 131.00% year on year, mainly because
(1) The subsidiary SEG Baohua paid the decoration deposit RMB 8,980,000 for the new
Dongmen Branch of Mellow Orange Hotel.
(2) The headquarters paid the earlier-stage deposit RMB 1,030,000 in total for new
Other receivables
projects.
(3) The incomings and outgoings of the subsidiary Wuxi SEG with Wuxing Xinyuan
Construction Development Co., Ltd. increased by RMB 10,300,000 in total.
(4) The purchasing deposit of SEG Intelligent increased by RMB 2,000,000.
In the report period, the inventory increases by 33.56% year on year, mainly because
Inventory project construction expenditure was incurred by Nantong SEG Times Plaza, resulting in
increase of this item.
In the report period, the long-term deferred expense increases by 91.57% year on year,
Long-term deferred expense mainly because the decoration expense of Nantong SEG Times Plaza RMB 42,970,000
was incurred.
In the report period, other non-current assets increase by 170.48% year on year, mainly
Other non-current assets because the earlier-stage expenditure of the new branch of Mellow Orange Hotel RMB
7,460,000 was incurred.
2. Main Overseas Assets
□ Applicable √ Not applicable
III. Analysis of Core Competence
Shenzhen SEG Electronics Market operated by the Company is the founder of the electronics market operation
model in China, as a leader in the industry. It has won honorable titles successively including "Five-star Market
of Electronic Products in China", "Most Influential Market in Shenzhen Special Economic Zone in 30 Years",
"National Integrity Demonstrative Market 2014-2015" awarded by the State Administration for Industry &
Commerce, and ten branded markets in Shenzhen for "Influencing China".
Through 28 years of hard work in the electronics market, the Company has acquired abundant market merchant
resources and mature market operation and management experience. As of today, the Company has set up more
than 20 electronics markets in China by means of direct operation, joint operation and entrusted operation, has
formed a chain system of electronics markets covering the Zhujiang River Delta, the Yangtze River Delta and
radiating the whole country, and has become the largest comprehensive electronics market in China and even in
Asia covering electronic components, digital IT and communication products, and has gained high brand
influence both at home and abroad.
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For the past several years, the Company has been carrying out exploration, innovation and practice in terms of
business transformation and upgrading of electronics markets for traditional main business. Faced with new
consumption, new channel and new retail, apart from updating hardware and upgrading services, SEG
Electronics Market has continuously introduced scene-mode, experience-mode, interaction-mode and
socializing-mode types of operation. In the fields where SEG has investment and resources integration capacity,
in order to improve core competitiveness and initiatives, SEG has attempted to create diversified types of
business with SEG characteristics by means of investment and joint venture, such as juvenile maker education,
e-sports, intelligent home and children's experience, etc. After the said featured types of business are gradually
formed, an offline shopping place featuring SEG Electronics (digital and communication) as the core, coexisting
of SEG's featured types of business, and other featuring cooperative types of business will come into being and
provide one-stop and comprehensive consumption experience to consumers.
In the report period, the Company has actively carried out major assets restructuring, reduce horizontal
competition at the maximum and enhance the profitability and core competitiveness of listed company. At the
same time, relying on the platform of the listed company, the Company has fully integrated the business of
electronics markets, and eventually fulfilled strategic integration, transformation and upgrading of current
business of the listed company. In the report period, the Company's scheme of major assets restructuring was
conditionally approved by China Securities Regulatory Commission Acquisition and Restructuring Committee.
After the completion of major assets restructuring, the Company will continuously integrate the existing business
and resources, develop in-depth cooperation with Longyan Energy Technology, Wangyu Technology, Alibaba,
Fujian Babycat, and Tencent in such new business fields as new energy, e-sports, e-commerce, animation, and
makers, actively promote the transformation and upgrading of the original business, develop new business, and
achieve coordinated development of multiple business types. The Company will develop diversified strategic
emerging industries and high-end manufacturing and services.
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Chapter 4 Management Discussion and Analysis
I. Overview
In the report period, the global economy, affected by such events as slow-down of economic growth in USA and
Brexit, is in downturn of growth. Affected by complicated and severe international and domestic environment,
the economic growth and transformation of China is still under the downturn pressure.
Facing the complicated external economic environment and fierce market competition, the Company has
actively promoted major assets restructuring in 2016. In this way, the Company has acquired such core operating
assets held by the controlling shareholders as the quality electronics market, property management, and
commercial real estate, which will enhance and stabilize the operating results of the Company. The income from
investment in the real estate development project in the major assets restructuring will also enhance the
profitability of the Company. The Company has also strengthened efforts on resource integration, transformation
and upgrading through the major assets restructuring, vigorously developed innovative business, and looked for
new profit growth point to constantly enhance the core competitiveness of the Company.
In the report period, the Company achieved the operating income of RMB 760,910,000, decreasing by 10% year
on year. The main reasons of decrease are: (1) the operating income from electronics market and property lease
plates declined; (2) due to the program of replacing business tax with value-added tax, the total income of the
Company decreased by around RMB 19,000,000; and (3) the operating income of microcredit business
decreased.
In the report period, the Company achieved total profit as much as RMB 187,540,000, increasing by 31.08%
year on year. The main reason for the increase is: the investment income of the Company from sales of the equity
of Huakong SEG and SEG E-commerce.
II. Analysis of Main Business
1. Overview
The main business of the Company comprises development and operation of electronics markets and supporting
projects, property lease service, trade and channel operation, microcredit value-added service, and economical
hotel business.
(1) Operation of electronics markets (including relevant business such as maker platform and Internet +)
With the fast development of Internet and mobile Internet, fast popularization of terminal operation, the
formation of oligopoly of e-commerce platforms as well as the vertical subdivision of e-commerce market, the
electronics market has been impacted to a certain extent.
Facing heated market competition and the impact of new commerce modes, by focusing on users' value and
integrating all kinds of resources, expanding the industrial chain, enriching value-added services, improving the
service quality, and establishing multi-channel profit model, the Company has greatly promoted the
transformation and upgrading of the existing electronics market business, actively explored new business
development modes and continuously improved the operation capacity and the innovation capacity of the main
electronics markets.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
In the report period, the Company carried out strategic business cooperation with Taobao, established online and
offline business platform, has made a solid first step on the path of creating O2O electronics market innovation
and value-added services with SEG features. By carrying out strategic business cooperation with Allied eSports,
Wangyu Technology and Fujian Babycat, the Company has gradually set foot in production and operation of
relevant contents from unitary commercial platform operation, and created comprehensive platform service
operator. The Company has signed a strategic cooperation agreement with Tencent to use respective platform
and resources advantages for strategic cooperation, jointly create a comprehensive service platform for makers
that combines incubation and investment, key cooperative physical display and distribution platform for
hardware and hardware lab platform of pragmatic innovation service, and establishes a maker incubation service
benchmark combining software and hardware in China. The Company has signed a strategic cooperation
agreement with Tmall. The parties will carry out strategic cooperation in terms of target recommendation of
maker products or mature products, maker support event of "global gathering and innovation", Internet
intelligent acceleration channel, online and offline marketing events, media promotion and resources
complementation. SEG CPARK affiliated to SEG has attracted many international and domestic famous brands
and creative products from makers to enter. It has gathered more than 500 models of branded products, and held
more than 130 road shows, academic exchange and products release. It has been highly recognized by leaders at
all levels and achieved extensive influence and good social demonstrative effects. SEG CPARK obtained the
special fund of RMB 2,000,000 for makers in Shenzhen in August 2016, and has recently been awarded the title
as a "Base for Science Education" by Shenzhen Science and Technology Association.
In the report period, the Company's electronics market business achieved operating income of RMB 281,600,000,
decreasing by 19.59% year on year; and achieved total profit of RMB 46,470,000, decreasing by 33.67% year on
year. The operating income and total profit decreased because: on the one hand, the psychical store industry is
impacted by economic slowdown and fast development of mobile Internet and e-commerce in China; on the
other hand, the Company has vigorously promoted diversification, transformation, and upgrading of market
operations, retains the original well-managed business types, brings in different strategic industries, and
coordinates different business type combinations to enhance the core competitiveness of the Company. The
investment in such strategy has an impact on decline in the annual revenue of the Company.
(2) Property lease service business
The Company's property lease service includes the property lease business of the head office, the subsidiary SEG
Baohua held by the Company and Nantong SEG operating company. In the report period, the performance of the
property lease business of the head office and subsidiary SEG Baohua held by the Company has been relatively
stable.
The Company has maintained the all-year-round lease rate above 98% by effective operation measures such as
improving management and service quality of properties, controlling costs and expenses and adjusting strategies
to attract investment. In the report period, the Company's property lease service achieved the operating income
of RMB 61,680,000, decreasing by 5% year on year; and achieved the total profit of RMB 19,790,000,
decreasing by 17% year on year. The main reasons for decrease of operating income and total profit are: firstly,
affected by the overall economic environment, in order to maintain the stability of property operation and give
merchants confidence in operation, the Company lowered down the rents of some properties; secondly, Nantong
SEG Times Plaza Commercial Project was opened at the end of October 2016. The investment and relevant costs
in the earlier stage were incorporated into the property lease business, resulting in decrease of total profit.
(3) Trade and channel business
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
In the report period, the overall operation of SEG Industry declined sharply, mainly due to increasing economic
downturn pressure in China, and business stagnation of upstream and downstream partners, which resulted in
delayed capital return and slow capital circulation of cooperating customers of SEG Industry, and directly
affected the operating income of the Company. At the moment the Company has filed lawsuits against the
cooperating customers that delayed the payment for goods and taken relevant legal measures to protect the
interests of the Company. SEG Intelligent Company was invested and established by the Company in January
2016. It engages in smart home business, develops intelligent and engineering projects, and provides multiple
intelligent solutions for home, engineering, and plants. SEG Intelligent also acts as agent for retail of famous
brands of communications.
In the report period, the Company's trade and channel business achieved the operating income of RMB
284,330,000, increasing by 7.58% year on year. The main reason for increase of operating income is the income
from channel business of SEG Intelligent Company added in the report period.
(4) Microcredit business
In the report period, SEG Credit, the subsidiary held by the Company was stable in operation. The Company's
cargo pledge business is getting more and more mature. In order to adapt to the market changes and the demands
of the customers, the Company has continuously explored new models of loan. Under the precondition of risk
control, the Company has attempted to carry out dynamic cargo pledge operation model and has achieved initial
success.
In the report period, the Company's microcredit business achieved the operating income of RMB 88,530,000,
decreasing by 15% year on year; and achieved the total profit of RMB 42,270,000, decreasing by 10% year on
year. The main reasons for decrease of operating income and total profit are as follows. On one hand, the
competition of microcredit industry has been intensified in 2016 according to the industrial statistical data. The
overall operation performance has declined. Moreover, a large number of guarantee companies and commercial
banks have got involved in the microcredit industry, which affected the income of the microcredit companies.
On the other hand, affected by the decrease of entire interest rates of China, the overall income level of the
Company has decreased slightly.
(5) Economical hotel business
In the report period, SEG Baohua opened a new economical hotel in Luohu District, Shenzhen (Mellow Orange
Dongmen Branch), and its previous economical hotel business included Changsha Branch, Xingsha Branch and
Bao'an Branch. In the report period, the Company's economical hotel business achieved the operating income of
RMB 24,920,000, decreasing by 6% year on year; and achieved the total profit of RMB 2,050,000, decreasing by
1.5% year on year. The main reasons for the decrease of operating income and total profit are: firstly, they are
affected by the external economic environment, and the competition of the economical hotel industry has been
intensified; secondly, affected by the program of replacing business tax with value-added tax as well as the new
opening of Dongmen Hotel, the operating income has decreased slightly.
(6) E-commerce business
In the report period, the Company's e-commerce business achieved the operating income of RMB 19,860,000,
decreasing by 44.19% year on year. The main reason for decrease of operating income is that in the report period
the Company implemented the transfer of SEG E-commerce, and SEG E-commerce scaled back all its
operations.
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2. Income and Cost
(1) Formation of operating income
Unit: Yuan
2016 2015 Year-on-year
Percentage of Percentage of increase/decrease
Amount Amount
operating income operating income (%)
Total operating
760,915,085.86 100% 846,675,884.33 100% -10.13%
income
Classified by industry
Electronics market
operation and 343,280,375.05 45.11% 415,127,517.70 49.03% -17.31%
property leasing
Trade 284,331,867.85 37.37% 264,303,143.71 31.22% 7.58%
Hotel 24,915,964.23 3.27% 26,523,482.58 3.13% -6.06%
E-commerce 19,856,069.34 2.61% 35,579,532.94 4.20% -44.19%
Finance 88,530,809.39 11.63% 105,142,207.40 12.42% -15.80%
Classified by product
Classified by region
Shenzhen 463,882,693.06 60.96% 625,255,412.68 82.17% -25.81%
Xi'an 61,087,396.36 8.03% 59,688,953.13 7.84% 2.34%
Su Zhou 177,711,494.88 23.35% 79,040,494.44 10.39% 124.84%
Changsha 24,597,175.67 3.23% 39,091,884.16 5.14% -37.08%
Nanjing 24,795,038.43 3.26% 32,421,829.58 4.26% -23.52%
Foshan 3,020,405.16 0.40% 2,474,556.31 0.33% 22.06%
Wuxi 5,820,882.30 0.76% 7,079,142.74 0.93% -17.77%
(2) Information on industries, products or regions accounting for over 10% of operating income or
operating profit
√ Applicable □ Not applicable
Should the Company abide by the disclosure requirements of special industries?
No.
Unit: Yuan
Year-on-year Year-on-year
Year-on-year
increase/decrease increase/decrease
Operating income Operating cost Gross profit rate increase/decrease
of operating of gross profit
of operating cost
income rate
Classified by industry
Electronics 343,280,375.05 243,760,551.06 28.99% -17.31% -19.15% 1.62%
market operation
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and property
leasing
Trade 284,331,867.85 284,740,411.64 -0.14% 7.58% 9.19% -1.48%
Hotel 24,915,964.23 21,705,084.88 12.89% -6.06% -2.47% -3.20%
(3). E-commerce 19,856,069.34 19,858,461.31 -0.01% -44.19% -20.53% -29.77%
Finance 88,530,809.39 12,430,171.06 85.96% -15.80% 45.67% -5.92%
Classified by product
Classified by region
Shenzhen 463,882,693.06 322,380,893.92 30.50% -25.81% -23.88% -1.76%
Xi'an 61,087,396.36 44,494,862.35 27.16% 2.34% 2.34% 0.00%
Su Zhou 177,711,494.88 163,336,457.22 8.09% 124.84% 116.24% 3.66%
Changsha 24,597,175.67 15,356,162.14 37.57% -37.08% -44.53% 8.39%
Nanjing 24,795,038.43 29,081,888.23 -17.29% -23.52% -14.14% -12.81%
Wuxi 3,020,405.16 2,873,099.31 4.88% 22.06% 24.16% -1.61%
If the statistical caliber of main business data is adjusted in the report period, the Company shall use the main
business data of the previous year collected at the end of the report period after adjustment of statistical caliber.
□ Applicable √ Not applicable
(3) Is the Company's material sales revenue more than its service revenue?
□ Yes √ No
(4) Performance of executed major sales contracts as of the report period
□ Applicable √ Not applicable
(5) Formation of operating cost
Industry classification
Unit: Yuan
2016 2015 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Electronics Electronics
market operation market operation
41.85% 301,511,104.70 48.78% -19.15%
and property and property 243,760,551.06
leasing leasing
Trade Trade 284,740,411.64 49.22% 260,773,559.46 42.19% 9.19%
Hotel Hotel 21,705,084.88 3.75% 22,255,148.18 3.60% -2.47%
E-commerce E-commerce 19,858,461.31 3.43% 24,989,821.48 4.04% -20.53%
Finance Finance 12,430,171.06 2.15% 8,533,082.37 1.38% 45.67%
Industry Item 2016 2015 Year-on-year
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classification Percentage of Percentage of increase/decrease
Amount Amount
operating cost operating cost (%)
Electronics
market operation Lease and
89,787,034.41 36.83% 99,519,264.28 33.01% -9.78%
and property property costs
leasing
Electronics
Total
market operation
remuneration for 57,842,140.82 24.12% 73,123,516.29 24.25% -20.90%
and property
employees
leasing
Electronics
market operation Depreciation and
26,896,131.93 11.22% 29,266,499.62 9.71% -8.10%
and property amortization
leasing
Electronics
Market and
market operation
property service 59,910,715.55 24.99% 75,217,006.81 24.95% -20.35%
and property
costs
leasing
Electronics
market operation Retail goods sales
9,324,528.35 3.89% 24,384,817.70 8.09% -61.76%
and property cost
leasing
2016 2015 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Total
Hotel remuneration for 5,110,635.15 23.55% 5,458,034.64 24.52% -6.36%
employees
Depreciation and
Hotel 3,243,021.27 14.94% 3,577,343.55 16.07% -9.35%
amortization
Hotel Administrative fee 202,279.31 0.93% 597,774.92 2.69% -66.16%
Hotel Lease cost 8,258,888.25 38.05% 8,199,833.24 36.84% 0.72%
Hotel Others 4,890,260.90 22.53% 4,422,161.83 19.87% 10.59%
2016 2015 Year-on-year
Product category Item Percentage of Percentage of increase/decrease
Amount Amount (%)
operating cost operating cost
Trade Goods sales cost 262,813,004.51 92.30% 260,773,559.46 100.00% 0.78%
Trade Lease cost 4,060,000.00 1.43%
Trade Manpower cost 984,567.12 0.35%
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Trade Others 16,882,840.01 5.93%
2016 2015 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Finance Lease cost 835,447.71 6.72% 664,432.82 7.79% 25.74%
Financial service
Finance 11,594,723.35 93.28% 7,868,649.55 92.21% 47.35%
cost
2016 2015 Year-on-year
Industry
Item Percentage of Percentage of increase/decrease
classification Amount Amount
operating cost operating cost (%)
Total
E-commerce remuneration for 791,042.52 3.98% 1,248,958.81 5.00% -36.66%
employees
E-commerce Sales cost 14,803,990.32 74.55% 16,457,203.37 65.86% -10.05%
Promotion
E-commerce 2,201,214.57 11.08% 2,562,768.35 10.26% -14.11%
expenses
Customs
E-commerce declaration and 1,411,072.73 7.11% 2,058,226.13 8.24% -31.44%
logistics expenses
E-commerce Others 651,141.17 3.28% 2,662,664.82 10.65% -75.55%
(6) Is the consolidation scope changed in the report period?
√ Yes □ No
Compared with the previous period, three more entities are included in and one entity is excluded from the
consolidated financial statements in the current period, including:
1. Subsidiaries, special purpose entities, and business entities that gain control by way of commissioning
management or renting included in the consolidation scope in the current period
Name Reason for change
Suzhou SEG Intelligent Technology Co., Ltd. Newly established
Shenzhen SEG Longyan New Energy Application
Newly established
and Development Co., Ltd.
Shenzhen SEG Longyan Energy Technology Co.,
Newly established
Ltd.
2. Subsidiaries, special purpose entities, and business entities that lose control by way of commissioning
management or leasing excluded from the consolidation scope in the current period
Name Reason for change
Shenzhen SEG E-commerce Co., Ltd. Transfer-out of all equities
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(7) Information about significant changes or adjustments of business, product or service in the report
period
□ Applicable √ Not applicable
(8) Information on main customers and main suppliers
Information about the Company's major customers
Sales amount of top 5 customers (Yuan) 178,353,088.59
Percentage of the total sales amount of top 5 customers to
26.53%
the annual sales
Percentage of the sales amount of related parties among
0.00%
top 5 customers to the annual sales
Information about top 5 customers
No. Customer Name Sales amount (Yuan) Percentage of the annual sales amount
1 Shenzhen Runneng Digital Co., Ltd. 86,573,198.09 12.88%
Shenzhen Nanfang Yunhe Technology Co.,
2 52,034,318.22 7.74%
Ltd.
3 Shenzhen Comnet Technology Co., Ltd. 18,413,719.60 2.74%
Xinjiang Zhongdi Communication
4 13,445,496.60 2.00%
Equipment Co., Ltd.
5 Shenzhen Wonder Industry Co., Ltd. 7,886,356.08 1.17%
Total -- 178,353,088.59 26.53%
Other information on main customers
□ Applicable √ Not applicable
Information about major suppliers
Total purchase amount of top 5 suppliers (Yuan) 158,288,064.96
Percentage of the total purchase amount of top 5 suppliers
27.17%
to the annual purchase
Percentage of the purchase amount of related parties
0.00%
among top 5 customers to the annual purchase amount
Information about top 5 suppliers
No. Name of supplier Purchase amount (Yuan) Percentage of the annual purchase
1 www.189zg.cn 45,473,737.61 7.81%
2 Shenzhen Shuojian Industry Co., Ltd 44,717,876.92 7.68%
Telling Telecommunication Holding Co.,
3 32,862,893.16 5.64%
Ltd.
Shenzhen Youyou Financial Service Co.,
4 18,862,559.83 3.24%
Ltd.
Beijing Hengsha Science and Technology
5 16,370,997.44 2.81%
Co., Ltd.
Total -- 158,288,064.96 27.17%
Other information on main suppliers
24
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□ Applicable √ Not applicable
3. Expense
Unit: Yuan
Year-on-year
2016 2015 increase/decrease Description of significant changes
(%)
In the report period, the opening of Nantong
SEG Times Plaza incurred the expense of
Sale expenses 13,846,141.59 4,585,434.23 201.96% RMB 10,510,000, and the newly-added
investment in the subsidiary SEG Intelligent
added to the sales expense of the Company.
In the report period, major assets restructuring
incurred the expense of RMB 16,800,000 and
Management expenses 60,042,027.31 44,222,779.09 35.77%
the compensation of RMB 1,440,000 was paid
due to SEG E-commerce restructuring.
In the report period, due to the completion and
opening of Nantong SEG Times Plaza, the
Financial cost 4,627,175.84 3,564,776.76 29.80% interest expense capitalized decreased and the
interest expense included in profit or loss
increased.
4. Investment in research and development
□ Applicable √ Not applicable
5. Cash Flow
Unit: Yuan
Year-on-year increase/decrease
Item 2016 2015
(%)
Subtotal of cash inflow from
1,313,569,362.59 2,188,033,814.36 -39.97%
operating activities
Subtotal of cash outflow in
1,433,599,420.27 2,200,487,338.18 -34.85%
operating activities
Net cash flow from operating
-120,030,057.68 -12,453,523.82
activities
Subtotal of cash inflow from
805,548,757.27 2,264,549,143.15 -64.43%
investing activities
Subtotal of cash outflow in
729,919,986.64 2,172,173,875.73 -66.40%
investing activities
Net cash flow from investing
75,628,770.63 92,375,267.42 -18.13%
activities
Subtotal of cash inflow from
461,367,812.30 442,000,000.00 4.38%
financing activities
Subtotal of cash outflow in
512,995,153.98 628,455,033.90 -18.37%
financing activities
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Year-on-year increase/decrease
Item 2016 2015
(%)
Net cash flow arising from
-51,627,341.68 -186,455,033.90
financing activities
Net increase in cash and cash
-96,028,613.26 -106,533,251.60
equivalents
Description of main factors of significant year-on-year change
√ Applicable □ Not applicable
1. Subtotal of cash inflow from operating activities decreases by 39.97% year on year in the report period,
mainly due to decline in the supply chain business of SEG E-commerce, trading business contraction of SEG
Industry, and decrease in the cash flow.
2. Subtotal of cash outflow from operating activities decreases by 34.85% year on year in the report period,
mainly for the following reasons:
(1) Decline in the supply chain business of the subsidiary SEG E-commerce results in decrease in the cash paid
in the report period.
(2) The purchasing expense for trading business of the subsidiary SEG Industry decreases year on year in the
report period.
3. Net cash flow from operating activities decreases year on year in the report period, mainly due to year-on-year
growth of the real estate development expense of Nantong SEG.
4. Subtotal of cash inflow from investing activities decreases by 64.43% year on year in the report period, mainly
due to reduction of investment in bank financing.
5. Subtotal of cash outflow from investing activities decreases by 66.40% year on year in the report period,
mainly because reduction of investment in bank financing resulted in decrease in investment return.
6. Net cash flow from investing activities decreases by 18.13% year on year in the report period, mainly because
larger investment return resulted in larger net cash inflow from investing activities in the same period of the
previous year while the reduction of investment in bank financing resulted in decrease in investment return in the
report period.
7. Subtotal of cash inflow from financing activities increases by 4.38% year on year in the report period, mainly
due to increase in bank loans obtained by the Company.
8. Subtotal of cash outflow from financing activities decreases by 18.37% year on year in the report period,
mainly due to the Company's repayment of the due bank loans and decrease in the principal and interest of
short-term financing bond.
9. Net cash flow from financing activities increases year on year in the report period, mainly because the
financing scale of the Company decreased and cash outflow was larger in the same period of the previous year
while the financing scale of the Company was basically flat in the report period.
10. Net increase in cash and cash equivalents increase year on year in the report period, for the reasons described
in Items 7, 8, and 9.
Reasons for the big difference between the net cash flow arising from operating activities and the annual net
profit in the report period
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□ Applicable √ Not applicable
III. Analysis of Non-major Business
√ Applicable □ Not applicable
Unit: Yuan
Percentage of
Amount Reason Sustainable or not
total profit
1. Gains on reduction of holding-shares of
Huakong SEG and sales of the equity of
1. Unsustainable
Investment income 99,145,904.44 52.87% SEG E-commerce;
2. Sustainable
2. financial income and income from
investment in joint ventures
Impairment provision for loans and
Asset impairment -3,476,898.53 -1.85% Partially sustainable
advances granted by subsidiary SEG Credit
Non-operating Government subsidies and liquidated
10,897,524.02 5.81% Partially sustainable
income damages
Non-operating Litigation compensation of Nanning SEG in
4,366,432.31 2.33% Unsustainable
expenses the report period
IV. Assets and Liabilities
1. Significant Changes in Asset Formation
Unit: Yuan
End of 2016 End of 2015
Increase/decre Description of
Percentage of Percentage of
Amount Amount ase significant changes
total assets total assets
Monetary funds 183,094,815.84 7.19% 276,863,429.10 10.59% -3.40%
Accounts
50,870,545.72 2.00% 98,212,422.87 3.76% -1.76%
receivable
Inventory 602,098,738.92 23.63% 450,809,934.72 17.24% 6.39%
Investment
425,169,768.62 16.68% 443,851,726.40 16.98% -0.30%
properties
Long-term equity
183,649,044.67 7.21% 185,122,573.88 7.08% 0.13%
investment
Fixed assets 39,181,793.82 1.54% 37,524,425.25 1.44% 0.10%
Construction in
0.00% 140,810.00 0.01% -0.01%
progress
Short-term
355,000,000.00 13.93% 367,759,630.48 14.07% -0.14%
borrowing
2. Assets and liabilities measured based on fair value
√ Applicable □ Not applicable
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Unit: Yuan
Cumulative
Change in fair change in fair Impairment Amount of Amount of
Opening Closing
Item value of the value accrued in the purchase in the sales in the
balance balance
current period recognized in current period current period current period
the equity
Financial assets
3.
Available-for-sa
744,580.41 -61,289.83 683,290.58
le financial
assets
Subtotal of
744,580.41 -61,289.83 683,290.58
financial assets
Total 744,580.41 -61,289.83 683,290.58
Financial
0.00 0.00
liabilities
Are major asset measurement attributes of the Company materially changed in the report period?
□ Yes √ No
3. Restricted asset rights as of the end of the report period
□ Applicable √ Not applicable
V. Investment
1. General
√ Applicable □ Not applicable
Investment over the same period of the
Investment in the report period (Yuan) Increase/decrease (%)
previous year (Yuan)
167,406,096.68 171,899,357.22 -2.61%
28
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
2. Significant equity investment in the report period
√ Applicable □ Not applicable
Unit: Yuan
Investment
Progress as
profit or
Main Investment Investment Shareholding Source of Investment Product of the Projected Lawsuit Disclosure Disclosure
Investee name Partner loss of the
business mode amount percentage capital horizon type balance income involved date (if any) index (if any)
current
sheet date
period
http://www.cnin
fo.com.cn
Announcement
of Shenzhen
Suzhou SEG
SEG Co., Ltd.
Intelligent Newly- Self-owned Not -3,445,047. January 13,
Trade 10,000,000.00 100.00% None Digital Opening No on the
Technology established capital applicable 53 2016
Establishment of
Co., Ltd.
Shenzhen SEG
Intelligent
Technology Co.
Ltd.
Advanced
Solar Power http://www.cnin
(Hangzhou ) fo.com.cn
Inc., Announcement
Shenzhen SEG Shenzhen of Shenzhen
Longyan New Raytai SEG Co., Ltd.
Energy
Newly- Self-owned Technology Not Photovol In May 10, on Foreign
Application Energy 2,500,000.00 50.00% Photovoltaic 0.00 No Investment and
established capital applicable taic preparation 2016
and Engineering Establishment of
Development Co., Ltd., SEG Longyan
Co., Ltd. Shenzhen New Energy
Energy Application and
Nanjing Development
Energy Co., Ltd.
Holdings
29
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Limited
http://www.cnin
fo.com.cn
Announcement
of Shenzhen
Shenzhen SEG Co., Ltd.
International on Equity
Shenzhen
Consumer Investment and
Exhibiti Newly- Self-owned Futian Not Exhibitio In -8,181,957. May 12,
Electronics 9,000,000.00 30.00% 0.00 No Establishment of
on established capital Investment applicable n preparation 94 2016
Exhibition/Exc Shenzhen
Co., Ltd.
hange Center International
Co., Ltd. Consumer
Electronics
Exhibition/Exch
ange Center
Co., Ltd.
http://www.cnin
fo.com.cn
Advanced
Solar Power Announcement
(Hangzhou ) of Shenzhen
Shenzhen SEG Inc., Southern SEG Co., Ltd.
Longyan Raytai Group, on the
Newly- Self-owned Not In November Establishment of
Energy Energy 82,500,000.00 50.00% Shenzhen Energy 0.00 No
established capital applicable preparation 12, 2016 SEG Longyan
Technology Energy
Co., Ltd. Nanjing Energy
Energy Technology Co.,
Holdings Ltd. and Launch
Limited of CdTe Film
Photovoltaic
Industrial Base
104,000,000.0 -11,627,005
Total -- -- -- -- -- -- -- -- 0.00 -- -- --
0 .47
3. Significant non-equity investment in progress in the report period
√ Applicable □ Not applicable
Unit: Yuan
Investment Fixed asset Industries Amount of Accumulated Source of Projected Accumulated Reasons for Disclosure Disclosure
Project name Progress
mode investment? involved in investment amount capital income income as of failure to date (if any) index (if any)
30
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
investment during the invested as of the end of the achieve the
report period the end of the report period plan schedule
report period objective and
expected
income
Self-owned
Nantong SEG Not
Self-constructed No Real estate 148,406,096.68 597,264,847.59 capital and 0.00 -8,396,389.16
Times Plaza applicable
bank loans
Total -- -- -- 148,406,096.68 597,264,847.59 -- -- 0.00 -8,396,389.16 -- -- --
4. Financial assets investment
(1) Security investment
√ Applicable □ Not applicable
Unit: Yuan
Gains and
losses Amount of
Accumulative Amount of
Short form Accounting from fair purchase Gains and
Stock Initial Opening book change of fair sales in the Closing book Source of
Stock type of the measurement value in the losses in the Accounting item
code investment cost value value counted current value capital
security mode changes in current report period
into equity period
the current period
period
Domestic and
Youhao Measurement Available-for-sale Self-owned
overseas 600778 90,405.00 744,580.41 -61,289.83 0.00 0.00 0.00 683,290.58
Group of fair value financial assets capital
shares
Domestic and Measurement
Huakong Self-owned
overseas 000068 204,864,058.29 of cost 181,743,161.07 178.21 -9,086,648.37 1,895,383.08 174,552,073.99 Other assets
SEG capital
shares method
31
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Gains and
losses Amount of
Accumulative Amount of
Short form Accounting from fair purchase Gains and
Stock Initial Opening book change of fair sales in the Closing book Source of
Stock type of the measurement value in the losses in the Accounting item
code investment cost value value counted current value capital
security mode changes in current report period
into equity period
the current period
period
Domestic and Measurement
SEG Available-for-sale Self-owned
overseas 832770 8,275,321.43 of cost 13,515,392.83 0.00 0.00 0.00 13,515,392.83
Navigations financial assets capital
shares method
Total 213,229,784.72 -- 196,003,134.31 -61,111.62 -9,086,648.37 1,895,383.08 188,750,757.40 -- --
(2) Investment of derived products
□ Applicable √ Not applicable
No investment in derivatives is involved in the report period.
5. Use of the collected capital
□ Applicable √ Not applicable
In the report period, there was no usage of raised capital.
VI. Sales of Major Assets and Equity
1. Sales of Major Assets
√ Applicable □ Not applicable
Net profit Proportion
Association Transfer Transfer of Implemented
contributed Impact of of the net Pricing
Transaction by the with the of all all as scheduled
the sale profit principle
Date of price or not? If Disclosure
Counterparty Sold assets asset to the on the contributed for the Connected counterparty property creditor's
Disclosure index
sale (RMB transaction? (applicable rights of rights and not, indicate date
listed Company by the sale of
10,000) to connected assets debts reasons and
company (Note 3) assets to assets
transactions) involved? involved? measures
from the the listed
taken by the
beginning company
32
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
of the to total net Company
period to profit
the date of
sale (RMB
10,000)
51% of the Announcement on the
equity of Progress of Equity
Wang Shenzhen December December Transfer of Shenzhen SEG
534.97 -430.75 348.64 3.17% Fair value No N/A Yes Yes Transferred
Yunling SEG 8, 2016 15, 2016 E-commerce Co., Ltd.
E-commerce disclosed on
Co., Ltd. http://www.cninfo.com.cn
Announcement on the
Implementation of
10,066,700
Secondary Reduction of
shares of December December
market 8,815 8.72 8,620.23 78.27% Fair value No N/A Yes Yes Transferred Holding-shares of
Huakong 31, 2016 31, 2016
investors Shenzhen SEG Co., Ltd.
SEG
disclosed on
http://www.cninfo.com.cn
2. Sales of Major Equity
√ Applicable □ Not applicable
Net profit
contributed Proportion
by the asset of the net Implemented
to the listed profit Association as scheduled
Impact of
company contributed Pricing with the or not? If
Transaction the sale on Transfer of
from the by the principle for Connected counterparty not, indicate Disclosure
Counterparty Sold assets Date of sale price (RMB the all equities Disclosure index
beginning assets to the the sale of transaction? (applicable reasons and date
10,000) Company involved?
of the listed assets to connected measures
(Note 3)
period to company to transactions) taken by the
the date of total net Company
sale (RMB profit
10,000)
51% of the Announcement on the
equity of Progress of Equity
Wang Shenzhen December December Transfer of Shenzhen SEG
534.97 -430.75 348.64 3.17% Fair value No None Yes Yes
Yunling SEG 8, 2016 15, 2016 E-commerce Co., Ltd.
E-commerce disclosed on
Co., Ltd. http://www.cninfo.com.cn
Secondary 10,066,700 December 8,815.09 8.72 8,620.23 78.27% Fair value No None Yes Yes December Announcement on the
33
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
market shares of 31, 2016 31, 2016 Implementation of
investors Huakong Reduction of
SEG Holding-shares of
Shenzhen SEG Co., Ltd.
disclosed on
http://www.cninfo.com.cn
VII. Analysis of Controlling and Holding Companies
√ Applicable □ Not applicable
Information on main subsidiaries and holding companies with more than 10% influences on the Company's net profits
Unit: Yuan
Company name Company type Main business Registered capital Total assets Net assets Operating income Operating profit Net profit
SEG Credit Subsidiary Micro-credit 150,000,000.00 527,128,411.41 190,217,607.42 78,351,087.18 42,273,929.06 31,709,669.74
Property operation and
SEG Baohua Subsidiary 30,808,800.00 160,403,186.06 112,528,058.07 80,289,375.74 35,800,313.60 26,881,089.95
management and hotel business
Channel retail terminal of
SEG Industry Subsidiary electronic products and property 25,500,000.00 103,489,093.25 44,646,580.89 183,761,151.85 6,312,881.57 5,984,662.68
operation and management
Operation and management of
Longgang SEG Subsidiary 3,000,000.00 18,632,641.84 7,365,800.29 8,885,058.01 2,302,057.14 1,766,813.36
professional electronics market
Operation and management of
Shunde SEG Subsidiary 6,000,000.00 4,768,727.23 3,251,329.59 3,020,405.16 66,777.56 92,107.04
professional electronics market
Operation and management of
Changsha SEG Subsidiary 35,000,000.00 90,333,829.24 69,762,432.18 24,597,175.67 8,597,440.66 6,004,911.59
professional electronics market
Operation and management of
Xi'an SEG Subsidiary 3,000,000.00 42,746,870.72 18,277,318.13 39,901,579.15 12,566,775.67 10,729,264.73
professional electronics market
Operation and management of
Xi'an Hairong SEG Subsidiary 3,000,000.00 27,047,412.83 5,470,844.74 21,185,817.21 2,384,182.47 2,187,519.46
professional electronics market
34
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Company name Company type Main business Registered capital Total assets Net assets Operating income Operating profit Net profit
Operation and management of
Nanjing SEG Subsidiary 20,000,000.00 23,115,769.70 4,436,932.79 24,795,038.43 -4,778,383.95 -4,552,613.66
professional electronics market
Operation and management of
Wujiang SEG Subsidiary 3,000,000.00 23,504,627.13 5,084,589.72 15,420,790.93 2,136,733.06 1,777,325.36
professional electronics market
Operation and management of
Wuxi SEG Subsidiary 3,000,000.00 15,945,797.55 4,471,380.86 5,820,882.30 741,528.88 526,070.18
professional electronics market
Operation and management of
Suzhou SEG Subsidiary 3,000,000.00 36,718,623.73 11,421,072.36 41,978,978.54 8,126,629.35 5,980,331.82
professional electronics market
Operation and management of
Suzhou SEG Digital Subsidiary 8,000,000.00 22,832,637.84 -2,049,294.53 27,149,253.66 491,000.53 493,897.43
professional electronics market
SEG Intelligent Subsidiary Trade 10,000,000.00 12,190,666.91 6,554,952.47 93,162,471.75 -3,461,244.46 -3,445,047.53
Development and operation of
Nantong SEG Subsidiary 30,000,000.00 720,210,231.69 21,603,610.84 -10,227,118.54 -2,208,110.04
real estate
Nantong SEG
Commercial Subsidiary Property Operation - 8,843,404.99 -4,501,816.70 878,147.31 -4,501,343.74 -4,501,343.73
Operation
SEG E-Commerce Subsidiary E-commerce - 19,856,069.34 -4,433,595.83 -4,307,477.61
Manufacturing and operation of
Shareholding
Huakong SEG color picture tube (CPT), CPT 1,006,671,464.00 1,313,724,068.11 800,907,363.73 297,563,205.88 21,931,533.98 8,723,288.17
company
materials, and glass apparatus
Shareholding Operation and management of
Shanghai SEG 5,000,000.00 17,903,203.15 9,827,332.82 7,333,583.64 657,870.52 491,843.57
company professional electronics market
Shareholding
CEEC Electronics exhibition 30,000,000.00 23,006,940.08 21,818,042.06 4,675,561.08 -8,181,856.34 -8,181,957.94
company
35
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Information on the acquisition and disposal of subsidiaries in the report period
√ Applicable □ Not applicable
Mode of acquisition and disposal of
Company name Impact on the overall production and performance
subsidiaries in the report period
It achieved the operating income of RMB 93.16
Suzhou SEG Intelligent
Newly-established million and the loss of RMB 3.45 million in the
Technology Co., Ltd.
report period.
Shenzhen SEG Longyan New
It is in preparation and has not opened for business
Energy Application and Newly-established yet.
Development Co., Ltd.
Shenzhen SEG Longyan Energy It is in preparation and has not opened for business
Technology Co., Ltd. Newly-established yet.
It achieved the operating income of RMB 19.86
Shenzhen SEG E-Commerce Co.,
Transfer of all equities million and the loss of RMB 4.31 million in the
Ltd.
report period.
Information on controlling and holding companies
1. In the report period, the operating income of SEG Industry decreases by 32.96% over the previous year. For
more reasons, see the third point of 1. Overview in Section 4 - II. Analysis of Main Business.
2. In the report period, the operating income of Longgang SEG decreases by 15.81% over the previous year.
Because the vacancy rate of the market increased, the operating income decreased and total profit was down.
3. In the report period, the operating income of Shunde SEG increases by 22.06% over the previous year, mainly
because the occupancy rate of the company significantly rose, the overall renewal rate reached 90%, and leasing
of small offices was stable.
4. In the report period, the operating income of Nanjing SEG decreases by 23.52% over the previous year. The
occupancy rate of Nanjing SEG from January to May was lower than that in the same period of the previous year.
The market occupancy rate rose in the second quarter, but preferences during the decoration period for new
merchants resulted in decrease in the operating income of the company.
5. In the report period, the total profit of Wujiang SEG increases by 39.97% over the previous year, mainly
because the rental income and advertising income increased by 5.93% and the gross profit increased.
6. In the report period, the operating income of Wuxi SEG decreases by 17.77% over the previous year and the
total profit decreases by 39.97%, mainly because the overall market occupancy rate decreased year on year. The
decrease in the rental income led to decrease in the total profit. Besides, other receivables of the Company
increased and the amount of funds decreased, and the financial income decreased by RMB 270,000 year on year.
7. In the report period, the operating income of Suzhou SEG increases by 69.09% over the previous year, mainly
because the property lessor Zongheng International Electronic Expo City (Suzhou) Co., Ltd. sold the property
and the parties reached a temporary agreement. In Q4 2016, the paid rent decreased by RMB 1,206,000 year on
year. The cost decreased and the profit increased. Besides, the litigation compensation to Suzhou Rail Transit
was incurred in same period of the previous year while no such compensation was incurred in the current period.
8. In the report period, the operating income of Suzhou SEG Digital decreases by 21.85% over the previous year,
mainly because the company adjusted business types and terminated direct selling of digital products. As new
business types generated higher returns. Suzhou SEG Digital turns from deficits to profit in the report period.
9. As a newly-established enterprise in the report period, Intelligent Technology engages in smart home business,
develops intelligent and engineering projects, and provides multiple intelligent solutions for home, engineering,
36
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
and plants. The company achieves the annual operation income of RMB 93,160,000. As the low gross profit rate
is low and the organization expense is recognized in the current profit or loss, the Company has a loss of RMB
3,450,000 in the report period.
10. In the report period, the operating income of Nantong SEG was RMB 4,500,000, mainly because Nantong
SEG Times Plaza starts business and the organization expense is recognized in the current profit or loss.
11. The Company sold all its equity of SEG E-commerce in the report period. The operating income attributable
to the listed company decreases by 44.19% in the report period. For details, see the Announcement of Shenzhen
SEG Co., Ltd. on the Progress of Equity Transfer of SEG E-commerce (No. 2016-112) published by the
designated information disclosure media of the Company on December 15, 2016.
VIII. Information on Structural Entity Controlled by the Company
□ Applicable √ Not applicable
IX. Outlook of future development of the Company
(I) Future development planning of the Company
1. Implementation of major assets restructuring
The Company's application for issuing shares and paying cashes to acquire assets and raise supporting funds &
connected transaction has been approved by the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to
Shenzhen SEG Group Co., Ltd. to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) on
January 17, 2017.
On January 19, 2017, business registration formalities for shareholder alteration related to transfer of 100% of
the equity of SegMaker, 55% of the equity of SEG Kangle, 100% of the equity of SEG Property Development,
and 79.02% of the equity of SEG Real Estate held by SEG Group to the Company was completed. After the
completion of alteration, the Company holds 100% of the equity of SegMaker, 55% of the equity of SEG Kangle,
100% of the equity of SEG Property Development, and 79.02% of the equity of SEG Real Estate.
On January 21, 2017, Da Hua Certified Public Accountants (special general partnership) hired by the Company
verified newly-added capital stock of RMB 450,857,239 arising from share issuance of the Company, and issued
a verification report (D. H. Y. Zi. [2017] No. 000044).
450,857,239 A shares were issued by the Company through private placement (including 450,857,239 restricted
shares) and listed from March 6, 2017.
After the said private placement, the core assets of SEG Group were injected into the listed company, reducing
horizontal competition to the greatest extent. The listed company after restructuring will be based on electronics
markets, commercial (industrial park) real estate, maker business, and CdTe film solar business, promote
interactive development with multiple business models, comprehensively integrate business resources, build
SEG new industrial eco-circle, create a diversified and strategic emerging industry development platform, and
develop into a leader in high-end manufacturing and services.
In terms of transformation of the existing specific main business, the Company will be based on electronics
markets, combine service advantages and customer resources of electronics markets, step up efforts to develop
the maker business, culture and education, intelligent technology, sports and entertainment, virtual experience,
37
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
e-sports, financial services, strategic emerging industries, high-end manufacturing and services, optimize and
integrate the business chain systems, and implement industrial transformation and upgrading.
2. In 2017, the Company will rely on the capital market and the platform as a listed company, center around the
Company's 13th five-year plan, be based on its actual development and existing resources, make full use of
capital market, integrate internal and external resources, carry out capital operation mainly through the "external
industrial mergers and acquisitions", "investment funds" and other models, and deliver a platform for diversified
strategic emerging industries.
2017 investment plan of the Company focuses on commercial (industrial park) real estate and business
transformation and upgrading. The total amount of the investment plan is expected to be RMB 1,813,760,000,
consisting of RMB 1,302,410,000 for commercial real estate projects (including fund raising and investment
projects, Nantong SEG Times Plaza, etc.), RMB 462,100,000 for new investment projects (including CdTe
project, Hongtu SEG Intelligent Industrial Fund, and e-sport Internet café etc.), and the non-operating capital
expenditure of RMB 49,250,000.
(II) Completion Result of Main financial budget and investment plan of 2016:
1. The Company released the Announcement of Resolution of 9th meeting of the 6th Session of the Board of
Directors on March 30, 2016, wherein main financial budget targets of 2016 was disclosed. The completion
result is shown in the table below:
Unit: RMB 10,000
No. Item Budget target of 2016 Actual amount of 2016 (audited)
1 Total assets 293,504 254,828
2 Total liabilities 121,830 78,977
3 Operating income 85,638 76,092
4 Owners' equity 171,674 175,851
5 Including: Owners' equity attributable to the 151,858 154,820
parent company
6 Asset-liability ratio 41.51% 30.99%
7 Management expenses 6,416 6,004
2. 2016 annual project investment plan of the Company focuses on business transformation and upgrading,
which is expected to be RMB 326,700,000 in total.
Unit: RMB 10,000
No. Project name Annual Cumulative Project progress
budget completed
investment investment
1 Nantong SEG Times Plaza 14,100 15,573 Nantong projects Animation Industrial Park and
animation business hqve opened and put into operation.
2 New investment project 18,570 3560.36
(1) SEG intelligent technology project 1,000.00 The new company has been registered and RMB
10,000,000 is invested in the registered capital. The
company is in formal business.
38
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
(2) Shenzhen International Consumer 900.00 The new company has been registered and RMB
Electronics Exchange/Exhibition 9,000,000 is invested in the registered capital,
Center Co., Ltd. accounting for 30% of the equity.
(3) SEG "Internet café project 240.44 The company signed the strategic cooperation agreement
with Allied eSports and Wangyu Technology. The first
project is located at 4F of Nantong SEG Times Plaza and
open for business on October 28, 2016. Suzhou store and
Shenzhen Allied eSports flagship store are in progress.
(4) Children project reserve 319.92 The company set up Children's Industry Division in
August 2016, which is responsible for development,
expansion and operation of SEG children's theme
experience venue. The first project was launched in
Nantong SEG Times Plaza and open for business on
October 28, 2016.
(5) New hotel investment project 1,100.00 In May 2016, the Company signed the lease contract
concerning the original Dongmen hotel property located
at 2195 Hubei Road and invested in the establishment of
Dongmen Branch of Mellow Orange Hotel. The
decoration of the hotel has been completed. The
company is applying for the license for special industries
and preparing for the opening.
Total 32670 19133.36
Note: There is deviation between 2016 project investment plan and the actual completion result because: Hongtu
SEG Intelligent Industrial Fund is under examination and approval and has not been funded yet; for industrial
reasons and prudence, the Company has not invested in new electronics market projects.
(III) Summary of progress of development strategies and operation plans disclosed earlier in the report
period
According to the development strategies disclosed by the Company in the annual report of 2015, the Company
would try to change from the traditional profit model focusing on rental income to the profit model of
multi-channel platform. The Company dug into the user values, expanded value-added service connotations and
increased users' experience. By integrating all kinds of tangible and intangible resources on the inventory market,
the Company created the maker service platform, financial service platform and electronics market operation
platform, facilitated SEG Electronics Market to transfer from the traditional profit model focusing on rental
income to the profit model of multi-channel platform. At the same time, the Company has set foot in emerging
strategic industries such as CdTe film solar energy.
In the report period, the main work done by the Company is as follows:
1. In order to reduce horizontal competition at the maximum, enhance the profitability and core
competitiveness of listed company, and fully integrate the business of electronics markets by relying on the
platform of the listed company, eventually fulfill integration, transformation and upgrading of current business
of the listed company, facilitate the Company to develop toward diversified business, extend the industrial chain,
expand the profit margins of the listed company, and enhance the influence of the listed brand, the Company
carried out major assets restructuring in 2016.
39
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
For restructuring, the Company intended to purchase 100% of the equity of SegMaker, 55% of the equity of SEG
Kangle, 100% of the equity of SEG Property Development and 79.02% of the equity of SEG Real Estate held by
SEG Group by means of issuing shares and paying cash to acquire assets, in which the percentage of payment by
the equity is 86.90% and that of cash payment 13.10%. At the same time, in order to improve the efficiency of
restructuring, the Company intended to raise the supporting fund for the restructuring from no more than 10
specific investors by means of non-public offering, with the total raised fund no more than 38.78% of the
transaction price of the assets to be acquired. According to the appraised value, the total amount of assets did not
exceed RMB 2 billion.
On November 15, 2016, China Securities Regulatory Commission Acquisition and Restructuring Committee
conditionally approved Shenzhen SEG issuing shares and paying cash to acquire assets and raising supporting
fund as well as related party transaction issues on the 85th Acquisition and Restructuring Committee Working
Meeting of 2016.
On January 17, 2017, the Company received the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to
Shenzhen SEG Group Co., Ltd. to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) issued
by China Securities Regulatory Commission, which approved the Company to issue 450,857,239 shares to SEG
Group to acquire relevant assets and raise supporting funds for the said share issuance and asset acquisition by
non-public offering of no more than 201,207,243 new shares. The said approval document issued by China
Securities Regulatory Commission will be valid within 12 months after the issuance.
The transfer formalities of the subject assets were completed on January 19, 2017, and the 450,857,239 new
shares in A-share by non-public offering were listed for trading on March 6, 2017.
2. Transformation and upgrading of electronics markets and implementation of new businesses are actively
carried out by the Company.
(1) E-sports and Internet cafébusiness
In terms of e-sports, the Company signed the Regional Agency Contract of Wangyu Internet Caféwith Shanghai
Wangyu Information Technology Co., Ltd. on March 14, 2016 to develop strategic cooperation with Wangyu, by
using respective advantages of platform and resources, to deploy "e-sport" physical stores on the basis of
subordinate property assets. The Company would reproduce layout in subordinate properties or core business
circles of core cities based on operation situation, maturity and market demand of the e-sport projects. Therefore,
the Company established the E-sport Division in August 2016, in charge of development, expansion and
operation of business related to e-sports. At present, the first physical store "Wangyu Internet
Café-EventE-sports" arranged in Nantong SEG was put into trial operation in October 2016, and relevant
operation data met the expectations. Apart from daily operation, two e-sport competitions have been held and
attracted 32 teams and nearly 400 people, achieving good brand benefits. The e-sport venue has a construction
area of 1600 m2 and investment of RMB 5,000,000. Now the second e-sport venue has settled in Suzhou and is
nearly finished. It is expected to open for business in April 2017. The Company signed the Strategic Cooperation
Agreement with Tianjin Allied eSports on December 16, 2016. The parties jointly invested RMB 24,800,000 to
establish Shenzhen SEG Lianzhong Internet Technology Co., Ltd. to carry out the operation projects of
large-scale comprehensive e-sport venues. The Company acquired the business license on February 10, 2017.
The Company invested RMB 13,640,000, accounting for 55% of the shares. The e-sport project will integrate
upstream and downstream resources of the e-sport industry, create super top-rank comprehensive entertainment
venues of e-sport events in China, and create an e-sport club that integrates "games, leisure bars, online and
offline communication platform for professional electronic gamers and players". The project was started for
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
construction at the end of February 2017 and is expected to finish in June 2017 and can undertake large-scale
e-sports events.
(2) Children's experience business
In order to build a new commercial operation platform of SEG Electronics Market and actively promote the
transformation and upgrading of the main business of the Company-the physical electronics markets, based on
its actual situation and the needs of business transformation, the Company planned to create a scene-mode
children's technology and culture experience platform that focuses on education and culture, and covers also
children's animation, experience, education, service and entertainment.
Therefore, the Company established the Children's Industry Division in August 2016, dedicated to development,
expansion and operation of SEG children's theme experience venue. The first project was launched in Nantong
SEG Times Plaza and open for business on October 28, 2016. The children's type of business is the largest
backbone store in Nantong project, which is packaged with Babycat animation image as the theme of the park
with a usable area of 2,235 m2. Driven by stable customers, sufficient customer flow has been brought to other
types of business and promoted increase in the sales volume per square meter rented of the shopping mall. Since
the operation of the children's amusement park project, it has attracted 3,800 WeChat followers, more than 1,500
members, and nearly 100% customer retention rate.
(3) E-commerce business cooperation with Taobao
In order to actively promote the transformation and upgrading of the main business of the Company, i.e. the
physical electronics markets, accelerate the combination of physical electronics markets and Internet, explore
new types of cooperation methods and create an "Internet +" model truly with SEG features and internal core
value, the Company signed the Strategic Cooperation Agreement of Taobao "Enterprises Purchasing" Project
with Taobao (China) Software Co., Ltd. on January 27, 2016 (see the announcement of Shenzhen SEG Co., Ltd.
on signing the strategic cooperation agreement with Taobao (China) Software Co., Ltd. on January 28, 2016 for
details), aiming at promoting SEG's unique online and offline mixed service mode by organically integrating the
advantages of physical merchants of SEG Electronics Market and Taobao's online resources. In order to
implement and facilitate the work, the Company set up the E-commerce Division in August 2016, which is
dedicated to the implementation and settlement of the strategic cooperation projects with Taobao, assumes other
business functions related to e-commerce and explores new profit mode. SEG set up "SEG Taobao Zone" in
Taobao and was launched on September 29, 2016, obtained the distribution access on the front page, and tried to
make the domain of the zone a secondary domain of Taobao. The total gross merchandise volume (GMV) in half
a year after launch is nearly RMB 800 million. At present, more than 2,600 merchants have formally entered.
The launch of "SEG@Taobao DIY-one-stop electronic components purchasing channel" indicates that the
strategic cooperation between the Company and Taobao's industrial market has been fully implemented and
material breakthrough has been achieved. A solid step has been made on the way of creating innovative and
value-added services of O2O electronics market with SEG features.
(4) Makers business
In order to implement the Company's development strategies, fully promote "mass entrepreneurship and
innovation", and establish a complete "SEG maker" industrial ecological system, the Company signed a
Three-party Cooperation Agreement with SegMaker and Tencent on April 5, 2016. The three parties will use
respective platform and resources advantages to carry out strategic cooperation, jointly create comprehensive
venture service platform that combines incubation and investment, physical hardware display and distribution
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
platform under key cooperation and hardware lab platform of pragmatic innovation services, and establish a
venture incubation service benchmark integrating software and hardware in China.
At the same time, the Company signed the Strategic Cooperation Agreement with Tmall on April 8, 2016. The
two parties will carry out strategic cooperation in terms of target recommended cooperation in makers products
or mature products, cooperation in the maker support event of "global gathering and innovation" Internet
intelligent acceleration channel, online and offline marketing events, media promotion and resources
complementation. From April 9 to April 12, 2016, SEG products were promoted in Juhuasuan for 3 days
successively. Through joint selection by Alibaba and SEG, 20 "black technology" products that participated in
the event were sold on the platform. During the 3 days, nearly 30,000 pieces were traded, and 1,000 pieces in
promotional products of 12 types were traded, and the total sales volume exceeded RMB 10 million.
In the report period, SEG CPARK signed cooperation agreements with more than 30 brands. Meanwhile SEG
CPARK product training and children's science popularization education will be carried out synchronously. At
present, the maker education project of SEG CPARK is designed to develop a maker education complex which is
oriented towards "maker education activities" as the theme and integrates scientific innovation, education,
competition, experience, achievement transformation, and team culture construction. With the activity center as
the carrier, the project brings in enterprises or teams featuring advanced technologies and product innovation,
provides schools, organizations and families with the space for off-campus practice, maker classes, and
parent-child experience. The project is in cooperation with Makeblock, Mago Imagineer, Zhongyi Sports, and
Zhihui Tongxing.
Hongtu SEG Intelligent Industrial Investment Fund: Hongtu SEG Intelligent Industrial Investment Fund jointly
initiated and established by the Company and Shenzhen Capital Group Co., Ltd. and Shenzhen Guiding Fund has
a scale of RMB 300 million. Its main target of investment includes: Hongtu SEG Fund mainly for new intelligent
electronic information industry, wearable intelligent devices, intelligent equipment, 3D printing, robot, VR/AR
industry and Internet of things, Internet/mobile Internet+, cloud computation and projects with potentials for
growth in relevant emerging industries of Shenzhen. In the report period, the industrial and commercial
registration of the fund management company has been completed (i.e. "Shenzhen Hongtu SEG Investment
Management Co., Ltd."). As of today, the industrial and commercial registration of the fund limited partnership
(i.e. "Shenzhen Hongtu SEG Intelligent Industrial Investment Fund (Limited Partnership)") has been completed
and relevant registration and record formalities are in progress.
(5) SEG Intelligence
The Company established Suzhou SEG Intelligent Technology Co., Ltd. in January 2016, which is dedicated to
the business of intelligent home and focuses on creating one-stop purchasing and after-sale service platform of
intelligent home. SEG "Dream Home" intelligent home experience center, as the carrier of the platform, has
been fully integrated with the automatic control system, computer network system and network communication
technology, and can provide various networked intelligent home solutions and individual intelligent hardware for
families, projects and factories.
(6) Consumer Electronic Exhibition/Exchange Center (CEEC) Project
CEEC is jointly built by the Ministry of Industry and Information and Shenzhen City under a frame agreement. It
is designed to create a world-level consumer electronic exhibition/exchange center that integrates release of
high-end consumers' electronic products, display, user experience, investment and discussion, cooperation and
trade, based in Shenzhen, serving the whole country, and facing the world. On May 10, 2016, Shenzhen Futian
Investment Development Co., Ltd., Shum Yip Land Company Limited and Shenzhen SEG Co., Ltd. jointly
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
invested and established Shenzhen International Consumer Electronic Exhibition/Exchange Center Co., Ltd. The
project is linked with the industrial resources of North Huaqiang of Shenzhen with the construction area of
around 40,000 m2, with Shum Yip Shangcheng LOFT as the center. Currently it is in the period of attracting
investment.
(7) New energy business
The new energy market has high potentials, is environment-friendly and ecological, and is an industry
encouraged and supported by the government. Among all enterprises that are engaged in the CdTe solar energy
photovoltaic industry, Advanced Solar Power (Hangzhou) Co., Ltd., as an enterprise that possesses the CdTe film
cell component technology with completely independent intellectual property, is a technically leading enterprise
in the industry both at home and abroad. In May 2016, the Company invested and established "Shenzhen SEG
Longyan New Energy Application and Development Co., Ltd" jointly with Advanced Solar Power (Hangzhou)
Co., Ltd., Shenzhen Raytai Technology Photovoltaic Engineering Co., Ltd. and Shenzhen Energy Nanjing
Energy Holding Limited, to engage in the promotion of the integration of CdTe film PV power generation station,
building integrated photovoltaics (BIPV), integrated project contracting, and the sales of CdTe film solar cell
components. In the future, the SEG Longyan CdTe Film PV Industrial Park Project invested by the Company
will engage in the construction of CdTe film PV components production line and develop solar film cell industry.
The planned total investment of the project is RMB 570,989,900 and two production lines of CdTe film PV
components with the total production output of 80 MW will be built. The main products include standard PV
components and light transmitting components. The project is estimated to be finished and put into operation
within one year. The aforesaid two projects will become upstream and downstream businesses that facilitate each
other in operation. "SEG Longyan Film Solar PV Project" has finished relevant decision-making procedure and
the joint venture company SEG Longyan has been established. The project is planned to be located at Shenzhen
Shantou Cooperation Zone. Recently, SEG Longyan won the bid for the right to use the state-owned construction
land (lot No. E2016-0025) located at Ebu Town, Shenzhen-Shantou Special Cooperation Area at RMB
28,010,000, which will ensure the successful implementation of SEG Longyan's CdTe film photovoltaic project.
SEG Longyan will continue to promote environmental assessment and design of the park.
3. Orderly promoting commercial real estate business
Nantong SEG Times Plaza is opening and put into operation. Nantong SEG Times Plaza will combine the two
themes including technology and animation, and create two operation cores focusing on commerce and industrial
park. At the same time, Nantong SEG will increase income and reduce expenditures, trying to get supporting
funds.
On June 18, 2016, Nantong SEG Times Plaza Animation Industrial Park was opened. Now 16 animation
enterprises have signed contracts with a total area of 9,360 m2, accounting for 65.7% of the total area. Through
the operation of Animation Industrial Park, scale, production value and industrial influence of the enterprises that
enter Nantong Animation industrial Base will be improved continuously. On October 28, 2016, the commercial
part of Nantong SEG Times Plaza was opened. Through post-stage operation, customer flow, sales amount and
commercial influence will be improved continuously, so as to further enhance the brand value of SEG and the
market value of the skirt building properties.
(IV) Main problems for the business development of the Company
1. Some electronics market business, due to the issues including the cooperators, is in difficulty. The industry
is highly affected by the economic environment, and both rental income and market lease rate have decreased,
highlighting the difficulty in operation.
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2. The project of Nantong SEG Times Plaza has certain operational risks. Nantong SEG Times Plaza project
faces certain operation risks. Due to increase in the supply of Nantong real estate in the short term and serious
homogeneous competition, based on analysis of the present and future macro-environment of Nantong
commercial real estate, although Nantong SEG Project has entered the operation stage from the development and
construction state, it still faces huge challenges.
(V) Key tasks of the Company in 2017
Key tasks of the Company in 2017 include:
1. The Company will raise and utilize supporting funds for major assets restructuring.
2. After the completion of major assets restructuring, directed by the strategic development orientation, the
Company will accelerate effective integration of business, personnel, organization, capital, and information
resources, and develop the business model and management model compatible with the strategic
development platform after major assets restructuring.
3. The Company will accelerate the implementation of new projects, focus on CdTe film solar photovoltaic
projects, and develop strategic emerging industries; determine the construction land for "SEG Longyan
Film Photovoltaic Industrial Park", promote the design and construction of the park, and strive for
government support; accelerate the establishment and operation of Shenzhen Hongtu SEG Intelligent
Industrial Investment Fund, and give play to the active role of the fund.
4. The Company will rely on the current electronics market, closely combine the service advantages and
customers resources of the electronics market, expand the maker business, culture and education, intelligent
technology, sports, entertainment, virtual experience and e-sports, continuously deliver innovative
value-added services of the O2O electronics market with SEG characteristics, accelerate integration of the
physical electronics market and the Internet, develop new cooperation modes, create the Internet+ model
with SEG characteristics and intrinsic core value, and continuously strengthen its core competitiveness and
profitability.
5. The Company will promote the real estate development and operation of the industrial park, coordinate
resources, and accelerate the real estate construction, investment promotion, sales, and operation of the
industrial park.
6. The Company will further improve the basic management quality, strengthen standard operation, and duly
perform the information disclosure obligation as a listed company; strengthen communication with
investors and potential investors, enhance the investors' understanding and identification with the Company,
carry out investor relationship management from multiple channels and at multiple levels, duly guarantee
the legal rights and interests of investors, particularly small and medium-sized investors, further strengthen
overall risk management and the construction and implementation of the internal control system, strengthen
the responsibility of risk subjects, improve the decision-making awareness, further improve the risk control
system, and carry out risk assessment throughout the lifecycle of major investment projects.
7. The Company will strengthen system innovation and the construction of the talent team, carry out the pilot
program on investing enterprises, and establish and improve the incentive system suitable for the Company
together with major assets restructuring. The Company will promote innovation in human resources
management, talent cultivation, and talent pool, particularly talent incentives.
(VI) Risk warning
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The future development planning and investment plan mentioned above do not reflect the profit estimation of
2017 by the Company. The results depend on multiple factors such as changes in market condition, efforts of the
operation team, and approval of relevant authority departments and uncertainties exist. Investors shall pay
special attention to it.
X. Statement of receipt of surveys, communication and visits
1. Registration form for investigations, communication and Interviews in the report period
√ Applicable □ Not applicable
Time Means Type Basic information on investigation
Inquire about the progress of major assets restructuring. The
January 4, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the progress of major assets restructuring. The
January 7, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the progress of major assets restructuring. The
January 8, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the progress of major assets restructuring. The
February 1, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the progress of major assets restructuring. The
February 2, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the reply to the Letter of Inquiry about the
Restructuring of Shenzhen SEG Co., Ltd. issued by Shenzhen
Stock Exchange. The Company has replied that it has arranged
February 19, 2016 Phone call Individual agencies for studying, verifying and replying to relevant issues
and investors may pay attention to the upcoming
announcement of the Company.
Inquire about the reply to the Letter of Inquiry about the
Restructuring of Shenzhen SEG Co., Ltd. issued by Shenzhen
Stock Exchange. The Company has replied that it has arranged
February 20, 2016 Phone call Individual agencies for studying, verifying and replying to relevant issues
and investors may pay attention to the upcoming
announcement of the Company.
Inquire when the Company will resume trading. The Company
February 22, 2016 Phone call Individual has given a reply according to the actual progress disclosed.
Inquire about when the Company will resume trading. The
February 23, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about asset injection in major assets restructuring. The
February 25, 2016 Phone call Individual Company has given a reply according to the major assets
restructuring plan disclosed.
Inquire why stocks of the Company have not risen after
resumption and whether there is any important announcement
February 26, 2016 Phone call Individual to be disclosed. The Company has replied that there is no
information which shall be disclosed but not disclosed.
Inquire why stocks of the Company have not risen after
resumption and whether there is any important announcement
February 27, 2016 Phone call Individual to be disclosed. The Company has replied that there is no
information which shall be disclosed but not disclosed.
Inquire about the number of shareholders as of February 29.
March 1, 2016 Phone call Individual The Company has given a reply according to the register of
shareholders released by the Securities Depository and
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Time Means Type Basic information on investigation
Clearing Corporation.
Inquire about the number of shareholders as of March 15. The
Company has given a reply according to the register of
March 15, 2016 Phone call Individual shareholders released by the Securities Depository and
Clearing Corporation.
Inquire when the Company will disclose the annual report.
March 22, 2016 Phone call Individual The Company has replied that the annual report will be
disclosed on March 30, 2016.
Inquire about the financial data of Q1. The Company asked
March 31, 2016 Phone call Individual investors to pay attention to 2016 Q1 report of the Company to
be disclosed.
Inquire about asset injection in major assets restructuring. The
April 20, 2016 Phone call Individual Company has given a reply according to the major assets
restructuring plan disclosed.
Inquire about the number of shareholders as of April 29. The
Company has given a reply according to the register of
April 30, 2016 Phone call Individual shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the progress of major assets restructuring. The
May 19, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the number of shareholders as of June 15. The
Company has given a reply according to the register of
June 15, 2016 Phone call Individual shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the financial data of Q1. The Company asked
June 30, 2016 Phone call Institution investors to pay attention to 2016 semi-annual report of the
Company to be disclosed.
Inquire about the progress of major assets restructuring. The
July 6, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the progress of major assets restructuring. The
July 14, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the progress of major assets restructuring. The
July 27, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about asset injection in major assets restructuring. The
August 9, 2016 Phone call Individual Company has given a reply according to the major assets
restructuring plan disclosed.
Inquire about the number of shareholders as of August 15. The
Company has given a reply according to the register of
August 18, 2016 Phone call Individual shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the progress of major assets restructuring. The
August 23, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
Inquire about the number of shareholders as of August 30. The
Company has given a reply according to the register of
August 31, 2016 Phone call Individual shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about voting results of the general meeting of the
September 1, 2016 Phone call Individual Company. The Company has given a reply according to the
disclosed notice of the general meeting.
Inquire about the progress of major assets restructuring. The
September 7, 2016 Phone call Individual Company has given a reply according to the actual progress
disclosed.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Time Means Type Basic information on investigation
Inquire about the approval progress of the CSRC on major
September 19, 2016 Phone call Individual assets restructuring. The Company has given a reply according
to the actual progress disclosed.
Inquire about the main business, transformation, and private
September 21, 2016 Phone call Individual placement of the Company. For details, see the disclosure on
irm.cninfo.com.cn.
Inquire about the main business, transformation, and private
September 28, 2016 Phone call Individual placement of the Company. For details, see the disclosure on
irm.cninfo.com.cn.
Inquire about the financial data of Q3. The Company asked
October 8, 2016 Phone call Individual investors to pay attention to 2016 Q3 report of the Company to
be disclosed.
Inquire about the approval progress of the CSRC on major
October 16, 2016 Phone call Individual assets restructuring. The Company has given a reply according
to the actual progress disclosed.
Inquire about the Company's sales of the equity of Huakong
October 27, 2016 Phone call Individual SEG. The Company has given a reply according to the
announcement disclosed.
Inquire about the Company's sales of the equity of Huakong
October 28, 2016 Phone call Individual SEG. The Company has given a reply according to the
announcement disclosed.
Inquire about the number of shareholders as of October 31.
The Company has given a reply according to the register of
November 3, 2016 Phone call Individual shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about issues related to the CdTe film photovoltaic
November 15, 2016 Phone call Individual industrial base project. The Company has given a reply
according to the announcement disclosed.
Inquire about the review reply of the M&A and Restructuring
Review Committee of the CSRC on major assets restructuring.
November 18, 2016 Phone call Individual The Company has given a reply according to the actual
progress disclosed.
Inquire about issues related to the CdTe film photovoltaic
November 25, 2016 Phone call Individual industrial base project. The Company has given a reply
according to the actual progress disclosed.
Inquire about the progress of the Company's transfer of the
November 30, 2016 Phone call Individual equity of SEG E-commerce. The Company has given a reply
according to the announcement disclosed.
Inquire about the number of shareholders as of November 30.
The Company has given a reply according to the register of
December 2, 2016 Phone call Individual shareholders released by the Securities Depository and
Clearing Corporation.
Inquire about the progress of the Company's sales of shares of
Huakong SEG. The Company asked investors to pay attention
December 9, 2016 Phone call Individual to the progress report disclosed in the designated information
disclosure media.
Inquire about the operating result of Q4. The Company asked
December 16, 2016 Phone call Individual investors to pay attention to 2016 annual report of the
Company to be disclosed.
Inquire about the progress of the Company's sales of shares of
Huakong SEG. The Company asked investors to pay attention
December 20, 2016 Phone call Individual to the progress report disclosed in the designated information
disclosure media.
Inquire whether Company has obtained the approval of the
December 22, 2016 Phone call Individual CSRC on major assets restructuring. The Company asked
investors to pay attention to real-time announcements.
Inquire whether Company has obtained the approval of the
December 29, 2016 Phone call Individual CSRC on major assets restructuring. The Company asked
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Time Means Type Basic information on investigation
investors to pay attention to real-time announcements.
Frequency of reception 48
Number of institutions received 9
Number of individuals received 46
Number of other objects received 0
Is there any important information
No
disclosed?
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Chapter 5 Important Matters
I. Plan of common share profit distribution and plan of transfer of capital reserves into share
capital
Information on the establishment, implementation or adjustment of the ordinary share profit distribution policy,
especially the cash dividend policy:
√ Applicable □ Not applicable
(I) Information on the establishment, implementation or adjustment of the profit distribution policy:
According to the Articles of Association and Shareholder Return Plan for the Next Three Years (2015-2017), the
Annual Profit Distribution Plan of 2015 was formulated by the Company in 2016 and passed by the Board of
Directors and general meeting. The statutory surplus reserve was RMB 7,009,501.20, accrued at 10% of the
profit available for distribution. Based on 784,799,010 share capital of the Company as of December 31, 2015,
the cash dividends were distributed to all shareholders at 0.30 yuan (tax included) for every 10 shares. The total
amount of profit distribution of the Company was RMB 23,543,970.30, in which cash dividends accounted for
100%. The Company did not transfer reserves into share capital. The annual profit distribution plan of 2015 was
completed on June 16, 2016.
Special explanation of cash dividend policy
Does it comply with the Article of Association of the Company
Yes
or the resolutions of the meeting of shareholders?
Are the dividend standard and ratio explicit and clear? Yes
Are the decision-making procedure and mechanism perfect? Yes
Do independent directors fulfill their obligations and play their
Yes
role?
Is there any channel for medium and small shareholders to fully
express themselves? Are their legitimate rights and interests fully Yes
protected?
Are the conditions and procedure for adjustment or change of
Yes
cash dividend policy compliant and transparent?
Information on ordinary share profit distribution (proposal) and the plan of transfer of capital reserves into share
capital (proposal) in the recent three years (including the report period)
Pursuant to the Accounting Standard for Business Enterprise 2014, the investment in subsidiaries by the
Company was calculated based on the basis of cost method, the profit of parent company remained bigger
differences with consolidated profit. In accordance with relevant provisions of the Company Law, the profit
distribution was implemented with the parent company as the main body. Therefore, the profit distribution of the
Company in 2014, 2015 and 2016 was implemented depending on the distributable profit of the parent company.
1. Profit distribution proposal and the proposal for transfer of capital reserves into share capital in 2016:
According to auditing by Da Hua Certified Public Accountants Co., Ltd., the net profit attributable to the listed
company realized by the parent company in 2016 amounted to RMB 118,807,033.67, the undistributed profit at
the beginning of the year is RMB 63,085,510.75, and the current profit available for distribution to shareholders
was RMB 181,892,544.42. According to the Articles of Association and Shareholder Return Plan for the Next
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Three Years (2015-2017), the annual profit distribution plan of 2016 is as follows: The statutory surplus reserve
was 11,880,703.37, accrued at 10% of the achieved net profit of the current year; the other profit available for
distribution to shareholders was RMB 146,342,426.58. The Company decided not to distribute the profit nor
transfer reserves into share capital in 2016. The Company intends to distribute the profit properly after the
business of raising supporting funds is completed.
2. Profit distribution proposal and the proposal for transfer of capital reserves into share capital in 2015:
According to auditing by Da Hua Certified Public Accountants Co., Ltd., the net profit attributable to the listed
company realized by the parent company in 2015 amounted to RMB 92,305,001.57, the undistributed profit at
the beginning of the year is RMB -22,209,989.62, and the current profit available for distribution to shareholders
was RMB 70,095,011.95. The annual profit distribution plan of 2015 was as follows: The statutory surplus
reserve was RMB 7,009,501.20, accrued at 10% of the profit available for distribution. Based on 784,799,010
share capital of the Company as of December 31, 2015, the cash dividends were distributed to all shareholders at
0.30 yuan (tax included) for every 10 shares. The total amount of profit distribution of the Company in 2015 was
RMB 23,543,970.30, in which cash dividends accounted for 100%. The Company did not transfer reserves into
share capital.
3. Profit distribution proposal and the proposal for transfer of capital reserves into share capital in 2014:
According to auditing by Da Hua Certified Public Accountants Co., Ltd., the net profit attributable to the listed
company realized by the parent company in 2014 amounted to RMB 32,887,973.01, the undistributed profit at
the beginning of the year is RMB -55,097,962.63, and the current profit available for distribution to shareholders
was RMB -22,209,989.62. The Company decided not to distribute the profit nor transfer capital reserves into
share capital.
Table of distribution of ordinary share cash dividends by the Company in the recent three years (including the
report period)
Unit: Yuan
Net profit
Ratio of net profit
attributable to
attributable to
ordinary
ordinary Amount of cash Percentage of cash
Year for bonus Amount of cash shareholders of
shareholders of dividends otherwise dividends otherwise
distribution bonus (incl. tax) listed company in
listed company in distributed distributed
consolidated
consolidated
statement of bonus
statement (%)
year
2016 0.00 107,560,213.41 0.00% 0.00 0.00%
2015 23,543,970.30 74,242,090.49 31.71% 0.00 0.00%
2014 0.00 48,380,294.05 0.00% 0.00 0.00%
The net profit of the Company was positive and the profit of the parent company to be distributed to ordinary
shareholders was also positive, but the proposal for distribution of cash dividends was not put forward.
√ Applicable □ Not applicable
Reason for no common share cash dividend distribution proposal
despite positive net profit and positive profit of the parent
Purpose and usage plan of the undistributed profit
company available for distribution to common shareholders in
the report period
As the Company has obtained the approval of the CSRC for The Company intends to distribute the profit after the business of
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
issuing shares to acquire assets and raise supporting funds, the raising supporting funds is completed.
release of the supporting fund is in progress. According to terms
of Article 18 of the Measures for the Administration of the
Offering and Underwriting of Securities (Order No. 121 of the
China Securities Regulatory Commission), if the profit
distribution plan and the plan of transferring reserves into share
capital are not submitted to the general meeting for voting or
passed by the general meeting but not implemented, the listed
company shall issue securities only after such plans are
implemented. In view of long-term development, shareholders'
interests, and the validity term of the approval for major assets
restructuring, the Company decides not to distribute the profit in
2016 nor transfer reserves into share capital.
II. Plan of profit distribution and plan of transfer of capital reserves into share capital in the
report period
□ Applicable √ Not applicable
The Company plans not to distribute cash dividends or bonus shares nor transfer reserves into share capital.
III. Fulfillment of Commitments
1. Commitments fulfilled in the report period or yet to be fulfilled as of the end of the report period by the
Company, shareholders, actual controllers, purchaser, directors, supervisors, senior executives or other
associates
√ Applicable □ Not applicable
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Commitment Commitment
Commitments Subject Type Content Performance
date term
Commitment for share
Not applicable
reform
"1. The Company undertakes that as of October 31, 2015, controlling shareholders of
Shenzhen SEG or other related persons who occupy funds of Shenzhen SEG or the
subject company due to non-operating events will repay them before the shareholders'
meeting that is intended to review the restructuring plan;
2. After restructuring, the financial independence of the listed companies shall be
guaranteed and no illegal occupation of funds of listed companies will occur;
3. The Company will abide by and urge listed companies to abide by relevant laws and
administrative regulations such as the Code on Corporate Governance of Listed
Companies, the Notice on Regulating the Funds Transfers between Listed Companies and
Related Parties and the External Guarantee of Listed Companies, and the Listing Rules of
Shenzhen Stock Exchange, regulations, regulatory documents, and Shenzhen Stock
Commitment on Exchange business rules, and improve awareness of compliance;
horizontal
Shenzhen SEG competition, 4. The Company will exercise the rights of shareholders according to law, and will not August 3,
abuse the rights of shareholders to damage the interests of listed companies and other 2016 Long-term In progress
Group Co., Ltd. related
transaction, and shareholders;
capital occupation 5. The Company will optimize the governance structure of listed companies, improve the
Commitments in the internal control system, regulate the operation of the three organs, give full play to
Acquisition Report and functions and supervisory role of independent directors and the Board of Supervisors, and
the Report of Changes restrict decision-making and operation by controlling shareholders and actual controllers
on Equity of the Company;
6. The Company will fulfill the obligation of information disclosure strictly in accordance
with relevant provisions, actively cooperate with listed companies on information
disclosure, timely inform major events incurred or to be incurred, and ensure the
authenticity, accuracy, integrity, timeliness and fairness of information disclosure. In case
of breach of the foregoing commitments, the Company will bear all losses thus incurred
to Shenzhen SEG, the subject company, other companies, enterprises, or other economic
organizations controlled by the Company."
"1. When the Company acts as the controlling shareholder of Shenzhen SEG, the
Company, other companies, enterprises, or other economic organizations controlled by the
Commitment on Company, will minimize and regulate associated transactions with Shenzhen SEG or the
horizontal subject company, other companies, enterprises, or other economic organizations
Shenzhen SEG competition, controlled by the Company. August 3, In normal
Long-term
Group Co., Ltd. related 2. When the restructuring is completed, the Company, other companies, enterprises, or 2016 progress
transaction, and other economic organizations controlled by the Company will handle associated
capital occupation transactions with Shenzhen SEG or the subject company that are unavoidable or incurred
for reasonable cause at fair and reasonable market price, perform the decision-making
procedure for associated transactions according to relevant laws, regulations, and
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
normative documents, fulfill the obligation of information disclosure and handle the
approval procedures according to the law, do not use the dominant position of the
controlling shareholder to damage the legal rights and interests of Shenzhen SEG and
other shareholders.
3. The Company, other companies, enterprises, or other economic organizations
controlled by the Company will not use the rights of shareholders of the listed company
or the actual control ability to manipulate or instruct the listed company or its directors,
supervisors and senior executives to have the listed company unfairly provide or accept
funds, goods, services or other assets, or engage in any acts detrimental to the interests of
listed companies. In case of breach of the following commitments, the Company will bear
all losses thus incurred to Shenzhen SEG, the subject company, other companies,
enterprises, or other economic organizations controlled by the Company."
"1. In the restructuring, relevant assets such as some commercial electronics markets of
SEG Group that constitute the horizontal competition have not been injected into the
listed company. SEG Group will trust such assets to Shenzhen SEG or its subsidiaries
after the major asset restructuring. Within 5 years after the major asset restructuring, SEG
Group will take all necessary measures to solve flaws of such assets, and incorporate the
preceding specialized electronics markets that constitute horizontal competition into
Shenzhen SEG or transfer them to the third party in a feasible way such as sales based on
operating needs of Shenzhen SEG and the completeness of the ownership of such assets.
If SEG Group fails to complete the foregoing matters as scheduled, before injecting
relevant assets to Shenzhen SEG, SEG Group shall lease them to Shenzhen SEG for direct
operation and enjoy the income from such property. The annual rent of Shenzhen SEG is
the depreciated value of such property. Profit and loss incurred by leasing of such
property assets shall be shared by Shenzhen SEG. The parties shall separately enter into a
Commitment on leasing agreement.
horizontal 2. Except assets owned and business operated before the validity date of commitment,
Shenzhen SEG competition, when acting as a controlling shareholder or actual controller of Shenzhen SEG, in order to August 03, In normal
Long-term
Group Co., Ltd. related guarantee sustainable development of Shenzhen SEG, the Company will exercise 2016 progress
transaction, and supervision and restriction on operating activities of its own and affiliated enterprises
capital occupation under its control, will not establish new or acquire any assets or business same as or
similar to its main business within the operation area of Shenzhen SEG, and will not be
engaged in any activities that may damage the interests of Shenzhen SEG and other
companies and enterprises controlled by Shenzhen SEG, or other economic organizations.
If in the future there is any business opportunity same as or similar to other main business
within Shenzhen SEG operation area, such opportunity will preferentially be
recommended to Shenzhen SEG and other companies and enterprises controlled by
Shenzhen SEG, or other economic organizations. However, any of the following cases is
an exception: (1) Due to national laws, regulations and policies and other reasons, any
commercial properties and real estate development projects appropriated or allocated
through oriented protocols by the government to SEG Group and any enterprises invested
by it; or (2) when the general conditions of tender, transfer or assignment of specific
commercial properties and real estate development projects have specific requirements on
the bidder or assignee, Shenzhen SEG is not qualified y but SEG Group is qualified.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Commercial property and real estate development projects that are same as the main
business of Shenzhen SEG or result in horizontal competition subject to the above
exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that
such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written
acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and
transfer such projects to Shenzhen SEG. In case of breach of the foregoing commitments,
the Company will bear all losses thus incurred to Shenzhen SEG, the subject company,
other companies, enterprises, or other economic organizations controlled by the
Company."
"1. The Company will guarantee the independence of personnel of Shenzhen SEG and
subject company: (1) After completion of the restructuring, the labor, personnel and
compensation management of Shenzhen SEG are independent from the Company and
related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (2) After completion of the restructuring, senior executives of
Shenzhen SEG and the subject company hold full-time position at Shenzhen SEG and the
subject company and receive compensation, and will not assume any duties other than
director and supervisor in the Company and related parties, such as other companies,
enterprises, or other economic organizations controlled by the Company. (3) After
completion of the restructuring, the Company will not interfere with the shareholders'
meeting and the Board of Directors' exercise of power in appointment/dismissal of
personnel.
2. The Company will guarantee the independence of organs of Shenzhen SEG and the
subject company: (1) After completion of the restructuring, Shenzhen SEG and the
subject company will develop a sound corporate governance structure and an independent
and complete organizational structure. (2) After completion of the restructuring, the
shareholders' meeting, the Board of Directors, and the Board of Supervisors of Shenzhen
Shenzhen SEG August 3, In normal
Other commitment SEG and the subject company will exercise duties and powers according to laws, Long-term
Group Co., Ltd. 2016 progress
regulations and articles of association of Shenzhen SEG and the subject company.
3. The Company will guarantee the independence and completeness of Shenzhen SEG
and the subject company: (1) After completion of the restructuring, Shenzhen SEG and
the subject company will have independent and complete assets related to production and
management. (2) After completion of the restructuring, the site for business operation of
Shenzhen SEG and the subject company are independent of the Company and related
parties, such as other companies, enterprises, or other economic organizations controlled
by the Company. (3) After completion of the restructuring, except normal operational
contacts, Shenzhen SEG and the subject company are not involved in the following case:
funds or assets are occupied by the Company and related parties, such as other companies,
enterprises, or other economic organizations controlled by the Company.
4. The Company will guarantee the business independence of Shenzhen SEG and the
subject company: (1) After completion of the restructuring, Shenzhen SEG and the
subject company own relevant qualification for independent business operation, and have
the independent and sustainable market-oriented operation capability. (2) Except assets
owned and business operated before the validity date of commitment, when acting as a
controlling shareholder of Shenzhen SEG, in order to guarantee sustainable development
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
of Shenzhen SEG, the Company will exercise supervision and restriction on operating
activities of its own and the affiliated enterprises under its control, will not establish new
or acquire any assets or businesses same as or similar to its main business within the
operation area of Shenzhen SEG, and will also not be engaged in any activities which may
damage the interests of Shenzhen SEG and other companies, enterprises, or other
economic organizations controlled by Shenzhen SEG. If in the future there is any business
opportunity same as or similar to other main business within Shenzhen SEG operation
area, such opportunity will be preferentially recommended to Shenzhen SEG and other
companies, enterprises, or other economic organizations controlled by Shenzhen SEG. (1)
Due to national laws, regulations and policies and other reasons, any commercial
properties and real estate development projects appropriated or allocated through oriented
protocols by the government to SEG Group and any enterprises invested by it; or (2)
When the general conditions of tender, transfer or assignment of specific commercial
properties and real estate development projects have specific requirements on the bidder
or assignee, Shenzhen SEG is not qualified but SEG Group is qualified. Commercial
property and real estate development projects that are same as the main business of
Shenzhen SEG or result in horizontal competition subject to the above exclusions may be
invested and built by SEG Group at first. If Shenzhen SEG thinks that such assets are
eligible to be injected into Shenzhen SEG, upon receipt of the written acquisition notice
from Shenzhen SEG, SEG Group will negotiate on acquisition and transfer such projects
to Shenzhen SEG. (3) After completion of the restructuring, the Company and related
parties, such as other companies, enterprises, or other economic organizations controlled
by the Company will reduce related transactions with Shenzhen SEG and the subject
company and other companies, enterprises, or other economic organizations controlled by
them; for any related transactions that are indeed necessary and unavoidable, the
Company will handle them at fair price based on the market principle, and fulfill relevant
approval procedures and the information disclosure obligation according to provisions of
relevant laws, regulations and normative documents.
5. The Company will guarantee the financial independence of Shenzhen SEG and the
subject company: (1) After completion of the restructuring, Shenzhen SEG and the
subject company will establish an independent financial department, independent
financial accounting system, and standard and independent financial accounting rules. (2)
After completion of the restructuring, Shenzhen SEG and the subject company will
separately open an account in banks, and do not share accounts with the Company and
related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (3) After completion of the restructuring, financial personnel
of Shenzhen SEG and the subject company will not hold a part-time job in the Company
or related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (4) After completion of the restructuring, Shenzhen SEG and
the subject company will independently make financial decisions, and the Company will
not interfere with fund usage of Shenzhen SEG and the subject company. (5) After
completion of the restructuring, Shenzhen SEG and the subject company will pay taxes
independently according to laws. In case of breach of the foregoing commitments, the
Company will bear all losses thus incurred to Shenzhen SEG, and the subject company."
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
"(I) Contract subjects and date of signing
Shenzhen SEG and SEG Group signed Performance Commitment and Compensation
Agreement on August 3, 2016.
(II) Performance commitment period
3 accounting periods following the completion of the transaction (including the year of
completion and the following consecutive two accounting periods). If the transaction is
completed before December 31, 2016 (included), the performance commitment period
includes 2016, 2017, and 2018. If the transaction is completed between December 31,
2016 and December 31, 2017 (included), the performance commitment period includes
2017, 2018, and 2019. After the completion of the transaction, Shenzhen SEG shall hire
an accounting firm with the qualification of securities that is recognized by SEG Group
within 4 months after the end of each accounting period during the performance
commitment period to respectively issue a special audit report and/or an impairment test
report (hereinafter referred to as the "special audit report") with respect to the promised
net profit/promised cash flow income/promised development profit (hereinafter
collectively referred to as "promised performance") related to assets within the transaction Three
compensation scope agreed in the agreement, and recognize the promised performance or accounting
impairment of assets within the transaction compensation scope in each year during the years from
performance commitment period. the year of
completion
(III) Performance commitment and performance compensation of
Commitments made at Underlying assets injected into Shenzhen SEG in this transaction are subject to multiple restructuring
the time of Shenzhen SEG Performance appraisal methods: 100% of the equity of SegMaker, 55% of the equity of SEG Kangle, August 3, In normal
(including
restructuring of major Group Co., Ltd. Commitment and 79.02% of the equity of SEG Property Investment are priced on the basis of appraisal 2016 progress
the year of
assets conclusion with the asset-based method, in which property assets are subject to the completion
income method and market method and real estate development in the long-term equity and the
investment is subject to the hypothetical development method; 100% of the equity of SEG subsequent
Property Development and 100% of the equity of SEG Property Management (a two
wholly-owned subsidiary of SEG Property Investment) are subject to the income method. accounting
Therefore, all parties recognize and agree that the performance guarantee of relevant years)
underlying assets of the transaction and the compensation methods shall be carried out
according to the following stipulations:
1. Performance guarantee of underlying assets appraised by income approach and
performance compensation
(1) If the transaction is completed before December 31, 2016 (included), SEG Group
warrants that: 1) Audited net profits of SEG Property Development after the deduction of
non-recurring profits and losses and investment income of 2016, 2017 and 2018
respectively (hereinafter referred to as "guaranteed net profits") shall not be lower than
RMB 8.05 million, RMB 7.85 million and RMB 7.75 million respectively; 2) The
guaranteed net profits of SEG Property Management of 2016, 2017 and 2018 shall not be
lower than RMB 4,05 million, RMB 3.45 million and RMB 3.6 million respectively; 3)
The net profits attributable to the parent company (net profits attributable to the parent
company = shareholding percentage of parent company x [income actually realized by
corresponding property assets (including the income of new area after renovation of
property assets)-depreciation and amortization of the cost of renovation-direct cost and
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
management costs (including urban property tax, business tax, urban construction tax and
education surtax, stamp duty, maintenance tax, insurance premium and land use tax,
excluding depreciation and amortization)-relevant losses caused by renovation (if
any)-other operating costs and taxes of corresponding properties (including income tax)],
hereinafter referred to as "guaranteed net profits") of the property assets (minus the parts
used by the companies) of SegMaker, SEG Kangle and SEG Real Estate of 2016, 2017
and 2018 appraised by income approach shall not be lower than RMB 63,013,500, RMB
59,995,800 and RMB 77,627,200 respectively.
(2) If the transaction is completed after December 31, 2016 and before December 31,
2017 (included), SEG Group warrants that: 1) Guaranteed net profits of SEG Property
Development of 2017, 2018 and 2019 respectively shall not be lower than RMB 7.85
million, RMB 7.75 million and RMB 7.75 million respectively; 2) The guaranteed net
profits of SEG Property Management of 2017, 2018 and 2019 shall not be lower than
RMB 3.45 million, RMB 3.60 million and RMB 3.75 million respectively; 3) The
guaranteed net profits corresponding to the property assets (minus the parts used by the
companies) of 2017, 2018 and 2019 as appraised by income approach of SegMaker, SEG
Kangle and SEG Real Estate shall not be lower than RMB 59,995,800, RMB 77,627,200
and RMB 94,723,100 respectively.
(3) If the actual net profits on the foregoing assets appraised by income approach after
accumulative deduction of non-operating profits and losses as of the end of any year
during the performance guaranteed period are lower than the accumulatively guaranteed
net profits of corresponding assets as of the end of such year, SEG Group shall use Shen
SEG shares obtained by acquisition of relevant assets as the consideration to make
compensation for Shenzhen SEG in terms of the shares issued to SEG Group according to
the following calculation method. For the part not covered by shares, SEG Group shall
compensate in cash: 1) to compensate 100% of the equity of SEG Property Development
and 100% of the equity of SEG Property Management appraised by income approach: I.
Number of shares to be compensated every year = (accumulated guaranteed net profits as
of the end of the current period -actually accumulated net profits as of the end of the
current period)/total guaranteed net profits of years during the compensation period x total
subscribed shares-amount of compensated shares. Remarks: The "total subscribed shares"
refers to the total number of shares obtained by SEG Group by subscribing all shares
issued by Shenzhen SEG at 100% of the equity of SEG Property Development and 100%
of the equity of SEG Property Management appraised, i.e. total subscribed shares = 100%
of the equity of SEG Property Development or 100% of the equity of SEG Property
Management as the overall price/offering price of the shares issued this time to purchase
assets. When the number of shares of Shenzhen SEG is calculated by 100% of the equity
of SEG Property Management, the impact of the 79.02% of the equity of SEG Real Estate
(the parent company of SEG Property Management) held by SEG Group should be taken
into consideration. II. The part not covered by shares will be compensated by SEG Group
in cash. Amount of extra cash to be compensated = number of shares not covered x
offering price of the shares issued this time to purchase assets.
2) Compensation of property assets held by all target companies appraised by income
approach
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
I. Number of shares to be compensated every year = (accumulated guaranteed net
profits as of the end of the current period -actually accumulated net profits as of the end
of the current period)/total guaranteed net profits of years during the compensation period
x total subscribed shares-amount of compensated shares. Remarks: The "total subscribed
shares" in the foregoing formula refers to the total number of shares obtained by SEG
Group by subscribing all shares issued by Shenzhen SEG at the price of the property
assets (including the property assets appraised by income approach and are held by
SegMaker, SEG Kangle and SEG Real Estate) appraised by income approach, i.e. total
subscribed shares = appraised price of the property assets appraised by all target
companies with income approach/the offering price of the shares issued this time to
purchase assets. When the number of shares of Shenzhen SEG is calculated, the impact of
the percentages of share rights of all target companies held by SEG Group shall be taken
into consideration. II. The part not covered by shares will be compensated by SEG Group
in cash. Amount of extra cash to be compensated = number of shares not covered x
offering price of the shares issued this time to purchase assets.
(4) When the performance guaranteed period expires, Shenzhen SEG shall hire the
Certified Public Accountants with securities practice qualification recognized by both
parties to carry out impairment test on the foregoing assets appraised by income approach
and issue the impairment test report. If the impairment amount at the end of the current
period of the assets appraised by income approach is greater than the total number of
shares compensated during the performance guaranteed period x offering price of the
shares issued this time to purchase assets + total amount of cash compensated, SEG
Group shall make compensation for the impaired part of such assets of Shenzhen SEG: 1)
Number of shares compensated for the impaired part of the assets appraised by income
approach = impairment amount at the end of the current period of the underlying assets
appraised by income approach/offering price of the shares issued this time - total shares
already compensated during the performance guaranteed period. 2) The part not covered
by shares will be compensated by SEG Group in cash. Amount of extra cash to be
compensated = number of shares not covered x offering price of the shares issued this
time to purchase assets.
(5) Under any circumstances, the total number of shares compensated arising from the
actual net profits less than the guaranteed net profits and the impairment test in total shall
be limited to the total number of Shen SEG shares (including share increase by transfer
and stock dividends) obtained by subscription with 100% of the equity of SEG Property
Development, 100% of the equity of SEG Property Management and property assets of
target companies appraised by SEG Group with income approach. The part not covered
will be compensated in cash by SEG Group, which is limited to the cash consideration
paid for Shen SEG shares with such assets.
2. Performance guarantee of underlying assets appraised by hypothetical development
method and performance compensation
(1) SEG Group warrants that the actual development profits (hereinafter referred to as
"guaranteed development profits") of SEG ECO Phase I Project, Shenzhen SEG
International Electronics Industry Center Project of Shenzhen SEG New City
Construction and Development Co., Ltd. (hereinafter referred to as "SEG New City
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Development"), Xi'an SEG Plaza Project of Xi'an SEG (subsidiary of SEG Real Estate),
and the remaining building of Oriental Venice Project and SEG Holiday Plaza Project of
Huizhou Stars Real Estate Development Co., Ltd. (subsidiary of SEG Real Estate) shall
not be lower than RMB 104,007,500, RMB 449,494,900, RMB 661,619,900, RMB
18,501,000 and RMB 154,605,400 respectively.
(2) The compensation period of the transaction is three fiscal years from the year of
completion of the transaction (included). When the restructuring compensation period
expires, Shenzhen SEG shall hire the Certified Public Accountant with securities practice
qualification recognized by both parties to carry out auditing on the realized profits of the
foregoing real estate projects appraised by hypothetical development method (including
the development profits realized in the transitional period) and unrealized development
profits (if any), and issue special audit reports respectively. If, during the period from the
appraisal base date to the expiry date of the three-year guaranteed period, the achieved
sales area of the real estate projects under the underlying assets (hereinafter referred to the
"achieved sales area") fails to reach 90% of the remaining sellable area as of the appraisal
base date or the sellable area after completion, SEG Group agrees to extend the
performance guaranteed period of the real estate projects appraised by hypothetical
development method to the end of the year when the achieved sales area reaches 90% (i.e.
December 31 of that year). All the real estate projects appraised by hypothetical
development method shall be subject to the foregoing stipulations separately. During the
transaction compensation period, the amount of the capital raised this time with impact
shall be deducted from realized and unrealized development profits (if any) of the real
estate projects appraised by hypothetical development method, the calculation formula of
the amount of the supporting capital raised this time with impact is as below: amount of
the supporting capital raised this time with impact on the performance guarantee =
amount of the supporting capital raised this time actually used in funded projects x
interest of loan from the bank of corresponding period x (1 - income tax rate of the
implementation subject of implementation of the funded projects) x actual days of capital
use/365, in which the interest of loan from the bank of corresponding period shall be
determined by the interest rate of loan of 1 to 3 years of the People's Bank of China of the
corresponding period of the actual operation plus 20% extra, and the actual days of use of
the capital raised shall be calculated by the natural days during the period from the date
on which the raised capital is provided to the implementation subject of the funded project
till the earlier one of the expiry date of the compensation period and the date on which
relevant capital is repaid to the listed company. If the total amount of the realized
development profits and the unrealized development profits (if any) of such real estate
projects is lower than the guaranteed development profits, SEG Group shall compensate
Shenzhen SEG with the shares used by Shenzhen SEG as payment consideration acquired
from relevant project subscription according to the following calculation method, and
SEG Group shall compensate in cash the part not covered by shares: 1) number of shares
to be compensated = [accumulated realized development profits from the base date of
appraisal to the expiry date of the performance guarantee period - unrealized development
profits of the projects (if any)]/guaranteed development profits x total subscribed shares.
Remarks: In the foregoing formula, the "total subscribed shares" refer to the total number
of shares obtained by SEG Group by using the real estate projects held indirectly that are
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
appraised by hypothetical development method to subscribe the total shares issued by
Shenzhen SEG. When the number of shares subscribed of Shenzhen SEG is calculated,
the impact of the percentage of equity of SEG Real Estate held by SEG Group and that of
the foregoing real estate projects held by SEG Real Estate shall be taken into
consideration. The realized development profits in the foregoing formula refer to the net
profits of the projects after deducting corresponding inventory development cost already
carried forward, expenses and taxes from the realized sales income of real estate projects
as of the expiry date of the restructuring compensation period. The unrealized
development profits refer to that if there are development products not sold yet in
corresponding real estate projects when the restructuring compensation period expires, the
unrealized development profits corresponding to the remaining development products
shall be determined according to the following methods: unrealized development profits =
estimated unit sales price of the remaining development products x area - book cost
corresponding to development products - estimated sales cost - estimated sales cost -
measured land VAT - measured income tax. Remarks: In the estimated unit sales price of
the remaining development products, if a sales contract has been signed, the unit price set
out in the contract shall prevail, and if no sales contract has been signed, the unit sales
price shall be determined by the unit sales price of the same type of products sold earlier;
the area shall be determined by the actually sold sales area corresponding to the
development product; estimated sales cost shall be determined according to the
percentage of the sales cost corresponding to the sales product in the sales income;
estimated sales taxes shall be determined according to the fee standard of the real estate
industry; and measured land VAT and income tax shall be calculated according to relevant
standards of the tax laws.
2) The part not covered by shares will be compensated by SEG Group in cash. Amount
of extra cash to be compensated = number of shares not covered x offering price of the
shares issued this time to purchase assets.
(3) When the performance guaranteed period expires, Shenzhen SEG shall hire the
Certified Public Accountant with securities practice qualification recognized by both
parties to carry out impairment test on the foregoing assets appraised by hypothetical
development method and issue the impairment test report. If the impairment amount at the
end of period of the real estate projects appraised by hypothetical development method is
greater than the total number of shares compensated during the performance guaranteed
period x offering price of the shares issued this time to purchase assets + total amount of
cash compensated, SEG Group shall make compensation for the impaired part of such
assets of Shenzhen SEG: 1) Number of shares compensated for the impaired part of the
real estate projects appraised by hypothetical development method = impairment amount
at the end of period of the real estate projects appraised by hypothetical development
method/offering price of the shares issued this time - total shares already compensated
during the performance guaranteed period. 2) The part not covered by shares will be
compensated by SEG Group in cash. Amount of extra cash to be compensated = number
of shares not covered x offering price of the shares issued this time to purchase assets.
(4) Under any circumstances, the total of the total amount of actually realized
development profits and unrealized development profits (if any) and the total number of
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
compensated shares occurred due to impairment test shall not exceed the total number of
shares of Shenzhen SEG (including the shares increased by transferring and stock
dividends) obtained by SEG Group subscribing the shares issued by Shenzhen SEG with
the real estate projects appraised by hypothetical development method. The insufficient
part will be compensated in cash by SEG Group with the limit as the cash consideration
paid for Shen SEG shares with such projects.
3. Performance compensation of assets appraised by market approach
(1) For the property assets appraised by market approach, Shenzhen SEG shall engage
certified public accountants that possess the qualification in practicing the securities
business in the end of every year during the performance guaranteed period to carry out
impairment test, and issue impairment test report. SEG Group shall compensate Shenzhen
SEG with the shares used by Shenzhen SEG as payment consideration acquired from
relevant assets subscription according to the following calculation method, and SEG
Group shall compensate in cash the part not covered by shares: 1) Total number of shares
to be compensated = impairment amount at the end of the current period/offering price of
the shares issued this time to purchase assets -number of shares already compensated. 2)
The part not covered by shares will be compensated by SEG Group in cash. Amount of
extra cash to be compensated = number of shares not covered x offering price of the
shares issued this time to purchase assets.
(2) Under any circumstances, the total number of shares compensated arising from the
impairment test shall not exceed the total amount of Shenzhen SEG shares acquired by
SEG Group with the property assets appraised by market approach previously (including
share increase by transfer and stock dividends). The part not covered by shares and the
amount compensated in cash in total shall not exceed the cash consideration paid for
Shenzhen SEG shares acquired by SEG Group with such property assets. Relevant
compensation methods for the foregoing 100% of the equity of SEG Property
Development, 100% of the equity of SEG Property management and the property assets
held by the target companies appraised by income approach and the real estate projects
appraised by hypothetical development method as well as other property assets appraised
by market approach are independent. The number of shares compensated by assets
appraised by other methods is not considered when the number of shares compensated is
calculated. When the number of shares to be compensated and/or amount of cash
calculation of each year is calculated according to relevant stipulations mentioned above,
if the number of compensated shares calculated is smaller than 0, take 0, i.e. the shares
compensated will not be refunded; if the cash compensation amount calculated is smaller
than 0, take 0, and the cash compensated will not be refunded. When the impairment
amount is calculated, the impact of capital increase, decrease, acceptance of the gift and
profit distribution of the shareholders of underlying assets during the performance
guaranteed period on the amount of impairment shall be eliminated.
(IV) Triggering condition for performance compensation
After the completion of the transaction, if assets within the transaction compensation
scope as specified in the special audit report are impaired or fail to achieve the promised
performance, SEG Group shall make compensation to Shenzhen SEG as agreed in the
agreement.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
(V) Performance compensation method
After the completion of the transaction, if assets within the transaction compensation
scope are impaired or fail to achieve the promised performance, SEG Group shall
compensate Shenzhen SEG in cash or shares.
(VI) Effectiveness and termination of the agreement
The agreement is made upon signature and seal by the legal representative or authorized
agent of each party. As an integral part of the Asset Purchase Facility, the agreement shall
come into effect from the date of effectiveness of the Asset Purchase Facility.
When the Asset Purchase Facility is rescinded, terminated, or deemed as invalid, the
agreement is also rescinded, terminated, or invalid.
(VII) Liability for breach of the agreement
Except for in case of force majeure, violation of any terms of the agreement by either
party constitutes breach of the agreement. The default party shall compensate for all
losses arising from breach of the agreement to the non-breaching party.
"1. In the restructuring, relevant assets, such as some commercial electronics markets of
SEG Group that constitute horizontal competition, have not been injected into the listed
company. SEG Group will trust such assets to Shenzhen SEG or its subsidiaries after the
major asset restructuring. Within 5 years after the major asset restructuring, SEG Group
will take all necessary measures to solve flaws of such assets, and incorporate the
preceding specialized electronics markets that constitute horizontal competition into
Shenzhen SEG or transfer them to the third party in a feasible way such as sales based on
operating needs of Shenzhen SEG and the completeness of the ownership of such assets.
If SEG Group fails to complete the foregoing matters as scheduled, before injecting
relevant assets to Shenzhen SEG, SEG Group shall lease them to Shenzhen SEG for direct
operation and enjoy the income from such property. The annual rent of Shenzhen SEG is
the depreciated value of such property. Profit and loss incurred by leasing of such
Commitment on property assets shall be shared by Shenzhen SEG. The parties shall separately enter into a
horizontal leasing agreement.
Shenzhen SEG competition, 2. Except assets owned and business operated before the validity date of commitment, August 3, In normal
Long-term
Group Co., Ltd. related when acting as a controlling shareholder or actual controller of Shenzhen SEG, in order to 2016 progress
transaction, and guarantee sustainable development of Shenzhen SEG, the Company will exercise
capital occupation supervision and restriction on operating activities of its own and affiliated enterprises
under its control, will not establish new or acquire any assets or business same as or
similar to its main business within the operation area of Shenzhen SEG, and will not be
engaged in any activities that may damage the interests of Shenzhen SEG and other
companies and enterprises controlled by Shenzhen SEG, or other economic organizations.
If in the future there is any business opportunity same as or similar to other main business
within Shenzhen SEG operation area, such opportunity will preferentially be
recommended to Shenzhen SEG and other companies and enterprises controlled by
Shenzhen SEG, or other economic organizations. However, any of the following cases is
an exception: (1) Due to national laws, regulations and policies and other reasons, any
commercial properties and real estate development projects appropriated or allocated
through oriented protocols by the government to SEG Group and any enterprises invested
by it; or (2) when the general conditions of tender, transfer or assignment of specific
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
commercial properties and real estate development projects have specific requirements on
the bidder or assignee, Shenzhen SEG is not qualified y but SEG Group is qualified.
Commercial property and real estate development projects that are same as the main
business of Shenzhen SEG or result in horizontal competition subject to the above
exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that
such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written
acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and
transfer such projects to Shenzhen SEG. In case of breach of the foregoing commitments,
the Company will bear all losses thus incurred to Shenzhen SEG, the subject company,
other companies, enterprises, or other economic organizations controlled by the
Company."
"1. When the Company acts as the controlling shareholder of Shenzhen SEG, the
Company, other companies, enterprises, or other economic organizations controlled by the
Company, will minimize and regulate associated transactions with Shenzhen SEG or the
subject company, other companies, enterprises, or other economic organizations
controlled by the Company.
2. When the restructuring is completed, the Company, other companies, enterprises, or
other economic organizations controlled by the Company will handle associated
transactions with Shenzhen SEG or the subject company that are unavoidable or incurred
Commitment on for reasonable cause at fair and reasonable market price, perform the decision-making
horizontal procedure for associated transactions according to relevant laws, regulations, and
Shenzhen SEG competition, normative documents, fulfill the obligation of information disclosure and handle the August 3, In normal
Long-term
Group Co., Ltd. related approval procedures according to the law, do not use the dominant position of the 2016 progress
transaction, and controlling shareholder to damage the legal rights and interests of Shenzhen SEG and
capital occupation other shareholders.
3. The Company, other companies, enterprises, or other economic organizations
controlled by the Company will not use the rights of shareholders of the listed company
or the actual control ability to manipulate or instruct the listed company or its directors,
supervisors and senior executives to have the listed company unfairly provide or accept
funds, goods, services or other assets, or engage in any acts detrimental to the interests of
listed companies. In case of breach of the foregoing commitments, the Company will bear
all losses thus incurred to Shenzhen SEG, the subject company, other companies,
enterprises, or other economic organizations controlled by the Company."
1. The subject company is a limited liability company or stock-limited company
established and validly existing according to law with legitimate business qualification;
the subject company has obtained all approvals, permission, authorization and permits
required for its setting up and operation of business, all such approvals, permission,
Before
authorization and permits are valid and there exists no reasons or situations which may
Shenzhen SEG August 3, completion In normal
Other commitment cause the above approvals, permission, authorization and permits invalid.
Group Co., Ltd. 2016 of progress
2. The subject company has not been involved in any severe violation of laws or restructuring
regulations during production operation nor any situations where termination is required
according to the requirements of relevant laws, regulations, normative documents and
articles of association. As of the date of issuance of this commitment letter, the subject
company has no pending or predictable significant lawsuit, arbitration or administrative
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
penalty with amount of subject of more than one million or which will generate adverse
impact on its operation.
3. The subject company will independently and fully fulfill the labor contracts it signed
with employees.
4. If the subject company is subject to any recovery of fees or penalty from the relevant
competent organization in industrial and commerce, tax, employee salaries, social
insurance, housing fund, business qualification or competent authorities due to any facts
existing before this restructuring, the Company will fully indemnify the subject company
for all fees owned by subject company and assume all losses occurred by subject
company and Shenzhen SEG as a result of this.
5. The subject company legally possesses the ownership and/or right of usage of office
space, office equipment, trademark and other assets as necessary to guarantee normal
production operation, has independent and complete assets and business structure, has
legal ownership to its main assets with independent, complete and clear indication of
ownership.
6. The subject company has not been involved in any lawsuit, arbitration, judicial
mandatory enforcement and other situations which interferes with the transfer of company
ownership, and has not incurred any external guarantee that is against laws and articles of
association of the Company. After completion of this restructuring, if any loss is caused to
Shenzhen SEG and the subject company due to the Company's breach of the above
commitment, the Company agrees to assume the above mentioned liability of
indemnity/compensation to Shenzhen SEG/subject company.
"1. 100% shares of SEG Property have been entrusted to a share entrusting agency as
required. Its equity form is authentic and valid, and the equity structure and ownership are
clear. The Company has no objection to the share ownership, share quantity, and share
holding percentage of SEG Property. The Company has no disputes over share ownership Before
Shenzhen SEG with SEG Property and other shareholders. August 3, completion
Other commitment In progress
Group Co., Ltd. 2. In case any dispute over ownership of the 3.85% shares of SEG Property of which 2016 of
ownership has not been determine as of July 26, 2016 occurs in the future, the Company restructuring
commits to SEG Property that the Company will provide any necessary assistant to SEG
Property to solve the dispute, protect SEG Property from any loss caused thereby, and
undertake corresponding responsibilities."
"1. The Company will guarantee the independence of personnel of Shenzhen SEG and
subject company: (1) after completion of the restructuring, the labor, personnel and
compensation management of Shenzhen SEG are independent from the Company and
related parties, such as other companies, enterprises, or other economic organizations
Shenzhen SEG controlled by the Company. (2) Guarantee that after completion of this restructuring the August 3, In normal
Other commitment senior executives of Shenzhen SEG and the subject company hold full-time position at Long-term
Group Co., Ltd. 2016 progress
Shenzhen SEG and the subject company and receive compensation, and will not assume
any duties other than director and supervisor in the Company and other companies,
enterprises or other economic organizations and other connected parties under control of
the Company. (3) Guarantee not to, after completion of this restructuring, interfere with
the shareholders' meeting and board of directors meeting's exercise of power in
64
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
appointment/dismissal of personnel.
2. Guarantee the independence of institutions of Shenzhen SEG and subject company (1)
guarantee that after completion of this restructuring Shenzhen SEG and subject company
will have sound corporate governance structure and independent, complete organization.
(2) Guarantee that after completion of this restructuring the shareholders' meeting, board
of directors meeting and board of supervisors meeting of Shenzhen SEG and subject
company will exercise duties and powers according to laws, regulations and articles of
association of Shenzhen SEG and subject company.
3. The Company will guarantee the independence and completeness of Shenzhen SEG
and the subject company: (1) After completion of the restructuring, Shenzhen SEG and
the subject company will have independent and complete assets related to production and
management. (2) Guarantee that after completion of this restructuring the site for business
operation of Shenzhen SEG and subject company are independent of the Company and
other companies, enterprises or other economic organizations and other connected parties
under control of the Company. (3) Except normal operational intercourse, guarantee that
after completion of this restructuring Shenzhen SEG and subject company do not exist
any situation that funds or assets are possessed by the Company and other companies,
enterprises or other economic organizations and other connected parties under control of
the Company.
4. Guarantee the businesses of Shenzhen SEG and subject company are independent (1)
guarantee that after completion of this restructuring Shenzhen SEG and subject company
have relevant qualification for independently carrying out operational activities, and
possess independent, sustainable market-oriented operational capability. (2) Except the
assets owned and business operated before validity date of commitment, during the period
as controlling shareholder of Shenzhen SEG, in order to guarantee sustainable
development of Shenzhen SEG, the Company will exercise supervisory and restriction on
operating activities of its own and the affiliated enterprises under its control, and will not
establish new or acquire any assets or businesses same or similar with its main businesses
within the operation area of Shenzhen SEG, and will also not be engaged in any activities
which may damage the interests of Shenzhen SEG and other companies, enterprises or
other economic organizations under control of Shenzhen SEG; if in future there exists any
business opportunity same or similar with other main businesses within Shenzhen SEG
operation area, such opportunity will preferentially recommended to Shenzhen SEG and
other companies, enterprises or other economic organizations under control of Shenzhen
SEG. (1) Due to national laws, regulations and policies and other reasons, any commercial
properties and real estate development projects appropriated or allocated through oriented
protocols by the government to SEG Group and any enterprises invested by it; or (2)
When the general conditions of tender, transfer or assignment of specific commercial
properties and real estate development projects have specific requirements on the bidder
or assignee, Shenzhen SEG is not qualified but SEG Group is qualified. Commercial
property and real estate development projects that are same as the main business of
Shenzhen SEG or result in horizontal competition subject to the above exclusions may be
invested and built by SEG Group at first. If Shenzhen SEG thinks that such assets are
eligible to be injected into Shenzhen SEG, upon receipt of the written acquisition notice
65
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
from Shenzhen SEG, SEG Group will negotiate on acquisition and transfer such projects
to Shenzhen SEG. (3) Guarantee that after completion of this restructuring, the Company
and other companies, enterprises, other economic organizations or other connected parties
under control of the Company will reduce connected transactions with Shenzhen SEG and
subject company and other companies, enterprises, other economic organizations or other
connected parties under their control; for any connected transactions which are indeed
necessary and unavoidable, guarantee to carry out fair operation following market
principle at fair price and fulfill relevant approval procedure and information disclosure
obligations according to the provisions of relevant laws, regulations and normative
documents.
5. The Company will guarantee the financial independence of Shenzhen SEG and the
subject company: (1) After completion of the restructuring, Shenzhen SEG and the
subject company will establish an independent financial department, independent
financial accounting system, and standard and independent financial accounting rules. (2)
After completion of the restructuring, Shenzhen SEG and the subject company will
separately open an account in banks, and do not share accounts with the Company and
related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (3) After completion of the restructuring, financial personnel
of Shenzhen SEG and the subject company will not hold a part-time job in the Company
or related parties, such as other companies, enterprises, or other economic organizations
controlled by the Company. (4) After completion of the restructuring, Shenzhen SEG and
the subject company will independently make financial decisions, and the Company will
not interfere with fund usage of Shenzhen SEG and the subject company. (5) After
completion of the restructuring, Shenzhen SEG and the subject company will pay taxes
independently according to laws. In case of breach of the foregoing commitments, the
Company will bear all losses thus incurred to Shenzhen SEG, and the subject company."
1. The Company does not exist any of the following situations as specified in Clause 6,
Administrative Measures On Acquisition Of Listed Companies: (1) Damage legitimate
rights and interests of the company acquired and its shareholders utilizing acquisition of
listed company; (2) With large amount of outstanding debts and this in-debt status has
lasted for a certain period of time; (3) Has actual or alleged serious illegal activities in
recent three years; (4) Has serious behaviors of breaching promises in securities market in Before
Shenzhen SEG August 3, completion
Other commitment recent three years; (5) Other situations in which no acquisition of listed companies are In progress
Group Co., Ltd. allowed according to laws and administrative regulations and in the opinions of CSRC. 2016 of
restructuring
2. The Company and its main managers have not suffered from any administrative
punishment (administrative punishment obviously unrelated to security market excluded),
criminal punishment, major civil lawsuit or arbitration related to economic disputes
within the last five years. In case of breach of the foregoing commitments, the Company
will bear all losses thus incurred to Shenzhen SEG, and the subject company."
"1. The Company is an enterprise incorporated in China that owns the full capacity for
Before
civil conduct and has the legal body qualification for participating in the restructuring,
Shenzhen SEG August 3, completion In normal
Other commitment signing agreements with Shenzhen SEG, and performing rights and obligations under the
Group Co., Ltd. 2016 of progress
agreement.
restructuring
2. Except that the property located at 4F, Block 2, SEG Industry Building of SEG
66
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Property Investment funded by the Company is to handle the transfer formality (with no
legal impediment), the Company has fulfilled the obligation of contributing capital to the
subject company, and has no acts against its obligations and responsibilities as a
shareholder, such as false contribution, deferred investment, or withdrawal of capital.
There are no circumstances that may affect the legal existence of the subject company.
3. There is no dispute or potential dispute over ownership of equities of the subject
company. There are no circumstances that may affect the legal existence of the subject
company.
4. The equities held by the Company in the subject company are actually legally owned.
There is no dispute or potential dispute over ownership of equities, no trust, shareholding
under entrustment or similar arrangement, no commitment or arrangement of forbidden
transfer or limited transfer, no pledge, freezing, seals up, property preservation or other
limitation of rights, and no lawsuit, arbitration or other forms of dispute which would
affect the restructuring. Meanwhile, the Company guarantees that the equities it held in
the subject company will maintain the status until the equities are registered under
Shenzhen SEG after change of registration.
5. The equities held by the Company in the subject company are assets with clear
ownership. The Company undertakes that there are no legal obstacles to stock transfer
after the restructuring of Shenzhen SEG is approved by CSRC, and no credit and debt
disputes. The Company promises to complete formalities for ownership transfer of these
equities within the agreed period.
6. Before the equities are registered under Shenzhen SEG after change of registration, the
Company undertakes that the subject company will maintain normal, orderly, and
legitimate operation, and will not take actions irrelevant to normal production and
management, such as disposal of assets, external guarantee, or additional major debts, or
illegally transfer or conceal assets and business. If the foregoing actions are indeed
necessary, provided that national laws, regulations, and normative documents are not
violated, these actions can be taken only after written approval of Shenzhen SEG.
7. The Company undertakes that there are not any ongoing or potential litigation,
arbitration, or dispute that may affect the Company's equity transfer, and all agreements or
contracts do not contain restrictive clauses that may affect the Company's equity transfer.
The articles of association, internal management system documents, and contracts or
agreements do not contain restrictive clauses that may affect the Company's equity
transfer. In case of breach of the foregoing commitments, the Company will bear all
losses thus incurred to Shenzhen SEG."
"The Company has not disclosed any insider information about the restructuring or
Shenzhen SEG August 3, In normal
Other commitment utilized such insider information for insider trading. In case of breach of the foregoing Long-term
Group Co., Ltd. 2016 progress
commitments, the Company will bear all losses thus incurred to Shenzhen SEG."
"1. Shares of Shenzhen SEG subscribed by the Company in the restructuring will be
Shenzhen SEG locked up for 36 months from the date of listing. Shares of Shenzhen SEG acquired in the August 3, In normal
Other commitment restructuring shall not be traded or transferred or managed by others under entrustment or Long-term
Group Co., Ltd. 2016 progress
repurchased by Shenzhen SEG within 36 months from the date of completion of the
offering. After the completion of this offering, additional shares held due to bonus shares
67
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
and converted equity capital shall be also subject to the foregoing agreement. When the
foregoing lockup period expires, share transfer and transaction will be subject to the valid
laws, regulations, and provisions, rules, and requirements of China Securities Regulatory
Commission and Shenzhen Stock Exchange.
2. If the closing price of Shenzhen SEG stocks is lower than the initial offer price for
consecutively 20 trading days within 6 months after the completion of the restructuring or
the closing price of Shenzhen SEG stocks is lower than the initial offer price at the end of
6 months after the completion of the restructuring, the lockup period of Shenzhen SEG
stocks will be automatically extended for 6 months.
3. If the information provided or disclosed in the restructuring is suspected of false
representations, misleading statements, or material omissions and the judicial authority or
China Securities Regulatory Commission investigates and places the case on file, shares
of Shenzhen SEG held by the Company will not be transferred.
4. Before the restructuring, all stocks of Shenzhen SEG held by the Company shall not be
transferred within 12 months after the completion of the restructuring.
5. If relevant laws, regulations, and normative documents have special requirements on
the lockup period of shares, these laws, regulations, and normative documents shall
prevail.
6. If the foregoing lockup period is not consistent with the latest regulation requirement of
the security regulatory authority, the Company agrees to adjust it according to the latest
regulation opinion of the regulation suggestion of the security regulatory authority and
implement the relevant provision of China Securities Regulatory Commission and
Shenzhen Stock Exchange after the lockup period expires.
"1. In the recent 5 years, the Company has not been subject to any administrative penalty
(except those not related to the securities market) or criminal penalty.
2. In the recent 5 years, except for those cases that have been concluded, such as the case
of Hainan SEG International Trust and Investment Company, Zhongshi case, GTJA case
and Dasheng case, the Company is not involved in other major civil proceedings or
arbitration (the subject in dispute of 10 million yuan) related to economic disputes. Before
Shenzhen SEG August 3, completion In normal
Other commitment 3. The Company has never been suspected of insider trading related to major asset
Group Co., Ltd. restructuring and placed on file for investigation or placed on file with the case not 2016 of progress
settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill restructuring
commitments, or been subject to administrative supervision measures by the CSRC or
disciplinary action by the Stock Exchange due to insider trading related to major assets
restructuring, or been held criminally liable by the judicial authorities according to law. In
case of breach of the foregoing commitments, the Company will bear all losses thus
incurred to Shenzhen SEG."
Bo Hongxi, "1. I have not been subject to any administrative penalty by the CSRC in recent 36
Cao Xiang, Fan months, or public censure by the Stock Exchange in the recent 12 months. Before
Zhiqing, Li August 3, completion In normal
Other commitment 2. I have not been investigated by judicial authorities due to alleged crimes or by CSRC 2016
Luoli, Liu of progress
due to alleged irregularities. restructuring
Fusong, Liu
Zhijun, Ru In case of breach of the following commitments, I will bear all losses thus incurred to
68
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Guiqin, Song Shenzhen SEG."
Pingping, Tang
Chongyin,
Wang Li, Xu
Ning, Yu Qian,
Zhang
Guangliu,
Zhang Haifan,
Zheng Dan,
Zhu Longqing
"1. In the recent 5 years, the Company has not been subject to any administrative penalty
or criminal penalty or involved in other major civil proceedings or arbitration related to
economic disputes.
Directors,
supervisors, and 2. The Company has never been suspected of insider trading related to major asset Before
senior restructuring and placed on file for investigation or placed on file with the case not August 3, completion In normal
Other commitment settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill
executives of 2016 of progress
Shenzhen SEG commitments, or been subject to administrative supervision measures by the CSRC or restructuring
Group Co., Ltd. disciplinary action by the Stock Exchange due to insider trading related to major assets
restructuring, or been held criminally liable by the judicial authorities according to law. In
case of breach of the following commitments, I will bear all losses thus incurred to
Shenzhen SEG."
SegMaker, SEG
Kangle, SEG "1. In the recent 3 years, the Company has not been subject to any major administrative
Property punishment or criminal punishment or involved in other major civil proceedings or
Development, arbitration related to economic disputes.
SEG Property 2. The Company has never been suspected of insider trading related to major asset Before
Investment, restructuring and placed on file for investigation or placed on file with the case not August 3, completion In normal
SEG New City Other commitment settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill 2016 of progress
Construction, commitments, or been subject to administrative supervision measures by the CSRC or restructuring
SEG Property disciplinary action by the Stock Exchange due to insider trading related to major assets
Management, restructuring, or been held criminally liable by the judicial authorities according to law. In
Huizhou case of breach of the following commitments, I will bear all losses thus incurred to
Qunxing, Xi'an Shenzhen SEG."
SEG, Beijing
"1. SEG Group has legal ownership of lands, properties, and equities transferred to
SegMaker without compensation before the restructuring, and there is no dispute over the
ownership of transferred assets. Except for some mortgaged properties that require the
Before
consent of the mortgagee, there is no legal obstacle to the registration of ownership
Shenzhen SEG August 3, completion In normal
Other commitment change.
Group Co., Ltd. 2016 of progress
2. The Company undertakes to complete the formalities of ownership registration change restructuring
of assets transferred to SegMaker before the Board of Directors reviews the restructuring
draft. The Company will compensate SegMaker in full if SegMaker is held responsible or
punished, or suffer any other loss due to the Company's violation of the foregoing
69
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
commitment or defects of the transferred assets."
"As of the date of issuance of the commitment letter, SEG Kangle owns 9 properties with
the total construction area of 12,941.28 square meters. The actual proprietor of the
property located at 1F, Block 1, SEG Industry Building with an area of 902 square meters
is SEG Group. Due to the provision that industrial buildings in Shenzhen shall be
transferred as a whole, the transfer registration formality for the property has not been
handled. The actual proprietor of Room 508, Block 4, SEG Residential Quarter is SEG
Kangle, but the property is registered under SEG Group and the transfer formality for the
property has not been handled. The Company undertakes that all parties have no disputes
over the ownership of the foregoing property whose registered proprietor is SEG Kangle
but whose actual proprietor is SEG Group and the property whose registered proprietor is
SEG Group but whose actual proprietor is SEG Kangle. SEG Group will assist SEG
Kangle in completing the division and transfer registration formalities for the foregoing
properties. After the restructuring, if Shenzhen SEG suffers any losses due to ownership
of such properties, SEG Group will compensate Shenzhen SEG in full.
2. The construction in process-assembly workshop that SEG Group uses to contribute
capital to SEG Property Investment is 4F, Block 2, SEG Industry Building (real estate
proprietorship certificate No.: S. F. D. Zi. No. 3000759297) with the total area of 1,936.71
square meters. The property was delivered to SEG Property Investment upon capital
contribution, but the transfer formality could not be handled without the certificate on
capital contribution. Due to negligence of the handler, the property was registered under Before
Shenzhen SEG SEG Group together with other properties of SEG Industry Building belonging to SEG August 3, completion In normal
Other commitment Group. Due to the restriction of transfer of industrial buildings as a whole, the transfer
Group Co., Ltd. 2016 of progress
formality has not been handled.SEG Property Investment has been occupying, using, and restructuring
acquiring operating revenue from the property since capital contribution. The Company
will assist SEG Property Investment in completing the transfer registration formality of
the foregoing property. After the restructuring, if Shenzhen SEG suffers any losses due to
ownership of such properties, SEG Group will compensate Shenzhen SEG in full.
3. The Company will help and propel the subject company and its subsidiaries to
complete ownership registration of land and property assets and regulate the land purpose.
4. If due to land use rights and property assets existing before the completion of the
restructuring, the subject company and its subsidiaries (1) fail to timely handle the land
use rights and the proprietorship certificate (excluding results not caused by the subject
company and its subsidiaries, such as force majeure, laws, policies, government
management, and change in planned land purpose); or (2) cannot handle the relevant land
use rights and real estate proprietorship certificate (excluding results not caused by the
subject company and its subsidiaries, such as force majeure, laws, policies, government
management, and change in planned land purpose); or (3) are subject to other
circumstances of nonstandard land use rights and properties (excluding results not caused
by the subject company and its subsidiaries, such as force majeure, laws, policies,
government management, and change in planned land purpose), and suffer actual losses
including but not limited to compensation, fines, expenses, and interests damage, the
Company will compensate the subject company and its subsidiaries in full.
70
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Before issuance date of the restructuring report of Shenzhen SEG, SEG Group will finish
formalities related to transfer of ownership of the property (4F, Block 2, SEG Industry
Building). If SEG Group fails to finish the formalities at expiration, SEG Group agrees to Before
Shenzhen SEG compensate SEG Property Investment RMB 1.5 million in currency, and allows SEG August 3, completion
Other commitment In progress
Group Co., Ltd. Property Investment to continue to use the property for free until SEG Group transfers the 2016 of
ownership of the property to SEG Property Investment. SEG Group agrees to compensate restructuring
SEG Property Investment for any operating loss or other economic loss of SEG Property
Investment caused by SEG Group's failure in transferring the ownership of the property.
"After updating and restructuring of SEG Industry Building, SEG Economy Building, and
SEG Kangle Industry Building, the area of added part that belongs to SegMaker, SEG
Kangle and SEG Property is 2,855.20 square meters.SEG Group undertakes that the use
of the temporary buildings belonged to SegMaker, SEG Kangle and SEG Property will be
renewed after expiration of the two-year use duration. In case when, due to failure in
renewal of use of temporary buildings, the listed company has any loss or the income
during the period from expiration of the performance commitment period to expiration of
the evaluated income expected period is lower than the expected compensation, or the
listed company has any loss because the temporary buildings are required to be
dismantled by governmental organs during the period from expiration of the performance
commitment period to expiration of the evaluated income expected period, SEG Group
will compensate the listed company timely and in full amount according to the following
compensation methods:
1. SEG Group has made commitments for the performance of the subject company within
three years after completion of major asset restructuring. Influence of the updating and
restructuring project has been taken into account in the commitments.
2. The amount of compensation for the income that is lower than the expected income
Shenzhen SEG August 3,
Other commitment during the period from expiration of the performance commitment period to expiration of Long-term In progress
Group Co., Ltd. the evaluated income expected period = (the predicted accumulated income to the end of 2016
the report period - actual accumulated income to the end of the report period) - the
compensated amount.
3. The loss caused when the temporary buildings are required to be dismantled by
governmental organs during the period from expiration of the performance commitment
period to expiration of the evaluated income expected period = the dismantling cost and
compensation amount related - (the accumulated total income to the time the buildings are
dismantled- predicted accumulated income during the predication period). Note: the
predicted income refers to the net value remained after the predicted total income from
the newly added temporary buildings in the evaluation reports of the subject companies
minuses the allocated investment cost during the operating period and the amount
influenced by permanent rent termination predicted in the evaluation report. Shenzhen
SEG should employ an auditing agency with security practice qualification recognized by
SEG Group to provide a formal auditing report on the compensation methods for the
property investment within the compensation scope of the report period within four
months at the end of each accounting year during the compensation period.SEG Group
should compensate in cash any property investment and compensation items within the
compensation scope of the report period. Shenzhen SEG should calculate the payable
71
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
compensation amount within 15 working days upon final specific review opinions
provided by the auditing agency, and send a written notice to SEG Group. Within 30
working days upon receipt of the written notice from Shenzhen SEG, SEG Group should
pay the compensation in cash in full amount."
"1. In case when, after the restructuring, the land/property use should be changed based
on the actual operating demands of the subject company or because the subject company
is required by the relevant house property management organ or the land regulatory
department to change the land/property use, SEG Group will assist the subject company
Shenzhen SEG August 3,
Other commitment in finishing the relevant formalities. Long-term In progress
Group Co., Ltd. 2016
2. In case when the subject company suffers from administrative penalty by relevant land
and/or house property management department because the actual use of the
land/property is different from those recorded in the certificate, SEG Group will
compensate the subject company for any expenditures and economic loss caused thereby."
"1. Since the issuance date of this commitment letter, SEG Group will assist SegMaker in
restoring for business purpose the part currently functioning as a parking garage on the
first floor of the podium of SEG Jingyuan Building within five years. Within five
years from
Shenzhen SEG 2. If the restoration work cannot be finished within the above mentioned period of time, August 3, the date of In normal
Other commitment SEG Group agrees to process the subject assets as follows: (1) paying in cash the
Group Co., Ltd. 2016 issue of the progress
evaluated value of the parking garage and the bank interest of the evaluated value in the commitment
same period from the restructuring closing date to the expiration of this commitment time; letter
or (2) purchasing in cash the first floor of the podium of SEG Jingyuan Building at a price
no less than the evaluated value of the building during this restructuring."
"1. If after the restructuring, Shen SEG is requested to make a supplementary payment for
land transfer and pay the overdue fine due to inconsistency between the actual use and the
Shenzhen SEG registered use of the above property, the Company undertakes to bear such expenses in August 3, In normal
Other commitment full. Long-term
Group Co., Ltd. 2016 progress
2. In case of breach of the foregoing commitments, the Company will bear all losses thus
incurred to Shen SEG."
According to the Article Five of the Equity Transfer Agreement signed by the Company
Commitment on
with SEG Group when the Company was listed, SEG Group agreed that the Company and
horizontal
its subsidiaries and associated companies to use the eight trademarks registered by SEG
Shenzhen SEG competition, In normal
Group at the National Trademark Bureau; SEG Group agreed that the Company used the July 1, 1996 Long-term
Group Co., Ltd. related progress
aforesaid trademarks or similar signs as the Company's logo and used the trademarks and
transaction, and
Commitment made at signs during its operation; the Company need not pay any fee to SEG Group for using the
capital occupation
the time of initial aforesaid trademarks or signs.
public offerings or As for the problem pointed out by Shenzhen Office of China Securities Regulatory
refinancing Commitment on
horizontal Commission during on-site inspection in 2007 in the Company that the Company and
Shenzhen SEG competition, SEG Group are competitive in the electronic business, the Company has received a September In normal
written Commitment Letter from SEG Group on September 14, 2007. The content of the 14, 2007 Long-term
Group Co., Ltd. related progress
transaction, and Commitment Letter is as follows: "The competition in electronic business between SEG
capital occupation Group and Shenzhen SEG Co., Ltd. occurs due to historical reasons and objective market
development background.SEG Group hereby commits that, we will not separately operate
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
businesses similar to those of Shenzhen SEG in the same city."
The term of
validity is
from
February 1,
2011 to
January 31,
2016, five
years in
total. And
the entrusted
operating
management
The 6th interim meeting of the 5th Board of Directors held on January 26, 2011 reviewed
Commitment on contract
and approved the Proposal of Solving the Horizontal Competition between the Company
horizontal expires
and Its Controlling Shareholder. After friendly consultation, SEG Group agreed to entrust
Shenzhen SEG competition, January 26, within the In normal
the Company to operate and manage with full authority SEG Communications Market
Group Co., Ltd. related 2011 report progress
under direct management of SEG Group. Therefore, the two parties have signed the
transaction, and period. As of
entrustment operation and management contract, and SEG Group will pay the Company
capital occupation the end of
RMB 200,000 Yuan as entrust management expenses.
the report
period, the
Contract has
been
renewed,
and the term
of validity is
from
February 1,
2016 to
January 31,
2017.
Commitment on equity
Not applicable
incentives
Based on our confidence in economic prospect of China and future development of the
Other commitments Company, in order to jointly maintain a stable capital market and promote a sustainable,
made to the medium Shenzhen SEG stable and healthy development of the Company, Shenzhen SEG Group Co., Ltd., the
Other commitment July 9, 2015 12 months Fulfilled
and small shareholders Group Co., Ltd. holding shareholder of the Company, hereby commits that, it will not reduce the amount
of the Company of shares of the Company it holds within the coming twelve months since the issuance
date of this Announcement, i.e., July 9.
Whether commitments
Yes
were fulfilled on time
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
2. The attainment of forecasts for the assets or projects of the Company which were profitable and the
description of the reasons with the report period remaining in the forecasting period
□ Applicable √ Not applicable
IV. Non-operating Capital Occupation on the Listed Company by the Controlling
Shareholders and Related Parties
□ Applicable √ Not applicable
No non-operating capital occupation on the listed company by the controlling shareholders and related parties is
involved in the report period.
V. Explanations of the Board of Directors, the Board of Supervisors and Independent
Directors (if any) to the "Non-standard Audit Report" made by the accounting firm in the
report period
□ Applicable √ Not applicable
VI. Information on changes in accounting policies, accounting estimates and accounting
methods compared with the financial reports of the last year
√ Applicable □ Not applicable
The Ministry of Finance issued the VAT Accounting Treatment Rules (C. K. [2016] No. 22) on December 3,
2016.
According to the VAT Accounting Treatment Rules, after the program of replacing business tax with value-added
tax is put into trial implementation, "business tax and surtax" is changed to "tax and surtax", relating to the
accounting of the consumption tax, urban maintenance and construction tax, resource tax, educational surtax,
property tax, land use tax, travel tax, and stamp duty incurred by business operation; the "business tax and
surtax" in the profit statement is changed to "tax and surtax".
As specified in the VAT Accounting Treatment Rules, the closing debit balance of "VAT payable", "unpaid VAT",
"input tax to be deducted, "input tax to be certified", and "excess VAT paid" under the "tax payable" item shall be
presented in "other current assets" or "other non-current assets" of the balance sheet statement as the case may be;
the closing debit balance of "tax payable-output tax to be transferred" shall be presented in "other current
liabilities" or "other non-current liabilities" of the balance sheet statement as the case may be.
In accordance with the VAT Accounting Treatment Rules, the Company has adjusted the amount of affected items
in the financial statements, such as assets, liabilities, profit and loss arising from transactions from May 1, 2016
to the implementation of the Rules. The property tax, land use tax, travel tax, and stamp duty incurred after May
1, 2016 are adjusted from "management fee" to "tax and surtax" RMB 4,775,904.89; "tax payable-deductible
input VAT" are classified in "other current liabilities" with the amount of RMB 350,217.26; the amount of
transactions occurring from January 1 to April 30, 2016 is not subject to retroactive adjustment; financial
statements (2016) in the comparable period are not subject to retroactive adjustment.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
VII. Information on retroactive restatements in corrections of major accounting errors in the report
period
□ Applicable √ Not applicable
There is no retrospective restatement due to corrections on significant accounting errors in the report period.
VIII. Information on changes in the scope of consolidation compared with the financial
report of the last year
√ Applicable □ Not applicable
Twenty-three entities are included in the current consolidated financial statements, namely:
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) right (%)
Shenzhen SEG Baohua Enterprise Development Holding
I 66.58 66.58
Co., Ltd. subsidiary
Holding
Shenzhen Mellow Orange Business Hotel
grandson II 66.58 66.58
Management Co., Ltd
company
Wholly-owned
Shenzhen SEG Industrial Investment Co., Ltd. I 100.00 100.00
subsidiary
Holding
Changsha SEG Development Co., Ltd. I 46.00 51.00
subsidiary
Shenzhen SEG Electronics Market Management Share-controlled
I 70.00 70.00
Co., Ltd. subsidiary
Suzhou SEG Electronics Market Managementy Co., Holding
I 45.00 45.00
Ltd. subsidiary
Holding
Xi'an SEG Electronics Market Co., Ltd. I 65.00 65.00
subsidiary
Holding
Shenzhen SEG Credit Co., Ltd. I 54.00 54.00
subsidiary
Shenzhen SEG Electronics Market Management Wholly-owned
I 100.00 100.00
Co., Ltd. subsidiary
Holding
Xi'an Hairong SEG Electronics Market Co., Ltd. I 51.00 51.00
subsidiary
Wujiang SEG Electronics Market Management Co., Holding
I 51.00 51.00
Ltd. subsidiary
Holding
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 Plaza Development Co., Ltd. I 100.00 100.00
subsidiary
Yantai SEG Times Plaza Development Co., Ltd. Holding I 90.00 90.00
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) right (%)
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
Xi'an Fengdong New Town SEG Times Plaza Wholly-owned
I 100.00 100.00
Properties Co., Ltd. subsidiary
Suzhou SEG Intelligent Technology Co., Ltd. Wholly-owned
I 100.00 100.00
subsidiary
Shenzhen SEG Longyan New Energy Application Holding
and Development Co., Ltd. I 50.00 50.00
subsidiary
Shenzhen SEG Investment Management Co., Ltd. Wholly-owned
I 100.00 100.00
subsidiary
Shenzhen SEG Longyan Energy Technology Co., Holding
Ltd. I 50.00 50.00
subsidiary
For the cause of difference between the proportion of shareholding and the proportion of voting rights and the
basis for control of the invested entity even with half of voting rights or less, see "Attachment 9: Equities in
other entities - (1) Equities in subsidiaries".
Compared with the previous period, three more entities are included in and one entity is excluded from the
consolidated financial statements in the current period, including:
1. Subsidiaries, special purpose entities, and business entities that gain control by way of commissioning
management or renting included in the consolidation scope in the current period
Name Reason for change
Suzhou SEG Intelligent Technology Co., Ltd. Newly established
Shenzhen SEG Longyan New Energy Application
Newly established
and Development Co., Ltd.
Shenzhen SEG Longyan Energy Technology Co.,
Newly established
Ltd.
2. Subsidiaries, special purpose entities, and business entities that lose control by way of commissioning
management or leasing excluded from the consolidation scope in the current period
Name Reason for change
Shenzhen SEG E-Commerce Co., Ltd. Transfer-out of all equities
For details of entity change in the consolidation scope, see "Note VIII. Change in consolidation scope".
IX. Engagement and dismissal of the accounting firm
Engaged accounting firm
Name of accounting firm engaged from China Da Hua Certified Public Accountants (Special General Partnership)
Remuneration for the accounting firm engaged from
45
China (RMB 10,000)
76
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Consecutive years of service offered by accounting
13
firm engaged from China
Name of certified public accounts from the
Zhang Xing and Zhang Zhaocheng
accounting firm engaged from China
Name of accounting firm engaged from outside of
None
China (if any)
Consecutive years of service offered by overseas
None
accounting firm (if any)
Is another accounting firm engaged in current period?
□ Yes √ No
Engagement of internal control audit accounting firm, financial adviser or sponsor
□ Applicable √ Not applicable
X. Information on Listing Suspension or Abortion after Disclosure of Annual Report
□ Applicable √ Not applicable
XI. Bankruptcy and Reorganization
□ Applicable √ Not applicable
No bankruptcy and reorganization matter is involved in the report period.
77
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
XII. Major lawsuits and arbitrations
√ Applicable □ Not applicable
Whether
Judgment
Amount estimated Judgment
Basic information about lawsuits and arbitrations Progress result and Disclosure date Disclosure index
(RMB: 10,000) liabilities execution
impact
occurred
Case number: 2016 G. 0102 M. C. No. 3653
Plaintiff: Nanning Haiqi Real Estate Development Co.,
Ltd.
Defendant 1: Nanning SEG Electronics Market Co., Ltd. http://www.cninfo.com.cn
("Nanning SEG")
Announcement of
Defendant 2: Shenzhen SEG Co., Ltd. The case is heard and
A dispute over the lease contract arose among 1,026.3 Yes Inconclusive None September 29, 2016 Shenzhen SEG Co., Ltd.
pending. on Receipt of Court
Nanning Haiqi, Nanning SEG and the Company. Nanning Summons and the Civil
SEG did not pay the rent for the third year according to the Complaint
cooperation contract. The court found that Nanning SEG
locked and sealed the shop front on June 30, 2015, which
constituted a fundamental breach of contract. Nanning
SEG was sued for breach of contract.
Case number: 2016 G. 0102 M. C. No. 3654
Plaintiff: Nanning Yuanpeng Property Service Co., Ltd.
Defendant 1: Nanning SEG Electronics Market Co., Ltd.
Defendant 2: Shenzhen SEG Co., Ltd. http://www.cninfo.com.cn
A dispute over the property service contract arose Announcement of
among Nanning Yuanpeng Property Service Co., Ltd. The case is heard and
(hereinafter referred as "Yuanpeng Property"), Nanning 246.98 No Inconclusive None September 29, 2016 Shenzhen SEG Co., Ltd.
pending. on Receipt of Court
SEG and the Company. Nanning SEG did not pay the rent Summons and the Civil
for the third year according to the cooperation contract. Complaint
The court found that Nanning SEG locked and sealed the
shop front on June 30, 2015, which constituted a
fundamental breach of contract. Nanning SEG was sued by
Yuanpeng Property for breach of contract.
Case number: 2015 X. M. Y. C. Zi. No. 1590 Nanning SEG's http://www.cninfo.com.cn
Plaintiff: Nanning SEG Electronics Market Co., Ltd. The case has been claim was 2016 Semi-annual Report
999.7 Yes Executed August 24, 2016
Defendant: Nanning Haiqi Real Estate Development Co., settled. dismissed by of Shenzhen SEG Co.,
Ltd. (2015) X. M. Y. Ltd.
78
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
A contract dispute arose between Nanning Haiqi and C. Zi. No. 1590
Nanning SEG. In March 2013, Nanning SEG rented Civil Judgment
houses located at 1F to 2F, Nanning Property Development of the People's
Plaza, 158 East Renmin Road, Xingning District, Nanning Court of
to set up the electronics market. The agreed lease term was Xingning
from March 18, 2013 to March 17, 2025. After District,
unsuccessful negotiation with Nanning Haiqi on large area Nanning.
of water seepage and water leakage of the leased houses
for several times, Nanning SEG filed a lawsuit to the
People's Court of Xingning District, Nanning.
Case number: 2015 X. M. Y. C. Zi. No. 1393
Plaintiff: Nanning Haiqi Real Estate Development Co.,
Ltd.
http://www.cninfo.com.cn
Defendant: Nanning SEG Electronics Market Co., Ltd. The case has been We lost the
1,280.99 Yes Executed August 24, 2016 2016 Semi-annual Report
A contract dispute arose between Nanning Haiqi and settled. lawsuit. of Shenzhen SEG Co.,
Nanning SEG. Due to Nanning SEG's failure to pay the Ltd.
rent and the breach of contract, Nanning Haiqi filed a
lawsuit against Nanning SEG to the court. The two cases
were consolidated for trial.
Case number: 2015 G. S. M. W. C. Zi. No. 00126
Plaintiff: Suzhou Rail Transit Co., Ltd.
Defendant: Shenzhen SEG Co., Ltd. http://www.cninfo.com.cn
A contract dispute arose between Resource The case has been We lost the 2016 Semi-annual Report
Development Subsidiary of Suzhou Rail Transit Co., Ltd. 284 Yes Executed August 24, 2016
settled. lawsuit. of Shenzhen SEG Co.,
("Suzhou Rail Transit ") and Suzhou SEG. On January 26, Ltd.
2015, Suzhou Rail Transit filed a lawsuit to the court and
petitioned the court to order Suzhou SEG to pay the
liquidated damages.
Case number: (2016) J. Z. A. Zi. No. 2294
Plaintiff: Shenzhen SEG Co., Ltd.
Defendant: Zongheng International Electronic Expo City http://www.cninfo.com.cn
(Suzhou) Co., Ltd. ("Zongheng International") As of the disclosure Announcement of
date of the report, the
Zongheng International breached the Suzhou SEG 2,460 No Inconclusive None October 14, 2016 Shenzhen SEG Co., Ltd.
Electronics Market Project Cooperation Agreement signed parties are trying to on the Acceptance of
with Suzhou SEG on June 5, 2009. According to the reach a settlement. Application for
dispute resolution terms in Article 7 (4) of the cooperation Arbitration
agreement, the Company applied for arbitration to Beijing
Arbitration Commission.
Case number: 2016 S. 0505 M. C. No. 5176 As of the disclosure http://www.cninfo.com.cn
Plaintiff: Suzhou SEG Electronics Market Co., Ltd. 1,900 No date of the report, the Inconclusive None November 19, 2016 Announcement of
Defendant: Zongheng International Electronic Expo City parties are trying to Shenzhen SEG Co., Ltd.
79
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
(Suzhou) Co., Ltd. reach a settlement. on the Acceptance of the
A loan dispute arose between Suzhou SEG and Lawsuit Filed by the
Zongheng International. Suzhou SEG filed a lawsuit Holding Subsidiary
against Zongheng International to the court.
80
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
XIII. Punishment and Rectification Issues
□ Applicable √ Not applicable
No punishment and rectification is involved in the report period.
XIV. Integrity of the Company and its Controlling Shareholders and Actual Controllers
□ Applicable √ Not applicable
XV. Implementation of Equity Incentive Plan, Employee Shareholding Plan or Other
Employee Incentives
□ Applicable √ Not applicable
No stock incentive plan and implementation is involved in the report period.
81
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
XVI. Major Connected Transactions
1. Transactions Concerning Routine Operation
√ Applicable □ Not applicable
Amount
Approved Exceeding
Pricing Transaction proportion Available
transaction the Transaction
Related Association Transaction Connected principles of Transaction amount occupied in similar Disclosure
amount approved clearing Disclosure index
party relationship type transactions connected price (RMB the market date
(RMB quota or form
transactions 10,000) transactions of price
10,000) not?
the same kind
Warehouse with an
Shenzhen Determined 67.33 According
Controlling Property area of 809.26m2
SEG Group by the (Yuan/m2. 65.39 0.10% 100 No to the -
shareholder lease on 8F of SEG
Co., Ltd. market month) agreement
Plaza
The controlling
shareholder
Shenzhen entrusted its Determined According
Controlling Entrusted
SEG Group investment in SEG by the 20 20 0.03% 20 No to the - http://www.cninfo.com.cn
shareholder operation
Co., Ltd. communications market agreement Announcement of
market to the March 30, Shenzhen SEG Co., Ltd.
Company. 2016 on 2016 Expected Daily
The 15th floor of Operating Connected
Determined 71.38 According
Shenzhen Controlling Property SEG Plaza, with an Transactions
by the (Yuan/m2. 2.45 0.00% No to the -
SEG Group shareholder lease area of 687.01
market month) agreement
square meters
Shenzhen 12F (West), Block
SEG Real Subsidiary 4, SEG Science Determined 204.21 According
Property
Estate of Park (with an area by the (Yuan/m2. 74.32 0.11% 140 No to the -
lease
Investment shareholders of 909.79 square market month) agreement
Co., Ltd. meters)
82
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Amount
Approved Exceeding
Pricing Transaction proportion Available
transaction the Transaction
Related Association Transaction Connected principles of Transaction amount occupied in similar Disclosure
amount approved clearing Disclosure index
party relationship type transactions connected price (RMB the market date
(RMB quota or form
transactions 10,000) transactions of price
10,000) not?
the same kind
No. 2 Warehouse
Shenzhen Determined 180 According
Controlling Property covering 66.7 m2
SEG Group by the (Yuan/m2. 13.21 0.02% No to the -
shareholder lease on B1 of SEG
Co., Ltd. market month) agreement
Plaza
Total -- -- 175.37 -- 260 -- -- -- -- --
Details about return of sold goods of large amount Not applicable
83
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
2. Connected Transactions Due to Asset or Equity Sales and Acquisition
□ Applicable √ Not applicable
No connected transaction due to asset or equity sales and acquisition is involved in the report period.
3. Connected Transactions Due to Joint External Investment
□ Applicable √ Not applicable
No connected transaction due to joint external investment is involved in the report period.
4. Creditor's Rights and Liabilities of Related Parties
□ Applicable √ Not applicable
No creditor's rights and liabilities of related parties are involved in the report period.
5. Other Important Transactions
□ Applicable √ Not applicable
In the report period, the Company has no other major connected transactions.
XVII. Important contracts and implementation
1. Trusteeship, Contracting, and Leasing Issues
(1) Trusteeship Issues
√ Applicable □ Not applicable
Explanations to trusteeship
The controlling shareholder Shenzhen SEG Group Co., Ltd. entrust the Company to manage SEG
telecommunication market. The Company administrates the income RMB 200,000 according to the trusteeship
agreement in the report period.
Projects which bring the losses and gains that take up 10% of the profit amount of the Company.
□ Applicable √ Not applicable
In the report period, the Company has no entrusted projects which bring the losses and gains that take up 10% of
the profit amount of the Company in the report period.
(2) Contracting Issues
□ Applicable √ Not applicable
No contracting issue is involved in the report period.
(3) Leasing Issues
√ Applicable □ Not applicable
Information about lease
Refer to the preceding section Transactions Concerning Routine Operation.
Projects which bring the losses and gains that take up 10% of the profit amount of the Company in the report
period.
84
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
□ Applicable √ Not applicable
In the report period, the Company has no lease projects which bring the losses and gains that take up 10% of the
profit amount of the Company in the report period.
2. Major guarantees
□ Applicable √ Not applicable
No guarantee issue is involved in the report period.
3. Information on cash asset management entrusted to others
(1) Entrusted financing
√ Applicable □ Not applicable
85
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Unit: RMB 10,000
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
CITIC-CP cash
China Citic Bank No 6,000 June 4, 2015 May 13, 2016 Floating income 6,000 194.94 194.94 194.94
management No.3
The Agricultural Bank December 2, January 15,
No AXLD 20 days 3,000 Floating income 3,000 11.55 11.55 11.55
of China 2015 2016
Shanghai Pudong Liduoduo February 14,
No 3,500 January 11, 2016 Floating income 3,500 14.71 14.71 14.71
Development Bank 2301137335 2016
Shanghai Pudong Liduoduo
No 6,500 April 13, 2016 May 16, 2016 Floating income 6,500 23.36 23.36 23.36
Development Bank 2301137335
Jinxueqiu 2015 November 28, February 3,
Industrial Bank No 2,300 Floating income 17.31 00
1st No. 3301C 2016 2017
Jinxueqiu 2015 December 12, January 10,
Industrial Bank No 10,000 Floating income 32.58 00
1st No. 3301B 2016 2017
Interbank December 29, January 4,
China Citic Bank No 1,000 Floating income 00
deposits 2016 2017
Industrial and
SZWL1560 (93 December 28, March 30,
Commercial Bank of No 2,000 Promised income 2,000 23.44 23.44 23.44
days) 2015 2016
China
Industrial and
SZWL1560 (93
Commercial Bank of No 3,800 April 7, 2016 July 9, 2016 Floating income 3,800 47.66 47.66 47.66
days)
China
CMB Dianjin
corporate finance
China Merchants Bank No profit increase 700 January 20, 2016 May 25, 2016 Floating income 700 9.67 9.67 9.67
series No. 61
financial plan
86
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
BOC wealth
accumulation September 20,
Bank of China No 500 March 1, 2016 Floating income 500 11.26 11.26 11.26
plan 2016 No. 2016
069
BOC wealth
accumulation
Bank of China No 500 March 4, 2016 July 4, 2016 Floating income 500 6.35 6.35 6.35
financial plan
2016 No. 073
BOC wealth
accumulation
Bank of China No 500 April 15, 2016 August 9, 2016 Floating income 500 5.72 5.72 5.72
(fixed term of the
head office) C
BOC wealth
accumulation August 19,
Bank of China No 400 April 29, 2016 Floating income 400 4.3 4.3 4.3
(fixed term of the 2016
head office) C
Accumulation
Bank of China No 300 May 9, 2016 May 31, 2016 Floating income 300 0.37 0.37 0.37
day by day
Wealth creation
China Merchants Bank No 100 May 10, 2016 June 23, 2016 Floating income 100 0.24 0.24 0.24
step by step 8688
Wealth creation
China Merchants Bank No 100 May 10, 2016 June 23, 2016 Floating income 100 0.42 0.42 0.42
step by step 8699
Accumulation
Bank of China No 100 May 25, 2016 May 31, 2016 Floating income 100 0.04 0.04 0.04
day by day
Wealth creation
China Merchants Bank No 700 May 27, 2016 June 23, 2016 Floating income 700 1.69 1.69 1.69
step by step 8699
Accumulation
Bank of China No 100 June 1, 2016 June 6, 2016 Floating income 100 0.03 0.03 0.03
day by day
Accumulation
Bank of China No 300 June 1, 2016 June 22, 2016 Floating income 300 0.49 0.49 0.49
day by day
China Construction Qianyuan - Silu December 29,
No 500 July 11, 2016 Floating income 500 8.45 8.45 8.45
Bank Tiantianying 2016
87
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
BOC wealth
December 2,
Bank of China No accumulation 500 August 19, 2016 Floating income 500 4.89 4.89 4.89
2016
financial plan
BOC wealth
September 13, December 9,
Bank of China No accumulation 400 Floating income 400 3.24 3.24 3.24
2016 2016
financial plan
BOC wealth
December 5, December 30,
Bank of China No accumulation 1,400 Floating income 1,400 0.86 0.86 0.86
2016 2016
financial plan
Qianyuan -
China Construction December 29, March 31,
No Premium 2016 500 Floating income 00
Bank 2016 2017
No. 86
Bank of China, Saige
BOC stable and January 4,
Guangchang No 1,300 January 5, 2015 Promised income 1,300 68.71 68.71 68.71
smart finance 2016
Sub-branch
Bank of China, Saige
BOC stable and March 17,
Guangchang No 1,500 March 19, 2015 Promised income 1,500 78.53 78.53 78.53
smart finance 2016
Sub-branch
CITIC-CP Asset CITIC-CP cash
Management No management No. 1,000 July 17, 2015 May 12, 2016 Floating income 1,000 39.45 39.46 39.46
Corporation Ltd. 3
BOC wealth
Bank of China, Saige
accumulation
Guangchang No 1,000 July 31, 2015 July 22, 2016 Promised income 1,000 44.01 44.01 44.01
financial plan
Sub-branch
2015-047-HQ
CITIC-CP Asset CITIC-CP cash
Management No management No. 1,000 August 4, 2015 May 12, 2016 Floating income 1,000 37.37 37.37 37.37
Corporation Ltd. 3
Bank of China, Saige
BOC stable September 24, September 27,
Guangchang No 2,100 Promised income 2,100 97.66 97.66 97.66
income finance 2015 2016
Sub-branch
Industrial and ICBC financial November 26, February 26,
No 100 Promised income 100 1.2 1.2 1.2
Commercial Bank of win-win and 2015 2016
88
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
China, Baohua profit increase
Sub-branch
BOC wealth
Bank of China, Saige
accumulation January 6,
Guangchang No 1,300 January 8, 2016 Promised income 53.8 00
financial plan 2017
Sub-branch
2016 No. 05
BOC wealth
Bank of China, Saige
accumulation March 24,
Guangchang No 1,600 March 22, 2016 Promised income 64.35 00
financial plan 2017
Sub-branch
2016 No. 100
Industrial and
ICBC financial
Commercial Bank of
No win-win and 1,000 April 20, 2016 July 21, 2016 Promised income 1,000 11.72 11.72 11.72
China, Baohua
profit increase
Sub-branch
Industrial and
ICBC financial
Commercial Bank of August 23,
No win-win and 1,000 May 23, 2016 Promised income 1,000 11.21 11.21 11.21
China, Baohua 2016
profit increase
Sub-branch
Industrial and
ICBC financial
Commercial Bank of October 28,
No win-win and 1,000 July 28, 2016 Promised income 1,000 10.67 10.67 10.67
China, Baohua 2016
profit increase
Sub-branch
Industrial and
ICBC financial
Commercial Bank of November 25,
No win-win and 1,500 August 25, 2016 Promised income 1,500 15.23 15.23 15.23
China, Baohua 2016
profit increase
Sub-branch
Industrial and
ICBC financial
Commercial Bank of September 29, December 30,
No win-win and 2,500 Promised income 24.84 00
China, Baohua 2016 2016
profit increase
Sub-branch
Industrial and
ICBC financial
Commercial Bank of November 3, February 3,
No win-win and 1,000 Promised income 9.43 00
China, Baohua 2016 2017
profit increase
Sub-branch
89
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
Industrial and
ICBC financial
Commercial Bank of November 29,
No win-win and 1,500 March 1, 2017 Promised income 14.91 00
China, Baohua 2016
profit increase
Sub-branch
PAB Tiantianli
guaranteed RMB December 12, January 21,
Ping An Bank No 1,200 Promised income 1,200 1.75 1.75 1.75
corporate 2015 2016
financial product
PAB Tiantianli
guaranteed RMB December 29, January 21,
Ping An Bank No 2,100 Promised income 2,100 3.05 3.05 3.05
corporate 2015 2016
financial product
PAB Tiantianli
guaranteed RMB December 31, February 1,
Ping An Bank No 1,000 Promised income 1,000 1.45 1.45 1.45
corporate 2015 2016
financial product
BOC
accumulation day
Bank of China,
by day - daily December 14, January 27,
Nantong Gangzha No 900 Promised income 900 1.74 1.74 1.74
plan 2015 2016
Sub-branch
productGSRJYL0
1
BOC
accumulation day
Bank of China,
by day - daily January 27,
Nantong Gangzha No 2,000 January 12, 2016 Promised income 2,000 2.3 2.3 2.30
plan 2016
Sub-branch
productGSRJYL0
1
BOC
accumulation day
Bank of China,
by day - daily February 1,
Nantong Gangzha No 500 January 28, 2016 Promised income 500 0.15 0.15 0.15
plan 2016
Sub-branch
productGSRJYL0
1
90
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
BOC
accumulation day
Bank of China,
by day - daily
Nantong Gangzha No 1,000 May 6, 2016 July 15, 2016 Promised income 1,000 0.78 0.78 0.78
plan
Sub-branch
productGSRJYL0
1
BOC
accumulation day
Bank of China,
by day - daily August 12,
Nantong Gangzha No 700 July 8, 2016 Promised income 700 0.87 0.87 0.87
plan 2016
Sub-branch
productGSRJYL0
2
BOC
accumulation day
Bank of China,
by day - daily August 18,
Nantong Gangzha No 500 July 26, 2016 Promised income 500 0.67 0.67 0.67
plan 2016
Sub-branch
productGSRJYL0
3
BOC
accumulation day
Bank of China,
by day - daily September 14,
Nantong Gangzha No 700 August 23, 2016 Promised income 700 0.55 0.55 0.55
plan 2016
Sub-branch
productGSRJYL0
4
BOC
accumulation day
Bank of China,
by day - daily September 27, December 16,
Nantong Gangzha No 800 Promised income 800 1.63 1.63 1.63
plan 2016 2016
Sub-branch
productGSRJYL0
5
BOC
Bank of China, accumulation day November 25,
Nantong Gangzha No by day - daily 1,500 June 30, 2017 Promised income 700 1.52 1.52
2016
Sub-branch plan
productGSRJYL0
91
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
6
Industrial and Guaranteed
Commercial Bank of 35-day stable February 16, Guaranteed and
No 30 January 8, 2016 30 0.09 0.09 0.09
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable February 16, Guaranteed and
No 30 January 8, 2016 30 0.09 0.09 0.09
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable February 16, Guaranteed and
No 30 January 8, 2016 30 0.09 0.09 0.09
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable February 16, Guaranteed and
No 30 January 8, 2016 30 0.09 0.09 0.09
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable February 16, Guaranteed and
No 30 January 8, 2016 30 0.09 0.09 0.09
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable February 16, Guaranteed and
No 30 January 8, 2016 30 0.09 0.09 0.09
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable February 16, Guaranteed and
No 20 January 8, 2016 20 0.06 0.06 0.06
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable Guaranteed and
No 30 March 25, 2016 June 2, 2016 30 0.16 0.16 0.16
China, Sipailou income RMB floating income
Sub-branch corporate finance
Industrial and No Guaranteed 30 March 25, 2016 June 2, 2016 Guaranteed and 30 0.16 0.16 0.16
92
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
Commercial Bank of 35-day stable floating income
China, Sipailou income RMB
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable Guaranteed and
No 30 March 25, 2016 June 2, 2016 30 0.16 0.16 0.16
China, Sipailou income RMB floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable Guaranteed and
No 30 March 25, 2016 June 2, 2016 30 0.16 0.16 0.16
China, Sipailou income RMB floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable Guaranteed and
No 30 July 5, 2016 August 9, 2016 30 0.08 0.08 0.08
China, Sipailou income RMB floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable Guaranteed and
No 30 July 5, 2016 August 9, 2016 30 0.08 0.08 0.08
China, Sipailou income RMB floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable Guaranteed and
No 30 July 5, 2016 August 9, 2016 30 0.08 0.08 0.08
China, Sipailou income RMB floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable Guaranteed and
No 30 July 5, 2016 August 9, 2016 30 0.08 0.08 0.08
China, Sipailou income RMB floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable September 20, Guaranteed and
No 30 August 16, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed September 20, Guaranteed and
Commercial Bank of No 35-day stable 30 August 16, 2016 30 0.07 0.07 0.07
2016 floating income
China, Sipailou income RMB
93
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable September 20, Guaranteed and
No 30 August 16, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable September 20, Guaranteed and
No 30 August 16, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable September 20, Guaranteed and
No 30 August 16, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable September 20, Guaranteed and
No 30 August 16, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable September 20, Guaranteed and
No 30 August 16, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable November 18, Guaranteed and
No 30 October 14, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable November 18, Guaranteed and
No 30 October 14, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and Guaranteed
Commercial Bank of 35-day stable November 18, Guaranteed and
No 30 October 14, 2016 30 0.07 0.07 0.07
China, Sipailou income RMB 2016 floating income
Sub-branch corporate finance
Industrial and No "Ever increasing" 30 January 13, 2016 June 30, 2017 Non-guaranteed and 30 0.32 0.32 0.32
94
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
Commercial Bank of earning corporate floating income
China, Sipailou finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 January 13, 2016 June 30, 2017 30 0.32 0.32 0.32
China, Sipailou floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 January 15, 2016 June 30, 2017 30 0.32 0.32 0.32
China, Sipailou floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 January 15, 2016 June 30, 2017 30 0.32 0.32 0.32
China, Sipailou floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of February 26, Non-guaranteed and
No earning corporate 30 June 30, 2017 30 0.83 0.83 0.83
China, Sipailou 2016 floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of February 26, Non-guaranteed and
No earning corporate 30 June 30, 2017 30 0.83 0.83 0.83
China, Sipailou 2016 floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of February 26, Non-guaranteed and
No earning corporate 30 June 30, 2017 30 0.83 0.83 0.83
China, Sipailou 2016 floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of February 26, Non-guaranteed and
No earning corporate 30 June 30, 2017 30 0.83 0.83 0.83
China, Sipailou 2016 floating income
finance
Sub-branch
Industrial and "Ever increasing"
February 26, Non-guaranteed and
Commercial Bank of No earning corporate 20 June 30, 2017 20 0.55 0.55 0.55
2016 floating income
China, Sipailou finance
95
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 March 22, 2016 June 30, 2017 30 0.76 0.76 0.76
China, Sipailou floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 March 31, 2016 June 30, 2017 30 0.74 0.74 0.74
China, Sipailou floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 March 31, 2016 June 30, 2017 30 0.74 0.74 0.74
China, Sipailou floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 March 31, 2016 June 30, 2017 30 0.74 0.74 0.74
China, Sipailou floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 April 1, 2016 June 30, 2017 30 0.73 0.73 0.73
China, Sipailou floating income
finance
Sub-branch
Industrial and
"Ever increasing"
Commercial Bank of Non-guaranteed and
No earning corporate 30 April 1, 2016 June 30, 2017 30 0.73 0.73 0.73
China, Sipailou floating income
finance
Sub-branch
BOC stable
financial plan - February 18,
Bank of China No 800 August 20, 2015 Promised income 800 17.15 17.15 17.15
smart series 2016
Q15558
BOC Jizhitong
financial plan -
September 22,
Bank of China No liquidity 700 March 4, 2016 Promised income 700 0 13.37 13.37
2015
enhancement
series A15603
96
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
BOC Jizhitong
financial plan -
November 27, January 26,
Bank of China No liquidity 500 Promised income 500 0 3.25 3.25
2015 2016
enhancement
series A15761
BOC stable
financial plan - March 10,
Bank of China No 600 February 1, 2016 Promised income 600 0 2.34 2.34
smart series 2016
Q16032-G
BOC stable
financial plan - February 22,
Bank of China No 750 April 7, 2016 Promised income 750 0 3.42 3.42
smart series 2016
Q16057-G
BOC stable
financial plan -
Bank of China No 300 January 18, 2016 May 9, 2016 Promised income 300 0 3.68 3.68
smart series
Q16008-G
BOC stable
financial plan -
Bank of China No 700 March 7, 2016 June 2, 2016 Promised income 700 0 6.34 6.34
smart series
Q16082-G
BOC stable and
smart financial
Bank of China No 650 March 14, 2016 June 27, 2016 Promised income 650 0 7.11 7.11
plan 2016 No.
075
BOC wealth
accumulation August 23,
Bank of China No 200 May 17, 2016 Promised income 200 0 1.88 1.88
financial plan 2016
2016 No. 178
BOC stable and
smart financial September 1,
Bank of China No 300 June 30, 2016 Promised income 300 0 1.81 1.81
plan 2016 No. 2016
227-G
Bank of China No BOC stable 450 April 14, 2016 October 20, Promised income 450 0 8.62 8.62
97
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
financial plan - 2016
smart series
Q16152-G
BOC stable
financial plan - November 28,
Bank of China No 700 June 6, 2016 Promised income 700 0 11.91 11.91
smart series 2016
Q16253-G
BOC stable
financial plan -
Bank of China No 400 June 30, 2016 June 22, 2017 Promised income 14.87 00
smart series
Q16301-G
BOC wealth
accumulation March 10,
Bank of China No 200 August 26, 2016 Promised income 3.71 00
financial plan 2017
2016 No. 319
BOC stable
financial plan - September 8, March 13,
Bank of China No 150 Promised income 2.64 00
smart series 2016 2017
Q16437-G
BOC stable
financial plan - October 19,
Bank of China No 400 October 24, 2016 Promised income 14.2 00
smart series 2017
Q16514-G
BOC stable and
smart financial December 1,
Bank of China No 800 May 25, 2017 Promised income 14.19 00
plan 2016 No. 2016
473-G
BOC stable
financial plan -
January 21,
Bank of China No smart series 400 October 22, 2015 Floating income 400 4.19 4.19 4.19
2016
(AMZYPWHQ15
711)
Shanghai Pudong Product code - January 25,
No 400 October 28, 2015 Floating income 400 4.54 4.54 4.54
Development Bank 2301137337; 2016
98
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
product name -
Liduoduo Wealth
Bus Progress No.
3
Product code -
2301137338;
Shanghai Pudong product name - November 21,
No 400 May 23, 2016 Floating income 400 8.78 8.78 8.78
Development Bank Liduoduo Wealth 2015
Bus Progress No.
4
Product code -
2301137335;
Shanghai Pudong January 15,
No product name - 400 December 16, Floating income 400 1.46 1.46 1.46
Development Bank 2016
Monthly profit
increase
Product code -
2301137338;
Shanghai Pudong
No product name - 400 January 19, 2016 July 21, 2016 Floating income 400 8.93 8.93 8.93
Development Bank
Wealth Bus
Progress No. 4
BOC stable
financial plan -
Bank of China No smart series 300 January 25, 2016 July 18, 2016 Floating income 300 6 6 6.00
(AMZYPWHQ60
23-G)
Product code -
2301137338;
Shanghai Pudong
No product name - 400 February 2, 2016 August 2, 2016 Floating income 400 8.73 8.73 8.73
Development Bank
Wealth Bus
Progress No. 4
Product code -
2301137336;
Shanghai Pudong September 25,
No product name - 400 July 27, 2016 Floating income 400 2.44 2.44 2.44
Development Bank 2016
Wealth Bus
Progress No. 2
99
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
Product code -
2301137337;
Shanghai Pudong November 3,
No product name - 400 August 4, 2016 Floating income 400 3.55 3.55 3.55
Development Bank 2016
Wealth Bus
Progress No. 3
Product code -
2301137337;
Shanghai Pudong September 2, December 2,
No product name - 400 Floating income 400 3.55 3.55 3.55
Development Bank 2016 2016
Wealth Bus
Progress No. 3
Product code -
2301137338;
Shanghai Pudong September 29, March 25,
No product name - 400 Floating income 7.08 00
Development Bank 2016 2017
Wealth Bus
Progress No. 4
Product code -
2301137337;
Shanghai Pudong November 4, February 1,
No product name - 600 Floating income 5.19 00
Development Bank 2016 2017
Wealth Bus
Progress No. 3
Product code -
2301137337;
Shanghai Pudong December 7,
No product name - 800 March 8, 2017 Floating income 7.58 00
Development Bank 2016
Wealth Bus
Progress No. 4
Bank of YTCF-RZL
No 100 January 11, 2016 April 11, 2016 Promised income 100 0.93 0.93 0.93
Communications 2171160015
Bank of YTCF-RZL
No 100 February 1, 2016 May 3, 2016 Promised income 100 0.92 0.92 0.92
Communications 2171160278
Bank of YTCF-RZL
No 100 March 7, 2016 June 7, 2016 Promised income 100 0.86 0.86 0.86
Communications 2171160596
Bank of YTCF-RZL October 17,
No 200 April 18, 2016 Promised income 200 3.39 3.39 3.39
Communications 2171161068 2016
100
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
Bank of YTCF-RZL August 16,
No 200 May 16, 2016 Promised income 200 1.71 1.71 1.71
Communications 2171161335 2016
Golden years August 16,
China Merchants Bank No 150 June 21, 2016 Guaranteed 150 0.75 0.75 0.75
51422 2016
Golden years November 4,
China Merchants Bank No 100 July 15, 2016 Guaranteed 100 0.91 0.91 0.91
51429 2016
PAB Tiantianli
guaranteed RMB December 12, January 21,
Ping An Bank No 1,200 Promised income 1,200 1.75 1.75 1.75
corporate 2015 2016
financial product
PAB Tiantianli
guaranteed RMB December 29, January 21,
Ping An Bank No 2,100 Promised income 2,100 3.05 3.05 3.05
corporate 2015 2016
financial product
PAB Tiantianli
guaranteed RMB December 31, February 1,
Ping An Bank No 1,000 Promised income 1,000 1.45 1.45 1.45
corporate 2015 2016
financial product
Industrial and 63-day stable
January 1,
Commercial Bank of No income corporate 200 October 30, 2015 Promised income 200 1.23 1.23 1.23
2016
China finance
Industrial and 63-day stable
November 24, January 26,
Commercial Bank of No income corporate 200 Promised income 200 1.09 1.09 1.09
2015 2016
China finance
Industrial and 63-day stable
November 26, January 28,
Commercial Bank of No income corporate 230 Promised income 230 1.83 1.83 1.83
2015 2016
China finance
Abundant
The Agricultural Bank November 27, February 25,
No principal and 550 Promised income 550 4.41 4.41 4.41
of China 2015 2016
interest 90-day
Ease express
The Agricultural Bank February 29, March 14,
No daily compound 550 Promised income 550 0.49 0.49 0.49
of China 2016 2016
interest
101
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
The Agricultural Bank Daily compound March 29,
No 550 March 14, 2016 Promised income 550 0.65 0.65 0.65
of China interest No. 2 2016
Industrial and
0701CDOB
Commercial Bank of No 220 March 9, 2016 July 1, 2016 Promised income 220 1.72 1.72 1.71
finance
China
The Agricultural Bank Daily compound
No 400 April 6, 2016 July 1, 2016 Promised income 400 2.09 2.09 2.09
of China interest No. 2
Industrial and
0701CDOB
Commercial Bank of No 200 May 10, 2016 July 13, 2016 Promised income 200 0.43 0.43 0.43
finance
China
Industrial and
0701CDOB December 1,
Commercial Bank of No 100 June 12, 2016 Promised income 100 0.8 0.8 0.80
finance 2016
China
Industrial and
0701CDOB August 26,
Commercial Bank of No 400 July 21, 2016 Promised income 400 0.63 0.63 0.63
finance 2016
China
Industrial and
0701CDOB December 2,
Commercial Bank of No 300 August 30, 2016 Promised income 300 1.31 1.31 1.31
finance 2016
China
Industrial and
0701CDOB December 16, Guaranteed and
Commercial Bank of No 100 June 30, 2017 00
finance 2016 floating income
China
B160C0169-Win-
December 2, December 6, Guaranteed and
China Citic Bank No win guaranteed 1,500 1,200 1.22 1.22
2016 2016 floating income
Tiantiankuai A
Total 105,230 -- -- -- 78,580 1,204.63 984.43 --
Source of fund for entrusted financing Own fund
Past-due amount of principal and income recoverable 0
Lawsuit (if applicable) Not applicable
Disclosure date of the announcement of the Board of
Directors on the approval of entrusted financing (if any)
102
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Accrued
Principal Actual loss Actual return
Amount of provisions
Connected Remuneration amount Projected and gain of gains and
Name of trustee Product type entrusted Start date End date for
transaction or not confirmation method returned in the income amount in the losses in the
financing impairment
report period report period report period
(if any)
Disclosure date of the announcement of the shareholder
meeting on the approval of entrusted financing (if any)
Is there any entrusted financing plan in the future? Yes
103
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
(2) Entrusted loaning
□ Applicable √ Not applicable
No entrusted loaning is involved in the report period.
4. Other Important Contracts
√ Applicable □ Not applicable
Book
value
of
Conne
assets Apprais
Contrac Contrac cted
Counter Date of involve al Pricing Associa
ting t transa Implementation as of the end of the report period
party signing d in the agency principle tion
party subject ction
contract (if any)
or not
(RMB
10,000)
(if any)
At the 15th interim meeting of the 6th Board of
Directors on July 29, 2014, the Company reviewed
and approved the Proposal for Adding the Working
Shenzh
Capital Loan of RMB 10,000,000 to Shenzhen SEG
en SEG
Shenzh Loan of Industrial Investment Co., Ltd. The Company
Industri
en SEG RMB July 29, Without provided the working capital loan of RMB
al 4,200 N/A No N/A
Co., 42 2014 interest 10,000,000 for the wholly-owned subsidiary
Investm
Ltd. million Shenzhen SEG Industrial Investment Co., Ltd. As a
ent Co.,
result, SEG Industry has borrowed RMB 42,000,000
Ltd.
in total from the Company, which bears no interest.
As of the end of the report period, the foregoing
contract is in progress.
At the 23rd interim meeting of the 6th Board of
Directors on May 27, 2015, the Company reviewed
Suzhou
and approved the Proposal for Providing the
SEG Financial Aid of RMB 10,000,000 for Suzhou SEG
Shenzh Digital Loan of Digital Plaza Management Co., Ltd. The Company
May
en SEG Plaza RMB Without provided the loan of RMB 10,000,000 for the
27, 1,000 N/A No N/A
Co., Manage 10 interest wholly-owned subsidiary Shenzhen SEG Industrial
2015
Ltd. ment million Investment Co., Ltd. to meet its development needs.
The foregoing loan bears no interest and the term is
Co.,
two years (from June 8, 2015 to June 7, 2017). As of
Ltd. the end of the report period, the foregoing contract is
in progress.
At the 3rd interim meeting of the 6th Board of
Directors on October 14, 2013, the Company
reviewed and approved the Proposal for Providing
the Financial Aid of RMB 10,000,000 for Shenzhen
SEG E-Commerce Co., Ltd. The term of loan was
one year (from September 15, 2013 to September 14,
2014). The loan was paid based on the need of
e-commerce business. SEG E-commerce paid the
Shenzh capital occupancy fee to the Company based on the
Shenzh en SEG Loan of actual amount and term of loan at the benchmark
Novem
en SEG E-Com RMB interest rate of one-year bank loan in the same
ber 10, 6,000 No N/A
Co., merce 60 period, and repaid the loan on the due date. At the
2013
Ltd. Co., million 5th interim meeting of the 6th Board of Directors on
December 5, 2014, the Company reviewed and
Ltd.
approved the Proposal for Providing the Financial
Aid of RMB 60,000,000 for Shenzhen SEG
E-Commerce Co., Ltd. This was borrowing renewal
and the term of loan is one year. SEG E-commerce
paid the capital occupancy fee to all shareholders as
the creditors based on the actual amount and term of
loan at 6.5%. As of the end of the report period, SEG
E-commerce has repaid the foregoing loan.
104
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
XVIII. Social Responsibility
1. Fulfillment of the social responsibility for targeted poverty alleviation
√ Applicable □ Not applicable
According to the decision of central government to win the fight against poverty and the work arrangements of
Shenzhen CPC Committee, the People's Government of Shenzhen, State-owned Assets Supervision and
Administration Commission of Shenzhen, and SEG Group on three-year targeted poverty alleviation, SEG
Group was designated to provide poverty alleviation aid for Zishi Village, Zishi Town, Longchuan County,
Heyuan. After receiving the assignment, the CPC Committee and leaders of the Company fully realized the
importance, arduousness and urgency of poverty alleviation and development in the new period. Our thoughts
and actions followed spirits conveyed by important talks of Xi Jinping, CPC General Secretary and decisions and
arrangements on targeted poverty alleviation of government at all levels and the upper CPC committee. SEG
Group promptly appointed the leader of the work team and arranged for special personnel to stay at villages for
poverty alleviation. In 2016, the CPC Committee and relevant branches of the Company visited five families
with financial difficulties in Zishi Village for field research, extended regards to them, and assisted the work
team in the village in carrying out poverty alleviation. In 2016, the Company has investigated the conditions of
poverty alleviation households, developed the poverty alleviation plan, and decomposed tasks of each poverty
alleviation stage. All work is progressing as planned to ensure the accomplishment of poverty alleviation goals of
Guangdong CPC Committee and People's Government of Guangdong Province by the end of 2018, namely
"rural poor people do not have to worry about food or clothing; compulsory education, basic medical care, and
housing security are guaranteed; the basic indicators of basic public services are equivalent to the average level
of Guangdong Province".
2. Fulfillment of other social responsibilities
Are the listed company and its subsidiaries on the list of key pollutant discharging enterprises released by the environment
protection department?
No.
Is a social responsibility report published?
□ Yes √ No
XIX. Notes on Other Important Matters
√ Applicable □ Not applicable
Inquiry Index for the Websites Disclosing
Overview of Important Events Disclosure Date
the Temporary Reports
1. Matters concerning the establishment of SEG Announcement of Shenzhen SEG Co., Ltd. on
Intelligent Technology Co., Ltd. the Establishment of Shenzhen SEG
January 13, 2016
Intelligent Technology Co. Ltd. disclosed on
http://www.cninfo.com.cn
2. Matters concerning the conclusion of the strategic Announcement on the Conclusion of the
cooperation agreement with Taobao (China) Software Strategic Cooperation Agreement with
January 28, 2016
Co., Ltd. Taobao (China) Software Co., Ltd. disclosed
on http://www.cninfo.com.cn
3. Matters concerning major assets restructuring plan Announcement on Resolutions of the 8th
February 4, 2016 Meeting of the 6th Board of Directors
disclosed on http://www.cninfo.com.cn
Warning Announcement on No Resumption
February 4, 2016 of Trading of the Company's Stocks disclosed
on http://www.cninfo.com.cn
February 4, 2016 Warning Announcement on General Risks of
Major Asset Restructuring disclosed on
105
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
http://www.cninfo.com.cn
Announcement on Share Issuance and Cash
Payment to Acquire Assets and Raise Funds
February 4, 2016 & Non-diluted Earnings Per Share of
Connected Transactions disclosed on
http://www.cninfo.com.cn
4. Matters concerning the conclusion of the strategic Announcement on the Conclusion of the
cooperation agreement with Shanghai Wangyu Strategic Cooperation Agreement with
Information Technology Co., Ltd. March 15, 2016 Shanghai Wangyu Information Technology
Co., Ltd. disclosed on
http://www.cninfo.com.cn
5. Matters concerning the conclusion of the strategic Announcement on the Conclusion of the
cooperation agreement with Fujian Babycat Animation Strategic Cooperation Agreement with
March 24, 2016
Technology Co., Ltd. Fujian Babycat Animation Technology Co.,
Ltd. disclosed on http://www.cninfo.com.cn
6. Matters concerning the conclusion of strategic Announcement on the Conclusion of the
cooperation agreements with related parties and Strategic Cooperation Agreement with
Shenzhen Tencent Computer System Co., Ltd. April 6, 2016 Related Parties and Shenzhen Tencent
Computer System Co., Ltd. disclosed on
http://www.cninfo.com.cn
7. Matters concerning the conclusion of the strategic Announcement on the Conclusion of the
cooperation agreement with Zhejiang Tmall Technology Strategic Cooperation Agreement with
April 9, 2016
Co., Ltd. Zhejiang Tmall Technology Co., Ltd.
disclosed on http://www.cninfo.com.cn
8. Matters concerning the cooperation between the Announcement on the Cooperation
controlling subsidiary and Shenzhen Capital Group between the Controlling Subsidiary and
Co., Ltd. on the setup of an investment management Shenzhen Capital Group Co., Ltd. on the
company and establishment of Shenzhen Hongtu Setup of an Investment Management
SEG Intelligent Industrial Investment Fund April 19, 2016 Company and Establishment of
(Limited Partnership) Shenzhen Hongtu SEG Intelligent
Industrial Investment Fund (Limited
Partnership) disclosed on
http://www.cninfo.com.cn
9. Matters concerning the Company's application for Announcement on Resolutions of the
the general credit limit for RMB loans 34th Interim Meeting of the 6th Board of
April 26, 2016
Directors disclosed on
http://www.cninfo.com.cn
10. Matters concerning foreign investment and Announcement on Foreign Investment
establishment of Shenzhen SEG Longyan New and Establishment of SEG Longyan New
Energy Application and Development Co., Ltd. May 10, 2016 Energy Application and Development
Co., Ltd. disclosed on
http://www.cninfo.com.cn
Announcement on Shenzhen SEG Longyan
New Energy Application and Development
June 1, 2016 Co., Ltd.'s Acquisition of the Business
License disclosed on
http://www.cninfo.com.cn
11. Matters concerning equity investment and Announcement on Equity Investment and
establishment of Shenzhen International Consumer Establishment of Shenzhen International
Electronics Exhibition/Exchange Center Co., Ltd. May 12, 2016 Consumer Electronics Exhibition/Exchange
Center Co., Ltd. disclosed on
http://www.cninfo.com.cn
12. Matters concerning the alteration of registered Announcement on Resolutions of the 37th
capital of Shenzhen Hongtu SEG Investment Interim Meeting of the 6th Board of
June 25, 2016
Management Co., Ltd. Directors disclosed on
http://www.cninfo.com.cn
13. Matters concerning the major assets Report of Share Issuance and Cash
restructuring process Payment to Acquire Assets and Raise Funds
August 4, 2016
& Connected Transactions disclosed on
http://www.cninfo.com.cn
106
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Announcement on the Approval of
State-owned Assets Supervision and
August 26, 2016 Administration Commission of Shenzhen on
the Major Assets Restructuring Plan
disclosed on http://www.cninfo.com.cn
Announcement on Recordation of the Asset
Appraisal Report Related to Major Assets
Restructuring by State-owned Assets
August 27, 2016
Supervision and Administration
Commission of Shenzhen disclosed on
http://www.cninfo.com.cn
Announcement on Receipt of the Notice of
the CSRC on Acceptance of Administrative
September 14, 2016 Licensing Application Concerning the
Major Assets Restructuring disclosed on
http://www.cninfo.com.cn
Announcement on Receipt of the Notice of
the CSRC on Primary Feedback Opinion
for Review of Administrative Licensing
October 10, 2016
Items Concerning the Major Assets
Restructuring disclosed on
http://www.cninfo.com.cn
Announcements of Reply to the Notice of
the CSRC on Primary Feedback Opinion
for Review of Administrative Licensing and
November 4, 2016 Report of Share Issuance and Cash
Payment to Acquire Assets and Raise Funds
& Connected Transactions (Revision)
disclosed on http://www.cninfo.com.cn
Announcement on the Review Reply of the
M&A and Restructuring Review Committee
of the CSRC on Major Assets Restructuring
November 22, 2016 and Report of Share Issuance and Cash
Payment to Acquire Assets and Raise Funds
& Connected Transactions (Revision)
disclosed on http://www.cninfo.com.cn
14. Matters concerning Shenzhen Hongtu SEG Announcement on Shenzhen Hongtu SEG
Investment Management Co., Ltd.'s acquisition of the Investment Management Co., Ltd.'s
September 1, 2016
business license Acquisition of the Business License
disclosed on http://www.cninfo.com.cn
15. Matters concerning progress of strategic cooperation Announcement on Progress of Strategic
between the Company and Taobao (China) Software Cooperation between the Company and
September 22, 2016
Co., Ltd. Taobao (China) Software Co., Ltd.
disclosed on http://www.cninfo.com.cn
16. Matters concerning the Company's receipt of court Announcement on Receipt of Court
summons and the civil complaint September 29, 2016 Summons and the Civil Complaint
disclosed on http://www.cninfo.com.cn
17. Matters concerning the acceptance of the Company's Announcement on the Acceptance of
application for arbitration Application for Arbitration disclosed on
Beijing Arbitration Commission accepted the http://www.cninfo.com.cn
October 14, 2016
Company's application for arbitration with Zongheng
International Expo City (Suzhou) Co., Ltd. as the
respondent
18. Matters concerning the reduction of holding-shares Announcement on Resolutions of the 5th
of Shenzhen Huakong SEG Co., Ltd. October 25, 2016 Interim Meeting of the 7th Board of
October 26, 2016 Directors disclosed on
http://www.cninfo.com.cn
Announcement on the Reduction of Stock
December 31, 2016 Equity of Shenzhen Huakong SEG Co., Ltd.
disclosed on http://www.cninfo.com.cn
107
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
19. Matters concerning the establishment of SEG Announcement on the Establishment of
Longyan Energy Technology Co., Ltd. and launch of SEG Longyan Energy Technology Co., Ltd.
CdTe film photovoltaic industrial base November 12, 2016 and Launch of CdTe Film Photovoltaic
Industrial Base disclosed on
http://www.cninfo.com.cn
20. Matters concerning the progress of the Company's Announcement on Stock Equity Transfer of
transfer of the equity of Shenzhen SEG E-commerce December 15, 2016 Shenzhen SEG E-commerce Co., Ltd.
Co., Ltd. disclosed on http://www.cninfo.com.cn
21. Matters concerning the acquisition of 2% of the Announcement on the Connected
equity of Shenzhen SEG Credit Co., Ltd. held by Transaction of Acquisition of 2% of the
Shenzhen SEG E-commerce Co., Ltd. Stock Equity of Shenzhen SEG Credit Co.,
December 15, 2016
Ltd. Held by Shenzhen SEG E-commerce
Co., Ltd. disclosed on
http://www.cninfo.com.cn
22. Matters concerning the conclusion of the strategic Announcement on the Conclusion of the
cooperation agreement with Tianjin Allied eSports Strategic Cooperation Agreement with
Internet Technology Co., Ltd. December 15, 2016 Tianjin Allied eSports Internet Technology
Co., Ltd. disclosed on
http://www.cninfo.com.cn
23. Matters concerning the establishment of Shenzhen Announcement on the Establishment of
SEG Allied eSports Co., Ltd. and operation of e-sport Shenzhen SEG Allied eSports Co., Ltd. and
December 16, 2016
venue Operation of E-sport Venue disclosed on
http://www.cninfo.com.cn
XX. Important Matters of Subsidiaries
□ Applicable √ Not applicable
108
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 6 Changes in Share Capital and Information on
Shareholders
I. Information on Changes in Share Capital
1. Changes of shares
Unit: Share
Before the change Increase/decrease by (+, -) After the change
New Capitalization
Bonus
Quantity Percentage share of public Others Subtotal Quantity Percentage
share
offering reserve
I. Restricted shares 71,689 0.01% 0 0 0 5,750 5,750 77,439 0.01%
1. State-owned shares 0 0.00% 0 0 0 0 0 0 0.00%
(2) State-owned legal
0 0.00% 0 0 0 0 0 0 0.00%
person's shares
3. Other domestic shares 71,689 0.01% 0 0 0 5,750 5,750 77,439 0.01%
Including: Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
overseas legal persons
Shares held by
71,689 0.01% 0 0 0 5,750 5,750 77,439 0.01%
domestic natural persons
4. Shares held by foreign
0 0.00% 0 0 0 0 0 0 0.00%
units
Including: Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
overseas legal persons
Shares held by
0 0.00% 0 0 0 0 0 0 0.00%
foreign natural persons
II. Unrestricted shares 784,727,321 99.99% 0 0 0 -5,750 -5,750 784,721,571 99.99%
1. RMB ordinary shares 538,266,003 68.59% 0 0 0 -5,750 -5,750 538,260,253 68.59%
2. Domestically listed
246,461,318 31.40% 0 0 0 0 0 246,461,318 31.40%
foreign shares
3. Overseas listed foreign
0 0.00% 0 0 0 0 0 0 0.00%
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%
Reason for change
□ Applicable √ Not applicable
Approval of changes in share capital
□ Applicable √ Not applicable
Share transfer
109
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
□ 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 report 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 Date for
Name of Restricted shares Reason for
at period released in the increased in the releasing
shareholder at period end restricted trade
beginning current period current period restricted trade
Senior
Xu Ning 15,000 0 0 15,000 executive-targeted 3
share
Senior
Liu Zhijun 7,500 0 0 7,500 executive-targeted 3
share
Senior
Zheng Dan 31,939 0 0 31,939 executive-targeted 3
share
Senior
Zhu Longqing 9,000 0 3,000 12,000 executive-targeted 3
share
Senior
Ying Huadong 7,500 0 2,500 10,000 executive-targeted January 13, 2017
share
Senior
Tian Jiliang 750 0 250 1,000 executive-targeted January 13, 2017
share
Total 71,689 0 5,750 77,439 -- --
II. Issuance and listing of shares
1. Securities Issue (preferential shares excluded) in the report period
□ Applicable √ Not applicable
2. Explanations to changes of the sum of shares and the shareholder structure as well as the changes of the
asset and debt structure of the company.
□ Applicable √ Not applicable
3. Information of existing staff shares
110
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
□ Applicable √ Not applicable
III. Information on Shareholders and Actual Controllers
1. Information on the number of shareholders and their shareholding status
Unit: Share
Total number
of preferred
shareholders
restored with
Total number of
Total number of the voting
Total number of ordinary
preferred rights at the
ordinary shareholders at the
shareholders end of the
shareholders at the 76,108 end of the month 73,299 0 0
restored with the month
end of the report immediately before
voting rights (if immediately
period the disclosure of the
any) (see note 8) before the
annual report
disclosure of
the annual
report (if any)
(see note 8)
Information on the shareholders holding more than 5% shares or top 10 shareholders
Share Quantity Information on pledged or
Shares held
increase/ of Quantity of frozen shares
Nature of Shareholding by the end
Name of shareholder decrease in restricted unrestricted
shareholder percentage of the report
the report shares shares held Share status Quantity
period
period held
Shenzhen SEG Group State-owned
30.24% 237,359,666 Unchanged 0 237,359,666 Unchanged
Co., Ltd. legal person
Domestic
Liu Guocheng 0.87% 6,804,502 -113,200 0 6,804,502
natural person
GF Securities Co., Ltd.
- Baoying Rui Feng
innovative and flexible
Others 0.56% 4,361,800 +4,361,800 0 4,361,800
configuration hybrid
securities investment
fund
Domestic
Zhang Jiao 0.52% 4,046,989 +2,998,601 0 4,046,989
natural person
Domestic
Liu Guohong 0.42% 3,300,558 -54,000 0 3,300,558
natural person
Overseas
Gong Qianhua 0.37% 2,940,000 Unchanged 0 2,940,000
natural person
Domestic
Zeng Ying 0.29% 2,300,000 -1,000,000 0 2,300,000
natural person
China Securities Domestic 0.29% 2,271,900 Unchanged 0 2,271,900
111
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Finance Corporation non-state-owned
Limited legal person
Domestic
Wu Guixiang 0.24% 1,898,801 +1,298,901 0 1,898,801
natural person
Overseas legal
NORGES BANK 0.24% 1,890,226 Unchanged 0 1,890,226
person
Strategic investors or general legal
entities who became one of the top ten
None
shareholders by participating in rights
issue (If any)
Shenzhen SEG Group Co., Ltd has no association relationship with other shareholders,
Explanations on the association nor it is a concerted action unit as described by the Management Methods for Disclosure
relationship or concerted action among of Information on Changes of Shareholding Status of Shareholders of Listed Companies It
the above-mentioned shareholders is unknown whether other shareholders have an association relationship or are concerted
action units or not.
Unrestricted Tradable Shares Held by Top Ten Shareholders
Unrestricted shares held at Type of share
Name of shareholder
the period end Type of share Quantity
Shenzhen SEG Group Co., Ltd. 237,359,666 RMB ordinary shares 237,359,666
Liu Guocheng 6,804,502 Domestically listed foreign shares 6,804,502
GF Securities Co., Ltd. - Baoying Rui
Feng innovative and flexible
4,361,800 RMB ordinary shares 4,361,800
configuration hybrid securities
investment fund
Zhang Jiao 4,046,989 RMB ordinary shares 4,046,989
Liu Guohong 3,300,558 Domestically listed foreign shares 3,300,558
Gong Qianhua 2,940,000 Domestically listed foreign shares 2,940,000
Zeng Ying 2,300,000 Domestically listed foreign shares 2,300,000
China Securities Finance Corporation
2,271,900 RMB ordinary shares 2,271,900
Limited
Wu Guixiang 1,898,801 RMB ordinary shares 1,898,801
NORGES BANK 1,890,226 Domestically listed foreign shares 1,890,226
Explanations on the association
Shenzhen SEG Group Co., Ltd has no association relationship with other shareholders,
relationship or concerted action among
nor it is a concerted action unit as described by the Management Methods for Disclosure
the top ten shareholders of unrestricted
of Information on Changes of Shareholding Status of Shareholders of Listed Companies It
shares, and between the top ten
is unknown whether other shareholders have an association relationship or are concerted
shareholders of unrestricted shares and
action units or not.
the top ten shareholders
Information of top ten ordinary Among the above top 10 shareholders, Zhang Jiao holds 0 shares of the Company by the
shareholders participating in financing ordinary account and 4,046,989 shares by the credit account of the securities margin
business (if any) (see note 4) trading investor, totaling 4,046,989 shares of the Company.
Do the top ten ordinary shareholders of the Company or top ten ordinary shareholders of non-restricted shares
conduct agreed repurchase transactions in the report period?
112
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
□ Yes √ No
The top ten ordinary shareholders of the Company or top ten ordinary shareholders of non-restricted shares did
not conduct agreed repurchase transactions in the report period.
2. Information about controlling shareholders of the Company
Nature of controlling shareholder: local state-owned control
Type of controlling shareholder: legal person
Name of controlling Legal representative/ Organization
Date of incorporation Main business
shareholder Company manager code
Electronic products, household appliances,
toys, electronic and telecommunications
facilities and equipment, instrument,
automobile and motorcycle accessories,
computers and accessories, office
automation equipment and supplies,
production research of electronic chemical
projects (the license of the production site
to be separately applied for); electronic
system engineering projects; electronics
and telecommunications markets; talent
Shenzhen SEG Group training; real estate development (on the
Sun Shengdian August 23, 1984 192180930
Co., Ltd. land with legally acquired land use rights);
real estate brokerage; freight forwarding;
logistics and warehousing; sightseeing and
catering, shopping mall and exhibition
business of Shenzhen SEG Plaza;
development and maintenance of network
and information engineering technology;
import and export business; paid use
license of SEG registered trademark;
investment consulting; investment
management; agency accounting; business
registration agency.
Equity of other overseas listed companies in which the controlling shareholders have a controlling share and hold shares
Proportion of
Abbreviations of held stock Number of shares held
No. Company name shareholding
and securities code (Unit: Share)
(%)
1 Shenzhen SEG Group Co., Ltd. Huakong SEG 000068 68,392,697 6.79
2 SEG (HONGKONG) Company Limited Shen Huafa B200020 16,569,560 5.85
GOOD HOPE CORNER
3 Shen Huafa 200020 12,700,000 4.48
INVESTMENTS LTD
4 SEG (HONGKONG) Company Limited NewOcean Energy 0342 100,000 0.01
Changes of the controlling shareholders in the report period
113
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
□ Applicable √ Not applicable
In the report period, the controlling shareholders of the Company are not changed.
3. Actual controller of the Company
Nature of actual controller: local state-owned assets management institution
Type of actual controller: legal person
Legal representative/ Date of
Name of actual controller Organization code Main business
Company manager incorporation
Shenzhen State-owned Assets
Supervision and Administration Gao Zimin Not applicable Not applicable
Commission
Equities of other listed companies
at home or abroad controlled by
Not applicable
the actual controller in the report
period
Changes of the actual controllers in the report period
□ Applicable √ Not applicable
In the report 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
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
114
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
5. Limited unloading of shares by controlling shareholder, actual controller, restructured entity and other
commitment makers
□ Applicable √ Not applicable
Chapter 7 Preferred Shares
□ Applicable √ Not applicable
No preferred share is involved in the report period.
115
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Chapter 8 Information on Directors, Supervisors, Senior Executives and Employees
I. Changes in Shares Held by Directors, Supervisors and Senior Executives
Increase of
Shares held at Decrease of shares Increase or Shares held at
Employment Beginning date of Ending date of shares held in the
Name Title Gender Age period beginning held in the report decrease period end
status office term office term report period
(share) period (share) (Share) (share)
(share)
Wang Li Chairman Incumbent Male 55 July 15, 2016 July 15, 2019 0 0 0 0 0
Zhang
Director Incumbent Male 54 July 15, 2016 July 15, 2019 0 0 0 0 0
Guangliu
Cao Xiang Director Incumbent Male 48 July 15, 2016 July 15, 2019 0 0 0 0 0
Yu Qian Director Incumbent Male 48 July 15, 2016 July 15, 2019 0 0 0 0 0
Director/ General
Liu Zhijun Incumbent Male 48 July 15, 2016 July 15, 2019 10,000 0 0 0 10,000
Manager
Director/Vice
General
Zheng Dan Manager/Secretary Incumbent Female 51 July 15, 2016 July 15, 2019 42,586 0 0 42,586
of the Board of
Directors
Independent
Li Luoli Incumbent Male 69 July 15, 2016 July 15, 2019 0 0 0 0 0
Director
Independent
Song Pingping Incumbent Female 49 July 15, 2016 July 15, 2019 0 0 0 0 0
Director
Independent
Fan Zhiqing Incumbent Male 67 July 15, 2016 July 15, 2019 0 0 0 0 0
Director
Zhou Hanjun Independent Former Male 47 June 17, 2013 July 15, 2016 0 0 0 0 0
116
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Director
Ye Jun Director Former Male 55 June 17, 2013 July 15, 2016 0 0 0 0 0
Chairman of the
Xu Ning Board of Incumbent Male 51 July 15, 2016 July 15, 2019 20,000 0 0 0 20,000
Supervisors
Tang Chongyin Supervisor Incumbent Male 56 July 15, 2016 July 15, 2019 0 0 0 0 0
Liu Fusong Supervisor Incumbent Male 46 July 15, 2016 July 15, 2019 0 0 0 0 0
Ru Guiqin Supervisor Incumbent Female 52 July 15, 2016 July 15, 2019 0 0 0 0 0
Zhang Haifan Supervisor Incumbent Female 43 July 15, 2016 July 15, 2019 0 0 0 0 0
Peng Aiyun Supervisor Incumbent Male 43 June 17, 2013 July 15, 2016 0 0 0 0 0
Tian Jiliang Supervisor Incumbent Male 50 June 17, 2013 July 15, 2016 1,000 0 0 0 1,000
Ying Huadong Supervisor Incumbent Male 47 June 17, 2013 July 15, 2016 10,000 0 0 0 10,000
Vice General
Zhu Longqing Incumbent Male 55 August 1, 2016 July 15, 2019 20,000 0 0 0 20,000
Manager
Vice General
Bo Hongxi Incumbent Male 58 August 1, 2016 July 15, 2019 0 0 0 0 0
Manager
Total -- -- -- -- -- -- 103,586 0 0 0 103,586
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II. Changes of Directors, Supervisors, and Senior Executives
Name Position Type Date Reason
Independent
Zhou Hanjun Retired after expiration of term July 15, 2016 General election of the Board of Directors
director
Ye Jun Director Retired after expiration of term July 15, 2016 General election of the Board of Directors
Zhu Longqing Director Retired after expiration of term July 15, 2016 General election of the Board of Directors
Peng Aiyun Supervisor Retired after expiration of term July 15, 2016 General election of the Board of Directors
Tian Jiliang Supervisor Retired after expiration of term July 15, 2016 General election of the Board of Directors
Ying Huadong Supervisor Retired after expiration of term July 15, 2016 General election of the Board of Directors
III. Information on Position
Professional background, work experience and main responsibility of incumbent directors, supervisors, and
senior executives
(I) Members of the Board of Directors
1. Wang Li, male, born in 1961, Master, is Chairman of the Company, Deputy Secretary of the CPC Committee
and General Manager of SEG Group, Chairman of SEG Credit, Director of Shenzhen STS Microelectronics Co.,
Ltd., and Director of SEG Longyan Technology. He was former Finance Manager, Domestic Owner of Central
Africa Division, Vice Director of Finance Department, Director of Fund Department & Deputy Chief Accountant
of Kenya Branch of SEG Group, President of SEG Hi-tech, and Vice General Manager & Executive Vice
General Manager of SEG Group.
2. Zhang Guangliu, male, born in 1962, Master, is Director of the Company, Vice General Manager of SEG
Group, Chairman of SEG Kangle, and Chairman of the Board of Supervisors of Shenzhen Si Semiconductors
Co., Ltd. He was former Vice Manager of Industrial Trade Center and Pingxiang Department Store of Jiangxi,
Vice Manager of Zhenhua Branch of Shenzhen Tianhong Department Store, Finance Chief of Shenzhen Hua
Sheng Enterprise Group Company Limited, Shenzhen Pharmaceutical Production and Supply Corporation, and
Shenzhen Building Materials Group Co., Ltd., Chairman of the Board of Supervisors of Huakong SEG, and
Chairman of SEG (HONGKONG) Company Limited.
3. Cao Xiang, male, born in 1968, Doctor of Laws, is Director of the Company, General Manager of Shenzhen
Kunpeng Equity Investment Management Co., Ltd., Director of Shenzhen HTI Group Co., Ltd., Director of A
Capital Group, Director of Shenzhen Institute of Building Research Co., Ltd., Director of SEG Group, and
Supervisor of Qianhai Equity Exchange. He was former core researcher of the Research Institute & Director of
Investment Banking Division of Guotai Junan Securities, Director of the Research Institute of Bohai Securities,
Director & Vice General Manager of Shenzhen Huayangnian Investment and Development Co., Ltd.,
specially-appointed researcher of the State-owned Assets Administration Research Institute of State-owned
Assets Supervision and Administration Commission of the People's Government of Shenzhen, and Vice General
Manager of Shenzhen Capital Co., Ltd.
4. Yu Qian, male, born in 1968, Bachelor, economist, is Director of the Company, Vice General Manager of
Shenzhen Office of China Orient Asset Management Co., Ltd. and Director of SEG Group. He was former
Section Chief & Deputy Director of Credit Bureau of Hunan Branch of Bank of China, Director of Changsha
Office & Senior Manager of China Orient Asset Management Co., Ltd., and Assistant General Manager and
Deputy General Manager of Dong Yin Development (Holdings) Limited.
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5. Liu Zhijun, male, born in 1968, Master of Engineering, is Secretary of the CPC Committee, Director &
General Manager of the Company, Chairman of Nantong SEG, Chairman of Longgang SEG, Chairman of Xi'an
SEG, Chairman of Xi'an Hairong SEG, Chairman & General Manager of SEC Investment, Director of SEG
Credit, Director of SEG Lianzhong, Supervisor of Kashgar Shenzhen City Co., Ltd, and General Manager of
CEEC. He was former Vice Secretary of the CPC Committee of the Company, Chairman of Longyan Application,
Chairman of SEG E-commerce, Chairman of Shanghai SEG, Manager of the Business Department of SEG
Group, and Vice General Manager of SEG Baohua.
6. Zheng Dan, female, born in 1965, Master of Science, senior economist, is Vice Secretary of the CPC
Committee, Secretary of the Committee for Discipline Inspection, Director, Vice General Manager & Secretary
of the Board of Directors of the Company, Standing Committee Member of the Second Committee of Directors
and Secretaries of China Association for Public Companies, a joint member of Hong Kong Institute of Chartered
Secretaries, winner of the 6th to 12th "Top Secretary" & "Hall of Fame" awarded by New Fortune, Chairman of
Suzhou SEG Digital, Chairman of Suzhou SEG Intelligent, Chairman of Wujiang SEG, Chairman of SEG
Baohua, Chairman of Suzhou Lianzhong, Director of SEG Credit, Director of Nantong SEG, Director of
Nantong SEG Commercial Operation Management Co., Ltd., Director of SEG Investment, Chairman of the
Board of Supervisors of Changsha SEG, and Chairman of the Board of Supervisors of Huakong SEG. She was
former Director Assistant, Deputy Director, and Director of the Preparation Office and Share and Securities
Representative of the Company, Deputy Director of the Equity Division Reform Office of Shenzhen Zhongkang
Glass Co., Ltd., Independent Director of Shenzhen Hongji (Group) Co., Ltd. (now known as Tunghsu Azure
Renewable Energy Co., Ltd., stock code 00040), Director of SEG E-Commerce, Director of Shenzhen SEG
Xinlide Co., Ltd., Director of SEG Navigations, Director of SEG Sanxing, Director of SEG E-commerce,
Director of Huakong SEG, Chairman of the Board of Supervisors of SEG Navigations, the Chairman of the
Board of Supervisors of Shenzhen SEG Storage and Transportation Co., Ltd., and Chairman of the Board of
Supervisors of SEG Baohua.
7. Li Luoli, male, born in 1947, Master of Economics, a professor & doctoral supervisor of Nankai University, is
Independent Director of Eternal Asia Supply Chain Management Co., Ltd., Vice Chairman of China
Development Institute, Vice President of China Society of Economic Reform, Chairman of Shenzhen Ma Hong
Foundation for Economic Improvement Research, and Chief Executive of Shenzhen Charity Federation. He was
former Deputy Director of the Institute of Economics of Nankai University, Deputy Director of the Price
Institute of the State Administration for Commodity Prices, Deputy Director of the Office of the People's
Government of Shenzhen, Director of Shenzhen Information Center, Deputy Secretary-General of Shenzhen
CPC Committee & Director of the Reception Office, Vice Chairman & Secretary-General of China Development
Institute, and President of China Opening Journal.
8. Song Pingping, female, born in March 1967, Master of Law, is Independent Director of the Company, partner
of Shenzhen Oriental Fortune Capital Co., Ltd., Secretary-General of the Risk Control Commission of China
Merger & Acquisition Fund Co., Ltd., Arbitrator of South China International Economic and Trade Arbitration
Commission, and Independent Director of Shenzhen Yantian Port Group Co., Ltd. She was former partner of
King & Wood Mallesons, Independent Director of Shenzhen INVT Electric Co., Ltd., Independent Director of
Sunner Development Inc., Independent Director of Shenzhen Topray Solar Co., Ltd., and permanent legal
adviser of Gemdale Group.
9. Fan Zhiqing, male, born in 1949, Master in Finance, senior accountant & senior economist, is Independent
Director of the Company and was former visiting professor of Shenzhen University and Shenzhen Managers'
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College, Independent Director of Shenbao Industrial Co., Ltd., Shenzhen Universal Group, Shahe Industrial Co.,
Ltd., Kingsignal Technology Co., Ltd., and Ocean's King Lighting Science and Technology Co., Ltd., Finance
Chief of the Ministry of Electronics Industry SUNTM Industry, Shenzhen Shenhua Industry and Trade
Corporation, Shenzhen Lianhua Investment Group, Shenzhen Investment Journal, Shenzhen Donghai Aidi Real
Estate Co., Ltd., and Oct Import & Export Co., Ltd., judge of Guangdong senior accountant and senior
economist title and expert of the professional team, senior financial advisor of Shenzhen Academy of Social
Sciences & Development Research Center of Shenzhen Municipal People's Government, and teaching and
scientific research member in Jiangxi University of Finance and Economics.
(II) Members of the Board of Supervisors
1. Xu Ning, male, born in 1965, Bachelor, is Chairman of the Board of Supervisors of the Company; Vice
Secretary of the CPC Committee, Secretary of the Committee for Discipline Inspection, and Chairman of Labor
Union of SEG Group; Secretary of the Committee for Discipline Inspection, Member of the CPC Committee,
and Chairman of the Board of Supervisors of Yantian Port Group. He was former researcher at division level of
State-owned Assets Supervision and Administration Commission of the People's Government of Shenzhen and
State-owned Assets Supervision and Administration Bureau; Member and Deputy Secretary of the Party
Committee and Member and Deputy Secretary of the Committee for Discipline Inspection of Lianhua Street,
Futian District, Shenzhen; Member of Standing Committee for Discipline Inspection and Deputy Director of
Supervision Bureau of Futian District, Shenzhen; Director and Senior Staff Member of the General Supervision
Office of the Committee for Discipline Inspection; Deputy Senior Staff Member, Senior Staff Member, and
Supervisor of Shenzhen People's Procuratorate; Section Clerk and Deputy Section Assistant Procurator
Anti-corruption Bureau of Jiangxi People 's Procuratorate.
2. Tang Chongyin, male, born in 1960, Doctor, is Supervisor of the Company, Director of Capital and Property
Management Department, Chairman of Shenzhen Daming Electronics Co., Ltd., Director of Shenzhen SEG
Hi-tech Investment Co., Ltd., Director of Shenzhen Si Semiconductors Co., Ltd., Director of Tianjin SEG
Haijing Co., Ltd., Director of Shenzhen SEG Yuren Technology Co., Ltd., and Chairman of the Board of
Supervisors of SEG Credit. He was former Director of SEG E-commerce and Vice Chairman of Shenzhen
Zhongheng Hwafa Co., Ltd.
3. Liu Fusong, male, born in 1970, Bachelor, is Supervisor of the Company, Member of the CPC Committee &
Vice General Manager of Shenzhen Office of China Great Wall Asset Management Co., Ltd., and Director of
SEG Group. He was former Section Member of Hebei Branch of Agricultural Bank of China, Deputy Senior
Staff Member of Asset Management Department of Shijiazhuang Office of China Great Wall Asset Management
Co., Ltd., Deputy Leader of the Manager Team of Changzhou Project, Deputy Senior Manager of Asset
Management Department No. 3, Deputy Senior Manager of Investment Management Department, Deputy Senior
Manager of Investment Banking Department, and Senior Manager and General Manager Assistant of Appraisal
Business Department.
4. Ru Guiqin, female, born in 1964, Bachelor, is Employee Supervisor, Director of General Affairs Department,
and Chairman of Immediate Labor Union of the Company, Director of Longgang SEG, and Director of SEG
Baohua. She was former Director, Deputy Director, and Director Assistant of the Office of the Company,
Business Assistant of Joint-stock System Preparation Office of SEG Group, and Business Assistant of Marketing
Department of SEG Group.
5. Zhang Haifan, female, born in 1973, Master, is Employee Supervisor and Business Manager of Finance and
Asset Management Department of the Company. She was former accountant responsible for consolidating
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financial statements of Finance and Asset Management Department, auditor of Audit Department, audit manager
of Shenzhen Zhongqing Certified Public Accountants, and technician of Technology Department of Chengdu
745 Plant.
(III) Senior executives
1. Liu Zhijun is General Manager. For details, see the above introduction to directors.
2. Zheng Dan is Vice General Manager. For details, see the above introduction to directors.
3. Zhu Longqing, male, born in 1961, MBA, is Vice General Manager of the Company, Chairman of SEG
Industry, Chairman of Changsha SEG, Chairman of Nanjing SEG, Chairman of Wuxi SEG, Chairman of Nanning
SEG, Chairman of Shanghai SEG, Director of Nantong SEG, Director of Nantong SEG Operation, Director of
SEG Navigations, and Chairman of the Board of Supervisors of SEG Baohua. He was former Director of the
Company, Chairman of the Board of Directors & Chairman of the Board of Supervisors of Shenzhen SEG
Storage and Transportation Co., Ltd., Director of Longyan Application, Director of SEG Baohua, Director &
General Manager of SEG Industry, and Director of SEG E-commerce.
4. Bo Hongxi, male, born in 1958, Bachelor, senior accountant, is Vice General Manager of the Company,
Director and General Manager of SEG Baohua, and Chairman of Nantong SEG Operation.
Information about directors, supervisors and senior executives serving in shareholders' units
√ Applicable □ Not applicable
Receiving remuneration
Name of Beginning date of Ending date of
Name Position in shareholders' units from shareholders' units
shareholders' units office term office term
or not
Vice Secretary of the CPC Committee
Wang Li SEG Group January 4, 2011 Up to now Yes
and General Manager
Zhang
SEG Group Vice General Manager March 10, 2003 Up to now Yes
Guangliu
Cao Xiang SEG Group Director May 15, 2015 Up to now No
Yu Qian SEG Group Director October 30, 2012 Up to now No
Vice Secretary of the CPC
Committee, Secretary of the
Xu Ning SEG Group October 1, 2012 Up to now Yes
Committee for Discipline Inspection,
& Chairman of the Labor Union
Tang Director of Capital and Property
SEG Group April 17, 2003 Up to now Yes
Chongyin Management Department
Liu Fusong SEG Group Director July 29, 2016 Up to now No
Information about directors, supervisors and senior executives serving in other units
√ Applicable □ Not applicable
Receiving
Position in other Beginning date of Ending date of
Name Name of other units remuneration from
units office term office term
other units or not
SEG Credit Chairman November 1, 2011 Up to now No
Wang Li
Shenzhen STS Director September 1, 2003 Up to now No
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Receiving
Position in other Beginning date of Ending date of
Name Name of other units remuneration from
units office term office term
other units or not
Microelectronics Co., Ltd.
SEG Longyan Technology Director December 1, 2016 Up to now No
SEG Kangle Enterprise
Chairman August 1, 2011 Up to now No
Development Co., Ltd.
Zhang Guangliu
Shenzhen Si Semiconductors Chairman of the
July 1, 2010 Up to now No
Co., Ltd. Board of Supervisors
Nantong SEG Chairman January 1, 2013 Up to now No
Longgang SEG Chairman June 1, 2010 Up to now No
Xi'an SEG Chairman May 1, 2013 Up to now No
Xi'an Hairong SEG Chairman May 1, 2013 Up to now No
Chairman & General
SEG Investment November 1, 2015 Up to now No
Manager
Liu Zhijun
SEG Credit Director September 1, 2011 Up to now No
SEG Lianzhong Director December 1, 2016 Up to now No
Kashgar Shenzhen City Co.,
Supervisor October 1, 2012 Up to now No
Ltd.
Director & General
Longyan Application May 1, 2016 March 1, 2017 No
Manager
CEEC General Manager May 1, 2016 Up to now No
Second Committee of
Directors and Secretaries of Standing committee
November 1, 2015 Up to now No
China Association for Public member
Companies
Wujiang SEG Chairman June 1, 2012 Up to now No
SEG Baohua Chairman April 1, 2013 Up to now No
Suzhou SEG Digital Chairman August 1, 2014 Up to now No
SEG Intelligent Chairman January 1, 2016 Up to now No
SEG Lianzhong Chairman December 1, 2016 Up to now No
Zheng Dan
Suzhou SEG Director July 1, 2016 Up to now No
SEG Credit Director September 1, 2011 Up to now No
Nantong SEG Director January 1, 2013 Up to now No
Nantong SEG Operation Director May 1, 2014 Up to now No
SEG Investment Director November 1, 2015 Up to now No
Chairman of the
Changsha SEG March 1, 2009 Up to now No
Board of Supervisors
Chairman of the
Huakong SEG March 1, 2014 Up to now No
Board of Supervisors
Shenzhen Yantian Port Group Secretary of the December 1, 2016
Xu Ning Up to now No
Co., Ltd. Committee for
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Receiving
Position in other Beginning date of Ending date of
Name Name of other units remuneration from
units office term office term
other units or not
Discipline
Inspection, Member
of the CPC
Committee &
Chairman of the
Board of Supervisors
Shenzhen SEG Hi-tech
Director July 1, 2006 Up to now No
Investment Co., Ltd.
Shenzhen Si Semiconductors
Director December 1, 2010 Up to now No
Co., Ltd.
Tianjin SEG Haijing Co., Ltd. Director December 1, 2006 Up to now No
Tang Chongyin Shenzhen Daming Electronics Chairman of the
July 1, 2006 Up to now No
Co., Ltd. Board of Directors
Chairman of the
SEG Credit May 1, 2014 Up to now No
Board of Supervisors
Shenzhen SEG Yuren
Director May 1, 2015 Up to now No
Technology Co., Ltd.
SEG Baohua Director April 1, 2013 Up to now No
Ru Guiqin
Longgang SEG Director May 1, 2014 Up to now No
SEG Industry Chairman May 1, 2013 Up to now No
Changsha SEG Chairman June 1, 2010 Up to now No
Nanjing SEG Chairman April 1, 2011 Up to now No
Wuxi SEG Chairman August 1, 2012 Up to now No
Nanning SEG Chairman April 1, 2013 Up to now No
Shanghai SEG Chairman June 1, 2014 Up to now No
Zhu Longqing
Nantong SEG Director January 1, 2013 Up to now No
Nantong SEG Operation Director May 1, 2014 Up to now No
SEG Navigations Director February 1, 2012 Up to now No
Longyan Application Director May 1, 2016 Up to now No
Chairman of the
SEG Baohua April 1, 2013 Up to now No
Board of Supervisors
SEG Baohua General Manager March 1, 2005 Up to now Yes
Bo Hongxi SEG Baohua Director March 1, 1999 Up to now Yes
Nantong SEG Operation Chairman May 1, 2014 Up to now No
Shenzhen Office of China Member of the CPC
Liu Fusong Great Wall Asset Committee & Vice February 1, 2015 Up to now Yes
Management Co., Ltd. General Manager
Shenzhen Oriental Fortune
Partner October 1, 2011 Up to now Yes
Capital Co., Ltd.
Secretary-General of
China Merger & Acquisition
Song Pingping Fund Co., Ltd. the Risk Control October 1, 2014 Up to now
Commission
Shenzhen Yantian Port Group
Independent director September 19, 2014 Up to now Yes
Co., Ltd.
Shenzhen Office of China Vice General
November 1, 2009 Up to now Yes
Yu Qian Orient Asset Management Manager
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Receiving
Position in other Beginning date of Ending date of
Name Name of other units remuneration from
units office term office term
other units or not
Co., Ltd.
China Development Institute Vice Chairman December 1, 1993 Up to now No
Shenzhen Ma Hong
Foundation for Economic Chairman November 1, 2011 Up to now No
Improvement Research
Eternal Asia Supply Chain
Independent Director June 22, 2016 Up to now Yes
Li Luoli Management Co., Ltd.
Professor & Doctoral
Nankai University September 1, 1994 Up to now No
Supervisor
China Society of Economic
Vice President June 1, 1999 Up to now No
Reform
Shenzhen Charity Federation Chief Executive September 1, 2016 Up to now No
Shenzhen Kunpeng Equity
Investment Management Co., General Manager January 18, 2017 Up to now Yes
Ltd.
Shenzhen HTI Group Co.,
Director October 16, 2013 Up to now No
Ltd.
Cao Xiang
A Capital Group Director September 1, 2011 Up to now No
Shenzhen Institute of
Director August 27, 2015 Up to now No
Building Research Co., Ltd.
Qianhai Equity Exchange Supervisor December 6, 2012 Up to now No
Information on punishment of incumbent and former directors, supervisors and senior executives in the report
period by the securities regulatory authority in the recent three years
□ Applicable √ Not applicable
IV. Information about Remuneration of Directors, Supervisors and Senior Executives
Decision-making procedure and establishment criteria for the remuneration to the directors, supervisors and
senior executives, and actual payment
The Company implements the position wage system. The annual remuneration of Senior Executives comprises
three parts, namely, the wage (the position wage and allowance), bonus, and legal welfare. The wage is decided
and monthly paid by the Board of Directors in accordance with the functions of a position and the position wage
system of the Company; the year-end bonus is decided based on the completing of annual operation targets and
work tasks laid out in the General Meeting of Shareholders, and is implemented after being approved by the
Board of Directors.
According to The Articles of Association, the remuneration of directors and supervisors is determined by the
General Meeting of Shareholders, but, at present, the Company has not implemented the remuneration system
for non-independent directors and supervisors except for independent directors. The directors and supervisors of
the Company only receive the wages corresponding to their administrative positions. In the report period, 5
incumbent directors (including independent directors), 2 incumbent supervisors (including employee
supervisors), 1 senior executive, 1 former director (including the independent director), and 2 former supervisors
(including employee supervisors) received total remuneration of RMB 3,503,200 (tax included) from the
Company. The Company shall issue RMB 100,000 (pre-tax) per year as the subsidies for independent directors
according to the resolution passed at the seventeenth General Meeting of Shareholders (2011) on April 20, 2012.
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The travel and accommodation expenses of Independent Directors due to attendance of the meetings of the
Board and the General Meeting of Shareholders as well as the expenses incurred by Independent Directors due to
exercising of their powers according to the Articles of Association are reimbursed by the Company according to
the actual expenses.
Remuneration for directors, supervisors and senior executives in the report period
Unit: RMB 10,000
Total pre-tax
Remuneration
Employment remuneration
Name Title Gender Age acquired from
Status from the
associates
Company
Wang Li Chairman Male 55 Incumbent Yes
Zhang Guangliu Director Male 54 Incumbent Yes
Cao Xiang Director Male 48 Incumbent Yes
Yu Qian Director Male 48 Incumbent Yes
Secretary of the
CPC Committee,
Liu Zhijun Male 48 Incumbent 84.38 No
Director &
General Manager
Deputy Secretary
of the CPC
Committee,
Secretary of the
Committee for
Discipline
Zheng Dan Female 51 Incumbent 71.22 No
Inspection,
Director, Vice
General Manager
& Secretary of
the Board of
Directors
Zhu Longqing Director Male 55 Incumbent No
Ye Jun Director Male 56 Former Yes
Independent
Li Luoli Male 69 Incumbent 10 No
Director
Independent
Song Pingping Female 49 Incumbent 10 No
Director
Independent
Fan Zhiqing Male 67 Incumbent 4.58 No
Director
Independent
Zhou Hanjun Male 47 Former 5.42 No
Director
Chairman of the
Xu Ning Board of Male 51 Incumbent Yes
Supervisors
Tang Chongyin Supervisor Male 56 Incumbent Yes
Liu Fusong Supervisor Male 46 Incumbent No
Employee
Ru Guiqin Female 52 Incumbent 25.89 No
Supervisor
Zhang Haifan Employee Female 43 Incumbent 14.33 No
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Supervisor
Peng Aiyun Supervisor Male 43 Former Yes
Employee
Tian Jiliang Male 50 Former 27.06 No
Supervisor
Employee
Ying Huadong Male 47 Former 26.22 No
Supervisor
Vice General
Zhu Longqing Male 55 Incumbent 71.22 No
Manager
Vice General
Bo Hongxi Male 58 Incumbent Yes
Manager
Total -- -- -- -- 350.32 --
Information on equity incentives bestowed to directors and senior executives in the report period
□ Applicable √ Not applicable
V. Information on Employees of the Company
1. Number, profession composition and education background of on-the-job employees
Number of on-the-job employees in the parent company 164
Number of on-the-job employees in the major subsidiaries 569
Total number of on-the-job employees 733
Total number of paid employees in the current period 733
Number of retired workers to whom the Company pays pension
0
benefits assumed by parent company and major subsidiaries
Profession composition
Profession composition Number of employees
Production staff 163
Sales staff 230
Technical staff 92
Financial staff 73
Administrative staff 175
Total 733
Education background
Education background Number of employees
Master 28
Bachelor 249
Junior college graduate 270
Technical secondary school (Polytechnic school) graduate 50
Senior high school (Professional high school) and below 136
Total 733
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2. Remuneration policy
Priority to effectiveness: Remuneration structure and level are related to operation performance. Rationally set
up salary differences based on value of position as well as individual performance and competence, and incline
to core positions to reflect effective incentives of remuneration.
Performance and capability orientation: Correlate remuneration adjustment and payment to organization
performance, employee performance and employee capability to reflect value of organization of individuals.
Salary varying with position: The remuneration system supports employee career development; remuneration is
strictly matched to position.
Dynamic adjustment: Based on development strategy and operation strategy as well as industrial development,
when business model and organization structure are significantly changed, organization functions and positions
change, and remuneration structure, payment and adjustment process must be dynamically adjusted for business
development.
3. Training plan
The training of the Company in 2016 focused on three key aspects:
1. The Company gave full play to advantages of the headquarters, instructed employees of the Company to
optimize working process, improve normative and professional work, enhanced their abilities to identify, analyze,
and solve problems, and developed the annual training plan of the Company, including job rotation, internal
training, and external training.
2. Benefiting from training resources of this system, the Company strengthen employee training. The Company
arranged for employees of the headquarters and subordinate enterprises to participate in certain special training
projects such as professional training on management staff, financial standardization to help employees further
enhance the comprehensive strength.
3. To make up shortcomings, the Company organized special training targeted at the existing problems.
4. Labor outsourcing
□ Applicable √ Not applicable
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Chapter 9 Corporate Governance
I. Basic information on corporate governance
(I) In the report period, the Company strictly abides by the Company Law, the Security Law, Administrative
Regulations on Listed Companies, and the Regulations on Stock Listing of Shenzhen Securities Exchange, and
relevant laws and regulations of China Securities Regulatory Commission, continuously improves the structure
for company legal person management, establishes and improves internal control system, makes further efforts
on Company management, so that the Company may further standardize its operation, increase information
disclosure, and actively engage in the management of investor relationships. As of the end of the report period,
the Company generally meets the specifications set forth in the regulation documents on listed companies as
published by China Securities Regulatory Commission. The followings are particulars on the Company's
management: The details of corporate governance of the Company are as follows:
1. Information on the Company and controlling shareholders
Controlling shareholders of the Company, exercising shareholder's rights through the General Meeting of
Shareholders, imposes rules on shareholder's behaviors in strict compliance with Administrative Regulations on
Listed Companies, the Regulations on Stock Listing of Shenzhen Securities Exchange, and the Articles of
Association of the Company. Controlling shareholders are not found to have directly intervened the Company's
business and decision-making by acting without consulting with the General Meeting of Shareholders and the
Board of Directors. The Company is capable of independent business operation, and is independent from the
controlling shareholder in respect of its business, asset, personnel, organization and finance. The Board of
Directors, the Board of Supervisors, and the internal organizations can work independently.
2. Shareholders and the General Meeting of Shareholders
The Company convened and held the General Meeting of Shareholders in strict compliance with the Guidance of
the Articles of Association and the Rules of Procedure of the Board of Directors. No proposal to hold the interim
meeting of shareholders was put forward by shareholders representing more than 10% of the Company's voting
shares in the report period, nor is there a meeting of shareholders held at the proposal of the Board of
Supervisors. In the report period, the Company complied with the Company Law and the Articles of Association
by making decisions subject to the deliberation at the general meeting of shareholders without overriding the
general meeting of shareholders or implementation before deliberation.
3. Directors and the Board of Directors
The Company elected its directors in strict compliance with the Articles of Association. The Board of Directors
comprised of 9 directors, including 3 independent directors. The number and composition of personnel in the
Board of Directors was in compliance with laws and regulations. The Board of Directors had three special
committees under its management. The Board of Directors conscientiously fulfilled its obligations in strict
compliance with the Articles of Association, Regulations on Work of Independent Directors, and the Rules of
Procedure of the Board of Directors. All directors of the Company attended the meeting of directors and general
meeting of shareholders, and actively took part in relevant trainings, and studies relevant laws and regulations.
Independent directors protected the overall interests of the Company by performing their obligations in an
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independent manner, and by paying special attention to the lawful interests of medium and small shareholders.
Also, independent directors expressed their independent opinions on matters of importance and significance.
4. Supervisors and the Board of Supervisors
The Company elected supervisors in strict compliance with the Company Law and the Articles of Association.
The number and composition of the Board of Supervisors complied with laws and regulations. The Company
formulated Rules of Procedure of the Board of Supervisors; the eligibility and election of supervisors complied
with regulations. All supervisors of the Company attended the meeting of supervisors, and reviewed the regular
reports prepared by the Board of Directors and gave written opinions by attending the general meeting of
shareholders as non-voting members, attending the meeting of the Board of Directors and holding the meeting of
the Board of Supervisors. The supervisors were effective at supervising matters of importance, connected
transactions and finance status of the Company, and at overseeing the legality and regulation compliance of the
Company's directors and senior executives in performing their duties.
5. Management
The management of the Company performs duties strictly according to provisions of the Articles of Association,
carries out resolutions of the Board of Directors, and does not act beyond its authority. Matters beyond the
authority of the management are submitted to the Board of Directors for review. There is no tendency of "insider
control". The management is diligent and dedicated to work, strengthens normative operation with honesty
during daily operation, and does not unfaithfully perform duties or breach faith.
6. Information disclosure and transparency
The Company designates the works on information disclosure, shareholder visitation and consultation reception
to the Secretary's Office of Board of Directors of the Company in strict compliance with the Management
Methods for Disclosure of Information and the System on Investor Relationship Management. The Company
appoints China Securities Journal, Securities Times, Securities Daily, Hong Kong Commercial Daily, and the
Cninfo Website as the newspapers and website on which the Company discloses its information. In the report
period, the Company published 116 public announcements in total, disclosing information on the Company's
business activities and major issues in a truthful, accurate, complete and timely manner. The Company imposed
strict, sufficient and effective internal control on information disclosure without violating regulations of relevant
supervisory organs. In the future, the Company will further strengthen communication and information exchange
with the supervisory organs by pro-actively reporting Company issues and by having a better understanding of
disclosure requirements.
(II) Non-compliance in the report period
1. The controlling shareholders exert the "Property Right Representatives Report System" for managing the
Company. The Company's controlling shareholder SEG Group is a state-controlled corporation in Shenzhen and
Shenzhen State-owned Assets Supervision and Administration Bureau is 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 the respect of personnel rating, our controlling shareholder SEG Group evaluates the annual operation
performance of the general manager based on the accomplishment of indexes of its annual operation plan and
other indexes.
3. The company reports the non-public information to the major shareholders and the actual controllers.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
The company reports the non-public information to the major shareholders and the actual controls based on the
property right representative reporting system and requirements of the national statistical departments. In
accordance with the requirements of state-owned assets supervision department, the Company has been
submitting monthly flash reports to the majority shareholder and the actual controller and reporting important
issues to the majority shareholder and the actual controller before they are disclosed. The Company submitted
the Undisclosed Information Provided by Listed Companies for the Majority Shareholder or Actual Controller
and Letter of Commitment to Shenzhen Securities Regulatory Bureau on October 18, 2007. SEG Group offered
the Letter of Commitment on Strengthening Management of Undisclosed Information to Shenzhen Securities
Regulatory Bureau. Meanwhile, the Company has established and implemented the Non-public Information
Insider Reporting System and the Confidentiality System of Shenzhen SEG Co., Ltd for Insiders of Non-public
Information and has monthly reported to Shenzhen Securities Regulatory Bureau about its reports of
unpublicized information. Senior executives and all employees at the headquarters signed a “Confidentiality
Agreement” with the Company on July 15, 2009. The “Confidentiality Agreement” clearly stipulates that all
employees are obligated to hold confidential the business secrets and undisclosed information of the Company.
The unpublicized information the Company offered to the Company's majority shareholder and actual controller
in the report period is as follows:
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
The invested corporation of
the Company and the The document Notice
financial staff at the about Formulation of the
The flash
Headquarters prepare the Monthly Flash Report of
report of main
report and consolidate the Enterprises Supervised Approved
financial
Controlling statements, which are by Stated-owned Assets by the
1 SEG Group indicators of Monthly
shareholder reviewed by the leadership Supervision and Board of
the Company
of the Financial Administration Directors
registered in
Department and reported Commission of the State
Shenzhen
through the State-owned Council (SASAC [2003]
Asset Management 23)
Information System.
The invested corporation of The document Notice
the Company and the about Formulation of the
financial staff at the Monthly Flash Report of
Summary sheet
Headquarters prepare the Enterprises Supervised Approved
of
Controlling sheet and consolidate the by Stated-owned Assets by the
2 SEG Group implementation Monthly
shareholder statements, which are Supervision and Board of
of monthly
reported through the Administration Directors
expense budget
State-owned Asset Commission of the State
Management Information Council (SASAC [2003]
System. 23)
Controlling Summary sheet The invested corporation of The document Notice Approved
3 SEG Group Monthly
shareholder of monthly the Company and the about Formulation of the by the
130
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
cash flow financial staff at the Monthly Flash Report of Board of
Headquarters prepare the Enterprises Supervised Directors
sheet and consolidate the by Stated-owned Assets
statements, which are Supervision and
reported through the Administration
State-owned Asset Commission of the State
Management Information Council (SASAC [2003]
System. 23)
The document Notice
about Formulation of the
The financial personnel at Monthly Flash Report of
Summary sheet
the Headquarters prepare Enterprises Supervised Approved
of deposits,
Controlling the sheet that is reported by Stated-owned Assets by the
4 SEG Group financing, and Quarterly
shareholder through the State-owned Supervision and Board of
loans of the
Asset Management Administration Directors
Headquarters
Information System. Commission of the State
Council (SASAC [2003]
23)
The invested corporation of The document Notice
Summary sheet the Company and the about Formulation of the
of quarterly financial staff at the Monthly Flash Report of
non-operating Headquarters prepare the Enterprises Supervised Approved
Controlling gains and sheet and consolidate the by Stated-owned Assets by the
5 SEG Group Quarterly
shareholder losses of the statements, which are Supervision and Board of
Company reported through the Administration Directors
registered in State-owned Asset Commission of the State
Shenzhen Management Information Council (SASAC [2003]
System. 23)
It has been reported since
June 2009. The document Notice
Summary sheet The invested corporation of about Formulation of the
of quarterly the Company and the Monthly Flash Report of
information on financial staff at the Enterprises Supervised Approved
Controlling investment Headquarters prepare the by Stated-owned Assets by the
6 SEG Group Quarterly
shareholder properties of sheet and consolidate the Supervision and Board of
the Company statements, which are Administration Directors
registered in reported through the Commission of the State
Shenzhen State-owned Asset Council (SASAC [2003]
Management Information 23)
System.
Controlling Monthly They should be reported The Notice of Shenzhen Approved
7 SEG Group Monthly
shareholder consolidated every month after being SEG Co., Ltd on by the
131
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Relationship
Organization
between the Time or Procedure
to which Type of
No. organization Procedure of report period Basis for report of
information information
and the of report approval
is reported
Company
statements printed, signed and sealed Submitting of Monthly Board of
(including the and reported every quarter Statements issued by Directors
Balance Sheet, through the State-owned Shenzhen SEG Group
the Profit Asset Management Co., Ltd.
Statement, the Information System. They
Cash Flow have been reported on line
Statement, the from July 2008.
Notes to
Preparation of
the Statements
and the
Financial
Statements)
Controlling It was provided by
SEG Group
shareholder Article Three of the
Statistics Law of the
People's Republic of
China that state organs,
social organizations,
corporations, public
institutions and privately
or individually owned
businesses, on which
Statistical statistical survey is
survey on the implemented, must
statements or comply with the
monthly and Statistics Law of P. R. Approved
Monthly
annual reports China and the by the
8 Shenzhen Sealed by the Company and
Government of the regulations of the state Board of
Statistics annually
branch production of and provide statistical Directors
Bureau electronics data faithfully but not
information make a false report,
industry 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
132
Full Text of 2016 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
the state.
The document Notice
about Formulation of the
Monthly Flash Report of
Enterprises Supervised Approved
Summary sheet
Controlling by Stated-owned Assets by the
9 SEG Group of quarterly Sealed by the Company Quarterly
shareholder Supervision and Board of
financial assets
Administration Directors
Commission of the State
Council (SASAC [2003]
23)
The hard copy of the
The Board
Register of top official website of Requirements from 2015
of
Shenzhen Actual 100 A and B Shenzhen Branch of China Shenzhen state-owned
10 Quarterly Directors
SASAC controller shareholders in Securities Depository and enterprise capital
agrees to
2016 Clearing Corporation operation meeting
report.
Limited
Is there any significant variance between the actual governance of the Company and normative documents on
listed companies released by China Securities Regulatory Commission?
□ Yes √ No
There is no significant variance between the actual governance of the Company and normative documents on
listed companies released by China Securities Regulatory Commission.
II. Description about the Company's independence from controlling shareholders in terms of
business, personnel, asset, organization and finance
The controlling shareholders of the Company execute rights of contributors through the general meeting and do
not interfere in decision-making and operating activities of the Company in ways other than exercise of the rights
of making motions and voting. The Board of Directors, Board of Supervisors, and internal management organs
operate independently. The Company has basically achieved independence from controlling shareholders in
respect of business, personnel, assets, organs, and finance.
(I) In the aspect of business, Shenzhen Securities Regulatory Bureau pointed out that there was horizontal
competition between the Company and SEG Group in regard to the electronics market business. The Company
received a written commitment letter from SEG Group on September 14, 2007, saying "We have similar business
to Shenzhen SEG Co., Ltd. (hereinafter referred to as Shenzhen SEG) in regard to the electronics market of
Shenzhen because of historical reasons with an objective market development background. We hereby promise
that we will not individually operate a market in a same city whose business is similar with that of Shenzhen
SEG. The aforesaid matter was disclosed on Securities Times, China Securities Journal and Hong Kong Wen Wei
Po and the Cninfo Website on September 18, 2007. In order to solve the issue of horizontal competition between
133
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
the Company and its controlling shareholder, SEG Group, due to historical reasons, the 6th temporary meeting of
the 5th Board of Directors held on January 26, 2011 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 income right of SEG Communications Market and assumes all
creditor's rights and liabilities occurring during the operation of SEG Communications Market. (2) The
management representative from the Company shall operate and management SEG Communications Market
during the period of entrustment operation and management, who has a sufficient authority in operation and
management of SEG Communications Market. (3) In accordance with the provisions of the Company on
entrustment management of the electronics market and with full consideration to the maturity of the entrusted
market and whether the market is located in a primary business area, the Company shall collect from SEG Group
the management fee and profit fee as follows based on the market sound value: the total income of SEG
Communications Market in 2010, RMB 20,000,000 Yuan, shall be regarded as the base number; the Company
shall collect a management fee of RMB 200,000 Yuan should the total income of the market in the current year is
equal to or less than RMB 20,000,000 Yuan; the Company shall take 20% from the part beyond the base number
apart from the management fee that is RMB 200,000 Yuan should the total income in the current year exceed
RMB 20,000,000 Yuan. The detailed information about the above-mentioned matter may be referred to in the
Public Notice on Shenzhen SEG Co., Ltd on the Connected Transaction for the Purpose of Solving the Issue of
Horizontal Competition between the Company and the Controlling Shareholder that was disclosed on the China
Securities Journal, the Securities Times, the Hong Kong Commercial Daily and the Cninfo Website on January
28, 2011. Till the disclosure date of this report, the Company had received the timely payment of the
management fee of 2011-2016, RMB 200,000 Yuan, from SEG Group.
In the report period, the Company actively promoted major assets restructuring and reduced horizontal
competition to the largest extent. After major assets restructuring, the majority of property assets of the
controlling shareholder SEG Group, which are engaged in the operation of the electronics market, have been
injected into the Company. However, the information registered in the proprietorship certificate is inconsistent
with the actual ownership. Some property assets are owned by other external actual proprietors not included in
the real estate proprietorship certificate or have no proprietorship certificate. These problems cannot be resolved
in the short term. The company will take all necessary measures to address flaws of such properties.
To eliminate the remaining small-scale horizontal competition with the Company, SEG Group made a
commitment to reduce horizontal competition on February 3, 2016 and supplemented the commitment on
February 19, 2016. For details, see Section 5 - III. Fulfillment of Commitments.
In the report period, SEG Group and SegMaker (a wholly-owned subsidiary of the Company now) entered into
the House Lease Contract. SEG Group leased 61 properties without proprietorship certificates to SegMaker at
the rent of RMB 653,000 per month, which was also an effective way to eliminate the remaining horizontal
competition between the parties.
(II) In respect of personnel, the Company's Senior Executives including General Manager, Vice General
Manager and Secretary of the Board of Directors take full-time posts; they receive wages from the Company and
do not take concurrent posts in the Company's first majority shareholder enterprise; the Company has a complete
management system for labor, human resources and wages, which can keep the independence of the personnel.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
(III) In respect of assets, at the beginning of the Company's establishment, the equity of the eight enterprises
separated from SEG Group to the Company was already audited and evaluated by domestic and overseas
accounting firms, which was acknowledged by the state-owned assets management departments of the state and
Shenzhen Municipality. The controlling shareholder of the eight enterprises was changed from SEG Group to the
Company, which was registered at the Industrial and Commercial Administration. The Company independently
makes registration, establishes accounts, and implements accounting and management so as to maintain the
completeness and independence of the assets. According to the Article Five of the Equity Transfer Agreement
signed by the Company with SEG Group when the Company was listed, SEG Group agreed that the Company
and its subsidiaries and associated companies to use the eight trademarks registered by SEG Group at the
National Trademark Bureau; SEG Group agreed that the Company used the aforesaid trademarks or similar signs
as the Company's logo and used the trademarks and signs during its operation; the Company need not pay any
fee to SEG Group for using the aforesaid trademarks or signs.
(IV) In respect of organization, the Company has set up organizations and arranged corresponding personnel
fully in accordance with its own demand of operation and management; its production and administrative
departments are totally independent from the majority shareholder.
(V) In respect of finance, as a legal entity that implements independent operation and accounting and assumes
sole responsibility for its profits and losses, the Company has set up an independent financial and 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.
III. Horizontal Competition
□ Applicable √ Not applicable
IV. Annual meeting of shareholders and interim meeting of shareholders held in the report
period
1. Annual general meeting of shareholders in the report period
Percentage of
Meeting No. Meeting Type Date Disclosure Date Disclosure Index
Investor Participation
http://www.cninfo.com.cn
21st General Annual general Announcement about
Meeting of meeting of 31.05% April 21, 2016 April 22, 2016 Resolutions of the 21st Meeting
Shareholders (2015) shareholders of Shareholders (2015) of
Shenzhen SEG Co., Ltd.
http://www.cninfo.com.cn
First Interim Announcement about
Interim general
Meeting of Resolutions of the First Interim
meeting of 30.77% July 15, 2016 July 16, 2016
Shareholders in General Meeting of
shareholders Shareholders (2016) of Shenzhen
2016 SEG Co., Ltd.
http://www.cninfo.com.cn
Second Interim Interim general Announcement about
Meeting of September 2, September 3, Resolutions of the Second
meeting of 32.73%
Shareholders in 2016 2016 Interim General Meeting of
2016 shareholders Shareholders (2016) of Shenzhen
SEG Co., Ltd.
135
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
http://www.cninfo.com.cn
Third Interim Interim general Announcement about
Meeting of October 18, October 19, 2016 Resolutions of the Third Interim
meeting of 30.78%
Shareholders in 2016 General Meeting of
2016 shareholders Shareholders (2016) of Shenzhen
SEG Co., Ltd.
http://www.cninfo.com.cn
Fourth Interim Interim general Announcement about
Meeting of November 30, Resolutions of the Fourth
meeting of 30.68% December 1, 2016
Shareholders in 2016 Interim General Meeting of
2016 shareholders Shareholders (2016) of Shenzhen
SEG Co., Ltd.
2. Preferred shareholders restored with the voting rights proposed to hold interim general meeting of
shareholders
□ Applicable √ Not applicable
V. Performance of independent directors in the report 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 attend
Number of Times of
Attendances Times of the meeting in
Name of independent meetings to be entrusted
through entrusted Times of absence person in two
director attended in the personal
communication presence consecutive
report period presence
times
Zhou Hanjun 10 2 8 0 0 No
Li Luoli 24 5 18 1 0 No
Song Pingping 24 6 18 0 0 No
Fan Zhiqing 14 4 10 0 0
Times for independent directors to
attend the general meeting of 4
shareholders
Explanation for failure to attend the meeting of the Board of Directors for two consecutive times
Not applicable
2. Objections raised by independent directors against relevant matters of the Company
Have independent directors raised objections against relevant matters of the Company
□ Yes √ No
Independent directors have not raised any objection against relevant matters of the Company in the report period.
3. Other descriptions about the performance of independent directors
Do independent directors accept proposals of the Company?
√ Yes □ No
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Explanation of independent directors for proposals accepted or unaccepted
In the report period, the Board of Directors of the Company held a general election. The term of independent
directors of the 6th Board of Directors including Zhou Hanjun, Li Luoli, and Song Pingping expired, and
independent directors of the 6th Board of Directors including Fan Zhiqing, Li Luoli, and Song Pingping was
elected at the first extraordinary general meeting (2016) of the Company on July 15, 2016. Four independent
directors of two Boards of Directors have adequately exercised powers specified by national regulations and the
Articles of Association, given play to professional expertise, fulfilled their obligations with reasonable care and
diligence, promoted scientific decisions and decision-making process of the Board of Directors, and protected
the overall interests of the Company, particularly legal rights and interests of small and medium-sized
shareholders.
(I) They attended the meeting of the Board of Directors on time, and actively fulfilled obligations of independent
directors. Independent directors deeply understood and investigated resolutions deliberated on by the Board of
Directors, actively participated in discussions, and gave rational suggestions. Besides, they always paid attention
to important matters of the Company, independently fulfilled obligations without being affected by controlling
shareholders, actual controllers or units or individuals having interest in the Company and its controlling
shareholders or actual controllers, objectively and cautiously deliberated on self-evaluation reports on connected
transactions, financial aid and internal control, expressed independent opinions and fulfilled the obligation of
supervision.
(II) They acooperated with the professional committees of the Board of Directors. Independent directors were
members of Development Strategy Committee, Audit Committee and Wage and Assessment Committee of the
Board of Directors. In compliance with the working rules of the professional committees, they actively
participated in daily work of the committees, gave professional opinions and suggestions on the Company
development planning, feasibility study of major projects, and major assets restructuring, and supported
scientific and cautious decision making of the Board of Directors.
(III) They paid attention to internal control of the Company. Independent directors communicated repeatedly
with the management and relevant departments over construction and evaluation of the internal control system,
and gave suggestions based on their professional experience. In this way, they played the role of supervisors,
supervised and urged the Company to continuously perfect corporate management structure, perfect the internal
control system, continuously and deeply carry out corporate management activities and improve normalized
operation.
(IV) They deeply understood the Company. In 2016, independent directors took advantage of the Company
meetings and specially took time to conduct field investigation of the Company and its investors to deeply
understand the Company's daily operation and project construction. Meanwhile, independent directors kept in
close touch with other directors, senior executives and personnel by means of phone and e-mails, always paid
attention to influences of changes of external environment and market on the Company, and timely understood
the progress of important matters of the Company. In addition, independent directors always paid attention to
information disclosure, supervised and check such disclosure, and ensure fair and timely disclosure of the
Company information so that public shareholders could be timely updated about the development of the
Company.
(V) Proposals raised by independent directors in regard to normalized development and the adoption of
proposals
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Proposal raised by Proposal content Form Adoption status
Zhou Hanjun, Song Pingping, Li Advice on Company major assets restructuring and
Oral Adopted
Luoli and Fan Zhiqing working implementation
Fan Zhiqing, Song Pingping and Li Advice on Emerging strategic cooperation business
Oral Adopted
Luoli
Fan Zhiqing, Song Pingping and Li Advice on project management and operation of
Nantong SEG Times Plaza Oral Adopted
Luoli
Advice on available capital operation modes for the
Song Pingping and Fan Zhiqing Company Oral Adopted
(VI) Independent directors' on-the-spot work, on-the-spot inspection, time and specific information
Name of Work location Work time On-the-spot inspection
independent
director
Zhou Hanjun Meeting room of the April 17, 2016, Ask the Office of the Secretary to the Chairman about the
Company 15:00-16:00 pm subsequent progress of major assets restructuring and offer
opinions and suggestions.
Li Luoli Meeting room of the April 18, 2016, Ask the Office of the Secretary to the Chairman about the
Company 15:00-16:00 pm subsequent progress of major assets restructuring and offer
opinions and suggestions.
Meeting room of the August 4, 2016, Ask the Finance and Asset Management Department about the
Company 11:30-12:00 am operating result of the first half of the year.
Meeting room of the November 15, 2016, Ask about the operating condition of Nantong SEG Times Plaza
Company 15:00-17:00 pm after opening and offer opinions and suggestions.
Song Pingping Meeting room of the April 18, 2016, Ask the Office of the Secretary to the Chairman about the
Company 15:00-16:00 pm subsequent progress of major assets restructuring and offer
opinions and suggestions.
Meeting room of the August 1, 2016, Ask the Finance and Asset Management Department about the
Company 11:30-12:00 am operating result of the first half of the year.
Meeting room of the November 10, 2016, Ask the Office of the Secretary to the Chairman about the current
Company 9:00-10:00 am status and future prospects of the CdTe film solar cell industry.
Meeting room of the November 14, 2016, Ask about the operating condition of Nantong SEG Times Plaza
Company 15:00-17:00 pm after opening and offer opinions and suggestions.
Fan Zhiqing Meeting room of the August 4, 2016, Ask the Finance and Asset Management Department about the
Company 11:30-12:00 am operating result of the first half of the year.
Meeting room of the November 18, 2016, Ask about the operating condition of Nantong SEG Times Plaza
Company 15:00-17:00 pm after opening and offer opinions and suggestions.
VI. Performance of duties by special committees of the Board of Directors
In the report period, the Audit Committee, Wage and Assessment Committee, and Development Strategy
Committee under the Board of Supervisors conscientiously performed their duties in compliance with the Code
of Corporate Governance for Listed Companies, the Articles of Association, the Rules of Procedure of the Board
of Directors, and functions, powers and obligations conferred by implementation rules of the special committees.
(I) Performance of duties by the Audit Committee of the Board of Directors
In accordance with the requirements of the Working Rules of the Audit Committee of Shenzhen SEG Co., Ltd and
the Working Procedures of the Audit Committee of Shenzhen SEG Co., Ltd for the Annual Report, the Audit
Committee, in the report 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 2016 Financial Statements of the Company
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
In the report 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 accounting standard and based on the actual conditions of the Company; the
financial statements prepared by the Company truthfully reflected the financial status of the Company as of
December 31, 2016 and the operating results and cash flow of the Company in 2016. The Committee approved
the use of these financial statements as the basis for implementation of the audit work for 2016.
(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 2016 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 2016 Annual Report and Report
Summary.
2. Supervision on and impelling over the audit work of the accounting firm
After consultation with Dahua Certified Public Accountants Co., Ltd., the auditing institution of 2016, the
arrangement for the 2016 auditing was decided by the Company in December 2016, 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
main responsible person of the project, the CPA whose signature was provided and relevant personnel got known
about the progress of the audit and the issues concerned about by the CPA, and reported the progress and the
issues to relevant department of the Company in time.
3. The work summary of the Audit Committee for the 2016 auditing conducted by Dahua Certified Public
Accountants Co., Ltd.
In order to conduct timely and accurate audit on the financial status and business results of 2016 of the Company,
Dahua Certified Public Accountants Co., Ltd. carried out preliminary investigation and pre-auditing in December
2016, and completed the audit work in March 2017.
The audit committee exchanged ideas with the CPAs on December 30, 2016, and continued the communication
during audit. Also, the audit committee reviewed the draft of the annual audit report issued by the CPAs. The
Audit Committee believed that the CPA could perform his duty in strict accordance with auditing laws,
regulations and principles, focused on the Company's operating environment, understood the establishment,
improvement and implementation of the internal control system of the Company, had a strong awareness of risks,
and could finish the audit work in time in accordance with the arranged audit schedule. The CPA was capable of
being independent and discreet, well finished the auditing on the Financial Statements and internal control of the
Company for the Year 2016, and issued an objective and fair audit report.
4. The Audit Committee implemented supervision and inspection on the establishment and improvement of the
internal control system and the defect rectification status, and listened to the report about the establishment of the
internal control standardization system.
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Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
5. Two meetings were held by the Audit Committee of the Board of Directors in the report period and the details
were as follows:
(1) At the first meeting of 2016 held by means of voting communication on March 18, 2016, the Audit
Committee of the Company reviewed and approved the Work Summary for 2015 and Work Plan for 2016 of the
Audit Committee, Opinions of the Audit Committee on 2015 Financial Statements, Proposal on Further
Employment of the Audit Institution for 2016 Annual Financial Report and Payment of the Audit Expense,
Proposal on Employment of the Audit Institution for 2016 Internal Control and Payment of the Audit Expense,
and Summary of the Audit Committee on 2015 Audit Work of Da Hua Certified Public Accountants (Special
General Partnership).
(2) At the second meeting of 2016 held by means of voting communication on December 30, 2016, the Audit
Committee of the Company reviewed and approved the Audit Work Plan and Communication Report of the Audit
Committee of 2016 of Shenzhen SEG Co., Ltd.
(II) Performance of duties by the Wage and Assessment Committee of the Board of Directors
The review opinion of the Wage and Assessment Committee on the disclosed remuneration of the present
directors, supervisors and senior executives of the Company: Liu Zhijun (general manager & finance chief),
Zheng Dan (director, vice general manager & secretary of the board of directors), Zhu Longqing (vice general
manager), Tian Jiliang (former supervisor), Ying Huadong (former supervisor), Ru Guiqin (supervisor), and
Zhang Haifan (supervisor) only received the wages corresponding to their respective administrative positions;
independent directors including Zhou Hanjun, Li Luoli, Song Pingping, and Fan Zhiqing received allowances for
independent directors; other directors and supervisors did not receive wages from the Company. The Company
has not implemented the remuneration system for non-independent directors and supervisors.
Two meetings were held by the Wage and Assessment Committee of the Board of Directors in the report period
and the details were as follows:
1. At the first meeting of 2016 held by means of communication on March 24, 2016, the Wage and Assessment
Committee of the Company reviewed and approved the Proposal of Shenzhen SEG Co., Ltd. on the
Implementation of 2015 Budget for Directors, Supervisors, and Senior Executives.
2. At the second meeting of 2016 held at the meeting room of the Company on December 31, 2016, the Wage
and Assessment Committee of the Company reviewed and approved the Proposal of Shenzhen SEG Co., Ltd. on
2017 Budget for Directors, Supervisors, and Senior Executives.
(V) Performance of duties by the Development Strategy Committee of the Board of Directors
Two meetings were held in the report period by the Development Strategy Committee of the Board of Directors
and the details were as follows:
1. At the first meeting of 2016 held by means of communication on August 1, 2016, the Development Strategy
Committee of the Company reviewed and approved the Proposal on Shenzhen SEG Co., Ltd.'s Share Issuance
and Cash Payment to Acquire Assets and Raise Supporting Funds & Connected Transaction (Draft) and the
Abstract. Committee members discussed issues related to major assets restructuring of the Company and offered
opinions and suggestions.
2. At the second meeting of 2016 at the meeting room of the Company on December 30, 2016, the Development
Strategy Committee of the Company reviewed and approved the Rolling Business Plan for 2017-2019 of
Shenzhen SEG Co., Ltd.
140
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
VII. Performance of the Board of Supervisors
Has the Board of Supervisors found any risk in the Company during supervision in the report period?
□ Yes √ No
The Board of Supervisors raised no objections against the supervised matters in the report period.
VIII. Assessment and incentive system for senior executives
Principles on performance management of senior executives of the Company
(I) Target management principle: the target management over senior executives is carried out in light of
enterprise annual target and enterprise management requirements.
(II) Categorized assessment principle: categorized assessment is carried out in accordance with the industry
engaged in by the enterprise and the industrial characteristics.
(III) The principle of coupling incentives with restrictions: senior executives were rewarded or punished in
accordance with the completion of annual targets, and the assessment system is carried out where incentives are
coupled with restrictions.
IX. Internal control
1. Information about the major defects discovered in the report period in the internal control
self-assessment report
□ Yes √ No
2. Internal Control Self-assessment Report
Disclosure date of the internal control
April 18, 2017
self-assessment report
Disclosure index of the internal control
Cninfo Website: http://www.cninfo.com.cn
self-assessment report
Proportion of total assets of enterprises
included in the assessment scope to total
99.37%
assets in the consolidated financial
statement of the Company
Proportion of operating income of
enterprises included in the assessment
scope to operating income in the 99.13%
consolidated financial statement of the
Company
Defect Identification Standard
Category Financial Statements Non-financial statements
Major defect: malpractice by directors, Major defects: extremely negative
supervisors and senior executives; correction impact due to the lack of scientific
to major errors in published financial report; decision-making procedures, the
Qualitative standards current financial report included major intended result being in contrary to the
faults, and internal control failed to detect result achieved, or extremely low
such faults in the process; the internal decision-making efficiency, rendering the
control and supervision by the Audit Company impossible to grasp market
141
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Committee and Internal Audit Division on opportunities; major miscalculation due
the internal control of the financial report is to the Company's decision-making
invalid. procedures; the Company is given
Important defects: failure in selecting and warnings from the securities agency or
applying accounting policies according to the securities exchange; serious loss of
publicly recognized accounting standards; medium and high level management and
failure in establishing anti-malpractice senior technical staff; frequent negative
procedures and control measures; failure in news on media, with widespread
establishing corresponding control negative influence and long-term impact;
mechanism or implementing corresponding lack of systematic control over major
compensatory control on non-conventional business or failure of the system; failure
or special transaction accounting treatments; in correcting major or significant internal
one or more defects in the process of control defects of the Company.
controlling closing financial report, and Important defects: serious negative
failure in ensuring the truthfulness and impact due to a lack of scientific
accuracy of the financial statements decision-making procedure, the result
prepared. achieved is far from the intended target,
or the decision-making efficiently is very
low, with frequent cases where market
opportunities are lost; general
miscalculation in the Company's
decision-making procedures; failure in
correcting important or general defects in
the Company's internal control; serious
loss of personnel in important positions;
regional impact of negative news on
media; defects in institution or system
for important business.
Major defects: satisfying one or more
conditions as follows: erroneous reporting ≥
10% of total profit; erroneous reporting ≥
1% of total asset; erroneous reporting ≥ 2%
of business income; erroneous reporting ≥
Major defects: absolute value of direct
1% of owner's equity.
property loss ≥ 10% of total profit.
Important defects: satisfying one or more
Quantitative standards Important defects: absolute value of
conditions as follows: 5% of total profit ≤
direct property loss ≥ 5% of total profit
erroneous reporting < 10% of total profit;
but <10% of total profit.
0.5% of total assets ≤ erroneous reporting <
1% of total asset; 1% of business income ≤
erroneous reporting < 2% of total business
income; 0.5% of owner's equity ≤ erroneous
reporting < 1% of owner's equity.
Number of major defects in financial report 0
Number of major defects in non-financial
0
report
Number of important defects in financial
1
report
142
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Number of important defects in financial
0
report
X. Internal Control Audit Report
√ Applicable □ Not applicable
Opinion paragraph in the internal control audit report
Da Hua Certified Public Accountants thinks that the Company has maintained effective internal financial control in every major
aspect in accordance with the Basic Standard for Enterprise Internal Control and relevant rules and regulations on December 31,
2016.
Disclosure on internal audit report Disclosure
Disclosure date of the internal
April 18, 2017
control audit report
Disclosure index of the internal Cninfo Website: http://www.cninfo.com.cn
control audit report Announcement about Internal Control Report (2016) of Shenzhen SEG Co., Ltd.
Type of advice on disclosure on
Standard unqualified opinion
internal audit report
Whether or not major defects exist
No
in non-financial report
Does the accounting firm provide the internal control audit report with a modified opinion?
□ 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
Chapter 10 Corporate Bonds
Has the Company issued and listed on the stock exchange corporate bonds that are not due or due but cannot be
repaid in full on the approved release data of the annual report?
No.
143
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Chapter 11 Financial Report
I. Audit Report
Type of auditor's opinion Standard unqualified opinion
Signing date of Audit Report April 14, 2017
Da Hua Certified Public Accountants (Special General
Name of audit firm
Partnership)
Audit Report Document No. Da Hua Shen Zi [2017] No. 003898
144
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
145
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Shenzhen SEG Co., Ltd.
Audit Report and Financial Statements
From January 1, 2016 to December 31, 2016
CONTENTS Page
I. Audit Report 121-122
II. Financial Statements 122-140
Consolidated Balance Sheet
Consolidated Profit Statement
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Owners' Equity
Balance Sheet of the Parent Company
Profit Statement of the Parent Company
Cash Flow Statement of the Parent Company
Statement on Changes of Owners' Equity of the Parent
Company
Notes to the Financial Statements 141-218
146
I. Audit Report
D. H. S. Zi. [2017] No. 003898
To: All shareholders of Shenzhen SEG Co., Ltd.,
We have audited the attached Financial Statements of Shenzhen SEG Co., Ltd (hereinafter referred to as "SEG
Corporation"), including the Consolidated Balance Sheet and the Balance Sheet of the Parent Company as of
December 31, 2016 as well as the Consolidated Profit Statement, the Profit Statement of the Parent Company,
the Consolidated Cash Flow Statement, the Cash Flow Statement of the Parent Company, the Consolidated
Statement of Changes in Owners' Equity, the Statement of Changes in Owners' Equity of the Parent Company
and the Notes to Financial Statements for the year 2016.
1. Responsibilities of the management to financial statements
It is the responsibility of the management of SEG Corporation to prepare and fairly present financial statements,
which includes: (1) preparing financial statements in accordance with the provisions of the Accounting Standard
for Business Enterprises and making the statements fairly reflect the financial status of the Company; (2)
designing, implementing and maintaining necessary internal control in order to avoid major misstatements
resulting from fraud, malpractice, mistakes or errors.
2. CPA's responsibility
Our responsibility is to express opinions on these financial statements on the basis of the implementation of
auditing work. We have conducted our audit in accordance with the provisions in the Auditing Standards for
Chinese Certified Public Accountants. The Auditing Standards for Chinese Certified Public Accountants require
that we observe the professional ethics and regulations, plan and perform the audit to obtain reasonable
assurance about whether these financial statements are free of misstatements.
The audit involves the implementation of an audit procedure to obtain the auditing evidences supporting the
amounts in the financial statements and relevant disclosure. The selection of the auditing procedure depends on
the judgment of the CPA, including the estimation to the risks on material misstatements in the financial
statements resulting from malpractice or mistakes and errors. During the process of risk assessment, we took into
account the internal control related to the 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
expressing auditor's opinions.
3. Auditor's opinion
147
We believe that the Financial Statements of SEG Corporation 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 status as of December 31, 2016 as well as the consolidated and
the parent company's operating results and cash flows for the year 2016.
Da Hua Certified Public Accountants (Special
Certified Public Accountant: Zhang Xing
General Partnership)
Beijing, China
Certified Public Accountant: Zhang Chaocheng
April 14, 2017
148
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II. Financial statements
The unit in the notes to the financial statements is RMB Yuan.
1. Consolidated Balance Sheet
Prepared by: Shenzhen SEG Co., Ltd.
December 31, 2016
Unit: Yuan
Item Closing balance Opening balance
Current assets:
Monetary funds 183,094,815.84 276,863,429.10
Deposit reservation for balance
Loans to other banks 40,000,000.00 40,000,000.00
Financial assets measured by fair value with
changes included in current profit and loss
Derivative financial assets
Notes receivable 100,792.00
Accounts receivable 50,870,545.72 98,212,422.87
Prepayment 47,387,004.02 129,044,887.26
Premiums receivable
Reinsurance accounts receivable
Reinsurance deposit receivable
Interest receivable
Dividends receivable
Other accounts receivable 63,183,612.96 27,352,784.33
Redemptory monetary capital for resale
Inventory 602,098,738.92 450,809,934.72
Held-for-sale assets
Non-current assets due within one year
Other current assets 268,069,887.58 339,430,419.74
Total current assets 1,254,805,397.04 1,361,713,878.02
Non-current assets:
Loans and prepayment issued 480,405,158.45 475,520,822.08
Available-for-sale financial assets 34,478,683.41 34,539,973.24
Held-to-maturity investment
Long-term receivables
Long-term equity investment 183,649,044.67 185,122,573.88
Investment properties 425,169,768.62 443,851,726.40
149
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Item Closing balance Opening balance
Fixed assets 39,181,793.82 37,524,425.25
Construction in progress 140,810.00
Engineering materials
Disposal of fixed assets
Productive biological assets
Oil & gas assets
Intangible assets 1,251,991.68 1,143,762.11
Development expenses
Goodwill 10,328,927.82 10,328,927.82
Long-term expenses to be amortized 94,320,491.68 49,235,999.86
Deferred income tax assets 10,880,347.67 10,433,814.57
Other non-current assets 13,804,660.46 5,103,811.14
Total non-current assets 1,293,470,868.28 1,252,946,646.35
Total assets 2,548,276,265.32 2,614,660,524.37
Current liabilities:
Short-term borrowing 355,000,000.00 367,759,630.48
Loans from central bank
Deposits from customers and interbank
Loans from other banks
Financial liabilities measured by fair value with
changes included in current profit and loss
Derivative financial liabilities
Notes payable
Accounts payable 20,282,611.08 89,908,781.98
Prepayment from customers 116,529,761.27 190,430,121.05
Financial assets sold for repurchase
Service charges and commissions payable
Payroll payable 16,817,256.46 21,849,134.16
Taxes payable 46,917,032.07 34,645,030.07
Interest payable 475,177.74 516,758.34
Dividends payable 17,019,185.19 2,218,224.58
Other payables 190,643,502.25 194,329,885.69
Reinsurance accounts payable
Insurance deposit
Customer brokerage deposits
Securities underwriting brokerage deposits
Held-for-sale liabilities
150
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Item Closing balance Opening balance
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 763,684,526.06 901,657,566.35
Non-current liabilities:
Long-term borrowing
Bonds payable
Preferred stock
Perpetual capital securities
Long-term payables
Payroll payable
Special payables
Estimated liabilities 7,000,000.00
Deferred income 11,183,333.34 9,634,114.77
Deferred income tax liabilities 14,899,853.99 16,024,102.35
Other non-current liabilities
Total non-current liabilities 26,083,187.33 32,658,217.12
Total liabilities 789,767,713.39 934,315,783.47
Owners' equity:
Share capital 784,799,010.00 784,799,010.00
Other equity instruments
Preferred stock
Perpetual capital securities
Capital reserve 495,759,877.42 506,545,831.11
Less: Treasury shares
Other comprehensive income 296,235.62 326,662.48
Special reserve
Surplus reserve 121,803,040.24 109,922,336.87
General risk provision
Undistributed profits 145,542,484.27 73,532,388.70
Total owners' equity attributable to the parent company 1,548,200,647.55 1,475,126,229.16
Minority shareholders' equity 210,307,904.38 205,218,511.74
Total owners' equity 1,758,508,551.93 1,680,344,740.90
Total liabilities and owners' equity 2,548,276,265.32 2,614,660,524.37
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
2. Balance Sheet of the Parent Company
Unit: Yuan
151
Full Text of Annual Report of Shenzhen SEG Co., Ltd. in 2016
Item Closing balance Opening balance
Current assets:
Monetary funds 90,504,836.76 186,369,470.58
Financial assets measured by fair value with
changes included in current profit and loss
Derivative financial assets
Notes receivable
Accounts receivable 426,069.15
Prepayment 418,544.10
Interest receivable
Dividends receivable
Other accounts receivable 724,658,970.18 570,671,617.38
Inventory 442,920.87 112,715.50
Held-for-sale assets
Non-current assets due within one year
Other current assets 438,146,382.10 393,166,401.54
Total current assets 1,254,179,179.06 1,150,738,749.10
Non-current assets:
Available-for-sale financial assets 33,515,392.83 33,515,392.83
Held-to-maturity investment
Long-term receivables
Long-term equity investment 453,584,470.91 455,106,100.12
Investment properties 273,880,749.30 284,399,860.14
Fixed assets 19,149,224.71 19,458,584.25
Construction in progress 140,810.00
Engineering materials
Disposal of fixed assets
Productive biological assets
Oil & gas assets
Intangible assets 425,708.10 622,054.24
Development expenses
Goodwill
Long-term expenses to be amortized 7,743,293.52 7,000,181.66
Deferred income tax assets 8,664,455.49 8,242,045.89
Other non-current assets
Total non-current assets 796,963,294.86 808,485,029.13
Total assets 2,051,142,473.92 1,959,223,778.23
Current liabilities:
152
Full Text of Annual Report of Shenzhen SEG Co., Ltd. in 2016
Item Closing balance Opening balance
Short-term borrowing 355,000,000.00 315,000,000.00
Financial liabilities measured by fair value with
changes included in current profit and loss
Derivative financial liabilities
Notes payable
Accounts payable 155,213.00 36,075.52
Prepayment from customers 25,448,125.00 42,704,620.99
Payroll payable 7,817,501.76 13,652,201.42
Taxes payable 23,485,483.97 10,033,418.41
Interest payable 475,177.74 477,402.78
Dividends payable 119,803.29 119,803.29
Other payables 75,858,657.13 95,119,560.37
Held-for-sale liabilities
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 488,359,961.89 477,143,082.78
Non-current liabilities:
Long-term borrowing
Bonds payable
Preferred stock
Perpetual capital securities
Long-term payables
Payroll payable
Special payables
Estimated liabilities 7,000,000.00
Deferred income 11,183,333.34 9,500,000.00
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 11,183,333.34 16,500,000.00
Total liabilities 499,543,295.23 493,643,082.78
Owners' equity:
Share capital 784,799,010.00 784,799,010.00
Other equity instruments
Preferred stock
Perpetual capital securities
Capital reserve 498,654,523.66 507,773,837.83
Less: Treasury shares
153
Full Text of Annual Report of Shenzhen SEG Co., Ltd. in 2016
Item Closing balance Opening balance
Other comprehensive income 178.21
Special reserve
Surplus reserve 121,803,040.24 109,922,336.87
Undistributed profits 146,342,426.58 63,085,510.75
Total owners' equity 1,551,599,178.69 1,465,580,695.45
Total liabilities and owners' equity 2,051,142,473.92 1,959,223,778.23
egal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
3. Consolidated Profit Statement
Unit: Yuan
Amount incurred in the current Amount incurred in the previous
Item
period period
I. Total operating income 760,915,085.86 846,675,884.33
Including: Operating income 672,384,276.47 741,533,676.93
Interest income 67,560,598.14 101,205,806.40
Earned premiums
Service charges and commissions income 20,970,211.25 3,936,401.00
II. Total operating cost 679,055,180.28 708,934,598.86
Including: Operating cost 582,494,679.95 618,062,716.19
Interest expenses 3,004,288.89 5,599,355.64
Commissions
Surrender value
Net compensation pay-outs
Net insurance deposit accrued
Insurance dividends
Reinsurance expenses
Operating tax and surcharges 18,517,765.23 27,804,172.86
Sale expenses 13,846,141.59 4,585,434.23
Management expenses 60,042,027.31 44,222,779.09
Financial cost 4,627,175.84 3,564,776.76
Loss from asset impairment -3,476,898.53 5,095,364.09
Income from change of fair value (enter "-" for
loss)
Income from investment (enter "-" for loss) 99,145,904.44 17,647,493.77
Including: Income from investment in joint
-387,059.05 1,703,803.48
ventures and associated enterprises
Income from exchange (enter "-" for loss)
III. Operating profit (enter "-" for loss) 181,005,810.02 155,388,779.24
154
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Amount incurred in the current Amount incurred in the previous
Item
period period
Add: Non-operating income 10,897,524.02 2,367,546.40
Including: Gains on disposal of non-current
116,977.79 19,382.00
assets
Less: Non-operating expenses 4,366,432.31 14,687,757.38
Including: Loss from disposal of non-current
345,909.08 276,651.63
assets
IV. Total profit (enter "-" for total loss) 187,536,901.73 143,068,568.26
Less: Income tax 45,306,572.11 35,099,837.65
V. Net profit (enter "-" for net loss) 142,230,329.62 107,968,730.61
Net profit attributable to owners of the parent
107,560,213.41 74,242,090.49
company
Profit and loss of minority shareholders 34,670,116.21 33,726,640.12
VI. Net of tax of other comprehensive incomes -45,789.16 142,453.34
Total owners' net of tax of other comprehensive
-30,426.86 94,845.43
incomes attributable to the parent company
1. Other comprehensive incomes not to be
reclassified into profit and loss
(1) Changes of net liabilities or net assets of
the re-measured defined benefit plans
(2) Shares of the investee of other
comprehensive incomes not to be reclassified into profit
and loss under the equity method
2. Other comprehensive incomes to be reclassified
-30,426.86 94,845.43
into profit and loss
(1) Shares of the investee of other
comprehensive incomes to be reclassified into profit and 178.21
loss under the equity method
(2) Profit and loss from changes of fair
-30,605.07 94,845.43
value of the available-for-sale financial assets
(3) Held-to-maturity investments
categorized as profit and loss from the available-for-sale
financial assets
(4) Effective gains or loss from cash flows
(5) Foreign currency translation differences
(6) Others
Net of tax of other comprehensive incomes
-15,362.30 47,607.91
attributable to minority shareholders
VII. Total comprehensive income 142,184,540.46 108,111,183.95
Total comprehensive income attributable to 107,529,786.55 74,336,935.92
155
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Amount incurred in the current Amount incurred in the previous
Item
period period
shareholders of the parent company
Total comprehensive income attributable to
34,654,753.91 33,774,248.03
minority shareholders
VIII. Earnings per share
1. Basic earnings per share 0.1371 0.0946
2. Diluted earnings per share 0.1371 0.0946
egal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
4. Profit Statement of the Parent Company
Unit: Yuan
Amount incurred in the current Amount incurred in the previous
Item
period period
I. Operating income 100,960,545.53 123,925,453.43
Less: Operating cost 74,670,318.50 76,436,384.08
Operating tax and surcharges 5,063,045.37 7,016,959.19
Sale expenses
Management expenses 40,538,467.44 22,226,491.04
Financial cost -17,489,447.63 -18,483,129.66
Loss from asset impairment 6,305.06 -448,067.93
Income from change of fair value (enter "-" for
loss)
Income from investment (enter "-" for loss) 141,237,490.92 70,405,467.34
Including: Income from investment in joint
-387,059.05 1,703,803.48
ventures and associated enterprises
II. Operating profit (enter "-" for loss) 139,409,347.71 107,582,284.05
Add: Non-operating income 1,830,706.13 297,504.50
Including: Gains on disposal of non-current
assets
Less: Non-operating expenses 3,905,790.35 8,207,673.50
Including: Loss from disposal of non-current
12,492.80
assets
III. Total profit (enter "-" for total loss) 137,334,263.49 99,672,115.05
Less: Income tax 18,527,229.82 7,367,113.48
V. Net profit (enter "-" for net loss) 118,807,033.67 92,305,001.57
V. Net of tax of other comprehensive incomes 178.21
1. Other comprehensive incomes not to be
reclassified into profit and loss
(1) Changes of net liabilities or net assets of
156
Full Text of Annual Report of Shenzhen SEG Co., Ltd. in 2016
the re-measured defined benefit plans
(2) Shares of the investee of other
comprehensive incomes not to be reclassified into profit
and loss under the equity method
2. Other comprehensive incomes to be reclassified
178.21
into profit and loss
(1) Shares of the investee of other
comprehensive incomes to be reclassified into profit and 178.21
loss under the equity method
(2) Profit and loss from changes of fair
value of the available-for-sale financial assets
(3) Held-to-maturity investments
categorized as profit and loss from the available-for-sale
financial assets
(4) Effective gains or loss from cash flows
(5) Foreign currency translation differences
(6) Others
VI. Total comprehensive income 118,807,211.88 92,305,001.57
VII. Earnings per share
1. Basic earnings per share
2. Diluted earnings per share
egal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
5. Consolidated Cash Flow Statement
Unit: Yuan
Amount incurred in the current Amount incurred in the previous
Item
period period
I. Cash flow from operating activities:
Cash received from sales of goods and rendering of
845,627,989.02 1,511,673,510.40
services
Net increase in deposits from customers and
interbank
Net increase in loans from central bank
Net increase in borrowing from other financial
institutions
Cash received from premiums of primary insurance
contracts
Net cash received from reinsurance business
Net increase in deposits from policyholders and
investment
Net increase in financial assets measured by fair
value with changes included in current profit and loss
157
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Amount incurred in the current Amount incurred in the previous
Item
period period
Cash received from interest and commissions 88,530,809.39 102,063,076.56
Net increase in loans from other banks
Net increase in redemption capital
Tax refunds 82,932,677.81 152,736,297.03
Other cash received related to operating activities 296,477,886.37 421,560,930.37
Subtotal of cash inflow from operating activities 1,313,569,362.59 2,188,033,814.36
Cash paid for goods and service 908,435,005.94 1,521,336,369.82
Net increase in loans to customers and prepayment 877,622.60 23,205,533.47
Net increase in deposits with central bank and
interbank
Cash paid for compensation pay-outs of primary
insurance contracts
Cash paid for interest, service charges, and
2,123,698.47 120,333.34
commissions
Cash paid as insurance dividends 113,247,538.62 101,723,764.24
Cash paid to and on behalf of employees 111,807,580.62 101,723,764.24
Taxes paid 118,517,063.83 127,410,425.79
Other cash paid related to operating activities 291,838,448.81 386,690,911.52
Subtotal of cash outflow in operating activities 1,433,599,420.27 2,200,487,338.18
Net cash flow from operating activities -120,030,057.68 -12,453,523.82
II. Cash flows from investing activities:
Cash received from withdrawal of investment 787,844,658.58 2,247,982,304.11
Cash received from investment income 11,119,431.60 16,383,656.54
Net cash received from disposal of fixed assets,
196,050.00 183,182.50
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries and
4,388,617.09
other business units
Other cash received related to investing activities 2,000,000.00
Subtotal of cash inflow from investing activities 805,548,757.27 2,264,549,143.15
Cash paid for purchase and construction of fixed
10,533,826.64 17,573,875.73
assets, intangible assets and other long-term assets
Cash paid for investment 719,386,160.00 2,154,600,000.00
Net increase in mortgage loans
Net cash paid for acquisition of subsidiaries and
other business units
Other cash paid related to investing activities
Subtotal of cash outflow in investing activities 729,919,986.64 2,172,173,875.73
158
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Amount incurred in the current Amount incurred in the previous
Item
period period
Net cash flow from investing activities 75,628,770.63 92,375,267.42
III. Cash flow from financing activities:
Cash received by absorbing investment
Including: Cash received by subsidiaries from
investment of minority shareholders
Borrowings received 460,020,000.00 442,000,000.00
Cash received from bond issue
Other cash received related to financing activities 1,347,812.30
Subtotal of cash inflow from financing activities 461,367,812.30 442,000,000.00
Cash repayment 458,179,630.48 513,484,629.66
Cash paid for dividend and profit distribution or
50,325,023.50 56,139,431.32
interest payment
Including: Dividends and profit paid by
10,647,780.72 23,853,751.20
subsidiaries to minority shareholders
Other cash paid related to financing activities 4,490,500.00 58,830,972.92
Subtotal of cash outflow in financing activities 512,995,153.98 628,455,033.90
Net cash flow arising from financing activities -51,627,341.68 -186,455,033.90
IV. Influence of exchange rate fluctuation on cash and
15.47 38.70
cash equivalents
V. Net increase in cash and cash equivalents -96,028,613.26 -106,533,251.60
Add: Opening balance of cash and cash equivalents 275,523,429.10 382,056,680.70
VI. Closing balance of cash and cash equivalents 179,494,815.84 275,523,429.10
egal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
6. Cash Flow Statement of the Parent Company
Unit: Yuan
Amount incurred in the current Amount incurred in the previous
Item
period period
I. Cash flow from operating activities:
Cash received from sales of goods and rendering of
105,235,891.60 124,700,292.45
services
Tax refunds
Other cash received related to operating activities 228,693,257.76 180,735,884.82
Subtotal of cash inflow from operating activities 333,929,149.36 305,436,177.27
Cash paid for goods and service 82,096,021.68 55,054,712.57
Cash paid to and on behalf of employees 43,976,017.80 37,351,053.58
Taxes paid 59,381,044.41 73,873,732.82
Other cash paid related to operating activities 336,858,224.56 262,681,816.46
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Amount incurred in the current Amount incurred in the previous
Item
period period
Subtotal of cash outflow in operating activities 522,311,308.45 428,961,315.43
Net cash flow from operating activities -188,382,159.09 -123,525,138.16
II. Cash flows from investing activities:
Cash received from withdrawal of investment 852,392,256.58 2,065,693,441.09
Cash received from investment income 67,578,674.96 70,106,085.85
Net cash received from disposal of fixed assets,
10,000.00
intangible assets and other long-term assets
Net cash received from disposal of subsidiaries and
other business units
Other cash received related to investing activities 2,000,000.00
Subtotal of cash inflow from investing activities 921,980,931.54 2,135,799,526.94
Cash paid for purchase and construction of fixed
1,809,071.46 2,002,530.00
assets, intangible assets and other long-term assets
Cash paid for investment 828,881,900.00 1,965,600,000.00
Net cash paid for acquisition of subsidiaries and
other business units
Other cash paid related to investing activities
Subtotal of cash outflow in investing activities 830,690,971.46 1,967,602,530.00
Net cash flow from investing activities 91,289,960.08 168,196,996.94
III. Cash flow from financing activities:
Cash received by absorbing investment
Borrowings received 355,000,000.00 315,000,000.00
Cash received from bond issue
Other cash received related to financing activities 7,812.30
Subtotal of cash inflow from financing activities 355,007,812.30 315,000,000.00
Cash repayments of amounts borrowed 315,000,000.00 350,000,000.00
38,780,262.58 27,697,680.55
Other cash paid related to financing activities
Subtotal of cash outflow in financing activities 353,780,262.58 377,697,680.55
Net cash flow arising from financing activities 1,227,549.72 -62,697,680.55
IV. Influence of exchange rate fluctuation on cash and
15.47 38.70
cash equivalents
V. Net increase in cash and cash equivalents -95,864,633.82 -18,025,783.07
Add: Opening balance of cash and cash equivalents 186,369,470.58 204,395,253.65
VI. Closing balance of cash and cash equivalents 90,504,836.76 186,369,470.58
egal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
160
7. Consolidated Statement of Changes in Owners' Equity
Amount incurred in the current period
Unit: Yuan
Current period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Perpetual Special Undistributed shareholders'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk equity
reserve profits equity
capital Others
Shares shares income provision
securities
I. Closing balance of
784,799,010.00 506,545,831.11 326,662.48 109,922,336.87 73,532,388.70 205,218,511.74 1,680,344,740.90
the previous year
Plus: Change of
accounting policies
Correction
to errors of the
previous period
Merger of
the enterprises under
the control of a same
entity
Others
II. Opening balance of
784,799,010.00 506,545,831.11 326,662.48 109,922,336.87 73,532,388.70 205,218,511.74 1,680,344,740.90
the current year
III. Increase and
decrease of the
-10,785,953.69 -30,426.86 11,880,703.37 72,010,095.57 5,089,392.64 78,163,811.03
current year (enter "-"
for decrease)
1. Total -30,426.86 107,560,213.41 34,654,753.91 142,184,540.46
161
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Current period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
reserve profits equity
capital Others
Shares shares income provision
securities
comprehensive
income
2. Capital invested or
-1,658,827.22 -2,375,474.47 -4,034,301.69
decreased by owners
(1) Ordinary shares
invested by the -14,700,000.00 -14,700,000.00
shareholders
(2) Capitals invested
by other equity
instrument holders
(3) Amount of
share-based payment
included in owners'
equity
(4) Others -1,658,827.22 12,324,525.53 10,665,698.31
3. Profit distribution 11,880,703.37 -35,550,117.84 -27,189,886.80 -50,859,301.27
(1) Accrual of surplus
11,880,703.37 -11,880,703.37
reserve
(2) Accrual of
-23,669,414.47 -27,189,886.80 -50,859,301.27
general risk provision
(3) Amount
distributed to owners
(or shareholders)
162
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Current period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
reserve profits equity
capital Others
Shares shares income provision
securities
(4) Others
4. Internal carrying
forward of owners'
equity
(1) Capital reserve
transferred to increase
capital (or share
capital)
(2) Surplus reserve
transferred to increase
capital (or share
capital)
(3) Surplus reserve
compensating losses
(4) Others
5. Special reserve
(1) Accrual of the
current year
(2) Amount utilized
in the current period
6. Others -9,127,126.47 -9,127,126.47
IV. Closing balance of 784,799,010.00 495,759,877.42 296,235.62 121,803,040.24 145,542,484.27 210,307,904.38 1,758,508,551.93
163
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Current period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Special Undistributed shareholders'
Perpetual equity
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk
reserve profits equity
capital Others
Shares shares income provision
securities
the current period
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
Amount of the previous period
Unit: Yuan
Previous period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Perpetual Special Undistributed shareholders'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk equity
reserve profits equity
capital Others
Shares shares income provision
securities
I. Closing balance of
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
the previous year
Plus: Change of
accounting policies
Correction to
errors of the previous
period
Merger of
enterprises under
common control
164
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Previous period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Perpetual Special Undistributed shareholders'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk equity
reserve profits equity
capital Others
Shares shares income provision
securities
Others
II. Opening balance of
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
the current year
III. Increase and
decrease of the current
101,818,573.39 94,845.43 7,009,501.20 67,232,589.29 8,820,154.98 184,975,664.29
year (enter "-" for
decrease)
1. Total comprehensive
94,845.43 74,242,090.49 33,774,248.03 108,111,183.95
income
2. Capital invested or
101,818,573.39 101,818,573.39
decreased by owners
(1) Ordinary shares
invested by the
shareholders
(2) Capitals invested by
other equity instrument
holders
(3) Amount of
share-based payment
included in owners'
equity
(4) Others 101,818,573.39 101,818,573.39
3. Profit distribution 7,009,501.20 -7,009,501.20 -24,954,093.05 -24,954,093.05
165
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Previous period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Perpetual Special Undistributed shareholders'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk equity
reserve profits equity
capital Others
Shares shares income provision
securities
(1) Accrual of surplus
7,009,501.20 -7,009,501.20
reserve
(2) Accrual of general
-24,954,093.05 -24,954,093.05
risk provision
(3) Amount distributed
to owners (or
shareholders)
(4) Others
4. Internal carrying
forward of owners'
equity
(1) Capital reserve
transferred to increase
capital (or share
capital)
(2) Surplus reserve
transferred to increase
capital (or share
capital)
(3) Surplus reserve
compensating losses
(4) Others
5. Special reserve
166
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Previous period
Owners' equity attributable to the parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Perpetual Special Undistributed shareholders'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve risk equity
reserve profits equity
capital Others
Shares shares income provision
securities
(1) Accrual of the
current year
(2) Amount utilized in
the current period
6. Others
IV. Closing balance of
784,799,010.00 506,545,831.11 326,662.48 109,922,336.87 73,532,388.70 205,218,511.74 1,680,344,740.90
the current period
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
8. Statement on Changes of Owners' Equity of the Parent Company
Amount incurred in the current period
Unit: Yuan
Amount incurred in the current period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
I. Closing balance of the
previous year
Plus: Change of
accounting policies
167
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Amount incurred in the current period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
Correction to
errors of the previous
period
Others
II. Opening balance of the
current year
III. Increase and decrease
of the current year (enter
"-" for decrease)
1. Total comprehensive
income
2. Capital invested or
decreased by owners
(1) Ordinary shares
invested by the
shareholders
(2) Capitals invested by
other equity instrument 784,799,010.00 507,773,837.83 109,922,336.87 63,085,510.75 1,465,580,695.45
holders
(3) Amount of share-based
payment included in
owners' equity
(4) Others
3. Profit distribution
168
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Amount incurred in the current period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
(1) Accrual of surplus
784,799,010.00 507,773,837.83 109,922,336.87 63,085,510.75 1,465,580,695.45
reserve
(2) Amount distributed to
-9,119,314.17 178.21 11,880,703.37 83,256,915.83 86,018,483.24
owners (or shareholders)
(3) Others 178.21 118,807,033.67 118,807,211.88
4. Internal carrying
forward of owners' equity
(1) Capital reserve
transferred to increase
capital (or share capital)
(2) Surplus reserve
transferred to increase
capital (or share capital)
(3) Surplus reserve
compensating losses
(4) Others
5. Special reserve 11,880,703.37 -35,550,117.84 -23,669,414.47
(1) Accrual of the current
11,880,703.37 -11,880,703.37
year
(2) Amount utilized in the
-23,669,414.47 -23,669,414.47
current period
6. Others
169
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Amount incurred in the current period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
IV. Closing balance of the
current period
-9,127,126.47 -9,127,126.47
784,799,010.00 498,654,523.66 178.21 121,803,040.24 146,342,426.58 1,551,599,178.69
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
Amount of previous period
Unit: Yuan
Previous period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
I. Closing balance of the
784,799,010.00 405,955,264.44 102,912,835.67 -22,209,989.62 1,271,457,120.49
previous year
170
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Previous period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
Plus: Change of
accounting policies
Correction to
errors of the previous
period
Others
II. Beginning balance of
784,799,010.00 405,955,264.44 102,912,835.67 -22,209,989.62 1,271,457,120.49
the current year
III. Increase and decrease
of the current year (enter 101,818,573.39 7,009,501.20 85,295,500.37 194,123,574.96
"-" for decrease)
1. Total comprehensive
92,305,001.57 92,305,001.57
income
2. Capital invested or
101,818,573.39 101,818,573.39
decreased by owners
(1) Ordinary shares
invested by the
shareholders
(2) Capitals invested by
other equity instrument
holders
(3) Amount of
share-based payment
included in owners' equity
171
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Previous period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
(4) Others 101,818,573.39
3. Profit distribution
(1) Accrual of surplus
reserve
(2) Amount distributed to
owners (or shareholders)
(3) Others 101,818,573.39
4. Internal carrying
7,009,501.20 -7,009,501.20
forward of owners' equity
(1) Capital reserve
transferred to increase 7,009,501.20 -7,009,501.20
capital (or share capital)
(2) Surplus reserve
transferred to increase
capital (or share capital)
(3) Surplus reserve
compensating losses
(4) Others
5. Special reserve
(1) Accrual of the current
year
(2) Amount utilized in the
current period
172
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Previous period
Other equity instruments
Less: Other
Item Perpetual Special Undistributed Total owners'
Share capital Preferred Capital reserve Treasury comprehensive Surplus reserve
capital Others reserve profits equity
Shares shares income
securities
6. Others
IV. Closing balance of the
784,799,010.00 507,773,837.83 109,922,336.87 63,085,510.75 1,465,580,695.45
current period
Legal representative: Wang Li Person in charge of accounting: Liu Zhijun Responsible person of the accounting institution: Ying Huadong
173
Shenzhen SEG Co., Ltd.
Notes to 2016 Financial Statements
I. Company Profile
(I) Registered Place, Organizational Form and Headquarters Address
Shenzhen SEG Co., Ltd. (hereinafter referred to as "the Company") was incorporated on July 16, 1996 through
public offering with Shenzhen SEG Group Co., Ltd. as the sole initiator upon the approval of relevant
departments of Shenzhen and the state in accordance with the Company Law of the People's Republic of China.
The Company holds the Enterprise Corporation Business License with the unified social credit code
91440300279253776E and the registration number 440301103573251. Upon the approval of the securities
administration departments of Shenzhen and the state, the Company's B shares and A shares were listed on
Shenzhen Stock Exchange respectively in July 1996 and December 1996.
On June 7, 2006, the Company passed a resolution at the general meeting of shareholders concerning the equity
division reform. According to the transfer plan of capital reserve into common shares, the Company distributed
4.6445 shares to tradable A share shareholders for each 10 shares, which totaled 40,233,322 transferred shares.
As a result, its non-tradable A shares were qualified for listing and circulating. Among the converted and
increased capital share obtained by the tradable A-share shareholders, 6,997,054 shares were received due to the
company's share capital expansion and the rest of 33,236,268 shares were the consideration paid to the tradable
A-share shareholders by non-tradable A-share holders under fixed arrangements.
As of December 31, 2016, the total capital share of the Company amounts to 784,799,010 shares, including
77,439 restricted shares and 784,721,571 unrestricted shares. The registered capital is 784,799,010 Yuan. The
registered address is 31F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen. The final
controlling party of the Company is Shenzhen State-owned Assets Supervision and Administration Commission.
The parent company is Shenzhen SEG Group Co., Ltd., and its final controlling party is Shenzhen State-owned
Assets Supervision and Administration Commission.
(II) Business Scope
General items: Investment in industrial projects (specific items to be declared separately); operation and
management of electronics markets; online trade; Internet technology development; advertising business;
housing leasing; sales of computers, software, auxiliary equipment, and electronic products; cultural and artistic
exchange activity planning (excluding performances); exhibition activities; investment in and management of
children's industrial chain projects; children's playground equipment leasing (excluding financial leasing
activities); playground management and services (limited to branch management); catering services (limited to
branch management); business management consulting; education consulting; wholesale and retail of
pre-packaged food, unpacked food, and dairy products (including infant formula milk powder) (limited to branch
management); sales of stationery, craft gifts, toys, children's clothing, electronic products, handicrafts, and daily
necessities; photography services; technical development of new energy; EPC of photovoltaic power generation
and building integrated photovoltaic (BIPV) engineering; technical development and services of CdTe film solar
cell modules; investment in photovoltaic power plants, contracting of BIPV curtain wall engineering; domestic
174
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
trade (excluding franchised goods, proprietary goods, and goods under special control). (Any item subject to
approval pursuant to laws can be operated only after approval.)
Licensed items: information services (limited to Internet information services); sales of food; manufacturing and
sales of CdTe solar cell modules.
(III) Business Property and Main Business Operations
The Company engages in business service industry, involving products and service mainly in operation and
management of special electronics markets, lease business and other tertiary industries.
(IV) Approval for Disclosure of the Financial Statements
The Financial Statements are approved for disclosure by all directors of the Company on April 14, 2017.
II. Scope of Consolidated Financial Statements
Twenty-three entities are included in the current consolidated financial statements, namely:
Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) right (%)
Shenzhen SEG Baohua Enterprise Development Holding
I 66.58 66.58
Co., Ltd. subsidiary
Holding
Shenzhen Mellow Orange Business Hotel
grandson II 66.58 66.58
Management Co., Ltd
company
Wholly-owned
Shenzhen SEG Industrial Investment Co., Ltd. I 100.00 100.00
subsidiary
Holding
Changsha SEG Development Co., Ltd. I 46.00 51.00
subsidiary
Shenzhen SEG Electronics Market Management Share-controlled
I 70.00 70.00
Co., Ltd. subsidiary
Suzhou SEG Electronics Market Management Co., Holding
I 45.00 45.00
Ltd. subsidiary
Holding
Xi'an SEG Electronics Market Co., Ltd. I 65.00 65.00
subsidiary
Holding
Shenzhen SEG Credit Co., Ltd. I 54.00 54.00
subsidiary
Shenzhen SEG Nanjing Electronics Market Wholly-owned
I 100.00 100.00
Management Co., Ltd. subsidiary
Holding
Xi'an Hairong SEG Electronics Market Co., Ltd. I 51.00 51.00
subsidiary
Wujiang SEG Electronics Market Management Co., Holding
I 51.00 51.00
Ltd. subsidiary
Holding
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
175
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Type of Proportion of Proportion of voting
Company name Level
subsidiary shareholding (%) right (%)
Nanning SEG Electronics Market Management Co., Wholly-owned
1 100.00 100.00
Ltd. subsidiary
Wholly-owned
Nantong SEG Times Plaza Development Co., Ltd. 1 100.00 100.00
subsidiary
Holding
Yantai SEG Times Plaza Development Co., Ltd. 1 90.00 90.00
subsidiary
Nantong SEG Commercial Operation Management Wholly-owned
1 100.00 100.00
Co., Ltd. subsidiary
Wholly-owned
Suzhou SEG Digital Plaza Management Co., Ltd. 1 100.00 100.00
subsidiary
Xi'an Fengdong New Town SEG Times Plaza Wholly-owned
1 100.00 100.00
Properties Co., Ltd. subsidiary
Suzhou SEG Intelligent Technology Co., Ltd. Wholly-owned
1 100.00 100.00
subsidiary
Shenzhen SEG Longyan New Energy Application Holding
and Development Co., Ltd. 1 50.00 50.00
subsidiary
Shenzhen SEG Investment Management Co., Ltd. Wholly-owned
1 100.00 100.00
subsidiary
Shenzhen SEG Longyan Energy Technology Co., Holding
Ltd. 1 50.00 50.00
subsidiary
For the cause of difference between the proportion of shareholding and the proportion of voting rights and the
basis for control of the invested entity even with half of voting rights or less, see "Attachment 9: Equities in
other entities – (1) Equities in subsidiaries".
Compared with the previous period, three more entities are included in and one entity is excluded from the
consolidated financial statements in the current period, including:
1. Subsidiaries, special purpose entities, and business entities that gain control by way of commissioning
management or renting included in the consolidation scope in the current period
Name Reason for change
Suzhou SEG Intelligent Technology Co., Ltd. Newly established
Shenzhen SEG Longyan New Energy Application
Newly established
and Development Co., Ltd.
Shenzhen SEG Longyan Energy Technology Co.,
Newly established
Ltd.
2. Subsidiaries, special purpose entities, and business entities that lose control by way of commissioning
management or leasing excluded from the consolidation scope in the current period
Name Reason for change
Shenzhen SEG E-Commerce Co., Ltd. Transfer-out of all equities
For details of entity change in the consolidation scope, see "Note VIII. Change in consolidation scope".
III. Basis of preparation of the financial statements
(I) Basis of preparation of the financial statements
176
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The Company has conducted confirmation and measurement based on the transactions and events that have been
actually incurred and in accordance with the Accounting Standards for Business Enterprises (ASBE) and specific
standards, the application guide of ASBE, the interpretation of ASBE and other relevant regulations (hereinafter
collectively referred to as "the ASBE"). According to Listed Company Information Disclosure Preparation Rules
No. 15 - General Regulations on Financial Report (amended in 2014) released by CSRC, the Company prepared
the financial statements.
(II) Going-concern ability
The Company has evaluated the going-concern ability for the 12-month period from the end of the report period,
and no matters or circumstances of major concern were found. Accordingly, the financial statements are prepared
on a going-concern basis.
IV. Main accounting policies and accounting estimates
(I) Statement on compliance with ASBE
The financial statements prepared by the Company comply with the requirements of the Accounting Standard for
Business Enterprises and truthfully and completely reflect relevant information on the financial position,
operating results, and cash flows of the Company.
(II) Accounting period
A fiscal year lasts from January 1st to December 31st of the Gregorian calendar.
(III) Business period
The business period is 12 months, which is a criterion for the liquidity division of assets and liabilities.
(IV) Recording currency
Renminbi is the recording currency of the financial statements of the Company.
(V) Accounting method for the business merger under or not under common control
1. If the terms and conditions or economic influences of deals involved in business merger by steps are
consistent with the following case(s), several deals will be treated as a package deal for accounting
treatment.
(1) Those deals are made at the same time or in consideration of mutual influences;
(2) A complete business result can be achieved only with the deals as integrity;
(3) The occurrence of one deal depends on the occurrence of at least one deal.
(4) A single deal is uneconomical but the integration with other deals is economical.
2. Business merger under common control
Assets and liabilities acquired by the Company in the merger are calculated based on the book value of the
merged party's assets and liabilities (including goodwill resulting from the acquisition of the merged party) in the
consolidated financial statements of the ultimate controlling party on the date of merger. The capital stock
premium of capital reserve is adjusted based on the difference between the book value of net assets acquired in
the merger and that of the consideration of the merger (or the total book value of issued shares). The retained
earnings are adjusted if the capital stock premium is not sufficient for writing off.
If contingent consideration exists and the estimated liabilities and assets have to be recognized, the capital
reserve (capital surplus or capital stock premium) is adjusted based on the difference between the estimated
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liabilities and assets and the subsequent contingent consideration. The retained earnings are adjusted if the
capital reserve is not sufficient for writing off.
For business merger through several deals, deals in a package will be treated as one deal with control right
acquired for accounting treatment; for deals not in a package, the capital reserve is adjusted based on the
difference between the initial cost of long-term equity investment and the sum of book value of long-term equity
investment before merger and book value of consideration payment for new shares. The retained earnings are
adjusted if the capital reserve is not sufficient for writing off. For equity investment held before merger, other
comprehensive income recognized by the equity method, financial instruments or calculation standards will not
be subject to accounting treatment, and until the disposal of such investment such accounting treatment is carried
out on the same basis as the direct disposal of related assets and liabilities by the invested party; other changes in
owners' equity excluding net profit and loss, other comprehensive income and profit distribution in the net assets
of the invested party recognized by the equity accounting method will not be subject to accounting treatment and
is transferred to current profit and loss after the disposal of such investment.
3. Business merger not under common control
The assets paid and the liabilities incurred or undertaken by the Company as the consideration on the date of
merger are calculated based on fair value. The difference between fair value and book value will be included in
current profit and loss.
If the merger cost is higher than the fair value of the net identifiable assets of the acquired party acquired by
merger, the difference is recognized as goodwill. If the merger cost is lower than the fair value of the net
identifiable assets of the acquired party acquired by merger, the difference is included in current profit and loss.
For business merger through several deals, deals in a package will be treated as one deal with control right
acquired for accounting treatment; for deals not in a package, the sum of book value of long-term equity
investment before merger and new investment cost is treated as the initial cost of long-term equity investment on
the date of merger. For equity investment held before merger, other comprehensive income recognized with the
equity accounting method, accounting treatment of such investment is carried out on the same basis as the direct
disposal of related assets and liabilities by the invested party. If the equity investment held before merger is
subject to recognition by financial instruments and accounting by measure standards, the sum of book value of
long-term equity investment on the date of merger and new investment cost is treated as the initial cost of
long-term equity investment on the date of merger. The difference between the fair value and book value of the
equity previously held and accumulative changes in fair value originally included in other comprehensive
income are transferred to the investment income of the period of the date of merger.
4. Expenses incurred due to merger
The auditing, legal, appraisal and consulting, and other relevant direct fees incurred for business merger are
included in current profit and loss at occurrence. The transaction expenses of equity securities issued for business
merger which are directly attributable to equity transaction are deducted from the equity.
(VI) Preparation method of the consolidated financial statements
1. Consolidation scope
The scope of the consolidated financial statements of the Company is determined based on share-holding status,
and all subsidiaries are included in the scope.
2. Consolidation procedure
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The Company prepares the consolidated financial statements based on the financial statements of its own and its
subsidiaries and other related materials. In the preparation of consolidated financial statements, the whole group
is deemed as an accounting entity. According to the recognition, calculation and presentation requirements of
related accounting standards and consistent accounting policies, the overall financial condition, operation results
and cash flow are reflected.
The accounting policies and accounting period adopted by all subsidiaries included in the consolidation scope
are consistent with those of the Company. Otherwise, the Company shall make necessary adjustments according
to its own accounting policies and accounting period when preparing the consolidated financial statements.
During the consolidation, the influences of internal transactions between the Company and its subsidiaries and
among the subsidiaries on the consolidated balance sheet statement, the consolidated profit statement, the
consolidated cash flow statement and the consolidated statement of changes of owner's equity will be
counteracted. If judgment on the same transaction differs from the group perspective and with the Company or a
subsidiary as the accounting entity, the transaction shall be adjusted from the group perspective.
The owner's equity of subsidiaries, current net profit and loss and minority shares in current comprehensive
income are separately listed in the owner's equity of the consolidated balance sheet statement, net profit and total
comprehensive income of the consolidated profit statement respectively. If the current losses undertaken by
minority shareholders of a subsidiary exceed the owners' equity shared by minority shareholders of a subsidiary,
the balance will be used to offset the minority shareholders' equity.
For a subsidiary acquired by merger of enterprises under common control, its financial statements are adjusted
based on the book value of its assets and liabilities (including goodwill resulting from acquisition of this
subsidiary) in the financial statements of the ultimate controlling party.
For a subsidiary acquired by merger of enterprises not under common control, its financial statements are
adjusted based on the fair value of net identifiable assets on the date of acquisition.
(1) Expansion of subsidiaries or business
In the current report period, in case of expansion of subsidiaries or business due to merger of enterprises under
common control, the opening amount of the consolidated balance sheet is adjusted. The income, expenses and
profits of such subsidiaries and business from the beginning of merger to the end of the current report period are
included in the consolidated profit statement. The cash flow of such subsidiaries from the beginning of merger to
the end of the current report period is included in the consolidated cash flow statement and relevant items of
comparative statements are also adjusted. The reporting entity after merger is deemed to exist since the ultimate
controlling party starts control.
If the Company exerts control on an invested party under common control due to additional investment, it is
deemed that all parties involved in merger make adjustments in the present condition since the ultimate
controlling party starts control. For the equity investment held before acquisition of control right of the acquiree,
relevant income and loss, other comprehensive income and other changes in net asset are recognized from the
later one between the date of acquisition of the original equity and the date of the acquirer and the acquiree under
common control to the date of merger, which are used to offset the opening retained earnings or current profit
and loss respectively.
In the current report period, in case of expansion of subsidiaries or business due to merger of enterprises not
under common control, the opening amount of the consolidated balance sheet is not adjusted. The income,
expenses and profits of such subsidiaries and business from the date of acquisition to the end of the current
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report period are included in the consolidated profit statement. The cash flow of such subsidiaries from the date
of acquisition to the end of the current report period is included in the consolidated cash flow statement
If the Company exerts control on an invested party not under common control due to additional investment, the
equity of the acquiree held before the date of acquisition shall be remeasured based on its fair value on the date
of acquisition, and the difference between the fair value and book value of the equity shall be included in current
investment income. If the equity of the acquiree held before the date of acquisition is involved in other
comprehensive income and other changes in owner's equity except net profit and loss, other comprehensive
income and profit distribution with the equity method, the relevant other comprehensive income and other
changes in owner's equity are included in current investment income, excluding other comprehensive income
due to re-measurement of changes in net liabilities and net assets in defined benefit plans.
(2) Disposal of subsidiaries or business
1) General disposal method
If the Company disposes of a subsidiary in the current report period, the income, expenses and profits of the
subsidiary from the beginning period to the disposal date are included in the consolidated profit statement and
the cash flow of the subsidiary in the same period is included in the consolidated cash flow statement.
If the Company loses control of its subsidiary due to disposal of part of equity investment or other reasons, the
remaining equity shall be remeasured at fair value on the day when the Company losses control of the subsidiary.
The difference between the sum of consideration acquired due to equity disposal & fair value of the remaining
equity and the sum of net assets to be enjoyed based on the original shareholding proportion since the date of
acquisition or merger & goodwill is included in the investment income in the period of loss of control. Other
comprehensive income and other changes in owner's equity except net profit and loss, other comprehensive
income and profit distribution relevant to the equity investment in any previous subsidiary are transferred to
current investment income at the time of loss of control, excluding other comprehensive income due to
re-measurement of changes in net liabilities and net assets in defined benefit plans.
2) Disposal of subsidiaries by steps
If the Company disposes of equity investment in a subsidiary in several deals by steps until its loss of control and
the terms and conditions or economic influences of deals are consistent with the following case(s), several deals
will be treated as a package deal for accounting treatment.
A. Those deals are made at the same time or in consideration of mutual influences;
B. A complete business result can be achieved only with the deals as integrity;
C. The occurrence of one deal depends on the occurrence of at least one deal.
D. A single deal is uneconomical but the integration with other deals is economical.
If deals incurred for disposal of equity investment in a subsidiary until the loss of control belong to a package
deal, the Company treats all deals as one for accounting treatment. However, the difference between the
consideration acquired from every disposal and the net asset to be enjoyed such subsidiary based on such equity
investment before loss of control is recognized as other comprehensive income of the consolidated financial
statements and transferred to the current profit and loss at the time of loss of control.
For deals not in a package, before loss of control, the accounting treatment is based on policies about disposal of
part of equity investment in a subsidiary in case of no loss of control while at the time of loss of control, the
accounting treatment is based on general methods for disposing of such subsidiary.
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(3) Acquisition of minority shares of subsidiary
Based on the difference between long-term equity investment acquired due to acquisition of minority shares and
net assets to be enjoyed from such subsidiary since the date of acquisition (or merger), the capital stock premium
of the consolidated balance sheet statement is adjusted. The retained earnings are adjusted if the capital stock
premium is not sufficient for writing off.
(4) Disposal of part of equity investment in a subsidiary in case of no loss of control
The difference between the consideration acquired due to disposal of party of long-term equity investment in a
subsidiary and net assets to be enjoyed from such subsidiary since the date of acquisition (or merger), the capital
stock premium of the consolidated balance sheet statement is adjusted. The retained earnings are adjusted if the
capital stock premium is not sufficient for writing off.
(VII) Classification of joint venture arrangement and accounting treatment method of joint operation
1. Classification of joint venture arrangement
Based on the structure and legal form of joint venture arrangement, terms agreed in joint venture arrangement
and other facts and condition, the Company classifies joint venture arrangement into joint operation and joint
venture.
Joint venture arrangement agreed not by individual entities is defined as joint operation. Joint venture
arrangement agreed by individual entities is generally defined as joint venture. If any joint venture arrangement
satisfies any of the following conditions and conforms to relevant laws and regulations with conclusive evidence,
such joint venture arrangement is defined as joint operation:
(1) The legal form of joint venture arrangement shows that joint ventures share rights and obligations for assets
and liabilities in such arrangement.
(2) It is agreed in the terms of joint venture arrangement that joint ventures share rights and obligations for assets
and liabilities in such arrangement.
(3) Other facts and condition show that joint ventures share rights and obligations for assets and liabilities in
such arrangement. For example, the joint ventures enjoy nearly all output relevant to such arrangement and
settlement of liabilities in such arrangement constantly depends on the support of joint ventures.
2. Accounting treatment method of joint operation
The Company recognizes the following items in interest shares during joint operation, and carries out accounting
treatment in accordance with Accounting Standards for Business Enterprises:
(I) Recognizing the assets held separately and assets shared based on shares;
(2) Recognizing the liabilities undertaken separately and liabilities shared based on shares;
(3) Recognizing the income from sales of the share in joint operation output;
(4) Recognizing the income from sales of joint operation output based on shares;
(5) Recognizing the expenses individually incurred and expenses incurred by joint operation based on shares.
If the Company invests or sells assets (excluding assets that constitute business) to the joint operation, before
such assets are sold by the joint operation to the third party, only the part of profit and loss attributed to other
parties in the joint operation incurred by such transaction is recognized. If any impairment losses occur to the
assets invested or sold in accordance with Accounting Standards for Business Enterprises No. 8 - Asset
Impairment, the Company recognizes the losses in full.
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If the Company purchases assets from the joint operation, before such assets are sold to the third party, only the
part of profit and loss attributed to other parties in the joint operation incurred by such transaction is recognized.
If any impairment losses occur to the assets purchased in accordance with Accounting Standards for Business
Enterprises No. 8 - Asset Impairment, the Company recognizes the losses based on shares.
The Company enjoys no common control of the joint operation. If the Company enjoys assets in the joint
operation and undertakes liabilities in the joint operation, the Company shall still carry out accounting treatment
based on the foregoing principles. Otherwise, the Company shall carry out accounting treatment in accordance
with Accounting Standards for Business Enterprises.
(VIII) Standards for determination of cash and cash equivalents
In the preparation of the cash flow statement, the cash on hand and the bank deposits available for payment at
any time of the Company are recognized as cash. The investments that meet four conditions at the same time, i.e.
short term (due within 3 months since the date of purchase), strong liquidity, easiness in being converted into
known cash, fairly small risk of value fluctuation are recognized as cash equivalents.
(IX) Foreign currency business and translation of foreign currency financial statements
1. Foreign currency business
In the initial recognition, a foreign currency business transaction is converted to RMB for bookkeeping based on
the spot exchange rate at the date of transaction.
On the balance sheet date, monetary items in foreign currency are converted based on the spot exchange rate on
the balance sheet date. The exchange difference thus incurred is included in current profit and loss while the
exchange difference incurred by special foreign currency borrowings for acquisition and construction of assets
eligible for capitalization is treated with the principle of capitalization of borrowing costs. Non-monetary items
in foreign currency measured by the historical cost method are converted based on the spot exchange rate at the
date of transaction, and the amount in the recording currency is not changed.
Non-monetary items in foreign currency measured by fair value are converted based on the spot exchange rate at
the date of recognition of the fair value while the translation difference thus incurred is included in current profit
and loss as profit and loss from changes in fair value. For non-monetary items in available-for-sale foreign
currency, the translation difference is included in other comprehensive income.
2. Translation of foreign currency financial statements
In the balance sheet statement, assets and liabilities are converted based on the spot exchange rate at the date of
balance sheet statement, and items other than "undistributed profits" in the owner's equity are converted based on
the spot exchange rate. The income and expense in the profit statement are converted based on the spot exchange
rate at the date of transaction. The translation difference of foreign currency financial statements with the
foregoing method is included in other comprehensive income.
At the disposal of overseas business, the translation difference of foreign currency financial statements that is
listed in other comprehensive income of the balance sheet statement and relevant to such overseas business is
transferred from other comprehensive income to current profit and loss in the period of disposal. The equity
proportion in overseas business is reduced due to disposal of part of equity investment or other reasons but the
control right on the overseas business remains, the translation difference of foreign currency financial statements
relevant to such overseas business is not transferred to current profit and loss. At the disposal of part of equity
investment in overseas business in the form of associate or joint venture, the translation difference of foreign
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currency financial statements relevant to such overseas business is transferred to current profit and loss in the
period of disposal based on the proportion of disposal.
(X) Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
1. Classification of financial instruments
According to the contract terms and economic nature of financial instruments rather than in the legal form only,
in combination of the purposes of acquisition and holding of financial assets and undertaking of financial debts,
during initial confirmation, the Company classifies financial assets and liabilities as follows: financial assets (or
liabilities) measured by fair value with changes included in current profit and loss, held-to-maturity investment,
accounts receivable, available-for-sale financial assets, and other financial liabilities.
2. Confirmation basis for and measurement method of financial instruments
(1) Financial assets (liabilities) measured by fair value with changes included in current profit and loss
Financial assets or liabilities measured by fair value with changes included in current profit and loss include
transactional financial assets or liabilities and financial assets or liabilities to be measured by fair value with
changes included in current profit and loss through direct designation.
Transactional financial assets or liabilities refer to financial assets or liabilities that satisfy any of the following
conditions:
1) Such financial assets or liabilities are acquired for the purpose of sales, repurchase or redemption in a short
term;
2) Such financial assets or liabilities are part of identifiable financial instruments portfolio available for central
management, and objective evidence shows that the Company has recently managed the portfolio for short-term
gains;
3) Such financial assets or liabilities belong to derivative financial instruments, excluding the designated
derivative instruments which are effective hedging instruments, derivative instruments for financial guarantee
contracts, and derivative instruments that are connected with equity instrument investments for which there is no
quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by
delivering the said equity instruments.
Financial assets or liabilities can be measured by fair value with changes included in current profit and loss
through designation only when one of the following conditions is met.
1) Through such designation, inconsistency in recognition or measurement of profit and loss resulting from
different measurement basis of financial assets or liabilities can be eliminated or obviously reduced;
2) It has been set forth in formal written documents about risk management or investment strategy that such
financial asset portfolio, financial liability portfolio, or the portfolio of such financial assets or liabilities shall be
managed, evaluated and reported to key management based on fair value;
3) A mixed instrument with one and several embedded derivative instrument (s), unless the embedded derivative
instruments cause no major changes to the cash flow of such mixed instrument or shall not be separated from the
derivative instrument (s) obviously;
4) A mixed instrument with embedded derivative instrument (s) that needs to be separated but cannot be
separately measured at the time of acquisition or the subsequent balance sheet date.
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The Company treats the fair value of financial assets or liabilities measured by changes in fair value included in
current profit or loss at the time of acquisition as the initial recognized amount, including relevant transaction
expenses in current profit and loss. The interests and cash dividends acquired during the period of holding are
recognized as investment income. At the time of disposal, the difference between the fair value and the initial
amount entered in the account is recognized as investment income and the profit and loss from changes in fair
value are adjusted at the same time.
(2) Accounts receivable
Accounts receivable are non-derivative financial assets with fixed and determinable payments that are not quoted
in an active market.
For credit receivable arising from commodities sold or labor services provided by the Company and credit of
other enterprises held by the Company other than the credit of debt tools that are quoted in an active market,
including accounts receivable, other receivables, notes receivable, and prepayment, the amount receivable in
contracts or agreements from the purchaser is treated as the initial recognition amount. For those of a financing
nature, the present value is treated as the initial recognition amount.
At the time of collection or disposal, the difference between the amount acquired and the book value of such
accounts receivable are included in current profit and loss.
(3) Held-to-maturity investment
Held-to-maturity investment refers to non-derivative financial assets with fixed maturity date and fixed or
definite recovery amount which the Company may hold to maturity with clear intention and ability.
For held-to-maturity investment, the Company treats the sum of fair value at the time of acquisition (deducting
bond interests matured but not collected) and relevant transaction expenses as the initial recognition amount.
During the period of share-holding, the interest income is calculated and confirmed in accordance with the
amortized and the actual interest rate, which is included in the investment income. The actual interest rate is
determined at the time of acquisition and remains unchanged within the anticipated existence period or a shorter
period applicable. At the time of disposal, the difference between the price of acquisition and the book value of
such investment is included in investment income.
If the amount of held-to-maturity investment disposed of or reclassified into other financial assets is larger than
the total amount of held-to-maturity investment before sales or reclassification, the remaining held-to-maturity
investment shall be immediately reclassified into available-for-sale financial assets after disposal or
reclassification. The difference between book value and fair value of such investment is included in other
comprehensive income at the date of reclassification, and transferred to current profit and loss in case of
impairment of such available-for-sale financial assets or termination of recognition. However, the following
cases are exceptional:
1) The date of sales or reclassification is close to the due date or redemption date of such investment (e.g. within
3 months before the due date), and changes in the market interest rate have no significant influence on the fair
value of such investment.
2) The enterprise has recovered almost all initial principal with the payment method agreed in the contract.
3) The sales or reclassification arise from independent events beyond the control that are not expected to recur
and is difficult to predict reasonably.
(4) Available-for-sale financial assets
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Available-for-sale financial assets refer to non-derivative available-for-sale financial assets through designation
at initial recognition and financial assets other than other financial asset categories.
For available-for-sale financial assets, the Company treats the sum of fair value at the time of acquisition
(deducting bond interests matured but not collected) and relevant transaction expenses as the initial recognition
amount. The interests or cash dividends obtained during the time of holding are recognized as investment income.
Profit or loss from change in the fair value of available-for-sale financial assets, excluding impairment loss and
exchange difference of monetary financial assets in foreign currency, are directly included in other
comprehensive income. At the time of disposal, the difference between the price of acquisition and the book
value of such financial assets is included in investment profit and loss. At the same time, the amount of assets
disposed originally included in the accumulative amount of changes in the fair value of other comprehensive
income is transferred to investment profit and loss.
Equity instruments with no quotes in the active market and with fair value not reliably measured and derivative
instruments that are connected with the said equity instruments and settled by delivery of the said equity
instruments are measured by cost.
(5) Other financial liabilities
The sum of the fair value of such assets and relevant transaction expenses is taken as the initial recognition
amount. The amortized cost is adopted in the subsequent measurement.
3. Recognition basis and measurement method of financial assets transfer
In case of financial assets transfer of the Company, if almost all risks and returns in the ownership rights of
financial assets are transferred to the assignee, the recognition of such financial assets is terminated, and if
almost all risks and returns in the ownership rights of such financial assets are retained, the recognition of such
financial assets is not terminated.
In the judgment whether a financial asset transfer meets the foregoing conditions for termination of its
recognition, the principle of more focus on substance than form is adopted. The Company divides financial
assets transfer into the complete and the partial transfer. Where the complete transfer of financial assets meets the
conditions for termination of recognition, the difference between the following two amounts is included in
current profit and loss.
(1) Book value of the transferred financial assets;
(2) The sum of consideration acquired due to transfer and the accumulative amount of changes in fair value
originally included in owners' equity (involving the case where the transferred financial assets are the
available-for-sale financial assets).
If the partial transfer of financial assets meets conditions for termination of recognition, the part with its
recognition terminated and that with its recognition not terminated, among the book value of all the transferred
financial assets, are apportioned separately based on their relevant fair value while the difference between the
following two amounts is included in current profit and loss.
(1) Book value of the part with its recognition terminated;
(2) The sum of consideration of the part with its recognition terminated and the amount of the part with its
recognition terminated originally included in the accumulative amount of changes in the fair value of owners'
equity (involving the case where the transferred financial assets are the available-for-sale financial assets).
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In case that financial assets transfer does not meet the conditions for termination of recognition, the recognition
of such financial assets is continued. The consideration acquired is recognized as a financial liability.
4. Conditions for termination of recognition of financial liabilities
If current obligations for a financial liability are discharged wholly or partially, the recognition of the financial
liability is terminated wholly or partially. If the Company signs an agreement with the creditor to substitute an
existing financial liability with a new financial liability and the contract terms about the new liability and the
existing liability are inconsistent, the recognition of the existing financial liability is terminated and the new
financial liability is recognized at the same time.
If material alterations have been made to contract terms of the existing financial liability wholly or partially, the
recognition of the existing liability is wholly or partially terminated and, in the meantime, the liability after
alterations is recognized as a new financial liability.
If the confirmation of all or a part of a financial liability is terminated, the difference between the book value of
the liability with its confirmation terminated and the consideration (including non-cash assets transferred or the
new liability assumed) is included in current profit and loss.
If the Company repurchases part of a financial liability, the total book value of such liability is allocated on the
date of purchase based on the relative fair value of the part with its recognition continued and that with its
recognition terminated. The difference between the book value allocated to the part with its recognition
terminated and the consideration (including non-cash assets or the new liability) is included in current profit and
loss.
5. Methods for the determination of the fair value of financial assets and liabilities
For financial assets and liabilities in an active market, the Company determines respective fair value based on
the quotation in the active market. The quotation in the active market includes the quotation of an asset or
liability that can be easily and regularly obtained from exchanges, dealers, brokers, industry groups, pricing
agencies, or regulators and can represent the actual and frequent trading on the basis of fair trade.
For financial assets initially acquired or derivative financial assets or liabilities undertaken, the Company
determines their fair value based on the market price.
For financial assets and liabilities that do not exist in an active market, their fair values are determined with
appraisal techniques. In appraisal, the Company adopts applicable appraisal techniques in the current case with
sufficient data and other information support, chooses the input values that are consistent with features of assets
or liabilities taken into consideration by market participants in relevant transactions, and makes priority use of
relevant observable input values. In case that relevant observable input values cannot be obtained or it is
unpractical to obtain them, unobservable input values will be used.
6. Accrual of impairment provision for financial assets (excluding accounts receivable)
The Company shall verify the book value of financial assets measured by fair value with changes included in
current profit and loss on the balance sheet date. If any objective evidence shows impairment of such financial
assets, an impairment provision shall be made.
Objective evidence for impairment of such financial assets includes but is not limited to:
(1) A serious financial difficulty occurs to the issuer or debtor;
(2) The debtor breaches any contract terms, for example, fails to pay or delays the payment of interests or the
principal;
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(3) The creditor makes any concession to the debtor which is in financial difficulties due to economic or legal
factors;
(4) The debtor will probably become bankrupt or carry out other financial reorganizations;
(5) The financial asset can no longer continue to be traded in the active market due to serious financial
difficulties of the issuer;
(6) It is impossible to identify whether the cash flow of a certain asset within a certain combination of financial
assets has decreased or not. But after an overall appraisal according to the public data available, it is found that
the predicted future cash flow of the said combination of financial assets has indeed decreased since it was
initially recognized and such decrease can be measured, for example, the ability of the debtor of the said
combination of financial assets worsens gradually, the unemployment rate of the country or region where the
debtor is situated increases, the prices of the region where the guaranty is situated are obviously dropping, or the
industrial sector concerned is in slump;
(7) Any seriously disadvantageous change has occurred to technical, market, economic or legal environment
wherein the issuer operates its business, which makes the investor of an equity instrument unable to withdraw its
investment cost;
(8) Where the fair value of the equity instrument investment drops significantly or not temporarily.
Specific impairment methods of financial assets are as follows:
(1) Impairment provision for available-for-sale financial assets
The Company shall appraise individual available-for-sale equity instrument investment on the balance sheet date.
In case the fair value of the equity instrument investment on the balance sheet date is lower than over 50%
(included) of its cost or is lower than its cost for over 12 months (included) consecutively, it indicates that such
asset is impaired. In case the fair value of such equity instrument investment on the balance sheet date is lower
than over 20% (included) but below 50% of its cost, the Company will determine whether such equity
instrument investment is impaired by taking into consideration other relevant factors such as price volatility.
The cost described in the preceding paragraph is determined at the initial acquisition cost of available-for-sale
equity instrument investment less the recovered principal, amortized amount, and impairment losses originally
included in profit or loss. The fair value of available-for-sale equity instrument investment that does not exist in
an active market is determined at the present value of the future cash flows discounted at the current market yield.
The fair value of available-for-sale equity instrument investment that is quoted in an active market is determined
at the closing price of the stock exchange at the end of the period, unless such available-for-sale equity
instrument investment is subject to restricted period. The fair value of available-for-sale equity instrument
investment that is subject to restricted period is determined at the closing price of the stock exchange at the end
of the period less the amount of compensation claimed by market participants for bearing the risk of being
unable to sell such equity instrument in the open market for a specified period.
When an available-for-sale financial asset is impaired, even if the recognition of the financial asset has not been
terminated, the accumulative losses arising from decrease in the fair value of the owner's equity which was
directly included in other comprehensive income shall be transferred out and included in current profit and loss.
The accumulative losses that are transferred out shall be the balance between the initial costs of the financial
asset available for sale and the principals as taken back, the current fair value and the impairment-related losses
as was included in current profit and loss.
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As for the available-for-sale debt instruments whose impairment losses have been recognized, if, within the
accounting period thereafter, the fair value has risen and such instruments are objectively related to the
subsequent events that occur after the original impairment losses were recognized, the originally recognized
impairment losses shall be reversed and included in current profit and loss. The impairment loss of
available-for-sale equity instruments shall be reversed when the value of such equity instruments rebound.
However, for equity instruments investment with no quotes in the active market and with fair value not reliably
measured and derivative instruments that are connected with the said equity instruments and settled by delivery
of the said equity instruments, the impairment loss shall not be reversed.
(2) Impairment provision for held-to-maturity investments
If any objective evidence shows impairment of held-to-maturity investments, the impairment loss shall be
calculated based on the difference between the book value of those investments and the current value of the
expected future cash flow. If any evidence indicates that the investment value has recovered after provision, the
originally recognized impairment loss can be reversed and included in current profit and loss. However, the
reversed book value shall not exceed the amortized cost of such financial assets at the date of reversal in case
that the impairment provision has not been made.
7. Counteraction of financial assets and liabilities
Financial assets and liabilities are separately listed in the balance sheet statement and not counteracted. However,
if the following conditions are satisfied at the same time, the balance after counteraction may be listed in the
balance sheet statement.
(1) The Company has the legal right to counteract the recognized amount which is currently enforceable.
(2) The Company plans to settle in net amount or realize such financial assets and liquidate such financial
liabilities at the same time.
(XI) Accounts receivable
1. Accounts receivable with single significant amount and single provision for bad debts
Recognition criteria for accounts receivable with single significant amount and single provision for bad debts:
Top 5 accounts receivable
Recognition criteria for accounts receivable with single significant amount: impairment tests are carried out
separately, and the difference between the expected future cash flow and its book value is accrued for bad debt
provision and included in current profit and loss. Accounts receivable with no impairment by test shall be
included in the bad debt provision for a certain combination.
2. Accounts receivable with bad debt provision accrued based on credit risk feature combinations
(1) Determination basis for credit risk feature combinations
Accounts receivable with no single significant amount and accounts receivable with single significant amount
and no impairment by test are classified into several combinations according to credit risk feature. Based on the
actual loss rate of the accounts receivable combinations with similar credit risk feature in the previous year, the
bad debt provision accrual shall be determined according to the present condition.
Determination basis for combination:
Name of combination Method of accrual Determination basis for combination
Combination of aging Aging analysis method The Company makes the best appraisal of the provision proportion of
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analysis method accounts receivable based on the previous experience and classifies
the credit risk feature combinations by reference to aging of accounts
receivable
Based on the property of accounts receivable, the bad debt provision
Combination of
No bad debt provision accrual is not accrued, including rental deposit, deposit, account with related
specific object
parties, etc.
(2) Accrual method based on credit risk feature combinations:
Bad debt provision accrued with the aging analysis method
Provision proportion of accounts Provision proportion of other accounts
Aging
receivable (%) receivable (%)
Within 1 year
1-2 years 5.00 5.00
2-3 years 10.00 10.00
Over 3 years 20.00 20.00
3. Accounts receivable with no single significant amount but with single provision for bad debts
Reason for single provision for bad debts: Any objective evidence indicates that the Company is unable to
recover the accounts receivable according to the original terms.
Accrual method for bad debt provision: The difference between the expected future cash flow and its book value
is accrued for bad debt provision.
(XII) Inventory
1. Classification of inventory
Inventory refers to finished products or commodities held for sale by the Company in daily activities, products in
process, and materials consumed in the production or labor service process. It mainly includes raw materials,
circulating materials, commissioned processing materials, products in process, semi-finished goods, finished
products (stock goods), delivered goods, development costs, developed products, etc.
Development costs refer to properties not completed for sale purposes. Lands to be developed refer to the land
which is purchased and planned for developed products after its completion. Developed products refer to
properties which have been completed and are to be sold. In the overall development of a project, lands to be
developed are transferred to development costs. In the development by phases, the land developed in phases is
transferred to development costs while the land not developed remains in the land to be developed.
2. Pricing method of inventory
Initial measurement will be carried out at the time of acquisition of the inventory based on its costs, including
procurement cost, processing cost and other costs. The pricing of the inventory is based on the weighted-average
method at the time of delivery.
3. Determination basis for net realizable value of inventory and accrual method for inventory depreciation
provision
After a complete check on the inventory at the end of the period, the inventory depreciation provision is accrued
or adjusted based on the lower one between the inventory cost and the net realizable value. The net realizable
value of commodity inventory directly for sale including finished products, stock goods and materials for sale is
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determined by the estimated selling price of such inventory minus estimated selling expenses and relevant taxes
during production and operation. The net realizable value of material inventory to be processed is determined by
the estimated selling price of the finished product minus estimated cost to be incurred until completion,
estimated selling expenses and relevant taxes during production and operation. The net realizable value of
inventory held for fulfilling sales contract or labor service contract is calculated based on the contract price. If
quantity of inventories held is more than the ordered quantity in the sales contract, the net realizable value of the
inventory for the excess part is calculated based on general selling price.
At the end of the period, the inventory depreciation provision is accrued based on separate items. However, for
inventories in large quantity at low unit price, the depreciation provision is accrued based on types of inventories.
For inventories that are related to product series produced and sold in the same area for same or similar final use
or purpose and difficult to be measured separately from other items, inventory depreciation provision is
consolidated for accrual.
Where factors that caused decrease in value of inventory disappear, the amount written down shall be recovered
and written back from the accrued inventory depreciation provision. The amount written back shall be included
in current profit and loss.
4. Inventory system
The perpetual inventory system is adopted.
5. Amortization method of low-value consumables and packages
(1) For low-value consumables, one-off amortization method is adopted.
(2) For packages, one-off amortization method is adopted.
(3) Other turnover materials are amortized with one-off write-off method.
6. Accounting method of land for development
The expenses incurred by pure land development project shall constitute the land development cost alone.
For projects with overall development of property, the expenses with definite payers are generally amortized to
the commodity house cost based on the actual area.
7. Accounting method of public facility expenses
For public facilities not available for paid transfer, the expenses shall be included in the commodity house cost
based on the benefit ratio;
For public facilities available for paid transfer, all supporting facilities are treated as the accounting object and
the costs incurred are collected.
8. Accounting method of maintenance fund
According to relevant provisions at the location of the developed project, the maintenance cost is collected from
the house purchaser or included in the development cost when the relevant developed product is sold (or
pre-sold), and turned in to maintenance cost management department.
9. Accounting method of quality deposit
The quality deposit is retained from the project fund of the construction party according to the construction
contract. Maintenance expenses incurred during the warranty period of the developed product are used to offset
the quality deposit. When the agreed warranty period expires, the remaining quality deposit is returned to the
construction party.
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(XIII) Loans and prepayment issued
1. Loan
Loan refers to the money in RMB lent to medium and small enterprise corporations, individual businessmen and
individuals according to the market interest rate, the principal of which issued will be taken as the amount for
initial recognition. The earnings of interest recognized during the holding of the loan shall be calculated
according to actual interest rate, which will be determined when the loan is issued, and will remain unchanged
during the holding of the loan or shorter period.
2. Reserve for loss of loan
In the end of every quarter, the Company will divide every unit loan into such five categories as normal, focused,
secondary, suspicious and lost according to the quality of the credit assets and incorporate into daily credit
management to carry out classified supervision.
The Company shall reasonably estimate possible loss that might arise from the loan to accrue reserve for loss of
loan in time, which shall include general reserve and special reserve. General reserve is accrued according to
certain percentage of the total balance of loan, used for compensating the reserve of potential loss not recognized.
Special reserve is the provision accrued for compensating special loss according to the level of the loss of every
loan after classifying the risks of the loan in light with the Guiding Principles o Classification of Risks of Loan.
The scope of provision of reserve for loss of loan comprises the assets to bear risks and losses, in details,
including all kinds of small loans (including loan by mortgage, pledge, guarantee and credit, etc.) and bill
discount, etc.
The Company shall withdraw general serve every quarter. The year-end balance of general reserve shall not be
lower than 1% of the balance of the loan in the end of the year.
The Company shall withdraw special reserve per quarter according to the following percentages:
(1) Normal loan: the percentage of provision is 1%;
(2) Focused loan: the percentage of provision is 2%;
(3) Secondary loan: the percentage of provision is 25%;
(4) Suspicious loan: the percentage of provision is 50%;
(5) Lost loan: the percentage of provision is 100%.
(XIV) Held-for-sale assets
1. Standards to recognize as held-for-sale
The Company will recognize the components of the enterprise (or non-circulating assets) satisfying the
following conditions at the same time as the held-for-sale part:
(1) Such components can be sold immediately under current situations according to the conventional terms for
selling such components;
(2) The enterprise has made resolution on how to dispose such components. If approval shall be obtained from
shareholders according to the stipulations, approval has been obtained from the General Meeting of Shareholders
or relevant power authority;
(3) The enterprise has signed irrevocable transfer agreement with the transferee;
(4) This transfer will be completed within one year.
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2. Accounting method for dividing to held-for-sale
The Company will adjust the estimated net residual value of the fixed asset held-for-sale to make its estimated
residual value reflect the amount of its fair value minus the disposition cost, but shall not exceed the original
book value of such fixed asset in compliance with the held-for-sale conditions. The balance between the original
book value and the estimated net residual value (the former higher than the latter) shall be recognized in current
profit or loss as assets impairment loss. No depreciation or amortization will be accrued for held-for-sale fixed
asset, but will measurement will be carried out according to the lower between the book value and the net
amount of fair value minus the disposition cost.
Other non-circulating assets including equity investment and intangible assets in compliance with the
held-for-sale conditions shall be treated according to the aforesaid principles, but will not include deferred
income tax assets, financial assets normalized by
the contractual rights arising from Enterprise Accounting Rules No. 22-Recognition and Measurement of
Financial Instruments, investment real estate and biological assets measured by fair value and contractual rights
arising from insurance contract.
(XV) Long-term equity investment
1. Determination of initial investment cost
(1) Long-term equity investment formed by consolidation of enterprises. For specific accounting policies, please
refer to Notes IV/v Accounting Treatment Methods of Consolidation of Enterprises under Same Control and Not
under Same Control.
(2) Long-term equity investment obtained by other methods
Concerning the long-term equity investment obtained by paying cash, the purchasing price actually paid will be
taken as initial investment cost, which includes costs, taxes and other necessary expenditures directly related
with the acquisition of long-term equity investment.
Concerning the long-term equity investment obtained by issuing equity securities, the fair value of the equity
securities issued shall be taken as the initial investment cost. Transaction cost arising from issuance or acquiring
own equity tools, if can be directly attributed to equity transaction, can be deducted from equity.
Under the preconditions that the non-monetary assets exchange possesses commercial nature and the fair value
of assets exchanged in or out can be reliably measured, the initial investment cost of long-term equity investment
exchanged in by non-monetary assets shall be determined based on the fair value of assets exchanged out, unless
there is solid evidence proving that the fair value of the assets exchanged in is more reliable. For the exchange of
non-monetary assets not satisfying aforesaid preconditions, the book value of the assets exchanged out and
relevant taxes payable shall be recognized as the initial investment cost of long-term equity investment
exchanged in.
The initial investment cost of the long-term equity investment obtained by restructure of debts shall be
determined based on fair value.
2. Subsequent measurement and recognition of profit or loss
(1) Cost method
The Company can adopt cost method to account the long-term equity investment controlled by the invested unit,
and priced according to the investment cost, add or recover the investment and adjust the cost of long-term
equity investment.
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Except the cash dividends or profits included in the price or the consideration actually paid when acquiring the
investment but not issued, the Company shall recognize the cash dividends or profits announced to distribute by
the invested unit as the current investment earnings.
(2) Equity method
The Company adopts equity method to account the long-term equity investment to the affiliated business and
jointly operated enterprise. For equity investment of the jointly operated enterprise indirectly held by similar
subject including venture investment organization, joint fund, trust company or unit-linked insurance fund, fair
value shall be adopted for measurement and the changes will be recognized in profit or loss.
For the balance between the initial investment cost of long-term equity investment higher than the identifiable
net assets fair value of the invested unit at the time of investment, initial investment cost of long-term equity
investment shall not be adjusted. The balance between the initial investment costs lower than the fair value
shares of identifiable net assets of the invested unit at the time of investment shall be recognized in current profit
or loss.
After the Company acquires long-term equity investment, according to the net profit or loss recognized by the
invested unit to be enjoyed or shared and other comprehensive earnings, investment earnings and other
comprehensive earnings shall be recognized respectively, meanwhile book value of long-term equity investment
shall be adjusted. Moreover, according to the profits or cash dividends announced by the invested unit to be
distributed, the part to be received will be calculated and book value of long-term equity investment shall be
reduced accordingly. Concerning other changes in owner's equity of the invested unit apart from net profit or loss,
other comprehensive earnings and profits distribution, book value of long-term equity investment shall be
adjusted and incorporated into owner's rights and interests.
When recognizing the shares of net profit or loss of the invested unit to be received, based on the fair value of
each identifiable asset of the invested unit at the time of acquiring the investment, recognition shall be made after
adjusting the net profits of the invested unit. Profits and losses from internal transactions not realized between
the Company and the joint ventures and jointly operated enterprises shall be amortized according to the part
attributable to the Company that is calculated based on the percentage receivable, and on such basis investment
profits and losses are recognized.
When the Company recognizing the losses of the invested unit to be shouldered, it shall be handled according to
the following sequence: firstly, to write down the book value of the long-term equity investment; secondly, if the
book value of long-term equity investment is not sufficient to write down, investment loss shall be recognized
continuously based on the book value of long-term equity that has materially formed net investment to the
invested unit, and write down the book value of long-term receivable items. At last, after aforesaid disposal,
according to investment contract or agreement, if it is stipulated that the enterprise shall undertake extra
obligations, estimated liabilities shall be recognized according to the estimated obligations for undertaking,
incorporated into current investment loss.
If profits are realized by the invested unit in subsequent period, after the Company deducts the shares to be
shouldered for the losses not recognized, the treatment shall be made according to reverse sequence as above
mentioned. After writing down the book balance of estimated liabilities, recovering the long-term equity that
actually forms net investment to the invested unit as well as the book value of long-term equity investment,
investment earnings shall be recovered in recognition.
3. Conversion of accounting method for long-term equity investment
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(1) Measurement of fair value changed to accounting by equity method
Concerning the equity investment on which accounting treatment is carried out held by the Company previously
that has no control, joint control or significant influences on the invested unit according to the recognition as
financial instruments and measurement rules, after increasing investment, if the Company is able to impose
significant influences on the invested unit or performs joint control by not control, the total of the fair value of
the equity investment held according to Enterprise Accounting Rules No. 22-Recognition and Measurement of
Financial Instruments plus the newly increased investment cost shall be recognized as the initial investment cost
accounted by equity method.
If the originally held equity investment is classified as available-for-sale financial asset, the balance between its
fair value and book as well as the total fair value changes that were incorporate dint other comprehensive
earnings shall be transferred to the current profit or loss accounted by equity method.
The book value of the long-term equity investment accounted by the balance between the initial investment cost
accounted by equity method and the fair value of identifiable net assets of the invested unit on the date of
increased investment determined by the new shareholding percentages after the increase of investment, and shall
be incorporated into current non-operating revenue.
(2) Fair value measurement or equity method accounting changed to accounting by cost method
Concerning the equity investment held by the Company in the invested unit that the Company does not control,
jointly control or generates significant influences accounted according to recognition of financial instruments
and measurement rules, or due to the increase of investment in long-term equity investment held in any joint
venture or jointly operated enterprise, the Company is able to perform control on the invested unit not under the
same control, when individual financial statement is prepared, the total of the book value of the equity
investment held previously and the newly increased investment cost will be recognized as initial investment cost
accounted by cost method.
Concerning other comprehensive earnings recognized by adopting equity method on equity investment held
before the date of acquisition, when such investment is disposed, accounting treatment shall be carried out
according to the same basis as directly treatment of relevant assets or liabilities by the invested unit.
If the equity investment held before the date of acquisition encounters accounting treatment in accordance with
relevant stipulations set out in Enterprise Accounting Rules No. 22 - Recognition and Measurement of Financial
Instruments, total changes of fair value that was incorporated into other comprehensive earnings previously shall
be transferred into current profit or loss when cost method is used for accounting.
(3) Accounting by equity method changed to measurement by fair value
If the Company loses it joint control or significant influence on the invested unit due to such reason as disposing
part of the equity investment, the remaining equity shall be accounted according to Enterprise Accounting Rules
No. 22 - Recognition and Measurement of Financial Instruments. The balance between the fair value and the
book value on the date of losing joint control or significant influence shall be incorporated into current profit or
loss.
Other comprehensive earnings recognized because of the adaptation of equipment method for the accounting of
the original equity investment shall receive accounting treatment of the same basis as the invested unit directly
treating relevant assets or liabilities when the use of equity method for accounting is terminated.
(4) Cost method changed to equity method
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If the Company has lost the control over the invested unit due to such reasons as treating part of equity
investment, when preparing individual financial statement, if the remaining equity after treatment can perform
joint control or impose significant influences on the invested unit, equity method shall be used for the accounting,
and adjustment shall be implemented as if the remaining equity has been accounted by using equity method since
the acquisition.
(5) Cost method changed to measurement by fair value
If the Company has lost the control over the invested unit due to such reasons as treating part of equity
investment, when preparing individual financial statement, if the remaining equity after treatment cannot
perform joint control or impose significant influences on the invested unit, accounting treatment shall be
changed to according to relevant stipulations set out in Enterprise Accounting Rules No. 22 - Recognition and
Measurement of Financial Instruments. The balance between the fair value and the book value on the date of
losing control shall be incorporated into current profit or loss.
4. Treatment on long-term equity investment
When treating long-term equity investment, the balance between its book value and the actually acquired price
shall be incorporated into current profit or loss. Concerning long-term equity investment accounted by equity
method, when treating such investment, the same basis used by the invested unit in directly treatment relevant
assets or liabilities shall be adopted to carry out accounting treatment on the part that was incorporated into other
comprehensive earnings according to relevant percentages.
When treating the equity investment to subsidiaries, if terms, conditions and economic influences of the
transactions comply with one or several situations below, several transactions shall be taken as package deal to
carry out accounting treatment:
(1) These transactions are concluded at the same time or after mutual influences are considered.
(2) The entirety of these transactions can reach a complete business result.
(3) Occurrence of one transaction depends on at least one other transaction.
(4) On transaction, separately seen, is not economic, but when being considered with other transactions, is
economic.
If control over the previous subsidiary is lost due to treating part of equity investment or other reasons, it is not
considered as package deal. Individual financial statement and consolidated financial statement shall be
distinguished to carry out relevant accounting treatment.
(1) In individual financial statement, the balance between the book value and the actual acquisition price of the
equity to be treated shall be incorporated into current profit or loss. If the remaining equity after treatment can
implement joint control or impose significant influence on the invested unit, equity method shall be changed for
accounting, and adjustment shall be made on the remaining equity as if it was accounted by equity method at the
time of acquisition. If the remaining equity after treatment cannot implement joint control or impose significant
influence on the invested unit, accounting treatment shall be carried out according to relevant stipulations set out
in Enterprise Accounting Rules No. 22 - Recognition and Measurement of Financial Instruments. The balance
between the fair value and the book value on the date of losing control shall be recognized in current profit or
loss.
(2) In consolidated financial statement, for all the transactions before the loss of the control on the subsidy,
capital surplus (share capital premium) shall be adjusted based on the balance between the disposition price and
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the net assets shares enjoyable in the subsidiary that is calculated continuously since the date of purchase or
consolidation. If the capital surplus is not sufficient to write down, retained earnings shall be adjusted. When the
control over the subsidy is lost, the remaining equity shall be measured again according to the fair value on the
date of losing the control. The balance obtained by total of consideration acquired by disposing equity and the
fair value of remaining equity minus the net assets calculated continuously since the date of purchase of the
subsidiary enjoyable as calculated according to the original shareholding percentage shall be incorporated into
the investment earnings of the term in which the control is lost, meanwhile goodwill shall be written down.
Other comprehensive earnings related with the equity investment of the previous subsidiary shall be transferred
to be current investment earnings when the control is lost.
If the transactions from dealing with the equity investment to subsidiary until the loss of control belong to
package deal, all transactions shall be taken as one transaction of disposing equity investment to the subsidiary
and losing control for accounting treatment. Relevant accounting treatment shall be carried out in individual
financial statement and consolidated financial statement:
(1) In individual financial statement, before the loss of control, the balance between the price of every disposal
and the book value of long-term equity investment corresponding to the equity disposed shall be recognized as
other comprehensive earnings, and will be transferred to losses and profits of the term in which the control is lost
when the control is lost.
(2) In consolidated financial statements, the balance between the price of every disposal before the loss of
control and the net assets shares held in the subsidiary corresponding to the disposal of investment shall be
recognized as other comprehensive earnings, and will be transferred to losses and profits of the term in which the
control is lost when the control is lost.
5. Standards to judge control joint and significant influences
If the Company controls some arrangement with other participants collectively according to relevant stipulations,
and the decision on activity that generates significant influence on the return of such arrangement only exists
upon consensus of all participants that share the control right, it will be regarded as the Company controls such
arrangement jointly with other participants, and the arrangement belongs to jointly operated arrangement.
If jointly operated arrangement is achieved by single entity, according to relevant stipulations, if it is judged that
the Company has right on the net assets of such single entity, the single entity shall be taken as joint venture, and
equity method will be adopted for settlement. If according to relevant stipulations, it is judged that the Company
has no right on the net assets of such single entity, such single entity shall be taken as jointly operating. The
Company shall recognize the items that are related with the shares of the jointly operated interests, and carry out
accounting treatment according to the stipulations set out in relevant enterprise accounting standards.
Significant influence refers that the investor has the power to participate in the decision-making of financial and
operation policies of the invested unit, but cannot control or jointly control with other parties the formulation of
these policies. The Company will judge the possession of significant influence on the invested unit through one
or several situations below and comprehensively consideration of all facts and situations. (1) Has designated
deputy in the Board of Directors or similar power authority in the invested unit; (2) Participates in the
formulation of financial and operation policies of the invested unit; (3) Has important transactions with the
invested unit; (4) Has dispatched management personnel to the invested unit; (5) Provides key technical files to
the invested unit.
(XVI) Investment real estate
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Investment real estate refers to the real estate held for earning rent or capital value adding or both, including the
using right of the land leased, the land using right held for transfer after appreciation and the leased buildings.
Cost of investment real estate of the Company shall be taken as entry value. Cost of purchased investment real
estate includes purchasing price, relevant taxes and other expenses that can be directly attributable to such asset.
Cost of the investment real estate built will be composed by all necessary expenses to build such asset and those
arising before the asset reach the estimated usable status.
The Company carries out follow-up measurement on investment real estate by adopting cost mode, and accrues
depreciation or amortization on buildings and land using right according to estimated service life and net residual
value rate. Estimated service life, net residual value rate and yearly depreciation (amortization) rate are shown
below:
Yearly depreciation (amortization)
Type Estimated service life (year) Estimated net residual value rate
rate
Buildings 20-40 5% 4.75%-2.38%
If the purpose of investment real estate is for own use, since the date of change, the Company converts such
investment real estate to fixed asset or intangible asset. If the purpose of the real estate is changed to earning rent
or capital value adding, since the date of change, the Company shall convert fixed asset or intangible asset to
investment real estate. When conversion occurs, the book value before the conversion will be taken as the entry
value after conversion.
When investment real estate is disposed or permanently exits from use, and is estimated that no economic
interest will be gained from its disposal, the recognition on such investment real estate shall be terminated. The
income of disposal of real estate, including selling, transferring, discarding or destroying the investment real
estate minus its book value and relevant taxes shall be recognized in current profit or loss.
(XVII) Fixed asset
1. Conditions to recognize fixed assets
Fixed assets refer to intangible assets that are held for producing commodities, providing labors, renting or
operation management with the service life over one fiscal year. Fixed asset will be recognized when satisfying
the following conditions at the same time:
(1) Economic interest related with such fixed assets might probably flow into the enterprise.
(2) Cost of such fixed asset can be reliably measured.
2. Initial measurement of fixed assets
Initial measurement on the fixed assets of the Company will be carried out according to the cost, in which cost of
fixed assets purchased include purchasing price and import tariff, etc. as well as other expenses arising in order
to make the fixed assets reach estimated usable status that can be directly attributable to such assets. Cost of
fixed asset built by the Company will be composed of necessary expenses to make the asset reach usable status.
Value of fixed asset invested by the investor stipulated in the investment contract or agreement shall be taken as
entry value, but if the price set out in the contract or agreement is not fair, it shall be accounted according to its
fair value. If the price of fixed asset purchased exceeds normal credit conditions and is paid in extension, in fact
possessing financing nature, the cost of fixed asset shall be determined based on the current value of purchasing
price. The balance between the actually paid price and the current value of purchasing price, except to be
capitalized, shall be recognized in current profit or loss in the credit period.
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3. Follow-up measurement and disposal of fixed assets
(1) Depreciation of fixed assets
Depreciation of fixed asset shall be accrued during the estimated service life according to the entry value minus
the estimated net residual value. For fixed asset that impairment reserve has been provided, depreciation shall be
determined according to the book value after the deduction of impairment reserve in the coming period as well
as the years to be used.
According to nature and situation of use of fixed asset, the Company will determine the service life and
estimated net residual value of the fixed asset. At the end of the year, the Company will recheck the service life,
the estimated net residual value and the depreciation method of the fixed. If there is difference from the
previously estimated amount, relevant adjustment shall be carried out.
Estimated service life, net residual value rate and yearly depreciation rate of different type of fixed assets are
shown below:
Yearly depreciation
Type Depreciation method Depreciation life (year) Residual value rate (%)
rate (%)
Buildings and Straight-line depreciation
20-40 5 4.75-2.38
constructions method
Machines and Straight-line depreciation
5-10 5 19.00-9.50
equipment method
Electronic Straight-line depreciation
5-10 5 19.00-9.50
equipment method
Transportation Straight-line depreciation
5-10 5 19.00-9.50
equipment method
Straight-line depreciation
Other equipment 5-10 5 19.00-9.50
method
(2) Subsequent expenditures of fixed assets
Subsequent expenditures related with fixed asset, if complies with the recognition conditions for fixed asset,
shall be incorporated into the cost of fixed asset; if does not comply with the recognition conditions for fixed
asset, shall be recognized in current profit or loss at the time of occurrence.
(3) Disposal of fixed asset
When a fixed asset cannot generate economic profits by disposal or by use as estimated, such fixed asset shall be
terminated in recognition. The amount received by disposal of fixed asset, such as selling, transferring,
discarding or destroying, minus its book value and relevant taxes shall be recognized in current profit or loss.
4. Recognition basis, pricing and depreciation method of fixed assets leased by financing
When fixed asset leased by the Company complies one or several standards set below, it shall be recognized as
fixed asset leased in by financing:
(1) When the leasing period is expired, the ownership of the leased asset will be transferred to the Company.
(2) The Company has the option to purchase the leased asset. It is estimated that the purchasing price concluded
will be far lower than the fair value of the leased asset at the time of exercising the option, therefore, it can be
reasonably decided from the starting date of the lease that the Company will excise such option.
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(3) Even if the ownership of asset will not be transferred, the leasing period accounts for most of the service life
of the leased asset.
(4) The current value of the minimum leasing payment from the starting date of the lease is almost equal to the
fair value of the leased asset when the lease starts.
(5) The nature of the leased asset is special. If no big renovation is made, it can only be used by the Company.
The lower between the fair value of the leased asset starting from the leasing date and the current value of the
minimum leasing payment will be taken as the entry value of the fixed asset leased in by financing. The
minimum leasing payment shall be taken as the entry value of long-term payable, and its balance shall be taken
as the unrecognized financing cost. Initially direct expenses arising from the leasing negotiation and the signing
of leasing contract attributable to leased items, including commission charge, lawyer fee, traveling cost and
stamp tax shall be incorporated into the value of the leased asset. The leasing expenses not recognized will be
amortized by using actual interest rate method during the period of leasing in installments.
The Company adopts depreciation policy consistent with the self-owned fixed assets to accrue depreciation of
fixed assets leased in by financing. If it can be reasonably determined that the ownership of the leased asset can
be acquired when the leasing period is expired, depreciation shall be accrued during the service life of the leased
asset. If it cannot be reasonably determined that the ownership of the leased asset can be acquired when the
leasing period is expired, depreciation shall be accrued in the shorter period between the leasing period and the
service life of the leased asset.
(XVIII) Construction in progress
1. Initial measurement of construction in progress
Construction in progress built by the Company shall be priced according to the actual cost, which will be
composed of the necessary costs to build the asset and make it reach the estimated usable status, including
material cost for the project, labor cost, relevant taxes paid, borrowing cost to be capitalized and indirect cost to
be amortized.
2. Standard and time for construction in progress to be carried over to fixed asset
All costs of construction in progress arising to make such asset reach estimated usable status shall be taken as the
entry value of the fixed asset. If the construction in progress built has reached the estimated usable status, but no
completion settlement is done, from the date of reaching the usable status, according to engineering budget,
construction cost or actual cost of the project, the construction in progress will be carried over to fixed asset
according to the estimated value, and depreciation of fixed asset shall be accrued according to the Company's
depreciation policy on fixed assets. After the completion settlement is done, the estimated value shall be adjusted
according to the actual cost, but the depreciation accrued will not be adjusted.
(XIX) Borrowing costs
1. Recognition principles of capitalization of borrowing costs
Borrowing costs incurred by the Company, if can be directly attributable to the purchase, construction or
production of asset in compliance with the capitalization conditions, will be capitalized upon satisfying the
conditions of capitalization, and incorporated into costs of relevant assets. Other borrowing costs will be
recognized as costs according to the accrual at the time of occurrence, and recognized in current profit or loss.
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Assets in compliance with the capitalization conditions refer to fixed assets, investment real estate and inventory
that can reach estimated usable or sellable status after quite long time of purchasing, construction or production
activities.
Borrowing costs will be capitalized when satisfying the following conditions at the same time:
(1) Assets costs have occurred, which include the expenses arising from paying cash, transferring non-cash assets
or bearing liabilities with interest in order to purchase, build or produce assets in compliance with the
capitalization conditions.
(2) Borrowing costs have occurred.
(3) Necessary activities including purchasing, building or production to make the asset reach estimated usable or
sellable status have been started.
2. Period of capitalization of borrowing costs
The capitalization period refers to the period from when the borrowing costs are capitalized to the stop of the
capitalization. The suspended period of capitalization of borrowing costs are not included.
When the assets purchased, built or produced in compliance with the capitalization conditions reach estimated
usable or sellable status, the capitalization of borrowing costs shall be stopped.
When part of the items in the assets purchased, built or produced in compliance with the capitalization are
completed respectively and can be used separately, the capitalization of borrowing costs of such part of assets
shall be stopped.
If the assets purchased, built or produced are completed in different parts, but can only be used or sold after the
entire completion, the capitalization of borrowing costs shall be stopped when such assets are entirely completed.
3. Period of suspension of capitalization
If asset in compliance with capitalization conditions encounters abnormal suspension, and the suspension
exceeds 3 months continuously during the process of purchase, construction or production, the capitalization of
borrowing costs shall be suspended. If such suspension is necessary procedure to make the asset in compliance
with capitalization conditions purchased, built or produced to reach usable or sellable status, capitalization of
borrowing costs shall be continued. The borrowing costs arising during the suspension shall be recognized in
current profit or loss until the activities of purchasing, building or production of asset are restarted, capitalization
of borrowing costs shall be continued.
4. Calculation method for amount of capitalization of borrowing costs
Interest of special loan (minus the income of interest obtained by unused loan deposited in the bank or the
investment earnings obtained by temporary investment) and its auxiliary costs shall be capitalized before the
asset in compliance with the capitalization conditions purchased, built or produced reaches usable or sellable
status.
Interest amount of general loan to be capitalized shall be calculated and determined by the weighted average of
the accumulated asset expenditures exceeding special loan multiplying the capitalization rate of general loan
occupied. Capitalization rate will be calculated and determined according to the weighted average interest rate of
general loan.
If the loan has discount or premium, amount of discount or premium to be amortized in every accounting period
shall be determined according to actual interest rate method, and amount of interest of every period shall be
adjusted.
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(XX) Intangible assets and development expenses
An intangible asset refers to an identifiable non-monetary asset without physical substance which is possessed or
controlled by the Company, including purchased software and land use rights.
1. Initial measurement of intangible assets
The cost of the intangible assets purchased from outside includes purchase price money, relevant taxes and other
expenses incurred due to putting such assets to the anticipated use that can be directly attributed to such assets.
Where the price money of the purchased intangible assets is paid on a deferred basis within a term exceeding
regular credit conditions and actually of a financing nature, the cost of the intangible assets is determined on the
basis of the current value of the price money in purchase.
The entry value in the account of the fixed assets obtained from debtors for the repayment of liabilities in debt
restructuring is determined on the basis of the fair value of the fixed assets. The difference between the book
value of debt restructuring and the fair value of the fixed assets used for the repayment of liabilities is 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.
The recorded value in the account of the intangible assets obtained by the merger of the enterprises under the
control of a same entity is determined according to the book value of the merged party. The recorded value in the
account of the intangible assets obtained by the merger of the enterprises under the control of different entities is
determined according to the fair value.
The cost of the intangible assets formed through internal R&D activities includes: the cost of materials and labor
consumed in the development of such intangible assets, registration fee, the amortization of other patent rights
and franchises used in the development process and the interests expenses that meet the conditions of
capitalization, and other direct expenses incurred due to putting such intangible assets into the anticipated use.
2. Subsequent measurement of intangible assets
When the Company acquires intangible assets, the Company analyzes and determines the service life and
classifies intangible assets into intangible assets with limited service life and intangible assets with uncertain
service life.
(1) Intangible assets with limited service life
The intangible assets with limited service life are amortized based on straight-line method in the period when the
assets bring economic benefits to the enterprise. The estimated service life and basis of intangible assets with
limited service life are as follows:
Item Estimated service life Basis
Outsourced software 5 Benefit period
Land use right 50 Benefit period
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At the end of each year, the service life and amortization method of intangible assets with limited service life are
rechecked and an adjustment is made if the service life differs from the original estimated service life.
At the end of the current period, the service life and amortization method of the intangible assets are the same as
the last year.
(2) Intangible assets with unlimited service life
If the period during which an intangible asset will bring economic benefits to an enterprise is unpredictable, the
service life of such intangible asset is deemed as uncertain. Intangible assets with uncertain service life are not
amortized during the holding period and the service life is reviewed at the end of each period. If the service life
is still uncertain after review, the impairment test is performed in each accounting period.
3. Classification standards for research and development phases of R&D projects inside the Company
Research phase: a phase in which creative and planned investigation and research activities are carried out for
the purpose of obtaining and understanding new scientific or technological knowledge.
Development phase: a phase in which research results or other knowledge, before being produced or used for
commercial purposes, are applied in a certain plan or design for the purpose of producing materials, equipment
and products that are new or feature substantial improvement.
The expenses for inside R&D projects in the research phase are included in current profit and loss when the
expenses occur.
4. Standards for meeting the conditions of capitalization by research phase
The expenditure in the development phase of the research and development project can be recognized as
intangible assets only when all the following conditions are met:
(1) The completion of such intangible assets makes it usable or its sale technically feasible.
(2) There is an intention to complete such intangible assets and use or sell it.
(3) The way that the intangible assets generate economic interests can prove that the product using such
intangible assets or the intangible assets itself have market. If the intangible assets are to be used internally, its
usefulness is proved.
(4) The Company has sufficient technical and financial resources and other resources to support the completion
of the development of such intangible assets and the capacities to use or sell such intangible assets.
(5) The expenditure attributed to the development stage of such intangible assets can be reliably measured.
The expenditure in the development phase not meeting the preceding conditions is recognized in current profit or
loss when it is incurred. The development expenditure that is recognized in profit or loss of the previous year
will not be identified as assets again in later years. The capitalized expenditure in the development phase is listed
as development expenditure in the balance sheet and is converted into intangible assets from the date when it
meets the expected purpose.
(XXI) Long-term impairment of assets
The Company determines whether any sign of possible impairment exists for long-term assets on the balance
sheet date. If the sign of impairment exists for long-term assets, the recoverable amount of each asset is
estimated. If the recoverable amount of each assets cannot be estimated, the recoverable amount of the asset
group where the asset belong is determined based on the asset group.
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The recoverable amount may be determined according to the higher one of the net value of the fair value of the
assets minus the disposal expenses and the current value of the anticipated future cash flow of the assets.
If the measurement result of recoverable amount indicates that the recoverable amount of a long-term asset is
lower than its book value, the book value of the long-term asset is written down to the recoverable amount. The
write-down amount is identified as asset impairment loss and is recognized in current profit or loss and provision
for asset impairment provision is made. Once the impairment loss of assets is recognized, the loss will not be
reversed in later accounting periods.
At the same time, the corresponding assets impairment provision is accrued. After the recognition of assets
impairment loss, corresponding adjustments are made in the future periods on the depreciation or amortized
expenses of the impaired assets so that the adjusted book value of such assets (with the anticipated expected
salvage value deducted) can be amortized systematically within the remaining service life.
The goodwill and intangible assets with uncertain service life, which are formed due to enterprise merger, are
tested every year on whether the sign of impairment exists.
During impairment test of goodwill, the book value of goodwill can be amortized to the asset group or
combination of asset groups that is expected to acquire synergistic benefit from business combination. When
impairment test is performed for relevant asset groups or asset group combinations that include goodwill, for
example, if the sign of impairment exists for asset groups or asset group combinations relevant to goodwill, the
impairment test is first performed for the asset groups or asset group combinations that do not include goodwill
and the recoverable amount is calculated and is compared with the relevant book value to recognize the
corresponding impairment loss. Then the impairment test is first performed for the asset groups or asset group
combinations that include goodwill and the book value (including the book value of amortized goodwill) of the
relevant asset groups or asset group combinations is compared with the recoverable amount. If the recoverable
amount of relevant asset groups or asset group combinations is lower than the book value, the impairment loss of
goodwill is recognized.
(XXII) Long-term expenses to be amortized
1. Method of amortization
Long-term unamortized expenses refer to the expenses that have incurred at the Company but should be born in
current period and later periods, where the amortization period is above one year. Long-term unamortized
expenses shall be amortized based on direct method in the period of benefit.
2. Age limit of amortization
It is based on benefit period.
(XXIII) Payroll
Payroll refers to various remunerations and compensations provided by the Company for obtaining services
provided by employees or for terminating the employment relationship. Payroll includes short-term remuneration,
welfare after leave, dismissal welfare and other long-term employee's welfare.
1. Short-term payroll
Short-term remuneration refers to the payroll that needs to be paid completely within 12 months in the annual
report period when employees provide relevant services, excluding welfare after leave and dismissal welfare. In
the accounting period when employees provide services, the Company identities short-term remuneration as
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liabilities and includes it in relevant asset costs and fees according to the benefit objects of services provided by
employees.
2. Post-employment welfare
The welfare after leave refers to the remuneration and welfare provided by the Company for obtaining services
provided by employees or for terminating the employment relationship after employees have retired, excluding
short-term remuneration and dismissal welfare. The welfare plan after dismissal of the Company is classified
into the defined contribution plan and the defined benefit plan.
The welfare defined contribution plan aims to join the social basic endowment insurance and unemployment
insurance organized and implemented by labor and social security agencies in various regions. In addition to
social basic endowment insurance and unemployment insurance, employees can join the pension plan set by the
Company at their own discretion. In the accounting period when employees provide the Company with services,
the amount that shall be paid and deposited shall be identified as liabilities according to the defined contribution
plan and is recognized in current profit or loss or relevant asset costs.
After making the preceding payment according to the national standard and pension plan, the Company shall no
longer have any other payment obligation.
3. Dismissal welfare
Dismissal welfare refers to the compensation the Company gives to an employee for terminating the employment
relationship with employee before the employment contract expires or for encouraging an employee to accept
downsizing. It is a liability incurred by compensating an employee for terminating employment relationship with
the employee when the Company cannot unilaterally withdraw the contract termination plan or downsizing
suggestion, or when the Company confirms the costs related to restructuring that involves payment of dismissal
welfare, whichever is earlier. Dismissal welfare is recognized in current profit or loss.
The Company provides early retirement welfare for the employees who accept early retirement. Early retirement
welfare involves salary paid to and social insurance premiums paid for the employees who are permitted by the
Company management to voluntarily leave office before state-specified retirement age. The Company pays early
retirement welfare to early retired employees from the day the arrangement takes effect to the day the employees
reach retirement age. The Company deals with early retirement welfare using the accounting method for
dismissal welfare, namely when the conditions for dismissal welfare are met, recognizing the salary and social
insurance premiums to be paid within the period from the day the employees leave office to the day the
employees reach the retirement age as liabilities and including them in current profit or loss once. Actuarial
analysis of early retirement welfare assumes that differences caused by changes and welfare standard adjustment
are recognized in current profit or loss.
4. Other long-term employees' welfare
Other long-term employees' welfare refers to all other employees' welfare except short-term remuneration,
welfare after leave and dismissal welfare.
For other long-term employees' welfare that meets conditions of the defined contribution plan, the amount that
shall be paid and deposited shall be identified as liabilities in the accounting period and is recognized in current
profit or loss or relevant asset costs; except other long-term employees' welfare in the preceding circumstance,
an independent actuary sets the welfare generated by the defined benefit plan to the period in which employees
provide services by using the method of expected accumulative welfare unit and includes it in current profit or
loss or relevant asset costs.
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(XXIV) Estimated liabilities
1. Recognition standards for estimated liabilities
The obligations related to contingencies, which meet all the following conditions, are recognized by the
Company as estimated liabilities.
The obligation is a current obligation undertaken by the Company;
The fulfillment of the obligation is very likely to cause an outflow of economic interests from the Company;
The amount of the obligation can be measured reliably.
2. Measurement method of estimated liabilities
Initial measurement is carried out to estimated liabilities of the Company according to the optimum estimation
amount of the required expense when relevant obligations are fulfilled.
When determining the optimum estimation amount, the Company considers in a comprehensive way the factors
related to contingencies like risks, uncertainties and time value of currency. Where there are great influences of
time value of currency, the optimum estimation amount is determined after discounting relevant future cash
flows.
The optimum estimation amount is determined according to different situations as follows:
Where there is a continuous range (or interval) of the required expense and different results in the range have
same possibility to occur, the optimum estimation amount is determined according to the intermediate value of
the range, i.e. the average of the maximal and the minimum amounts.
Where there is no continuous range (or interval) or there is a continuous range but different results have different
possibilities to occur, if contingencies involve individual proceedings, the optimum estimation amount is the
amount most likely to occur, and if contingencies involve several proceedings, the optimum estimation amount is
determined according to various possible results and the calculation of relevant probabilities.
If all expenses or part of them, which are used by the Company for paying off estimated liabilities, are
anticipated to be compensated by a third party and compensation amount is basically sure to be received, the
compensation amount is recognized separately as an asset, which should not exceed the book value of the
estimated liabilities.
(XXV) Share-based payment
1. Types of share-based payment
The Company provides equity-settled and cash-settled share-based payment.
2. Recognition of the fair value of equity instruments
For equity instruments such as the granted option, which exist in the active market, the fair value is recognized
according to their prices in the active market. For those not existing in the active market, their fair value is
recognized by using the option pricing model, which should be selected in consideration of the following factors:
a. option exercise price; b. option period; c. the current price of the underlying shares; d. the predicted
fluctuation rate of the share price, e. the estimated dividend of the share; f. risk free rate in the option period; g.
payment of shares of installment options
When determining the grant-date fair value of equity instruments, the Company shall take into account the
influence of market conditions in vesting conditions and non-vesting conditions stipulated in the share-based
payment agreement. Where a share-based payment has a non-vesting condition, the Company shall recognize
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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 treatment method
The Company shall measure the equity-settled share-based payment at the fair value of the granted employee
equity instruments. If the equity instruments granted vest immediately, the Company shall include the grant-date
fair value of equity instruments into related cost or expense, with a corresponding increase in capital reserve. If
the equity instruments granted do not vest until the counterparty completes a specified period of service or
achieves a performance condition in the vesting period, the Company shall include the service obtained in the
current period into related cost or expense and capital reserved by reference to the grant-date fair value of equity
instruments based on the best estimate of the number of vested equity instruments on each balance sheet date
during the vesting period. The Company shall not adjust the confirmed cost or expense and total equity amount
after the vesting date.
The case-settled share-based payment shall be measured by reference to the fair value of the Company's eligible
liabilities which is calculated based on shares or other equity instruments. If the equity instruments granted vest
immediately, the Company shall include the fair value of eligible liabilities in related cost or expense on the
vesting date, with a corresponding increase in liabilities. For the cash-settled share-based payment where the
granted options are not exercised until the counterparty completes a specified period of service or achieves a
performance condition in the vesting period, the Company shall include the service obtained in the current period
into related cost or expense and liabilities by reference to the grant-date fair value of liabilities, based on the best
estimate of the number of vested equity instruments on each balance sheet date during the vesting period. The
Company shall re-measure the fair value of its liabilities on each balance sheet date and settlement date before
settlement of related liabilities, and include liability changes in current profit and loss.
If a grant of an equity instrument is canceled during the vesting period, the Company shall account for the
cancellation as an acceleration of vesting, and shall therefore include immediately the amount that would
otherwise have been confirmed for services received over the remainder of the vesting period in the current
profit and loss, and recognize capital reserve. If employees or other parties can but fail to satisfy non-vesting
conditions in the vesting period, the Company shall account for the failure as a cancellation of the grant of the
equity instrument.
(XXVI) Other financial instruments such as preferred stock and sustainable debt
Based on the rules of financial instruments, the Company classifies financial instruments or their components
into financial liabilities or equity instruments during initial recognition according to the contact terms of
financial instruments such as preferred stock and sustainable debt and economic essence they reflect rather than
legal form, in combination with definitions of financial liabilities and equity instruments.
1. When one of the following conditions is met, the issued financial instrument is classified into financial
liabilities:
(1) Contractual obligation to deliver cash or other financial assets to other parties;
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(2) Contractual obligation to exchange financial assets or financial liabilities under potential adverse conditions;
(3) Non-derivative instrument contract that must or may use equity instruments of an enterprise for settlement in
the future (the enterprise delivers a variable number of equity instruments according to the contract);
(4) Derivative instrument contract that must or may use equity instruments of an enterprise for settlement in the
future (except derivative instrument contracts that use a fixed number of equity instruments to exchange a fixed
amount of cash or other financial assets).
2. When the following conditions are met at the same time, the issued financial instruments are classified
into equity instruments:
(1) The financial instruments do not include the contractual obligation to deliver cash or other financial assets to
other parties or exchange financial assets or financial liabilities under potential adverse conditions;
(2) For the financial instruments that must or may use equity instruments of an enterprise for settlement in the
future, if the financial instruments are non-derivative instruments, the contractual obligation to deliver a variable
number of equity instruments for settlement is not included; if the financial instruments are derivative
instruments, the enterprise can only settle the financial instruments by exchanging a fixed number of equity
instruments with the fixed amount of cash or other financial assets.
3. Accounting treatment method
For financial instruments that belong to equity instruments, the interest expenditure or dividend distribution shall
be used as profits of the enterprise for distribution, the buy-back and write-off are treated as changes of equity,
and transaction expenses such as handling charge and commission shall be deducted from the equity.
For financial instruments that belong to financial liabilities, the interest expenditure or dividend distribution shall
be treated as borrowing costs in principle, the gain or loss generated due to buy-back or redemption are
recognized in current profit or loss, and transaction expenses such as handling charge and commission are
included in the initial amount of measurement of the issues instruments.
(XXVII) Income
1. Standards for recognition time of sales income
The realization of the income from the sale of commodities is recognized when the Company has already
transferred the main risks and consideration in the ownership right of the commodities to the purchaser, the
Company has not retained any further management right connected to the ownership right nor implement
effective control over the sold commodities, the amount of the revenue can be reliably measured, relevant
economic interests are likely to flow into the enterprise, and relevant costs incurred or to be incurred can be
measured reliably.
The Company mainly runs the leasing business in the electronics market. It identifies received rental as rental
income in the term of lease by using the method of line and the income of other business is recognized when the
risk premium is transferred according to contract provisions.
The price of a contract or agreement is collected through deferral. In the case of actual financial nature, the
amount of income from sales commodities shall be determined according to the fair value of the price of the
contract or agreement.
2. Basis for recognition of income from transfer of asset use right
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When economic interests relevant to transaction probably flow into the enterprise and the amount of income can
be reliably measured, the amount of income from transfer of asset use right is determined in the following
circumstances:
(1) The amount of interest income is determined according to the time and actual interest rate of other people
using the monetary fund of the enterprise.
(2) The amount of the income from use fee is determined in accordance with the time and method of charges as
agreed in relevant contract or agreement.
3. Recognition basis and method for income from rendering of services
Where the results of the labor services provided on the balance sheet date can be estimated reliably, the income
from the provision of labor services is recognized with the completion percentage method. The completion
progress of a labor service transaction is determined by survey of the work completed.
When the following conditions are met at the same time, the result of rendering of services can be reliably
estimated:
(1) The amount of income can be measured reliably;
(2) Relevant economic interests are very likely to flow into the enterprise;
(3) The completion progress of transactions can be reliably determined;
(4) The costs that have been incurred or will be incurred in transactions can be reliably measured.
The total amount of the income from the provision of labor services is determined according to the price money
received or receivable of a relevant contract or agreement, unless the price money received or receivable of a
relevant contract or agreement is unfair. The labor services income of the current period is recognized on the
balance sheet date according to the resulted amount of the total amount of income from provision of labor
services times the completion percentage and deducted by the accumulative amount of the recognized income
from provision of labor services in previous accounting periods. At the same time, the labor cost of the current
period is carried forward according to the estimated total cost of the provision of labor services times the
completion percentage and deducted by the accumulative amount of the recognized labor cost in previous
accounting periods.
Where the results of the provision of labor services on the balance sheet date cannot be estimated reliably, such
results are processed respectively according to the following conditions:
(1) Where it is estimated that the labor services cost incurred can be compensated, the income from provision of
labor services is recognized according to the amount of the labor services cost incurred and the same amount is
transferred to the labor cost.
(2) Where it is estimated that the labor services cost incurred cannot be compensated, the labor services cost
incurred is included in current profit and loss and no income is recognized.
When the contracts or agreements between the Company and other companies involve commodity sales and
labor service and these two parts can be differentiated from each other and can be separately measured,
commodity sales and labor service are handled separately. If they cannot be differentiated from each other or
they can be differentiated from each other but cannot be separately measured, both parts will be handled as
commodity sales.
4. Recognition basis and method for income from construction contracts
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(1) When the results of construction contracts can be reliably estimated, relevant income from contracts and
costs of contracts are confirmed based on the method of completion percentage. The method of completion
percentage refers to the method for confirming income from contracts and costs of contracts according to the
completion progress of contracts. The completion progress of a contract is determined according to the ratio of
actual accumulative cost of the contract to estimated total costs of the contract.
If the following conditions are met at the same time, the result of a fixed construction contract can be reliably
estimated:
1) The total income from the contract can be reliably measured;
2) Economic interests relevant to the contract are very likely to flow into the enterprise;
3) The actual costs of the contract can be clearly distinguished and reliably measured;
4) The completion progress of the contract and the costs needed for completing the contract can be reliably
determined.
If the following conditions are met at the same time, the result of a cost-plus contract can be reliably estimated:
1) Economic interests relevant to the contract are very likely to flow into the enterprise;
2) The actual costs of the contract can be clearly distinguished and reliably measured;
On the balance sheet date, the amount of total contractual income multiplied by the completion progress,
deducting the accumulated confirmed income in the previous accounting period, is recognized as the current
contractual income; the amount of estimated total contract cost multiplied by the completion progress, deducting
the accumulative confirmed cost in the previous accounting period, is recognized as the current costs of contract.
The change of contract engineering, claim and bonus is included in the total income of contract based on the
amount that may be brought and can be reliably calculated.
(2) If the result of a construction contract cannot be reliably estimated, the contract is treated as follows:
1) If the contract cost can be recovered, the income from the contract is recognized according to the actual
recovered contract cost and the contract cost is recognized as the current costs of contract.
2) If the contract cost cannot be recovered, the cost is immediately recognized as the costs of contract in the
current period when the cost is incurred and the income from the contract is not recognized.
(3) If the total cost of contract probably exceeds the total income from the contract, the expected loss is
immediately recognized as costs.
5. Transfer of the assets with repurchase conditions
If the Company signs a repurchase agreement when selling products or transferring other assets, whether the
products sold meet the conditions for income recognition is judged according to the articles of the agreement. If
the repurchase is a financing transaction, the Company does not recognize sales income when delivering
products or assets. If the repurchase price is higher than the selling price, interests are accrued for the difference
during repurchase period and included in financial expenses.
(XXVIII) Government subsidies
1. Type
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. Based on the
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subsidy objects specified in relevant government documents, the subsidies are divided into subsidies relevant to
assets and subsidies relevant to profits.
Subsidies relevant to assets refer to government subsidies acquired by the Company for the purposes of
acquisition and construction or turned to long-term assets in other ways. Subsidies relevant to profits refer to
government subsidies other than subsidies relevant to assets.
2. Recognition of government subsidies
If any evidence indicates that the Company can meet relevant conditions for financial support policies and is
expected to obtain financial support fund at the end of the period, the government subsidy shall be recognized
based on the amount receivable. In other cases, government subsidies shall be recognized at receipt.
Government subsidies that are monetary funds shall be measured based on the amount received or receivable.
Government subsidies that are non-monetary funds shall be measured based on fair value. Where the fair value
cannot be reliably calculated, the nominal amount (1 Yuan) is measured. Government subsidies that are
measured by nominal amount shall be directly included in current profit and loss.
3. Accounting treatment method
The government subsidies relevant to assets are recognized as deferred income and are included in non-operating
income according to the service life of the built or purchased assets;
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.
If recognized government subsidies have to be returned and the balance of relevant deferred income exists, the
book balance of relevant deferred income is offset and the excess part is included in the current profit and loss;
when relevant deferred income does not exist, the government subsidies are directly included in the current profit
and loss.
(XXIX) Deferred income tax assets and liabilities
Deferred income tax assets and liabilities are calculated and recognized according to the difference (temporary
difference) between the taxable basis of the assets and liabilities and their book value. On the balance sheet date,
deferred income tax assets and liabilities are measured based on the tax rate applicable to the period when the
assets are expected to be recovered or the liabilities are expected to be paid off.
1. Basis for recognition of deferred incomes tax assets
The Company confirms the deferred income tax assets generated due to deductible temporary difference based
on the amount of taxable income that is probably obtained to deduct deductible temporary difference and can
carry over deductible loss and tax deduction. However, the deferred income tax assets generated due to initial
recognition of assets or liabilities in a transaction with the following features at the same time: (1) the transaction
is not business merger; (2) the transaction does not affect the accounting profit, taxable income or deductible
loss.
For the deductible temporary difference relevant to investment of joint ventures, when the following conditions
are met at the same time, corresponding deferred income tax assets are confirmed; the temporary difference is
probably reversed in the foreseeable future and taxable income used to deduct the deductible temporary
difference will probably be obtained in the future.
2. Basis for recognition of deferred income tax liabilities
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The temporary difference between the tax payable but unpaid in the current period and that in previous periods is
recognized by the Company as deferred income tax liabilities, excluding:
(1) Temporary difference formed due to initial confirmation of goodwill;
(2) Transaction or matter formed due to factors rather than business merger (the transaction or matter does not
affect the accounting profit or the temporary difference formed due to taxable income or deductible loss);
(3) For the taxable temporary difference relevant to investment of subsidiaries and joint ventures, the reversal
time of the temporary difference can be controlled and may not be reversed in the foreseeable future.
3. The balance between deferred income tax assets and deferred tax income liabilities is listed if the
following conditions are met at the same time.
(1) The entity has the legal right to settle the current tax income assets against current income tax liabilities; and
(2) The deferred income tax assets and deferred tax income liabilities are relevant to income taxes levied by
common 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.
(XXX) Lease
If the lease terms essentially transfer all risks and gains related to the ownership of the leased asset to the lessee,
such lease is finance lease while other leases are operating lease.
1. Accounting treatment of operating lease
(1) The rental fee paid by the Company for rented assets is apportioned by the straight-line method in the whole
lease term including the rent-free period and included in current expenses. The initial direct expenses related to
lease transactions, paid by the Company, are included in current expenses.
In case that the lessor undertakes the lease-related expenses that shall be undertaken by the Company, the
Company shall deduct such expenses from the total rental fee and the rental fee after deduction is apportioned in
the lease term and included in current expenses.
(2) The rental fee received by the Company from leasing of assets is apportioned by the straight-line method in
the whole lease term including the rent-free period and included in the lease income. The initial direct expenses
related to lease transactions, paid by the Company, are included in current expenses. Those with significant
amounts are capitalized and included in current profit in the whole lease term on the same basis for recognition
of the lease income.
In case that the Company undertakes the lease-related expenses which shall be undertaken by the lessee, the
Company shall deduct the expenses from the total lease income and the lease expenses after deduction are
allocated in the lease term.
2. Accounting treatment of financing lease
(1) Assets leased under financing lease: The lower one between the fair value of rented assets and the minimum
lease payment is treated as the recording value of the rented assets, the minimum lease payment as the recording
value of long-term accounts payable, and the difference between the two as financing expenses yet to be
recognized. For details of the determination basis, valuation method and depreciation method of fixed assets
under financing lease, see "Note IV (17) Fixed Assets".
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The financing expenses yet to be recognized are apportioned by the Company by the actual interest rate method
in the lease term of the assets and included in accounting expenses.
(2) Assets rented under financing lease: The difference between the total residual value, without guarantee, of the
financing lease payment receivable and the current value is recognized by the Company on the lease-beginning
date as financing profits yet to be realized and as the lease income in future lease periods. The initial direct
expenses related to lease transactions are included in the initial measurement of financing lease payment
receivable and the amount of profits recognized in the lease term is reduced.
(XXXI) Other significant accounting policies, accounting estimates, and preparation method of financial
statements
1. Termination of business
A constituent part that meets any of the following conditions and have been disposed of or classified as
held-for-sale and can be separately presented in operation or financial statements is recognized as a constituent
part of discontinuation.
(1) The constituent part stands for an independent main business or a major business area.
(2) The constituent part is part of the plan intended to dispose of an independent main business or a major
business area.
(3) The constituent part is a subsidiary acquired solely for the purpose of re-sale.
(XXXII) Changes of main accounting policies and accounting estimates
1. Changes of accounting policies
No change was made to main accounting estimates in the current report period.
2. Changes of accounting estimates
No change was made to main accounting estimates in the current report period.
V. Notes to change in items presented in financial statements
The Ministry of Finance issued the VAT Accounting Treatment Rules (C. K. [2016] No. 22) on December 3,
2016.
According to the VAT Accounting Treatment Rules, after the program of replacing business tax with value-added
tax is put into trial implementation, "business tax and surtax" is changed to "tax and surtax", relating to the
accounting of the consumption tax, urban maintenance and construction tax, resource tax, educational surtax,
property tax, land use tax, travel tax, and stamp duty incurred by business operation; the "business tax and
surtax" in the profit statement is changed to "tax and surtax".
As specified in the VAT Accounting Treatment Rules, the closing debit balance of "VAT payable", "unpaid VAT",
"input tax to be deducted, "input tax to be certified", and "excess VAT paid" under the "tax payable" item shall be
presented in "other current assets" or "other non-current assets" of the balance sheet statement as the case may be;
the closing debit balance of "tax payable-output tax to be transferred" shall be presented in "other current
liabilities" or "other non-current liabilities" of the balance sheet statement as the case may be.
In accordance with the VAT Accounting Treatment Rules, the Company has adjusted the amount of affected items
in the financial statements, such as assets, liabilities, profit and loss arising from transactions from May 1, 2016
to the implementation of the Rules. The property tax, land use tax, travel tax, and stamp duty incurred after May
1, 2016 are adjusted from "management fee" to "tax and surtax" RMB 4,775,904.89; the amount of transactions
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occurring from January 1 to April 30, 2016 is not subject to retroactive adjustment; financial statements (2016)
in the comparable period are not subject to retroactive adjustment.
VI. Taxes
(I) Main tax types and tax rates imposed on the Company
Tax category Basis Tax rate (%)
Sales of goods, taxable sales and service
Value-added tax 5%, 6%, 11%, 17%
income, intangible assets or real estate
Taxable turnover before the program of
Business tax replacing business tax with value-added 5%
tax
Urban maintenance and construction tax Paid-in turnover tax payable 7%
Educational surtax Paid-in turnover tax payable 3%
Local educational surtax Paid-in turnover tax payable 2%
Enterprise income tax Taxable income 15%, 25%
70% of the original value of the property
Property tax 1.2%, 12%
(or rental income) as the taxation basis
1. Notes to income tax rate for different tax payers:
Name of tax payer Income tax rate
Xi'an SEG Electronics Market Co., Ltd. 15%
Xi'an Hairong SEG Electronics Market Co., Ltd. 15%
2. Individual income tax
The individual income tax of the staff is withheld by the Company.
(II) Tax preference policy and basis
According to the confirmation letter (S. F. G. C. Y. Q. R. H. [2014] No. 134 issued by Shaanxi Provincial
Development and Reform Commission, Xi'an SEG Electronics Market Co., Ltd., a subsidiary of the Company, is
engaged in projects encouraged by the nation and complies with the corporate income tax preference policy for
development of the west regions. Therefore, the corporate income tax shall be paid at the rate of 15%.
According to the confirmation letter (S. F. G. C. Y. Q. R. H. [2015] No. 042 issued by Shaanxi Provincial
Development and Reform Commission, Xi'an Hairong SEG Electronics Market Co., Ltd., a subsidiary of the
Company, is engaged in projects encouraged by the nation and complies with the corporate income tax
preference policy for development of the west regions. Therefore, the corporate income tax shall be paid at the
rate of 15%.
Excluding the foregoing two subsidiaries, the income tax rates of other subsidiaries are 25%.
VII. Notes to Main Items of the Consolidated Financial Statements
(Unless specifically noted, the following unit of the amount is RMB Yuan)
Note 1 Monetary funds
Item Closing balance Opening balance
Cash on hand 568,293.43 526,467.72
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Item Closing balance Opening balance
Bank deposit 168,548,637.23 274,816,839.04
Other monetary capital 13,977,885.18 1,520,122.34
Total 183,094,815.84 276,863,429.10
Details of other restricted monetary fund:
Item Closing balance Opening balance
Performance bond 3,600,000.00 340,000.00
Cash deposit for credit card repayment 1,000,000.00
Total 3,600,000.00 1,340,000.00
Note 2 Loans to other banks
Item Closing balance Opening balance
Loans to interbank 40,000,000.00 40,000,000.00
Less: impairment provision --- ---
Total 40,000,000.00 40,000,000.00
Note 3 Notes receivable
1. Types of notes receivable
Item Closing balance Opening balance
Bank's acceptance bill 100,792.00 ---
Commercial acceptance bill - ---
Total 100,792.00 ---
2. The Company has no pledged notes receivable at the end of the period.
3. The Company has no notes receivable endorsed or discounted and not due on the balance sheet date at
the end of the period.
4. The Company has no notes that were transferred to accounts receivable due to default by the biller at
the end of the period.
Note 4 Accounts receivable
1. Accounts receivable disclosed by type
Closing balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Accounts receivable with single
significant amount and single 3,092,011.09 4.98 3,092,011.09 100.00 -
bad debt provision
Accounts receivable with bad
debt provision accrued based on 51,089,626.92 82.24 219,081.20 0.43 50,870,545.72
credit risk feature combinations
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Closing balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Accounts receivable with no
single significant amount but
7,937,897.42 12.78 7,937,897.42 100.00 -
with single provision for bad
debts
Total 62,119,535.43 100.00 11,248,989.71 18.11 50,870,545.72
Continued:
Opening balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Accounts receivable with single
significant amount and single --- --- --- --- ---
bad debt provision
Accounts receivable with bad
debt provision accrued based on 98,238,596.47 89.91 26,173.60 0.03 98,212,422.87
credit risk feature combinations
Accounts receivable with no
single significant amount but
11,029,908.51 10.09 11,029,908.51 100 ---
with single provision for bad
debts
Total 109,268,504.98 100.00 11,056,082.11 10.12 98,212,422.87
Notes to types of accounts receivable:
(1) Accounts receivable with single significant amount and single provision for bad debts at the end of the period
Closing balance
Name of company Accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for aging
Jiangsu Unicom 3,092,011.09 3,092,011.09 100.00
of over 5 years
Total 3,092,011.09 3,092,011.09 100.00 --
(2) Accounts receivable with no single significant amount but with single provision for bad debts at the end of
the period
Closing balance
Name of company Accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Shenzhen Shuangxionghui Industrial Unable to be recovered for aging
2,160,725.63 2,160,725.63 100.00
Co., Ltd of over 5 years
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Closing balance
Name of company Accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Shenzhen LiYuanshun Industrial Unable to be recovered for aging
1,906,865.35 1,906,865.35 100.00
Co., Ltd. of over 5 years
Zhejiang Financial Information Co., Unable to be recovered for aging
786,000.00 786,000.00 100.00
Ltd of over 5 years
Unable to be recovered for aging
Shanghai Tianci Industrial Co., Ltd. 899,000.00 899,000.00 100.00
of over 5 years
Unable to be recovered for long
Other companies 2,185,306.44 2,185,306.44 100.00
aging
Total 7,937,897.42 7,937,897.42 100.00 -
(3) Accounts receivable in combinations with bad debt provision accrued by the aging analysis method
Closing balance
Aging
Accounts receivable Bad debt provision Proportion of provision (%)
Less than one year 47,231,474.91 - ---
1-2 years 3,334,680.01 166,734.00 5.00
2-3 years 523,472.00 52,347.20 10.00
Over 3 years --- --- ---
Total 51,089,626.92 219,081.20 0.43
2. Accrual, recovery and writing back of current bad debt provision
The accrual amount of current bad debt provision is RMB 192,907.60.
3. No accounts receivable are written off in the current period.
4. Accounts receivable with top 5 closing balance collected based on debtors
Percentage in the total
Accrued bad debt
Name of company Closing balance amount of accounts
provision
receivable
Xinjiang Zhongdi Communication Equipment Co.,
13,241,726.56 21.32 ---
Ltd.
Shenzhen Runneng Digital Co., Ltd. 9,449,393.38 15.21 ---
Shenzhen Wonder Industry Co., Ltd. 7,785,736.82 12.53 ---
Shenzhen Comnet Technology Co., Ltd. 4,267,709.73 6.87 ---
Jiangsu Unicom 3,092,011.09 4.98 3,092,011.09
Total 37,836,577.58 60.91 3,092,011.09
5. There are no accounts receivable with its recognition terminated due to transfer of financial assets in
the current period.
6. There are no assets and liabilities due to transfer or increase of accounts receivable in the current
period.
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Note 5 Prepayment
1. Prepayment listed by aging
Closing balance Opening balance
Aging
Amount Proportion (%) Amount Proportion (%)
Less than one year 47,042,217.82 99.27 129,044,887.26 100.00
1-2 years 344,786.20 0.73 --- ---
2-3 years --- --- --- ---
Over 3 years --- --- --- ---
Total 47,387,004.02 100.00 129,044,887.26 100.00
2. Prepayment with top 5 closing balance collected based on prepayment payers
Percentage in the
Period-end total amount of Reason for
Name of company Prepayment date
amount accounts non-settlement
receivable (%)
Xi'an Gaoke (Group) New West China Less than one Prepaid rental for
20,000,000.00 42.21
Industrial Development Co., Ltd year 2017
Telling Telecommunication Holding Co., Less than one
15,239,668.97 32.16 Prepayment for goods
Ltd. year
Hunan Beilong Digital Technology Co., Less than one
4,139,237.00 8.73 Prepayment for goods
Ltd. year
Shenzhen Youyou Communication Less than one
1,911,048.71 4.03 Prepayment for goods
Equipment Co., Ltd. year
Hubei Songlian Dingsheng Technology Less than one
1,176,573.85 2.48 Prepayment for goods
Co., Ltd. year
Total 42,466,528.53 89.61 - -
Note 6 Other accounts receivable
1. Other receivables disclosed by type
Closing balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Other accounts receivable with
single significant amount and 20,131,835.38 20.97 20,131,835.38 100.00 -
single bad debt provision
Other accounts receivable with bad
debt provision accrued based on 63,841,785.75 66.50 658,172.79 1.03 63,183,612.96
credit risk feature combinations
Other accounts receivable with no
single significant amount but with 12,033,969.53 12.53 12,033,969.53 100.00 -
single provision for bad debts
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Closing balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Total 96,007,590.66 100.00 32,823,977.70 34.19 63,183,612.96
Continued:
Opening balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Other accounts receivable with
single significant amount and 14,434,547.87 24.12 14,434,547.87 100 ---
single bad debt provision
Other accounts receivable with bad
debt provision accrued based on 27,674,049.48 46.25 321,265.15 1.16 27,352,784.33
credit risk feature combinations
Other accounts receivable with no
single significant amount but with 17,731,257.04 29.63 17,731,257.04 100 ---
single provision for bad debts
Total 59,839,854.39 100 32,487,070.06 54.29 27,352,784.33
Notes to types of other accounts receivable:
(1) Other accounts receivable with single significant amount and single bad debt provision at the end of the
period
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for
Yangjiang Yuntong Grease Co., Ltd. 8,530,276.35 8,530,276.35 100.00
aging of over 5 years
Creditor's right transferred in by Unable to be recovered for
5,904,271.52 5,904,271.52 100.00
SEG Communications aging of over 5 years
Unable to be recovered for
Shenzhen Lianjing Trade Co., Ltd. 5,697,287.51 5,697,287.51 100.00
aging of over 5 years
Total 20,131,835.38 20,131,835.38 100.00 -
(2) Other accounts receivable with no single significant amount but with single provision for bad debts at the end
of the period
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for aging
Shenzhen Tuopu Industrial Co., Ltd. 3,281,387.96 3,281,387.96 100.00
of over 5 years
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Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for aging
Yunsen Trade Co., Ltd. 1,668,343.74 1,668,343.74 100.00
of over 5 years
Shenzhen Shoujia Industrial Unable to be recovered for aging
1,611,184.04 1,611,184.04 100.00
Development Co., Ltd. of over 5 years
Shenzhen Jimeng Industrial Unable to be recovered for aging
1,358,912.37 1,358,912.37 100.00
Development Co., Ltd. of over 5 years
Shenzhen SEG Xinlide Intelligent Unable to be recovered for aging
690,082.80 690,082.80 100.00
System Engineering Co., Ltd. of over 5 years
Unable to be recovered for aging
Shanghai subsidiary 659,224.00 659,224.00 100.00
of over 5 years
SEG Orient Industrial Development Unable to be recovered for aging
443,910.00 443,910.00 100.00
Co., Ltd. of over 5 years
Shenzhen SEG Xinlide Intelligent Unable to be recovered for long
349,061.35 349,061.35 100.00
System Engineering Co., Ltd. aging
Shenzhen Jamei scientific Unable to be recovered for aging
282,812.53 282,812.53 100.00
Equipment Co., Ltd. of over 5 years
Unable to be recovered for aging
Dongguan Changan Hongfa 231,920.00 231,920.00 100.00
of over 5 years
Unable to be recovered for aging
Other 19 companies 1,457,130.74 1,457,130.74 100.00
of over 5 years
Total 12,033,969.53 12,033,969.53 -
(3) Other accounts receivable in combinations with bad debt provision accrued by the aging analysis method
Closing balance
Aging
Other accounts receivable Bad debt provision Proportion of provision (%)
Less than one year 38,058,980.61 - ---
1-2 years 395,699.67 19,784.99 5.00
2-3 years 6,308,560.50 630,856.05 10.00
Over 3 years 37,658.75 7,531.75 20.00
Total 44,800,899.53 658,172.79 1.47
(4) Other accounts receivable in Combination 2 except for that withdrawn according to aging analysis method
are mainly deposit, security deposit, and account with related parties.
2. Accrual, recovery and writing back of current bad debt provision
The amount of the current accrued bad debt provision is RMB 336,907.64.
3. No other accounts receivable are written off in the current period.
4. Classification of other receivables by nature
Item Closing balance Opening balance
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Item Closing balance Opening balance
Creditor's right transfer cost 30,907,913.14 32,165,804.91
Imprest 1,242,431.61 831,185.54
Deposit and security deposit 34,040,886.22 23,342,863.94
Transfer-in of prepaid rental from
17,500,000.00
Zongheng International
Others 12,316,359.69 3,500,000.00
Total 96,007,590.66 59,839,854.39
5. Other accounts receivable with top 5 closing balance collected based on debtors
Percentage in the Bad debt
Nature of total amount of other provision
Name of company Closing balance Aging
receivables accounts receivable Closing
(%) balance
Zongheng International Less than one
Prepaid rental
Electronic Expo City 22,487,500.00 year and over 23.42 -
and deposit
(Suzhou) Co., Ltd. 5 years
Debt
Yangjiang Yuntong Grease
restructuring of 8,530,276.35 Over 5 years 8.89 8,530,276.35
Co., Ltd.
SEG Orient
Nantong Construction Salary deposit for
6,200,000.00 2-3 years 6.46 620,000.00
Engineering Administration peasant workers
Debt
Creditor's right transferred in restructuring of
5,904,271.52 Over 5 years 6.15 5,904,271.52
by SEG Communications SEG
Communications
Creditor's
Shenzhen Lianjing Trade Co.,
incomings and 5,697,287.51 Over 5 years 5.93 5,697,287.51
Ltd.
outgoings
Total 48,819,335.38 50.85 20,751,835.38
6. There are no items involving government subsidies in the current period.
7. There are no other accounts receivable with its recognition terminated due to transfer of financial assets
in the current period.
8. There are no assets and liabilities due to transfer or increase of other accounts receivable in the current
period.
Note 7 Inventory
1. Classification of inventory
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
provision provision
Raw materials 17,523.81 --- 17,523.81 149,186.66 --- 149,186.66
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Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
provision provision
Commodity
4,599,633.46 --- 4,599,633.46 1,579,916.40 --- 1,579,916.40
stock
Low-value
216,734.06 --- 216,734.06 222,080.75 --- 222,080.75
consumables
Development
--- --- --- 448,858,750.91 --- 448,858,750.91
cost
Development
597,264,847.59 --- 597,264,847.59 --- --- ---
product
Total 602,098,738.92 --- 602,098,738.92 450,809,934.72 --- 450,809,934.72
2. Notes to capitalization amount of borrowing costs included in closing balance of inventory
Decrease in the current Capitalization
period rate of
capitalization
Opening Increase in the
Inventory item name Closing balance amount
balance current period Decrease in
Others recognized in the
sales
current period
(%)
Nantong SEG Times
13,915,097.17 8,741,475.31 --- --- 22,656,572.48 4.59
Plaza
Total 13,915,097.17 8,741,475.31 --- --- 22,656,572.48
3. Development cost
Expected
Commencement Expected
Project name investment Closing balance Opening balance
time completion date
amount
Nantong SEG Times
2013. 05 2016. 06 0.7 billion --- 448,858,750.91
Plaza
Total --- --- --- --- 448,858,750.91
4. Development product
Completion Increase in the Decrease in the
Project name Opening balance Closing balance
time current period current period
Nantong SEG Times
2016. 06 --- 597,264,847.59 --- 597,264,847.59
Plaza
Total --- 597,264,847.59 --- 597,264,847.59
Note 8. Other current assets
Item Closing balance Opening balance
Bank financial products 266,500,000.00 259,831,270.00
Tax to be deducted and withheld 350,217.26 79,402,305.52
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Item Closing balance Opening balance
Prepaid tax 961,125.63
Others 258,544.69 196,844.22
Total 268,069,887.58 339,430,419.74
Note 9 Loans and prepayment issued
1. Loans and prepayment issued
Item Closing balance Opening balance
Loan principal 487,312,682.37 486,435,059.77
Advance --- ---
Less: Impairment provision for loans and
6,907,523.92 10,914,237.69
prepayment
Total 480,405,158.45 475,520,822.08
Note 10 Available-for-sale financial assets
1. Available-for-sale financial assets
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Available-for-sale debt
--- --- --- --- --- ---
instruments
Available-for-sale
--- --- --- --- --- ---
equity instruments
Measured by fair value 683,290.58 --- 683,290.58 744,580.41 --- 744,580.41
Measured by 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 34,493,683.41 15,000.00 34,478,683.41 34,554,973.24 15,000.00 34,539,973.24
2. Available-for-sale financial assets measured by fair value at the end of the period
Available-for-sale Available-for-sale debt
Classification Others Total
equity instruments instruments
Cost of equity
instruments/amortized cost of 90,405.00 --- --- 90,405.00
debt instruments
Accumulative changes in fair
value
592,885.58 --- --- 592,885.58
included in other
comprehensive income
Less: Accrued impairment
--- --- --- ---
amount
Fair value 683,290.58 --- --- 683,290.58
222
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3. Equity instruments measured by cost at the end of the period
Shareholding Book balance
Invested organization proportion Opening Increase in the Decrease in the
Closing balance
(%) balance current period current period
Kashgar Shenzhen City Co., Ltd. 3.03 20,000,000.00 --- --- 20,000,000.00
Shenzhen SEG GPS Scientific
11.38 13,515,392.83 --- --- 13,515,392.83
Navigations Co., Ltd.
Nanjing Shangsha Co., Ltd 0.68 280,000.00 --- --- 280,000.00
Anshan Yibai Co., Ltd --- 15,000.00 --- --- 15,000.00
Total 33,810,392.83 --- --- 33,810,392.83
Continued:
Impairment provision Cash dividends
Invested organization Opening Increase in the Decrease in the Closing of the current
balance current period current period balance period
Kashgar Shenzhen City Co., Ltd. - - - - -
Shenzhen SEG GPS Scientific
- - - - -
Navigations Co., Ltd.
Nanjing Shangsha Co., Ltd - - - - -
Anshan Yibai Co., Ltd 15,000.00 - - 15,000.00 -
Total 15,000.00 - - 15,000.00 -
4. Loss from impairment of available-for-sale financial assets in the current report period
Available-for-sale Available-for-sale
Available-for-sale financial assets Others Total
equity instruments debt instruments
Accrued impairment provision at the
15,000.00 - - 15,000.00
beginning of period
Provision of the year - - - -
Including: Transfer in Other
- - - -
comprehensive income
Decrease in the year - - - -
Including: Writing back due to
recovery of fair value at the end of the - - - -
period
Accrued impairment provision at the
15,000.00 - - 15,000.00
end of the period
Note 11 Long-term equity investment
Invested organization Opening balance Increase/Decrease of the year
223
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Investment profit Adjustment of
Additional Negative and loss other
investment investment recognized with comprehensive
the equity method income
I. Associates --- --- --- --- ---
Shanghai SEG Electronics Market
3,379,412.81 --- --- 172,145.25 ---
Co., Ltd.
-9,086,648.3
Shenzhen Huakong SEG Co., Ltd. 181,743,161.07 --- 1,895,383.08 178.21
7
Shenzhen International Consumer
Electronics Exhibition/Exchange --- 9,000,000.00 --- -2,454,587.38 ---
Center
-9,086,648.3
Total 185,122,573.88 9,000,000.00 -387,059.05 178.21
7
Continued:
Increase/Decrease of the year Closing
balance of
Issued cash Accrued
Invested organization Other equity Closing balance impairme
dividends or impairment Others
changes nt
profits provision
provision
I. Associates --- --- --- --- --- ---
Shanghai SEG Electronics Market
--- -1,000,000.00 --- --- 2,551,558.06 ---
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. --- --- --- --- 174,552,073.99 ---
Shenzhen International Consumer
Electronics Exhibition/Exchange --- --- --- --- 6,545,412.62 ---
Center
Total --- -1,000,000.00 --- --- 183,649,044.67 ---
Note 12 Investment properties
1. Details of investment properties
Construction in
Item Houses and buildings Land use right Total
progress
I. Original book value
1. Opening balance 718,281,629.05 5,237,512.49 --- 723,519,141.54
2. Increase in the current
--- --- --- ---
period
Outsourcing --- --- --- ---
Transfer-in of
inventory/fixed
--- --- --- ---
assets/construction in
progress
Consolidation of
enterprises not under the --- --- --- ---
same control
224
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Construction in
Item Houses and buildings Land use right Total
progress
Capital invested by
--- --- --- ---
shareholders
Increase for other
--- --- --- ---
reasons
3. Decrease in the current
--- --- --- ---
period
Disposal --- --- --- ---
Disposal of subsidiaries --- --- --- ---
Decrease for other
--- --- --- ---
reasons
4. Closing balance 718,281,629.05 5,237,512.49 - 723,519,141.54
II. Accumulated
depreciation (amortization)
1. Opening balance 277,694,588.74 1,972,826.40 279,667,415.14
2. Increase in the current
18,561,357.93 120,599.85 - 18,681,957.78
period
Accrual in the current
18,561,357.93 120,599.85 18,681,957.78
period
Consolidation of
enterprises not under the --- --- --- ---
same control
Capital invested by
--- --- --- ---
shareholders
Increase for other
--- --- --- ---
reasons
3. Decrease in the current
--- --- --- ---
period
Disposal --- --- --- ---
Disposal of subsidiaries --- --- --- ---
Decrease for other
--- --- --- ---
reasons
4. Closing balance 296,255,946.67 2,093,426.25 - 298,349,372.92
III. Impairment provision
1. Opening balance --- --- --- ---
2. Increase in the current
--- --- --- ---
period
Accrual in the current
--- --- --- ---
period
Consolidation of
enterprises not under the --- --- --- ---
same control
225
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Construction in
Item Houses and buildings Land use right Total
progress
Increase for other
--- --- --- ---
reasons
3. Decrease in the current
--- --- --- ---
period
Disposal --- --- --- ---
Disposal of subsidiaries --- --- --- ---
Decrease for other
--- --- --- ---
reasons
4. Closing balance --- --- --- ---
IV. Book value
1. Closing book value 422,025,682.38 3,144,086.24 --- 425,169,768.62
2. Opening book value 440,587,040.31 3,264,686.09 --- 443,851,726.40
2. Details of investment properties
Owner of investment property Investment property project Net value of investment property
Shenzhen SEG Co., Ltd. F2, F4 and F5 of SEG Plaza 222,339,172.95
Shenzhen SEG Co., Ltd. Some floors of Contemporary Window 49,942,717.21
Shenzhen SEG Co., Ltd. Other houses 1,598,859.14
Shenzhen SEG Baohua Enterprise
Blocks A and B of Baohua Building 32,166,007.03
Development Co., Ltd.
Shenzhen SEG Industrial Investment Co.,
Some floors of Contemporary Window 2,608,194.64
Ltd.
Changsha SEG Development Co., Ltd. Changsha SEG 116,514,817.65
Total 425,169,768.62
Note 13 Original value and accumulated depreciation of fixed assets
1. Details of fixed assets
Houses and Machinery Transportation
Item Other equipment Total
buildings equipment vehicles
I. Original book value --- --- --- --- ---
1. Opening balance 35,694,847.73 63,181,867.33 5,470,881.82 3,717,659.88 108,065,256.76
2. Increase in the current
- 5,787,713.18 238,989.74 1,028,668.38 7,055,371.30
period
Purchase --- 5,461,703.05 238,989.74 1,028,668.38 6,729,361.17
Transfer-in of
construction in --- 326,010.13 --- --- 326,010.13
progress
Increase due to
--- --- --- --- ---
business merger
226
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Houses and Machinery Transportation
Item Other equipment Total
buildings equipment vehicles
Capital invested by
--- --- --- --- ---
shareholders
Financial leasing --- --- --- --- ---
Other transfer-in --- --- --- --- ---
3. Decrease in the current
- 7,202,272.12 611,858.00 20,900.00 7,835,030.12
period
Disposal or scrap --- 6,525,192.75 611,858.00 20,900.00 7,157,950.75
Financial leasing --- --- --- --- ---
Other transfer-out --- 677,079.37 --- --- 677,079.37
4. Closing balance 35,694,847.73 61,767,308.39 5,098,013.56 4,725,428.26 107,285,597.94
II. Accumulated
--- --- --- --- ---
depreciation
1. Opening balance 14,788,585.07 49,599,205.42 3,630,627.47 2,522,413.55 70,540,831.51
2. Increase in the current
779,589.82 2,772,072.27 531,039.70 651,820.55 4,734,522.34
period
Accrual 779,589.82 2,772,072.27 531,039.70 651,820.55 4,734,522.34
Increase due to
--- --- --- --- ---
business merger
Other transfer-in --- --- --- --- ---
3. Decrease in the current
- 6,582,091.71 581,264.71 8,193.31 7,171,549.73
period
Disposal or scrap --- 6,098,282.86 581,264.71 8,193.31 6,687,740.88
Financial leasing --- --- --- --- ---
Other transfer-out --- 483,808.85 --- --- 483,808.85
4. Closing balance 15,568,174.89 45,789,185.98 3,580,402.46 3,166,040.79 68,103,804.12
III. Impairment provision --- --- --- --- ---
1. Opening balance --- --- --- --- ---
2. Increase in the current
--- --- --- --- ---
period
Accrual --- --- --- --- ---
Increase due to
--- --- --- --- ---
business merger
Other transfer-in --- --- --- --- ---
3. Decrease in the current
--- --- --- --- ---
period
Disposal or scrap --- --- --- --- ---
Financial leasing --- --- --- --- ---
Other transfer-out --- --- --- --- ---
227
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Houses and Machinery Transportation
Item Other equipment Total
buildings equipment vehicles
4. Closing balance --- --- --- --- ---
5. Book value --- --- --- --- ---
6. Closing book value 20,126,672.84 15,978,122.41 1,517,611.10 1,559,387.47 39,181,793.82
7. Opening book value 20,906,262.66 13,582,661.91 1,840,254.35 1,195,246.33 37,524,425.25
2. There are no fixed assets that are temporarily idle at the end of the period.
3. There are no fixed assets acquired through financing lease.
4. There are no fixed assets acquired through financing lease out.
5. Fixed assets with no property right certificate acquired at the end of the period
Reason for property right certificate not
Item Book value
acquired
Houses and buildings 1,201,218.88 Qualification procedures not complete
Total 1,201,218.88
Note 14 Construction in progress
1. Details of Construction in progress
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
LCD in the lobby
--- --- --- 140,810.00 --- 140,810.00
of SEG Plaza
Total --- --- --- 140,810.00 --- 140,810.00
Note 15 Intangible assets
1. Intangible assets
Item Land use right Outsourced software Total
I. Original book value
1. Opening balance 159,759.24 3,042,853.00 3,202,612.24
2. Increase in the current period --- 460,000.00 460,000.00
Purchase --- 460,000.00 460,000.00
Internal R&D --- --- ---
Consolidation of enterprises not
--- --- ---
under the same control
Increase for other reasons --- --- ---
3. Decrease in the current period --- 21,000.00 21,000.00
Disposal --- 21,000.00 21,000.00
Disposal of subsidiaries --- --- ---
Decrease for other reasons --- --- ---
228
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Item Land use right Outsourced software Total
4. Closing balance 159,759.24 3,481,853.00 3,641,612.24
II. Accumulated amortization
1. Opening balance 57,514.55 2,001,335.58 2,058,850.13
2. Increase in the current period 2,759.76 335,360.67 338,120.43
Accrual 2,759.76 335,360.67 338,120.43
Consolidation of enterprises not
--- --- ---
under the same control
Increase for other reasons --- --- ---
3. Decrease in the current period --- 7,350.00 7,350.00
Disposal --- 7,350.00 7,350.00
Disposal of subsidiaries --- --- ---
Decrease for other reasons --- --- ---
4. Closing balance 60,274.31 2,329,346.25 2,389,620.56
III. Impairment provision --- --- ---
1. Opening balance --- --- ---
2. Increase in the current period --- --- ---
Accrual --- --- ---
Consolidation of enterprises not
--- --- ---
under the same control
Increase for other reasons --- --- ---
3. Decrease in the current period --- --- ---
Disposal of subsidiaries --- --- ---
Decrease for other reasons --- --- ---
Other transfer-out --- --- ---
4. Closing balance --- --- ---
IV. Book value --- --- ---
1. Closing book value 99,484.93 1,152,506.75 1,251,991.68
2. Opening book value 102,244.69 1,041,517.42 1,143,762.11
Note 16 Goodwill
1. Original book value of goodwill
Decrease in the current
Name of the invested Increase in the current period
period
organization or the item
Opening balance Increase due Closing balance
contributing to a
to business Others Disposal Others
goodwill
merger
Changsha SEG
10,328,927.82 - - - - 10,328,927.82
Development Co., Ltd.
Total 10,328,927.82 - - - - 10,328,927.82
229
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The goodwill impairment testing was conducted at the end of the period and there was no sign of impairment, so
no provision was accrued for impairment.
Note 17 Long-term expenses to be amortized
Amortization
Increase in the
Item Opening balance amount of Other decrease Closing balance
current period
current period
Decoration expenses 44,225,335.11 58,698,115.44 13,604,194.26 --- 89,319,256.29
Firefighting renovation 4,318,931.80 225,000.00 844,927.44 --- 3,699,004.36
Market supporting fee of
691,732.95 --- 41,712.60 --- 650,020.35
Tower B
Others --- 711,716.98 59,506.30 --- 652,210.68
Total 49,235,999.86 59,634,832.42 14,550,340.60 --- 94,320,491.68
Note 18 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 32,341,604.22 8,084,514.34 32,235,258.25 8,058,814.57
Unrealized profit from
--- --- --- ---
internal transaction
Deductible losses --- --- --- ---
Payroll payable --- --- --- ---
Technology development
--- --- --- ---
expense
Accrued expenses --- --- --- ---
Estimated liabilities --- --- --- ---
Government subsidies
11,183,333.34 2,795,833.33 9,500,000.00 2,375,000.00
included in deferred income
Total 43,524,937.56 10,880,347.67 41,735,258.25 10,433,814.57
2. Deferred income tax liabilities not offset
Closing balance Opening balance
Item Taxable temporary Deferred income Taxable temporary Deferred income tax
difference tax liabilities difference liabilities
Asset evaluation increment for
consolidation of enterprises 59,006,530.50 14,751,632.59 63,442,234.08 15,860,558.49
not under the same control
Changes in fair value of the
available-for-sale financial 592,885.58 148,221.40 654,175.41 163,543.86
assets
230
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Closing balance Opening balance
Item Taxable temporary Deferred income Taxable temporary Deferred income tax
difference tax liabilities difference liabilities
Changes in fair value of
--- --- --- ---
transactional financial assets
Designated financial assets
measured by fair value with
--- --- --- ---
changes included in current
profit and loss
Changes in fair value of the
--- --- --- ---
investment property
Changes in fair value of
--- --- --- ---
productive biological assets
Total 59,599,416.08 14,899,853.99 64,096,409.49 16,024,102.35
3. Details of deductible temporary difference of deferred income tax assets unrecognized in this period
Item Closing balance Opening balance
Asset impairment provision 11,746,363.19 11,322,893.92
Estimated liabilities ---
Deductible losses 37,349,450.30 46,691,048.83
Total 49,095,813.49 58,013,942.75
The deductible temporary differences and deductible losses are not recognized because it is uncertain to make
sufficient taxable income in the future.
4. Unrecognized deductible losses of deferred income tax assets will be due in the following years
Item Closing balance Opening balance Remarks
2016 --- 12,973,257.02
2017 3,626,036.94 7,431,196.64
2018 2,610,263.14 9,295,488.88
2019 5,961,706.24 6,546,777.27
2020 10,444,329.02 10,444,329.02
2021 14,707,114.96 ---
Total 37,349,450.30 46,691,048.83
Note 19 Other non-current assets
Category and contents Closing balance Opening balance
Upfront expense of the new hotel 7,459,000.09 ---
Prepayment for engineering in the
6,345,660.37 5,103,811.14
electronics market
Total 13,804,660.46 5,103,811.14
Note 20 Short-term borrowing
231
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1. Classification of short-term borrowings
Item Closing balance Opening balance
Borrowing on credit 100,000,000.00 10,000,000.00
Pledge loans - 42,759,630.48
Mortgage loans 255,000,000.00 315,000,000.00
Total 355,000,000.00 367,759,630.48
2. There are no overdue outstanding short-term loans at the end of the period.
Note 21 Accounts payable
1. Details of accounts payable
Item Closing balance Opening balance
Payment for goods 524,596.07 84,158,671.54
Project fund payable 17,090,320.08 4,867,782.23
Others 2,667,694.93 882,328.21
Total 20,282,611.08 89,908,781.98
2. There are no significant accounts payable aged over one year at the end of the period.
Note 22 Advance receipt
1. Details of prepayment
Item Closing balance Opening balance
Advance brand royalty receipt 8,612,776.97 11,452,476.85
Advance rent receipt 83,730,245.80 111,836,641.23
Advance receipt of payment for goods 14,193,465.32 53,693,141.53
Advance receipt of advertising payment 6,325,655.29 8,013,712.80
Others 3,667,617.89 5,434,148.64
Total 116,529,761.27 190,430,121.05
Note 23 Payroll payable
1. List of payroll payable
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Short-term payroll 21,780,103.03 99,923,381.03 105,113,975.65 16,589,508.41
Welfare after leave – defined contribution
69,031.13 6,751,844.89 6,593,127.97 227,748.05
plan
Dismissal welfare - 100,477.00 100,477.00 -
Other welfare due within one year --- --- --- ---
Total 21,849,134.16 106,775,702.92 111,807,580.62 16,817,256.46
2. List of short-term payroll
232
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Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Wages, bonuses, allowances and
19,480,254.22 88,212,637.01 93,011,230.25 14,681,660.98
subsidies
Employee welfare - 3,052,628.75 3,052,628.75 -
Social insurance premiums 89,152.51 2,879,647.22 2,899,237.53 69,562.20
Including: Medical insurance premiums 88,756.51 2,561,573.88 2,582,722.19 67,608.20
Supplementary medical insurance 396.00 8,506.90 7,536.90 1,366.00
Work injury insurance - 132,207.18 131,870.18 337.00
Maternity insurance - 177,359.26 177,108.26 251.00
Housing fund 1,265,986.46 4,345,452.45 4,402,312.46 1,209,126.45
Labor union expenditures 944,709.84 1,415,275.56 1,730,826.62 629,158.78
Accumulative compensated absences in
- - - -
short term
Short-term profit (bonus) sharing plan - - -
Other short-term payroll - 17,740.04 17,740.04 -
Total 21,780,103.03 99,923,381.03 105,113,975.65 16,589,508.41
3. List of defined contribution plan
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Pension insurance 68,043.51 4,706,726.77 4,698,345.22 76,425.06
Unemployment insurance premium 987.62 172,953.88 172,618.51 1,322.99
Supplementary pension payment - 1,872,164.24 1,722,164.24 150,000.00
Total 69,031.13 6,751,844.89 6,593,127.97 227,748.05
Note 24 Taxes payable
Taxes and fees Closing balance Opening balance
Value-added tax 3,407,493.19 169,594.16
Business tax - 1,424,420.92
Enterprise income tax 38,886,840.80 28,476,563.20
Individual income tax 845,899.93 805,153.42
Urban maintenance and construction tax 294,456.12 178,371.98
Education surtax 194,225.97 102,484.34
Housing property tax 2,719,066.00 2,939,568.67
Stamp tax and water fund 133,606.17 532,994.96
Others 435,443.89 15,878.42
Total 46,917,032.07 34,645,030.07
Note 25 Interest payable
233
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Item Closing balance Opening balance
Interest payable on short-term loans 475,177.74 516,758.34
Total 475,177.74 516,758.34
Note 26 Dividends payable
Reason for not making
Item Closing balance Opening balance
payment for over one year
Common stock dividends 17,019,185.19 2,218,224.58 ---
Total 17,019,185.19 2,218,224.58 ---
Note 27 Other payables
1. Other payables listed based on nature
Nature of receivables Closing balance Opening balance
Deposit and security deposit 117,329,234.79 117,687,835.08
Central air conditioner maintenance cost and special
12,882,368.93 12,975,174.61
maintenance fund
Receipts under custody 12,453,423.30 16,469,845.49
Funds from related parties 352,077.98 2,753,679.48
Electronics market water and electricity charges and rental
47,626,397.25 44,443,351.03
payable
Total 190,643,502.25 194,329,885.69
Note 28 Estimated liabilities
Item Closing balance Opening balance Cause
External guarantee --- ---
Pending litigation --- 7,000,000.00
Total --- 7,000,000.00
Note 29 Deferred income
Opening Increase in the Decrease in the
Item Closing balance Cause
balance current period current period
Asset-related government
9,588,110.37 1,000,000.00 404,777.03 10,183,333.34 ---
subsidy
Income-related government
46,004.40 1,000,000.00 46,004.40 1,000,000.00 ---
subsidy
Total 9,634,114.77 2,000,000.00 450,781.43 11,183,333.34
1. Deferred income related to government subsidy
Amount of
Amount of Relevant to
Opening non-operating Other Closing
Liability item new subsidies assets/relevant
balance income in the changes balance
in this period to income
current period
234
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Subsidies for online Relevant to
88,110.37 53,015.16 35,095.21 -
SEG projects assets
Subsidies for project Relevant to
46,004.40 12,303.06 33,701.34 -
funds income
Support project for
construction of Relevant to
9,500,000.00 316,666.66 9,183,333.34
Nantong SEG assets
Electronics Market
Relevant to
1,000,000.00 1,000,000.00
CPARK Show assets
Promotion Center Relevant to
1,000,000.00 1,000,000.00
income
Total 9,634,114.77 2,000,000.00 381,984.88 68,796.55 11,183,333.34
Note 30 Share capital
Increase (+)/decrease (-) in the current period
Opening New Capitalizati
Item Bonus Closing balance
balance share on of public Others Subtotal
share
offering reserve
Unrestricted stock 784,772,321.00 --- --- --- -50,750.00 -50,750.00 784,721,571.00
Restricted stock 26,689.00 --- --- --- 50,750.00 50,750.00 77,439.00
Including: restricted
--- --- --- --- --- --- ---
equity incentive
Restricted executive
26,689.00 --- --- --- 50,750.00 50,750.00 77,439.00
shares
Sum of shares 784,799,010.00 --- --- --- --- --- 784,799,010.00
Note 31 Capital reserve
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
Capital premium (capital share premium) 322,339,973.81 - 1,666,639.52 320,673,334.29
Other capital reserves 184,205,857.30 7,812.30 9,127,126.47 175,086,543.13
Total 506,545,831.11 7,812.30 10,793,765.99 495,759,877.42
Notes to capital reserve:
1. Increase in capital reserve: The Company received RMB 7,812.3 as dividends of odd lots per year returned by
China Securities Depository and Clearing Company Limited.
2. Decrease in capital reserve: The Company acquired the equity of Shenzhen SEG Credit Co., Ltd. held by
Shenzhen SEG E-Commerce Co., Ltd. RMB 1,666,639.52 is written off from the capital reserve by the
difference between the transaction price for acquiring minority interests of the subsidiary and net assets. The
Company sold 0.999% of the equity in Shenzhen Huakong SEG Co., Ltd. through the Shenzhen Stock Exchange
quotation trading system, and the part originally included in the capital reserve is transferred into the investment
income RMB 9,127,126.47.
235
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Note 32 Other comprehensive incomes
Amount incurred in the current period
Less: profit
and loss
Pretax Amount Amount
transferred in
Opening amount Less: after tax after tax Closing
Item from other
balance obtained Income attributable attributable balance
comprehensiv
in this tax to parent to minority
e income in
period company shareholders
the current
period
I. Other comprehensive
incomes not to be reclassified
into profit and loss
(1) Changes in net liabilities
or net assets due to
--- --- --- --- --- --- ---
re-measurement in defined
benefit plans
(2) Shares of the investee of
other comprehensive
incomes not to be reclassified --- --- --- --- --- --- ---
into profit and loss with the
equity method
II. Other comprehensive
income to be reclassified into
profit and loss
(1) Shares of the investee of
other comprehensive
incomes to be reclassified
--- 178.21 --- --- 178.21 --- 178.21
into profit and loss with the
equity method if the required
conditions are met
(2) Profit or loss from
changes in the fair value of 326,662.
-61,289.83 --- -15,322.46 -30,605.07 -15,362.30 296,057.41
available-for-sale financial 48
assets
(3) Held-to-maturity
investments reclassified into
profit or loss from the --- --- --- --- --- --- ---
available-for-sale financial
assets
(4) Effective profit or loss
--- --- --- --- --- --- ---
from hedging of cash flows
(5) Foreign currency
--- --- --- --- --- --- ---
translation differences
326,662.
Total other comprehensive -61,111.62 --- -15,322.46 -30,426.86 -15,362.30 296,235.62
48
236
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Amount incurred in the current period
Less: profit
and loss
Pretax Amount Amount
transferred in
Opening amount Less: after tax after tax Closing
Item from other
balance obtained Income attributable attributable balance
comprehensiv
in this tax to parent to minority
e income in
period company shareholders
the current
period
income
Note 33 Surplus reserve
Increase in the current Decrease in the current
Item Opening balance Closing balance
period period
Statutory surplus
109,922,336.87 11,880,703.37 --- 121,803,040.24
reserve
Total 109,922,336.87 11,880,703.37 --- 121,803,040.24
Note 34 Undistributed profits
Item Amount Accrual/Distribution Rate
Before adjustment undistributed profits at the end of the previous
73,532,388.70 —
period
After adjustment total undistributed profits (+ for increase, - for
--- —
decrease) at the beginning of period
After adjustment undistributed profit at the beginning of period 73,532,388.70 —
Add: Net profits attributable to the parent company owner in the
107,560,213.41 —
current period
Less: Accrual of statutory surplus reserve 11,880,703.37 10%
Accrual of free surplus reserve --- ---
Accrual of reserve fund --- ---
Accrual of enterprise development fund --- ---
Accrual of bonus and welfare fund --- ---
Ordinary share dividends payable 23,669,414.47 ---
Ordinary share dividends converted to share capital --- ---
Preferred stock dividend --- ---
Other distributions to shareholders --- ---
Profits capitalized on return --- ---
Other profit distribution --- ---
Plus: Surplus reserve compensating losses --- ---
Changes in net liabilities or net assets due to re-measurement in
--- ---
defined benefit plans
Internal carrying forward of owners' equity --- ---
237
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Item Amount Accrual/Distribution Rate
Others 145,542,484.27 ---
Undistributed profits at the end of the period
Note 35 Operating income and operating cost
1. Operating income and operating cost
Amount incurred in the current period Amount incurred in the previous period
Item
Income Cost Income Cost
Main business 654,300,062.39 574,958,228.78 715,233,992.20 607,958,493.22
Other businesses 18,084,214.08 7,536,451.17 26,299,684.73 10,104,222.97
Total 672,384,276.47 582,494,679.95 741,533,676.93 618,062,716.19
2. Main operating businesses (by industry)
Amount incurred in the current period Amount incurred in the previous period
Name of company
Operating income Operating cost Operating income Operating cost
(1) Industry --- --- --- ---
(2) Trade 299,072,947.49 293,776,511.73 328,466,444.85 317,862,517.36
(3) Real estate --- --- --- ---
(4) Leasing and others 355,227,114.90 277,181,717.05 386,767,547.35 290,095,975.86
Total 654,300,062.39 570,958,228.78 715,233,992.20 607,958,493.22
Note 36 Tax and surcharges
Item Amount incurred in the current period Amount incurred in the previous period
Business tax 10,566,608.01 24,424,798.34
Urban maintenance and construction tax 1,713,932.00 1,877,631.66
Education surtax 1,230,833.98 1,349,358.86
Property tax 4,043,243.80 -
Land use right 359,007.01 -
Travel tax 1,920.00 -
Stamp duty 371,734.08 -
Others 230,486.35 152,384.00
Total 18,517,765.23 27,804,172.86
Note 37 Financial cost
Category Amount incurred in the current period Amount incurred in the previous period
Interest expenses 8,143,754.33 9,028,274.77
Less: Interest income 3,645,683.63 5,060,702.65
Loss on exchange -311,072.10 -1,048,526.70
Others 440,177.24 645,731.34
238
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Category Amount incurred in the current period Amount incurred in the previous period
Total 4,627,175.84 3,564,776.76
Note 38 Loss from asset impairment
Item Amount incurred in the current period Amount incurred in the previous period
Loss from bad debt 529,815.24 -106,419.36
Impairment losses on loans and
-4,006,713.77 5,201,783.45
prepayment
Loss from inventory depreciation
Loss from impairment of
available-for-sale financial assets
Total -3,476,898.53 5,095,364.09
Note 39 Investment income
1. Details of investment income
Amount incurred Amount incurred
Item in the current in the previous
period period
Long-term equity investment income by the equity method -387,059.05 1,703,803.48
Long-term equity investment income by the cost method ---
Income from disposal of long-term equity investments 89,688,725.07 ---
Income from holding financial assets measured by fair value with changes included in
--- ---
current profit and loss
Income from disposal of financial assets measured by fair value with changes included
--- ---
in current profit and loss
Income from holding of held-to-maturity investments --- ---
Income from disposal of held-to-maturity investments --- ---
Investment income during the possession of available-for-sale financial assets --- 755,461.47
Income from disposal of available-for-sale financial assets --- ---
Profit from re-measurement of fair value of the remaining equity after loss of control --- ---
Others (financial products) 9,844,238.42 15,188,228.82
Total 99,145,904.44 17,647,493.77
Note 40 Non-operating income
Amount included in
Amount incurred in the Amount incurred in the
Item current non-recurring
current period previous period
profit and loss
Total gains on disposal of non-current
116,977.79 19,382.00 116,977.79
assets
Including: Gain on disposal of fixed
116,977.79 19,382.00 116,977.79
assets
239
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Profit from disposal of intangible assets ---
Profit from debt restructuring ---
Profit from transfer of non-monetary
---
assets
Income from donations - --- -
Government subsidies 9,828,264.76 980,956.24 9,828,264.76
Liquidated damages 139,343.64 809,234.56 139,343.64
Others 812,937.83 557,973.60 812,937.83
Total 10,897,524.02 2,367,546.40 10,897,524.02
Government subsidies recorded into current profit and loss
Amount incurred in the Amount incurred in the Relevant to assets
Subsidy item
current period previous period /Relevant to income
Subsidies for online SEG projects 53,015.16 5,549.52 Relevant to assets
Subsidies for project funds 12,303.06 915,406.72 Relevant to income
Support funds for opening and
investment promotion of Nantong SEG 8,000,000.00 --- Relevant to income
Times Plaza animation industry base
2015 Special funds for development of
the service industry of Wujiang District
50,000.00 --- Relevant to income
from Finance Bureau of Wujiang District,
Suzhou
Special funds for industrial development
from Administrative Committee of the 40,000.00 --- Relevant to income
Economic Development Zone
2015 Reward for stable and healthy
100,000.00 --- Relevant to income
economic development
Headquarter operation reward of special
funds for industrial development of
1,240,100.00 --- Relevant to income
Enterprise Development Service Center,
Futian District, Shenzhen
Support project fund for construction of
316,666.66 --- Relevant to assets
Nantong SEG Electronics Market
Others 16,179.88 60,000.00 Relevant to income
Total 9,828,264.76 980,956.24
Note 41 Non-operating expenses
Amount included in
Amount incurred in the Amount incurred in the
Item current non-recurring
current period previous period
profit and loss
Total loss from disposal of non-current
345,909.08 276,651.63 345,909.08
assets
Including: loss from disposal of fixed
345,909.08 276,651.63 345,909.08
assets
Loss from disposal of intangible assets ---
Loss from debt restructuring ---
240
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Amount included in
Amount incurred in the Amount incurred in the
Item current non-recurring
current period previous period
profit and loss
Loss from transfer of non-monetary
---
assets
Donation expenses 5,000.00 3,000.00 5,000.00
Compensation for loss 3,712,493.90 10,511,906.63 3,712,493.90
Others 303,029.33 3,896,199.12 303,029.33
Total 4,366,432.31 14,687,757.38 4,366,432.31
Note 42 Income tax
1. Income tax
Item Amount incurred in the current period Amount incurred in the previous period
Income tax of the current period 46,862,031.11 36,103,014.96
Deferred income tax -1,555,459.00 -1,003,177.31
Total 45,306,572.11 35,099,837.65
2. Adjustment process of accounting profit and income tax
Item Amount incurred in the current period
Total profit 187,536,901.73
Income tax calculated according to statutory or applicable tax rate 46,884,225.43
Impact of different tax rates applicable to subsidiaries -1,525,518.62
Impact of income tax before adjustment -61,358.56
Impact of non-taxable income -3,262,414.25
Impact of non-deductible costs, expenses and losses 180,402.73
Impact of deferred income tax assets unrecognized in the early phase of utilization on
-146,267.76
deductible losses
Impact of deferred income tax assets unrecognized in the current period on deductible
3,237,503.14
temporary difference or deductible losses
Income tax 45,306,572.11
Note 43 Notes on the cash flow statement
1. Other cash received concerning operating activities
Item Amount incurred in the current period Amount incurred in the previous period
Acquisition of security deposit for land - 60,000,000.00
Incomings and outgoings 81,201,195.05 18,596,802.04
Goods payment collected from tenants 201,259,769.35 337,685,284.36
Interest income 3,645,683.63 5,060,702.65
Non-operating income 10,371,238.34 218,141.32
Total 296,477,886.37 421,560,930.37
241
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2. Other cash paid concerning operating activities
Item Amount incurred in the current period Amount incurred in the previous period
Incomings and outgoings 81,747,528.91 56,090,169.65
Goods payment paid for tenants 127,243,347.16 284,098,911.45
Cash expenses 71,918,581.22 46,498,830.42
Non-operating expenses 10,928,991.52 3,000.00
Total 291,838,448.81 386,690,911.52
3. Other cash received concerning investing activities
Item Amount incurred in the current period Amount incurred in the previous period
Asset-related government subsidy 2,000,000.00 ---
Total 2,000,000.00 ---
4. Other cash received concerning financing activities
Item Amount incurred in the current period Amount incurred in the previous period
Cash received from dividends of odd lots
Cash received from disposal of fractional 7,812.30 ---
share
Deposit returned 1,340,000.00 ---
Total 1,347,812.30 ---
5. Other cash paid related to financing activities
Item Amount incurred in the current period Amount incurred in the previous period
Interbank financing of related parties - 57,650,000.00
Payment for cash deposit 3,600,000.00 ---
Payment for loan interest of related
- 110,222.92
parties
Payment for issuance of short-term
890,500.00 1,070,750.00
financing bonds
Total 4,490,500.00 58,830,972.92
Note 44 Supplementary information to the cash flow statement
1. Supplementary information on the cash flow statement
Amount of the Amount of the
Item
current period previous period
1. Reconciliation of net income to cash flow from operating activities
Net profit 142,230,329.62 107,968,730.61
Plus: Asset impairment provision -3,476,898.53 5,095,364.09
Depreciation of fixed assets, oil & gas assets and consumable biological assets 23,416,480.12 23,685,663.67
Amortization of intangible assets 338,120.43 294,325.43
242
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Amount of the Amount of the
Item
current period previous period
Amortization of long-term expenses to be apportioned 14,550,340.60 13,649,643.71
Loss on disposal of fixed assets, intangible assets, and other long-term assets (enter "-"
-116,977.79 257,269.63
for profit)
Loss on discard of fixed asset (enter "-" for profit) 345,909.08 ---
Loss on change in fair value (enter "-" for profit) --- ---
Financial expenses (enter "–" for profit) 8,143,754.33 9,028,274.77
Income from investment (enter "–" for profit) -99,145,904.44 -17,647,493.77
Decrease in deferred tax assets (enter "–" for increase) -446,533.10 105,748.59
Increase in deferred tax liabilities (enter "–" for decrease) -1,108,925.90 -1,061,441.45
Inventory decrease (enter "–" for increase) -151,288,804.20 -172,528,348.00
Decrease in accounts receivable related to operating activities (enter "–" for increase) 92,639,116.52 183,111,842.51
Increase in accounts payable related to operating activities (enter "–" for decrease) -146,110,064.42 -164,413,103.61
Others --- ---
Net cash flow from operating activities -120,030,057.68 -12,453,523.82
2. Major investing and financing activities that involve no cash payments and receipts --- ---
Conversion of debt into capital --- ---
Convertible bonds due within one year --- ---
Fixed assets acquired by financing lease --- ---
3. Change in cash and cash equivalents: --- ---
Closing balance of cash 179,494,815.84 275,523,429.10
Less: Opening balance of cash 275,523,429.10 382,056,680.70
Add: Closing balance of cash equivalents --- ---
Less: Opening balance of cash equivalents --- ---
Net increase in cash and cash equivalents -96,028,613.26 -106,533,251.60
2. Net cash received from disposal of subsidiaries in the current period
Amount of the current
Item
period
Cash or cash equivalent received from disposal of subsidiaries in the current period 5,349,696.00
Including: Shenzhen SEG E-Commerce Co., Ltd. 5,349,696.00
Subtract: Cash and cash equivalent held by the Company at the time of loss of control 961,078.91
Including: Shenzhen SEG E-Commerce Co., Ltd. 961,078.91
Net cash received from disposal of subsidiaries 4,388,617.09
3. Combination of cash and cash equivalents
243
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Item Closing balance Opening balance
1. Cash 179,494,815.84 275,523,429.10
Including: Cash on hand 568,293.43 526,467.72
Bank deposits available for payment at any time 168,548,637.23 274,816,839.04
Other monetary capital available for payment at any time 10,377,885.18 180,122.34
Accounts in the central bank available for payment
Deposits from interbank
Loans from interbank
2. Cash equivalents
Including: Bond investments due within 3 months
3. Closing balance of cash and cash equivalents 179,494,815.84 275,523,429.10
Including: Cash and cash equivalents with the use by the parent company and
subsidiaries
Note 45 Assets with restrictions on ownership or the use right
Item Balance Reason for restriction
Monetary funds 3,600,000.00 Deposit for the L/G
Investment properties 97,257,376.24 Collaterals for bank loans
Fixed assets 15,355,470.16 Collaterals for bank loans
Total 116,212,846.40
Note 46 Foreign currency monetary items
1. Foreign currency monetary items
Closing balance of foreign Closing balance of converted
Item Discount exchange rate
currency RMB
Monetary funds
Including: HK$ 240.00 0.8945 214.68
VIII. Change in consolidation scope
(I) Disposal of subsidiaries
1. Single disposal of investment in subsidiaries and loss of control
Difference
between the
disposal price and
shares of the net
Equity
Equity assets of the
Equity disposal Determination basis for
Subsidiary name disposal Time of loss of control subsidiary in the
disposal price proportion time of loss of control
method consolidated
(%)
financial statement
corresponding to
investment
disposal
Transfer of the
Shenzhen SEG Equity
5,349,696.00 51.00 December 2016 management right in 3,486,412.04
E-Commerce Co., Ltd. transfer
December 2016
Continued:
244
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Amount of other
Proportion Determination comprehensive
of the method and main income related to
Book value of the Fair value of the Gain or loss from
residual assumption for the the equity
residual equity at residual equity at the residual equity
Subsidiary name equity at the fair value of the investment of the
the date of loss of the date of loss of remeasured based
date of loss residual equity at original subsidiary
control control on the fair value
of control the date of loss of transferred into
(%) control investment profit or
loss
Shenzhen SEG E-Commerce
--- --- --- --- --- ---
Co., Ltd.
(II) Change in the consolidation scope for other reasons
1. Newly-established subsidiary in the current period
Registered capital Paid-in capital (RMB
Company name Equity proportion
(RMB 10,000) 10,000)
Suzhou SEG Intelligent Technology Co., Ltd. 1,000.00 1,000.00 100.00
Shenzhen SEG Longyan New Energy Application
500.00 --- 50.00
and Development Co., Ltd.
Shenzhen SEG Longyan Energy Tecvhnology
16,500.00 --- 50.00
Co., Ltd.
VIII. Equity in other entities
(I) Equity in subsidiaries
1. Composition of the group
Main Shareholding
Place of Business Method of
Subsidiary name business proportion (%)
registration Nature of business acquisition
address Direct Indirect
Xi'an SEG Electronics Market Electronics market Investment and
Xi'an Xi'an 65.00 -
Co., Ltd. lease management establishment
Shenzhen SEG Electronics Electronics market Investment and
Shenzhen Shenzhen 70.00 -
Market Management Co., Ltd. lease management establishment
Suzhou SEG Electronics Market Electronics market Investment and
Su Zhou Su Zhou 45.00 -
Co., Ltd. lease management establishment
Shenzhen Mellow Orange Hotel management,
Investment and
Business Hotel Management Co., Shenzhen Shenzhen consultancy and - 66.58
establishment
Ltd property management
Petty loan business
(pooling public
deposits is prohibited) 38.00 16.00 Investment and
Shenzhen SEG Credit Co., Ltd. Shenzhen Shenzhen
within the establishment
administrative region
of Shenzhen.
Market facilities
leasing, property
Shenzhen SEG Electronics Investment and
Nanjing Nanjing management, sales of 100.00 -
Market Management Co., Ltd. establishment
electronic products and
advertisement
Property leasing, sales
Xi'an Hairong SEG Electronics Investment and
Xi'an Xi'an of electronic products 51.00 -
Market Co., Ltd. establishment
and advertisement
245
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Main Shareholding
Place of Business Method of
Subsidiary name business proportion (%)
registration Nature of business acquisition
address Direct Indirect
Wujiang SEG Electronics Market Electronics market Investment and
Wujiang Wujiang 51.00 -
Co., Ltd. lease management establishment
Wuxi SEG Electronics Market Electronics market Investment and
Wuxi Wuxi 51.00 -
Co., Ltd lease management establishment
Shunde SEG Electronics Market Electronics market Investment and
Foshan Foshan 100.00 -
Management Co., Ltd. lease management establishment
Nanning SEG Electronics Market Electronics market Investment and
Nanning Nanning 100.00 -
Management Co., Ltd. lease management establishment
Nantong SEG Times Plaza Investment and
Nantong Nantong real estate development 100.00 -
Development Co., Ltd. establishment
Merger of
Shenzhen SEG Baohua Enterprise Property lease and
Shenzhen Shenzhen 66.58 - enterprises under
Development Co., Ltd. management
common control
Investment in industrial Merger of
Shenzhen SEG Industrial
Shenzhen Shenzhen and commercial 100.00 - enterprises under
Investment Co., Ltd.
business common control
Merger of the
Changsha SEG Development Co., enterprises under
Changsha Changsha Property lease 46.00 -
Ltd. the control of a
same entity
Yantai SEG Times Plaza Real estate Investment and
Yantai Yantai 90.00 -
Development Co., Ltd. development establishment
Commercial operation
Nantong SEG Commercial Investment and
Nantong Nantong management, property 100.00 -
Operation Management Co., Ltd. establishment
management
Suzhou SEG Digital Plaza Property leasing, sales Investment and
Su Zhou Su Zhou 100.00 -
Management Co., Ltd. of electronic products establishment
Xi'an Fengdong New Town SEG Real estate Investment and
Xi'an Xi'an 100.00 -
Times Plaza Properties Co., Ltd. development establishment
Suzhou SEG Intelligent Sales of electronic Investment and
Su Zhou Su Zhou 100.00 ---
Technology Co., Ltd. products establishment
R&D and
Shenzhen SEG Longyan New
manufacturing of CdTe Investment and
Energy Application and Shenzhen Shenzhen 50.00 ---
solar cell modules, establishment
Development Co., Ltd.
photovoltaic projects
Investment in
management,
Shenzhen SEG Investment Investment and
Shenzhen Shenzhen investment in industrial 100.00 ---
Management Co., Ltd. establishment
projects, fund
management
Technical development
of new energy, R&D
Shenzhen SEG Longyan Energy and manufacturing of Investment and
Shenzhen Shenzhen 50.00 ---
Technology Co., Ltd. CdTe solar cell establishment
modules, photovoltaic
projects
246
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
(1) Cause for difference between the proportion of shareholding and the proportion of voting rights
For Changsha SEG Development Co., Ltd. (originally named Changsha Emerging Development Co., Ltd.), the
current capital stock structure is as follows: The company holds 46% of shares and is the largest shareholder. In
addition, according to the Memorandum of Cooperation Concerning the Stock Equity Project of Joint Investment
and Acquisition of Changsha Emerging Development Co., Ltd. signed by and between the Company and Hong
Kong Jinhong Group on October 8, 2008, Hong Kong Jinhong Group agreed to give up the 5% of voting power,
which would be exercised by the Company, and the voting power ratio of the company is 51%. Half of the
directors, the Chairman of the Board, the General Manager, the Chief Financial Officer and the management
team of Changsha SEG Development Co., Ltd are all dispatched by the Company. Therefore, the Company has
obtained the control of Changsha SEG Development Co., Ltd.
(2) Basis for control of the invested entity even with half of voting rights or less
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.
Half of the directors, the Chairman of the Board, the General Manager, and the management team of Shenzhen
SEG Longyan New Energy Application and Development Co., Ltd. are dispatched by the Company. The
Company substantially controlled the operation and management of Shenzhen SEG Longyan New Energy
Application and Development Co., Ltd. and thus has control over Shenzhen SEG Longyan New Energy
Application and Development Co., Ltd.
Half of the directors, the Chairman of the Board, the General Manager, and the management team of Shenzhen
SEG Longyan Energy Technology Co., Ltd. are dispatched by the Company. The Company substantially
controlled the operation and management of Shenzhen SEG Longyan Energy Technology Co., Ltd. and thus has
control over Shenzhen SEG Longyan Energy Technology Co., Ltd.
2. Important non-wholly-owned subsidiaries
Equity Minority
Current gains of Current dividends
proportion of shareholders'
Subsidiary name losses of minority paid to minority Remarks
minority equity at the end
shareholders shareholders
shareholders of the period
Shenzhen SEG Credit Co., Ltd. 46.00 14,779,630.76 14,490,000.00 87,500,099.41
Changsha SEG Development Co.,
54.00 3,242,652.26 - 62,949,397.20
Ltd.
Shenzhen SEG Baohua Enterprise 33.42 8,983,479.69 6,177,599.99 37,606,877.01
Development Co., Ltd.
Total 27,005,762.71 20,667,599.99 188,056,373.62
3. Main financial information on important non-wholly-owned subsidiaries
Main financial information of these subsidiaries is the amount before offset but adjusted according to the fair
value on the consolidation date and unified accounting policies:
Closing balance
Subsidiary name Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liabilities
247
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Shenzhen SEG 46,318,409.29 480,810,002.12 527,128,411.41 336,910,803.99 - 336,910,803.99
Credit Co., Ltd.
Changsha SEG
Development Co., 25,093,857.23 65,239,972.01 90,333,829.24 20,571,397.06 - 20,571,397.06
Ltd.
Shenzhen SEG
Baohua Enterprise 101,240,832.43 59,162,353.63 160,403,186.06 47,726,906.59 148,221.40 47,875,127.99
Development Co.,
Ltd.
Total 172,653,098.95 605,212,327.76 777,865,426.71 405,209,107.64 148,221.40 405,357,329.04
Continued:
Opening balance
Subsidiary name Non-current Non-current
Current assets Total assets Current liabilities Total liabilities
assets liabilities
Shenzhen SEG
Credit Co., 43,081,968.84 476,007,451.60 519,089,420.44 329,081,482.77 --- 329,081,482.77
Ltd.
Changsha SEG
Development 15,438,729.45 68,199,562.67 83,638,292.12 19,880,771.53 --- 19,880,771.53
Co., Ltd.
Shenzhen SEG
Baohua
Enterprise 97,334,289.19 52,503,037.02 149,837,326.21 45,495,566.87 163,543.86 45,659,110.73
Development
Co., Ltd.
Total 155,854,987.48 596,710,051.29 752,565,038.77 394,457,821.17 163,543.86 394,621,365.03
Continued:
Amount incurred in the current period Amount incurred in the previous period
Net cash flow
Net cash flow
Subsidiary name Operating Operating from
Net profit from operating Net profit
income income operating
activities
activities
Shenzhen SEG Credit 78,351,087.18 31,709,669.74 38,865,913.70 77,554,704.11 35,003,585.70 8,629,785.96
Co., Ltd.
Changsha SEG
24,597,175.67 6,004,911.59 10,536,670.49 23,221,623.20 5,350,203.30 28,183,561.72
Development Co., Ltd.
Shenzhen SEG Baohua
Enterprise 80,289,375.74 26,881,089.95 14,373,704.46 83,242,678.25 26,178,616.48 27,322,822.08
Development Co., Ltd.
Total 183,237,638.59 64,595,671.28 63,776,288.65 184,019,005.56 66,532,405.48 64,136,169.76
(II) Equity in joint venture arrangements or joint ventures
1. Important joint ventures and associates
248
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Main Place of Business Shareholding proportion
Accounting
Name of joint venture or associate business registrati Nature of (%)
treatment method
address on business Direct Indirect
Manufactu
Shenzhen Huakong SEG Co., Ltd. Shenzhen Shenzhen 19.001 - Equity method
ring
Shanghai SEG Electronics Market Service
Shanghai Shanghai 35.00 - Equity method
Co., Ltd. industry
2. Main financial information on important associates
Closing balance/amount incurred in the current period
Shenzhen International
Item Shenzhen Huakong SEG Shanghai SEG Electronics Consumer Electronics
Co., Ltd. Market Co., Ltd. Exhibition/Exchange
Center
Current assets 766,903,441.43 17,721,103.96 22,840,830.74
Non-current assets 546,820,626.68 182,099.19 166,109.34
Total assets 1,313,724,068.11 17,903,203.15 23,006,940.08
Current liabilities 509,176,585.61 8,075,870.33 1,188,898.02
Non-current liabilities 3,640,118.77 --- ---
Total liabilities 512,816,704.38 8,075,870.33 1,188,898.02
Minority shareholders' equity 176,677,423.85 --- ---
Shareholders' equity attributable to the
624,229,939.88 9,827,332.82 21,818,042.06
parent company
Net asset shares calculated based on
118,609,930.88 3,439,566.49 6,545,412.62
shareholding ratio
Adjustment items 55,942,143.30 -888,008.43 ---
Goodwill --- ---
-Unrealized profit from internal transaction --- ---
-Others 55,942,143.30 -888,008.43 ---
Book value of equity investment in
174,552,073.99 2,551,558.06 6,545,412.62
associates
Fair value of equity investment with public
1,591,435,838.72 --- ---
offer
Operating income 297,563,205.88 7,333,583.64 4,675,561.08
Net profit 8,723,288.17 491,843.57 -8,181,957.94
Net profit after termination of operation --- --- ---
Other comprehensive income 937.89 --- ---
Total comprehensive income 8,724,226.06 491,843.57 -8,181,957.94
Dividends received from associates in the
--- 1,000,000.00 ---
current period
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Continued:
Opening balance/amount incurred in the previous period
Shenzhen
International
Item Shenzhen Huakong SEG Shanghai SEG Electronics
Consumer Electronics
Co., Ltd. Market Co., Ltd.
Exhibition/Exchange
Center
Current assets 395,623,546.83 20,901,493.33 ---
Non-current assets 362,254,332.48 210,798.06 ---
Total assets 757,877,879.31 21,112,291.39 ---
Current liabilities 94,113,723.78 10,747,847.59 ---
Non-current liabilities 1,369,185.93 --- ---
Total liabilities 95,482,909.71 10,747,847.59 ---
Minority shareholders' equity 48,141,144.00 --- ---
Shareholders' equity attributable to the
614,253,825.60 10,364,443.80 ---
parent company
Net asset shares calculated based on
122,857,318.61 3,627,555.33 ---
shareholding ratio
Adjustment items --- --- ---
Goodwill --- --- ---
-Unrealized profit from internal transaction --- --- ---
-Others 58,885,842.46 -248,142.52 ---
Book value of equity investment in
181,743,161.07 3,379,412.81 ---
associates
Fair value of equity investment with public
2,551,041,568.11 --- ---
offer
Operating income 170,618,870.76 8,283,156.47 ---
Net profit 7,005,520.52 864,641.80 ---
Net profit after termination of operation --- --- ---
Other comprehensive income --- --- ---
Total comprehensive income 7,005,520.52 864,641.80 ---
Dividends received from associates in the
--- 500,000.00 ---
current period
X. Risk disclosure related to financial instruments
The operating activities of the Company may be exposed to a variety of financial risks: credit risks, liquidity
risks, and market risks (mainly currency risks and interest rate risks). The overall risk management plan of the
Company is designed to reduce the potential adverse impact of the unpredictability of the financial market on the
financial performance of the Company.
(I) Credit risk
Credit risks of the Company mainly arise from monetary funds, notes receivable, accounts receivable, and other
250
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receivables. The management has formulated appropriate credit policies and continuously monitored credit risk
exposure.
Monetary funds held by the Company are mainly deposited in state-owned banks and other large and
medium-sized commercial banks, as the management believes that these financial institutions with higher
reputation and better financial standing are at lower credit risks.
For notes receivable, accounts receivable, and other receivables, the Company has formulated relevant policies
to control credit risk exposure. The Company evaluates the credit qualification of customers and sets the
corresponding credit period based on the financial standing of customers, possibility of guarantee from the third
party, credit record, and other factors such as the present market condition. The Company will regularly monitor
customers' credit records. For customers with bad credit records, the Company will send a payment reminder,
shorten the credit period, or cancel the credit period to ensure that the overall credit risk of the Company is
controllable.
As of December 31, 2016, the accounts receivable of the top five customers of the Company account for 60.91%
of the total accounts receivable of the Company.
(II) Liquidity risk
Liquidity risk is the risk that the Company is unable to obtain sufficient funds in a timely manner to meet the
business development needs or to pay due debts and other payment obligations.
The Company has continuously monitored its short-term and long-term capital needs to maintain sufficient cash
reserves. The Company has also continuously monitored compliance with the terms of the Loan Agreement, and
obtained commitments on provision of sufficient reserve funds from major financial institutions to meet
short-term and long-term capital needs.
As of December 31, 2016, the undiscounted cash flows of financial liabilities based on the due date are shown in
the following table:
Closing balance
Item Original book
Net book value Within 1 year 1-2 years 2-5 years Over 5 years
value
Short-term
355,000,000.00 355,000,000.00 355,000,000.00 --- --- ---
borrowings
Accounts payable 20,282,611.08 20,282,611.08 20,282,611.08 --- --- ---
Advance receipts 116,529,761.27 116,529,761.27 116,529,761.27 --- --- ---
Other payables 190,643,502.25 190,643,502.25 190,643,502.25 --- --- ---
Subtotal of
682,455,874.60 682,455,874.60 682,455,874.60 --- --- ---
financial liabilities
Continued:
Opening balance
Item Original book
Net book value Within 1 year 1-2 years 2-5 years Over 5 years
value
Short-term
367,759,630.48 367,759,630.48 367,759,630.48 --- --- ---
borrowings
Accounts payable 89,908,781.98 89,908,781.98 89,908,781.98 --- --- ---
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Opening balance
Item Original book
Net book value Within 1 year 1-2 years 2-5 years Over 5 years
value
Advance receipts 190,430,121.05 190,430,121.05 190,430,121.05 --- --- ---
Other payables 194,329,885.69 194,329,885.69 194,329,885.69 --- --- ---
Subtotal of
842,428,419.20 842,428,419.20 842,428,419.20 --- --- ---
financial liabilities
(III) Market risk
1. Exchange rate risk
Main operation of the Company takes place in China and its main businesses are settled in RMB. As of
December 31, 2016, the Company held foreign currency 240.00 HKD (equivalent to RMB 214.68) only and no
foreign currency financial liabilities. Therefore, the overall currency risk is controllable.
2. Interest rate risk
The interest rate risk of the Company mainly arises from bank borrowings. Financial liabilities at a floating rate
may expose the Company to the cash flow interest rate risk while financial liabilities at a fixed rate may expose
the Company to the fair value interest rate risk. The Company determines the relative proportion of fixed rate
contracts to floating rate contracts based on the prevailing market environment.
The financial department of the Company has continuously monitored the interest rate of the Company. The
increase in the interest rate will result in increase in the cost of new interest-bearing debts and interest expenses
on interest-bearing debts not yet paid by the Company at a floating rate and have a material adverse impact on
the Company's financial performance. The management will make adjustments in a timely manner based on the
latest market condition, which can be interest rate swap arrangements to reduce interest rate risks.
XI. Fair value
(I) Financial instruments measured by fair value
The Company listed the book value of financial asset instruments measured by fair value on December 31, 2016
based on three levels of fair value. The fair value is classified into three levels according to the lowest level that
each important input value used in measurement of fair value is attributed to. Definitions of three levels:
Level 1: Unadjusted quotes of same assets or liabilities available on the date of measurement in the active
market.
Level 2: Directly or indirectly observable input values of relevant assets or liabilities other than input values at
level 1.
Input values at level 2 include: (1) quotes of similar assets or liabilities in the active market; (2) quotes of same
or similar assets or liabilities in the non-active market; (3) other observable input values other than quotes,
including observable interest rate and yield rate curves, implied volatility and credit spread in the interval of
normal quotes; (4) input values proved by the market.
Level 3: Unobservable input values of relevant assets or liabilities.
(II) Measurement of fair value at the end of the period
1. Persistent fair value measurement
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Fair value at the end of the period
Item
Level 1 Level 2 Level 3 Total
Total available-for-sale
683,290.58 --- --- 683,290.58
financial assets
Bond instrument
--- --- --- ---
investment
Equity instrument
683,290.58 --- --- 683,290.58
investment
Other investment --- --- --- ---
XII. Related parties and associated transactions
(I) Information on subsidiaries of the Company:
Registered Shareholding Voting right
Place of
Name of parent company Nature of business Capital proportion over the proportion over the
registration
(RMB 10,000) Company (%) Company (%)
Comprehensive
Shenzhen SEG Group Co., Ltd. Shenzhen 138,112.16 30.24 30.24
business
1. The final controlling party of the Company is Shenzhen State-owned Assets Supervision and
Administration Commission.
(II) For details of subsidiaries of the Company, see Note 9 (1) equity in subsidiaries
(III) Information on the joint ventures and associates of the Company
For details of important associates or joint ventures of the Company, see Note 9 (2) equity in joint venture
arrangement or associates.
(IV) Information on other related parties
Name of other related parties Relationship between other related parties and the Company
Shenzhen SEG 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
Shenzhen SEG Property Management Co., Ltd. Grandchild company of the controlling shareholder
Shenzhen SEG E-Commerce Co., Ltd. Subsidiary disposed of in the report period
Wang Li Chairman of Board pf Directors of the Company
Zhang Guangliu Director of the Company
Cao Xiang Director of the Company
Yu Qian Director of the Company
Director, General Manager and Person in charge of accounting
Liu Zhijun
of the Company
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Name of other related parties Relationship between other related parties and the Company
Director of the Company, Vice General Manager and Secretary
Zheng Dan
of Board of Directors of the Company
Li Luoli Independent Director of the Company
Song Pingping Independent Director of the Company
Fan Zhiqing Independent Director of the Company
Xu Ning Chairman of Board of Supervisors of the Company
Tang Chongyin Supervisor of the Company
Liu Fusong Supervisor of the Company
Ru Guiqin Supervisor of the Company
Zhanghaifan Supervisor of the Company
Bo Honhxi Vice General Manager
Zhu Longqing Vice General Manager
(V) 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) Information on the Company's entrusted management
Pricing basis for
Type of income from Trust profit
Name of trustor Name of trustee entrusted Starting date Ending date entrusted recognized in the
assets management/con current report period
tracting
SEG
Shenzhen SEG Shenzhen SEG February 1, January 31, Trusteeship
Communicat 188,679.24
Group Co., Ltd. Co., Ltd. 2016 2017 Agreement
ions Market
Total 188,679.24
3. Information on leases between the Company and related parties
(1) The Company as the leasee:
Rental recognized in this Rental recognized in previous
Name of lessor Type of leased assets
period period
Shenzhen SEG Group Co., Warehouse covering 809.26
653,883.84 638,661.00
Ltd. m2 on 8F of SEG Plaza
Total 653,883.84 638,661.00
(2) A subsidiary of the Company as the leasee:
Rental recognized in this Rental recognized in previous
Name of lessor Type of leased assets
period period
Shenzhen SEG Business The 15th floor of SEG Plaza, 24,519.15 465,593.70
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Rental recognized in this Rental recognized in previous
Name of lessor Type of leased assets
period period
Operation Co., Ltd. with an area of 687.01 square
meters
12F (West), Block 4, SEG
Shenzhen SEG Real Estate
Science Park with an area of 743,157.32 278,684.00
Investment Co., Ltd. 2
909.79 m
Shenzhen SEG Group Co., Warehouse covering 66.7 m2
128,635.74 ---
Ltd. on B1 of SEG Plaza
Total 896,312.21 744,277.70
4. Asset transfer and debt restructuring of related parties
Amount incurred in the Amount incurred in the
Transferring party Associated transaction
current period previous period
Transferring 2% of the
equity of Shenzhen SEG
Shenzhen SEG E-Commerce Co., Ltd. 5,251,900.00 ---
E-Commerce Co., Ltd. to the
Company
Total 5,251,900.00 ---
5. Remuneration of key managers
Amount incurred in the current period Amount incurred in the previous period
Item
(RMB 10,000) (RMB 10,000)
Remuneration of key managers 314.72 337.06
6. 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
5,347.00 --- 10,325.00 ---
Development Co., Ltd.
Shenzhen SEG Group Co.,
--- --- 227,149.60 ---
Ltd.
Shenzhen SEG Property
--- --- 20,100.00 ---
Management Co., Ltd.
Shenzhen SEG Real Estate
--- --- 139,342.00 ---
Investment Co., Ltd.
(2) Accounts payable to related parties
Project name Related party Closing balance Opening balance
Dividends
payable
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Project name Related party Closing balance Opening balance
Shenzhen SEG Computers Co., Ltd 662,310.00 662,310.00
Shenzhen SEG Group Co., Ltd. 12,088,800.00
Shenzhen SEG Property Development Co.,
2,520,000.00
Ltd.
Other payables
Shenzhen SEG Group Co., Ltd. 100,000.00 ---
XIII. Commitments and contingency
(I) Major commitments
1. Concluded lease contract being performed or to be performed and minimum rental to be paid the next
year
Shenzhen SEG
Shenzhen SEG Xi'an Hairong Wujiang SEG
Xi'an SEG Electronics
Electronics Market SEG Electronics Electronics
Remaining lease term Electronics Market
Management Co., Market Co., Market Co.,
Market Co., Ltd. Management
Ltd. Ltd. Ltd.
Co., Ltd.
Within one year (including
13,375,000.00 5,212,004.12 - - -
one year)
Above one year but within
two years (including two 13,625,000.00 5,368,364.28 - - -
years)
Above two years but within
three years (including three 13,875,000.00 5,529,415.17 - - -
years)
Over 3 years 21,250,000.00 4,239,675.63 - - -
Total 62,125,000.00 20,349,459.20 Note *1 Note *2 Note *3
(Continued)
Shunde SEG
Suzhou SEG
Remaining lease Electronics Market Wuxi SEG Electronics Suzhou SEG Digital Plaza
Intelligent
term Management Co., Market Co., Ltd Management Co., Ltd.
Technology Co., Ltd.
Ltd.
Within one year
(including one 4,000,000.00 --- --- 12,585,711.40
year)
Above one year but
within two years
--- --- --- 12,585,711.40
(including two
years)
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Shunde SEG
Suzhou SEG
Remaining lease Electronics Market Wuxi SEG Electronics Suzhou SEG Digital Plaza
Intelligent
term Management Co., Market Co., Ltd Management Co., Ltd.
Technology Co., Ltd.
Ltd.
Above two years
but within three
--- --- --- 13,001,905.56
years (including
three years)
Over 3 years --- --- --- 52,340,577.56
Total 4,000,000.00 Note *4 Note *5 90,513,905.92
Note *1: According to the cooperation agreement signed by and between both parties, Xi'an Hairong SEG
Electronics Market Co., Ltd. pays the rental at 70% of profits of the electronics market. Therefore, the amount of
rental in the future is uncertain.
Note *2: The rental of Shenzhen SEG Electronics Market Management Co., Ltd. is adjusted according to the CPI.
Therefore, the amount of rental in the future is uncertain.
Note *3: According to the cooperation agreement signed by and between both parties, Wujiang SEG Electronics
Market Co., Ltd. pays the rental at 70% of pretax profits of the electronics market. Therefore, the amount of
rental in the future is uncertain.
Note *4: According to the cooperation agreement signed by and between both parties, the rental payable by
Shunde SEG Electronics Market Management Co., Ltd. shall be negotiated per year and implemented according
to the supplementary agreement signed in the current year. Therefore, the amount of rental in the future is
uncertain.
Note *5: Wuxi SEG Electronics Market Co., Ltd. is exempted from the rental within the three years before
opening of the company and pays the rental in the fourth year according to 70% of the pre-tax profits of the
electronics market. Therefore, the amount of rental in the future is uncertain.
2. Other major financial commitment
(1) Other important financial commitments
As of the end of the current report period, the Company mortgaged its own property for bank loans. Details of
the mortgaged property and at the end of the current report period are as follows:
Net value of
Owner of property Name of property property at the end Remarks
of the period
Shenzhen SEG Co., Ltd. 4F, SEG Plaza 44,194,534.03 Mortgage for bank loans
Some floors of
Shenzhen SEG Co., Ltd. Contemporary 52,410,701.75 Mortgage for bank loans
Window
Shenzhen SEG Co., Ltd. 31F, Qunxing Plaza 9,315,215.47 Mortgage for bank loans
Shenzhen SEG Co., Ltd. Other properties 6,692,395.15 Mortgage for bank loans
Total 112,612,846.40
(II) Contingency on the balance sheet date
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1. Contingency arising from pending litigation or arbitration and its financial impact
Amount
of
Plaintiff Defendant Case subject Basic information about the case Progress of the case
(RMB
10,000)
Case number: 2016 G. 0102 M. C. No. 4611
Nanning Haiqi Nanning Haiqi alleged that Nanning SEG
Nanning SEG
Real Estate Electronics occupied its shop front located at No. 6, A Zone,
Dispute 1F, Property Development Plaza, 158 East
Market
Development over the Renmin Road, Nanning and petitioned the court The first instance is in trial
Management Co., 11.70
lease to order Nanning SEG to pay the occupancy and pending.
Co., Ltd. Ltd. ("Nanning
contract expense of RMB 37,800, liquidated damages of
SEG"), Shenzhen
("Nanning RMB 71,300, and attorney fee of RMB 8,000,
SEG Co., Ltd.
and that the Company should bear the joint
Haiqi")
liability.
Case number: 2016 G. 0102 M. C. No. 4612
Nanning Haiqi alleged that Nanning SEG failed
Nanning SEG to return the house in accordance with the Civil
Nanning Haiqi Electronics Dispute Judgment (2015) X. M. Y. C. Zi. No. 1393 made
Real Estate Market over the by the People's Court of Xingning District, The first instance is in trial
104.19 Nanning and the Lease Contract for Nanning
Development Management Co., lease and pending.
Co., Ltd. Ltd., Shenzhen contract SEG Electronics Market and petitioned the court
SEG Co., Ltd. to order Nanning SEG to pay for rental and
decoration losses of RMB 996,900 and the
attorney fee of RMB 45,000, and that the
Company should bear the joint liability.
Case number: 2016 G. 0102 M. C. No. 3653
Nanning Haiqi, Nanning SEG and the Company
entered into the Lease Contract for Nanning SEG
Electronics Market, and the rental and decoration
Nanning SEG fee as RMB 2,000,000 was paid to Nanning
Nanning Haiqi Electronics Dispute Haiqi as agreed in the Contract. As the lease
Real Estate Market over the contract was terminated according to the Civil The first instance is in trial
1,026.30
Development Management Co., lease Judgment (2015) X. M. Y. C. Zi. No. 1393 made and pending.
Co., Ltd. Ltd., Shenzhen contract by the People 's Court of Xingning District,
SEG Co., Ltd. Nanning Haiqi petitioned the court to order
Nanning SEG to pay for its decoration loss of
RMB 2,000,000, liquidated damages of RMB
8,000,000, attorney fee of RMB 263,000, and
that the Company should bear the joint liability.
Case number: 2016 G. 0102 M. C. No. 3654
Nanning Nanning Yuanpeng, Nanning SEG and the
Nanning SEG
Yuanpeng Dispute Company entered into the Property Management
Electronics
Property over the Service Contract. Nanning Yuanpeng alleged that
Market The first instance is in trial
Service Co., property 246.98 Nanning SEG delayed payment of the property
Management Co., and pending.
Ltd. service fee as scheduled, and petitioned the court to order
Ltd., Shenzhen
("Nanning contract Nanning SEG to pay the property fee of RMB
SEG Co., Ltd.
Yuanpeng") 1,316,200, overdue penalty of RMB 1,070,100,
and attorney fee of RMB 83,500.
Case number: 2016 G. 0102 M. C. No. 672
China As CCB Taoyuan Sub-branch breached the Lease
Nanning SEG Construction Contract for Nanning SEG Electronics Market,
Dispute
Electronics Bank Nanning refused to pay the rent, and unreasonably
over the The case has been registered
Market Taoyuan 88.64 occupied the shop front, Nanning SEG petitioned
lease but not heard.
Management Sub-branch the court to order CCB Taoyuan Sub-branch to
contract
Co., Ltd. ("CCB Taoyuan vacate and return the shop front and pay the rent
Sub-branch") and property management fee in arrears and
liquidated damages of RMB 886,400.
2. Issued letter of guarantee (L/G) and letter of credit (L/C)
L/G No. Beneficiary Bank L/G amount Unused amount Due date
Bank of
Shenzhen Tongchan China
GC1783916000848 3,510,192.00 3,510,192.00 2018.4.22
Group Co., Ltd Shenzhen
Branch
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Except the preceding contingency, the Company has no significant commitments that shall be disclosed but have
not been disclosed as of December 31, 2016.
XIV. Events after the balance sheet date
(I) Major non-adjustment items
1. Significant acquisitions or restructuring plan
On February 3, 2016, Shenzhen SEG Co., Ltd. and Shenzhen SEG Group Co., Ltd. entered into the Framework
Agreement on Issue of Shares and Assets Purchase in Cash. The Company plans to purchase the equity of
targeted companies held by SEG Group (including 55% of equity of SEG Kangle, 100% of equity of SEG
Property, 100% of equity of SEG SegMaker, and 79.02% of equity of SEG Real Estate) by non-public offering
of shares and in cash, and issue private placement to no more than 10 specific investors to raise supporting funds
for no more than 2 billion Yuan. The supporting funds are used to pay the cash considerations of such transaction,
the subsequent investment to the construction project of Xi'an SEG Plaza, and the subsequent investment to the
construction project of Shenzhen SEG International Electronics Industry Center by Shenzhen SEG New Urban
Construction Development Co., Ltd. As of the report date, the organization plan is in progress.
On January 17, 2017, the Company received the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to
Shenzhen SEG Group Co., Ltd. to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) from
China Securities Regulatory Commission (hereinafter referred to as the "CSRC"). As of January 19, 2017, the
Company has issued 450,857,239.00 shares to pay the consideration for acquisition and completed the business
registration formalities for equity changes of SegMaker, SEG Kangle, SEG Property Development, and SEG
Real Estate Investment.
2. Major litigation, arbitration, and commitment
Amount of
subject
Plaintiff Defendant Case Basic information about the case Progress of the case
(RMB
10,000)
Shenzhen Case number: (2017) Y. 0304 M. C. No. 5092
SEG Dispute As Shenzhen Wonder Industry Co., Ltd. delayed
Industrial Shenzhen Wonder over the the payment for goods, SEG Industrial petitioned The case has been
Investment Industry Co., Ltd., Liu purchase 839.41 the court to order the former to make payment for registered but not
Co., Ltd. Guiyun, Liu Yu and sales goods of RMB 7,899,800 as of January 2017 and heard.
("SEG contract overdue fine of RMB 514,300, and that Liu
Industrial") Guiyun and Liu Yu should bear the joint liability.
Shenzhen Yixin
Zhongtian Technology
Co., Ltd., Zhe Case number: (2017) Y. 0304 M. C. No. 5088
Shenzhen Shaojun, Zhao Dispute As Shenzhen Yixin Zhongtian Technology Co.,
SEG Xiaoyan, Xinjiang over the Ltd. delayed the payment for goods, SEG The case has been
Industrial Jiazhao Hengye purchase 1,480.57 Industrial petitioned the court to order the former registered but not
Investment Electronic Technology and sales to make payment for goods of RMB 13,241,700 heard.
Co., Ltd. Co., Ltd., Xinjiang contract as of January 2017 and overdue fine of RMB
Zhongdi 1,564,000.
Communication
Equipment Co., Ltd.
Shenzhen Comnet Case number: (2017) Y. 0304 M. C. No. 7976
Technology Co., Ltd.,
Shenzhen Dispute As Shenzhen Comnet Technology Co., Ltd.
Xiao Qingshan, Zhou
SEG over the delayed the payment for goods, SEG Industrial The case has been
Ronghua, Anhua
Industrial purchase 515.54 petitioned the court to order the former to make registered but not
Meishan Small Loan
Investment and sales payment for goods of RMB 5,144,200 as of the heard.
Co., Ltd., Shenzhen
Co., Ltd. contract end of February 2017 and overdue fine of RMB
Baiyide Technology
Co., Ltd. 11,200.
259
Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Amount of
subject
Plaintiff Defendant Case Basic information about the case Progress of the case
(RMB
10,000)
Shenzhen Runneng
Digital Technology Case number: (2017) Y. 0304 M. C. No. 7976
Shenzhen Co., Ltd., Xiao Dispute As Shenzhen Runneng Digital Technology Co.,
SEG Qingshan, Zhou over the Ltd. delayed the payment for goods, SEG The case has been
Industrial Ronghua, Anhua purchase 1,534.50 Industrial petitioned the court to order the former registered but not
Investment Meishan Small Loan and sales to make payment for goods of RMB 15,251,100 heard.
Co., Ltd. Co., Ltd., Shenzhen contract as of the end of February 2017 and overdue fine
Baiyide Technology of RMB 93,900.
Co., Ltd.
Case number: (2016) S. 0505 M. C. No. 5176
The Company and Zongheng International
entered into Suzhou SEG Electronics Market
Project Cooperation Agreement on June 5, 2005. The parties reached a
According to the agreement, the parties jointly settlement on February
funded Suzhou SEG and Suzhou SEG rented the 11, 2017. Suzhou SEG
trading market in Zongheng International withdrew the lawsuit of
Electronic Expo City Phase I and Phase II for 20 (2016) S. 505 M. C.
Suzhou SEG years from the official business date of Suzhou No. 5176 of the
Zongheng Dispute
Electronics SEG Electronics Market. As agreed by the People's Court of
International over the
Market parties, Suzhou SEG prepaid the rents for 2016 in Huqiu District, Suzhou.
Electronic Expo City claim for
Management 1,900.08 October 2015. Before the expiration of the lease The parties agreed on
(Suzhou) Co., Ltd. the
Co., Ltd. term, Zongheng International unilaterally settlement of
("Zongheng creditor's
("Suzhou terminated Suzhou SEG Electronics Market receivables payable,
International") right
SEG") Project Cooperation Agreement by the Notice of and Zongheng
Cancellation of the Cooperation Agreement and International repaid the
withdrew the leased property and related arrears of RMB
appurtenances. However, Zongheng International 17,185,600 as of
did not return the rents prepaid by Suzhou SEG. February 8, 2017 to
Suzhou SEG petitioned the court to order Suzhou SEG.
Zongheng International to return the prepaid
rents and pay for the possession of funds of RMB
19,000,800.
3. Important external investment
(1) Investment in establishing subsidiaries
On April 6, 2017, the Company held the 18th interim meeting of 7th Board of Directors to examine and
approve the Proposal of Investment in Establishing Shenzhen SEG Zhongtong Technology Co., Ltd. and
Participation in Wi-Fi-in-Station and Train Project of China Railway Co., Ltd. The Company has planned to
co-invest with Zhuhai Zhongtong Lexing Network Technology Co., Ltd. (hereinafter referred to as “Zhuhai
Zhongtong Company”) and Shenzhen Donglinde Investment Co., Ltd. (hereinafter referred to as “Donglinde
Company”) RMB 20 million in establishing Shenzhen SEG Zhongtong Technology Co., Ltd. (as the tentative
name, and the official name is subject to the registration in industrial and commercial administration, hereinafter
referred to as “SEG Zhongtong Company”), therein the Company invests RMB 9.8 million to occupy 49% of
share holding, and Zhuhai Zhongtong RMB 8.2 million and 41%, and Donglinde RMB 2 million and 10%
respectively.
The capital of each shareholder of SEG Zhongtogn Company will be invested be stages according to the
actual operation of the joint venture. The down payment of SEG Zhongtong will not exceed RMB 5 million. If
SEG Zhongtong fails to obtain as scheduled the qualification of equipment supplier and system integrator of the
said Wi-Fi Project of China Railway, the withdrawal mechanism will be launched automatically to avoid any
further losses.
(2) The holding subsidiary acquired the right of land use through bidding.
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On March 13, 2017, the Company held the 16th interim meeting of 7th Board of Directors to examine and
approve the Proposal of Approving Shenzhen Longyan Energy Technoloty Co., Ltd. to Participate in Acquiring
Land Through Bidding. Shenzhen SEG Longyan Energy Technology Co., Ltd., the subsidiary of the Company,
participated in acquiring through bidding the use right of the state-owned land for construction locating at Ebu
Town in Shenzhen-Shantou Special Cooperative Zone (the registration number of the plot is E2016-0025), and
finally acquired the use right of the plot through bidding at the cost of RMB 28.01 millio and signed with
Shenzhen Land & Real Estate Exchange Center the Confirmation of Transaction (S.S.D.J. [2016] No. 1). This
plot is designed to be used as the base in the project of CdTe film photovoltaic industry of the Company.
XV. Notes to other important matters
(I) Purchase of financial products with idle funds
At the 2nd general meeting on July 21, 2014, the Company approved the Proposal on Purchase of Financial
Products Using Idle Funds of the Company, which allows the company and its subsidiaries to invest and manage
wealth by using idle funds of not more than RMB 1 billion Yuan and the capital can be rolled over within the
forgoing limit. The shareholder's meeting passed a resolution that general manager of the Company shall make
decisions for specific projects and the management shall carry out such decisions. The investment period is from
the date of resolution to June 30, 2016 (subject to the time of purchasing financial products).
At the 2nd extraordinary general meeting (2016) on September 3, 2016, the Company approved the Proposal on
Purchase of Financial Products Using Idle Funds of the Company, and extended the investment term to June 30,
2019 (calculated from the time when financial products are purchased).
As of December 31, 2016, the balance of financial products purchased by the Company and its subsidiaries is as
follows:
Unit: RMB 10,000
Wujiang SEG Shenzhen SEG Baohua Wuxi SEG Xi'an Hairong
Company Shenzhen SEG
Electronics Market Enterprise Development Electronics SEG Electronics
name Co., Ltd.
Co., Ltd. Co., Ltd. Market Co., Ltd Market Co., Ltd.
Amount 13,300.00 1,800.00 7,900.00 100.00 1,950.00
Continued:
Xi'an SEG Nantong SEG Times
Company Shenzhen SEG Credit Co.,
Electronics Market Plaza Development Co., Total
name Co., Ltd. Ltd. Ltd.
Amount 500.00 800.00 300.00 26,650.00
XVI. Notes to main items in the financial statements of the parent company
Note 1 Accounts receivable
1. Accounts receivable disclosed by type
Closing balance
Book balance Bad debt provision
Type
Proportion of Book value
Amount Proportion (%) Amount
provision (%)
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Closing balance
Book balance Bad debt provision
Type
Proportion of Book value
Amount Proportion (%) Amount
provision (%)
Accounts receivable with single
significant amount and single 7,163,876.44 77.07 7,163,876.44 100.00 ---
bad debt provision
Accounts receivable with bad
debt provision accrued based on 426,069.15 4.58 - --- 426,069.15
credit risk feature combinations
Accounts receivable with no
single significant amount but
1,705,306.44 18.35 1,705,306.44 100.00 -
with single provision for bad
debts
Total 9,295,252.03 100.00 8,869,182.88 95.42 426,069.15
Continued:
Opening balance
Book balance Bad debt provision
Type
Proportion of Book value
Amount Proportion (%) Amount
provision (%)
Accounts receivable with single
significant amount and single 7,163,876.44 --- 7,163,876.44 100.00 ---
bad debt provision
Accounts receivable with bad
debt provision accrued based on --- --- --- --- ---
credit risk feature combinations
Accounts receivable with no
single significant amount but
1,705,306.44 100.00 1,705,306.44 100.00 ---
with single provision for bad
debts
Total 8,869,182.88 100.00 8,869,182.88 100.00 ---
Notes to types of accounts receivable:
(1) Accounts receivable with single significant amount and single bad debt provision
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for
Jiangsu Unicom 3,092,011.09 3,092,011.09 100.00
aging of over 5 years
Shenzhen Liyuanshun Industrial Co., Unable to be recovered for
1,906,865.35 1,906,865.35 100.00
Ltd. aging of over 5 years
Shanghai Tianci Industrial Co., Ltd. 899,000.00 899,000.00 100.00 Unable to be recovered for
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Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
aging of over 5 years
Unable to be recovered for
Zhejiang Financial Information 786,000.00 786,000.00 100.00
aging of over 5 years
Sichuan Huiyuan Electronics Co., Unable to be recovered for
480,000.00 480,000.00 100.00
Ltd. aging of over 5 years
Total 7,163,876.44 7,163,876.44 100.00
(2) Accounts receivable with no single significant amount but single bad debt provision
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Shenzhen Wal-Mart Zhujiang Unable to be recovered for
198,348.57 198,348.57 100.00
Department Store aging of over 5 years
Shenzhen Properties Department Unable to be recovered for
162,985.00 162,985.00 100.00
Store Co., Ltd. aging of over 5 years
Unable to be recovered for
Jiang Weibin 126,925.35 126,925.35 100.00
aging of over 5 years
Shenzhen Jinhuasheng Electronics Unable to be recovered for
85,000.00 85,000.00 100.00
Co., Ltd. aging of over 5 years
Unable to be recovered for
Other 43 companies 1,132,047.52 1,132,047.52 100.00
aging of over 5 years
Total 1,705,306.44 1,705,306.44 100.00
(3) Accounts receivable in Combination 1, for which bad debt provision is accrued by the aging analysis method:
Closing balance
Aging
Other accounts receivable Bad debt provision Proportion of provision (%)
Less than one year 318,069.15 - -
1-2 years - - -
2-3 years - - -
Over 3 years - - -
Total 318,069.15 - -
(4) Accounts receivable in Combination 2 is accounts receivable from subsidiaries in the consolidation scope
2. Accrual, recovery and writing back of current bad debt provision
The amount of the current bad debt provision accrued is RMB 0.00.
The amount of the current bad debt provision recovered or reversed is RMB 0.00.
3. No other accounts receivable are written off in the current period.
4. Accounts receivable with top 5 closing balance collected based on debtors.
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Percentage in the total amount
Name of company Closing balance Accrued bad debt provision
of accounts receivable
Jiangsu Unicom 3,092,011.09 33.26 3,092,011.09
Shenzhen LiYuanshun
1,906,865.35 20.51 1,906,865.35
Industrial Co., Ltd.
Shanghai Tianci Industrial
899,000.00 9.67 899,000.00
Co., Ltd.
Zhejiang Financial
786,000.00 8.46 786,000.00
Information Co., Ltd
Sichuan Huiyuan Electronics
480,000.00 5.16 480,000.00
Co., Ltd.
Total 7,163,876.44 77.06 7,163,876.44
5. There are no receivable accounts derecognized due to transfer of financial assets in the report period.
6. There are no assets or liabilities arising from transfer of and continuous involvement in accounts
receivable in the report period.
Note 2 Other accounts receivable
1. Other receivables disclosed by type
Closing balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Other accounts receivable with
single significant amount and single 14,227,563.86 1.90 14,227,563.86 100.00 -
bad debt provision
Other accounts receivable with bad
debt provision accrued based on 724,666,448.71 96.58 7,478.53 - 724,658,970.18
credit risk feature combinations
Other accounts receivable with no
single significant amount but with 11,373,065.58 1.52 11,373,065.58 100.00 -
single provision for bad debts
Total 750,267,078.15 100.00 25,608,107.97 3.41 724,658,970.18
Continued:
Opening balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
Other accounts receivable with
single significant amount and single 8,530,276.35 1.43 8,530,276.35 100 ---
bad debt provision
Other accounts receivable with bad 570,672,790.85 95.71 1,173.47 0 570,671,617.38
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Opening balance
Book balance Bad debt provision
Type
Proportion Proportion of Book value
Amount Amount
(%) provision (%)
debt provision accrued based on
credit risk feature combinations
Other accounts receivable with no
single significant amount but with 17,070,353.09 2.86 17,070,353.09 100 ---
single provision for bad debts
Total 596,273,420.29 100 25,601,802.91 4.29 570,671,617.38
Notes to types of other accounts receivable:
(1) Other accounts receivable with single significant amount and single bad debt provision
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for
Yangjiang Yuntong Grease Co., Ltd. 8,530,276.35 8,530,276.35 100.00
aging of over 5 years
Unable to be recovered for
Shenzhen Lianjing Trade Co., Ltd. 5,697,287.51 5,697,287.51 100.00
aging of over 5 years
Total 14,227,563.86 14,227,563.86 100.00
(2) Other accounts receivable with no single significant amount but single bad debt provision
Closing balance
Name of company Other accounts Bad debt Proportion of
Reason for provision
receivable provision provision (%)
Unable to be recovered for
Shenzhen Tuopu Industrial Co., Ltd. 3,281,387.96 3,281,387.96 100.00
aging of over 5 years
Unable to be recovered for
Yunsen Trade Co., Ltd. 1,668,343.74 1,668,343.74 100.00
aging of over 5 years
Shenzhen Shoujia Industrial Unable to be recovered for
1,611,184.04 1,611,184.04 100.00
Development Co., Ltd. aging of over 5 years
Shenzhen Jimeng Industrial Unable to be recovered for
1,358,912.37 1,358,912.37 100.00
Development Co., Ltd. aging of over 5 years
Unable to be recovered for
Other 18 companies 3,453,237.47 3,453,237.47 100.00
aging of over 5 years
Total 11,373,065.58 11,373,065.58 100.00
(3) Other accounts receivable in Combination 1, for which bad debt provision is accrued by the aging analysis
method:
Closing balance
Aging
Other accounts receivable Bad debt provision Proportion of provision (%)
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Closing balance
Aging
Other accounts receivable Bad debt provision Proportion of provision (%)
Less than one year 2,600,591.90 --- ---
1-2 years 131,806.58 6,590.33 5
2-3 years 8,882.00 888.20 10
Total 2,741,280.48 7,478.53 0.27
(4) Other accounts receivable in Combination 2 include deposit, security deposit, account with related parties.
2. Accrual, recovery and writing back of current bad debt provision
The amount of the current bad debt provision accrued is RMB 6,305.06.
3. No other accounts receivable are written off in the current period.
4. Classification of other receivables by nature
Item Closing balance Opening balance
Receivables of related parties 720,586,858.45 568,166,228.80
Creditor's right transfer cost 25,600,629.44 23,583,862.58
Imprest 929,258.20 579,868.64
Deposit and security deposit 1,338,309.78 1,446,667.78
Others 1,812,022.28 2,496,792.49
Total 750,267,078.15 596,273,420.29
5. Other receivables with top 5 closing balance collected based on arrears party
Bad debt
Percentage in the total
Nature of provision
Name of company Closing balance Aging amount of other
receivables Closing
accounts receivable
balance
Nantong SEG Times Plaza Loans and Within 4
662,301,827.64 88.28 -
Development Co., Ltd. interests years
Shenzhen SEG Industrial Loans and Over 5
47,088,490.03 6.28 -
Investment Co., Ltd. interests years
Suzhou SEG Digital Plaza Incomings and
10,000,000.00 1-2 years 1.33 -
Management Co., Ltd. outgoings
Debt
Yangjiang Yuntong Grease Co., Over 5
restructuring of 8,530,276.35 1.14 8,530,276.35
Ltd. years
SEG Orient
Incomings and
Shenzhen Lianjing Trade Co., Over 5
outgoings for 5,697,287.51 0.76 5,697,287.51
Ltd. years
creditor's right
Total 733,617,881.53 97.79 14,227,563.86
6. There are no accounts receivable related to government subsidies in the current period.
7. There are no other receivables derecognized due to transfer of financial assets in the current period.
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8. There are no assets or liabilities arising from transfer of and continuous involvement in other
receivables in the current period.
Note 3 Long-term equity investment
Closing balance Opening balance
Nature of
Bad debt Bad debt
receivables Book balance Book value Book balance Book value
provision provision
Investment in
269,935,426.24 --- 269,935,426.24 269,983,526.24 --- 269,983,526.24
subsidiaries
Investment in
associates and 183,649,044.67 --- 183,649,044.67 185,122,573.88 --- 185,122,573.88
joint ventures
Total 453,584,470.91 --- 453,584,470.91 455,106,100.12 --- 455,106,100.12
1. Investment in subsidiaries
Accrued
Initial impairmen Closing
Increase in Decrease in
Invested investment Opening Closing t provision balance of
the current the current
organization cost balance balance in the impairmen
period period
Cost current t provision
period
Shenzhen
SEG Baohua
Enterprise 20,512,499.04 20,512,499.04 20,512,499.04 --- ---
Developmen
t Co., Ltd.
Shenzhen
SEG
Industrial 29,181,027.20 29,181,027.20 29,181,027.20 --- ---
Investment
Co., Ltd.
Changsha
SEG
69,000,000.00 69,000,000.00 69,000,000.00 --- ---
Developmen
t Co., Ltd.
Shenzhen
SEG
Electronics
2,100,000.00 2,100,000.00 2,100,000.00 --- ---
Market
Management
Co., Ltd.
Suzhou SEG
Electronics
1,350,000.00 1,350,000.00 1,350,000.00 --- ---
Market Co.,
Ltd.
Xi'an SEG 1,950,000.00 1,950,000.00 1,950,000.00 --- ---
267
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Accrued
Initial impairmen Closing
Increase in Decrease in
Invested investment Opening Closing t provision balance of
the current the current
organization cost balance balance in the impairmen
period period
Cost current t provision
period
Electronics
Market Co.,
Ltd.
Shenzhen
SEG Credit 54,000,000.00 54,000,000.00 5,251,900.00 59,251,900.00 --- ---
Co., Ltd.
Shenzhen
SEG 15,300,000.0
15,300,000.00 15,300,000.00 - --- ---
E-Commerce 0
Co., Ltd.
Shenzhen
SEG
Electronics
20,000,000.00 20,000,000.00 20,000,000.00 --- ---
Market
Management
Co., Ltd.
Xi'an
Hairong
SEG
1,530,000.00 1,530,000.00 1,530,000.00 --- ---
Electronics
Market Co.,
Ltd.
Wujiang
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
Market 6,000,000.00 6,000,000.00 6,000,000.00 --- ---
Management
Co., Ltd.
Nanning
SEG 8,000,000.00 8,000,000.00 8,000,000.00 --- ---
Electronics
Market
268
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Accrued
Initial impairmen Closing
Increase in Decrease in
Invested investment Opening Closing t provision balance of
the current the current
organization cost balance balance in the impairmen
period period
Cost current t provision
period
Management
Co., Ltd.
Nantong
SEG Times
Plaza 30,000,000.00 30,000,000.00 30,000,000.00 --- ---
Developmen
t Co., Ltd.
Suzhou SEG
Digital Plaza
8,000,000.00 8,000,000.00 8,000,000.00 --- ---
Management
Co., Ltd.
Xi'an
Fengdong
New Town
SEG Times 30,000,000.00 - - --- ---
Plaza
Properties
Co., Ltd.
Suzhou SEG
Intelligent 10,000,000.0
10,000,000.00 - 10,000,000.00 --- ---
Technology 0
Co., Ltd.
309,983,526.2 269,983,526.2 15,251,900.0 15,300,000.0 269,935,426.2
Total --- ---
4 4 0 0 4
2. Investment in associates and joint ventures
Increase/Decrease of the year
Investment
Adjustment of
profit and loss
Invested organization Opening balance Additional Negative other
confirmed
investment investment comprehensive
under the equity
income
method
Shanghai SEG Electronics Market
3,379,412.81 --- --- 172,145.25 ---
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. 181,743,161.07 --- -9,086,648.37 1,895,383.08 178.21
Shenzhen International Consumer
Electronics Exhibition/Exchange --- 9,000,000.00 --- -2,454,587.38 ---
Center
Total 185,122,573.88 9,000,000.00 -9,086,648.37 -387,059.05 178.21
Continued:
269
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Increase/Decrease of the year Closin
g
balanc
Other Declared cash Accrued e of
Invested organization Closing balance
changes in dividends or impairment Others impair
equity profits distribution provision ment
provis
ion
Shanghai SEG Electronics Market
--- -1,000,000.00 --- --- 2,551,558.06 ---
Co., Ltd.
Shenzhen Huakong SEG Co., Ltd. --- --- --- --- 174,552,073.99 ---
Shenzhen International Consumer
Electronics Exhibition/Exchange --- --- --- --- 6,545,412.62 ---
Center
Total --- -1,000,000.00 --- --- 183,649,044.67 ---
Note 4 Operating revenue and operating cost
1. Operating income and operating cost
Amount incurred in the current period Amount incurred in the previous period
Item
Income Cost Income Cost
Main business 100,960,545.53 74,670,318.50 123,368,604.11 76,436,384.08
Other businesses - - 556,849.32 ---
Total 100,960,545.53 74,670,318.50 123,925,453.43 76,436,384.08
Note 5 Investment income
Amount incurred in the Amount incurred in the
Item
current period previous period
Long-term equity investment income by the cost method 33,647,355.51 32,436,680.00
Long-term equity investment income by the equity method -387,059.05 1,703,803.48
Income from disposal of long-term equity investments 76,252,009.03 ---
Income from holding financial assets measured by fair value with changes
--- ---
included in current profit and loss
Income from disposal of financial assets measured by fair value with changes
--- ---
included in current profit and loss
Income from holding of held-to-maturity investments --- ---
Investment income during the possession of available-for-sale financial assets --- 750,000.00
Income from disposal of held-to-maturity investments --- ---
Income from disposal of available-for-sale financial assets --- ---
Profit from re-measurement of fair value of the remaining equity after loss of
--- ---
control
Others 31,725,185.43 35,514,983.86
Total 141,237,490.92 70,405,467.34
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XVII. Supplementary material
(I) Details of non-recurring profit and loss
Item Amount Notes
profit and loss from disposal of non-current assets 89,459,793.78
Tax refund, reduction or exemption upon approval exceeding authorized
limits or without formal documents
Government subsidies included in current gains and losses (except those
closely related with corporate business and enjoyed according to national 9,828,264.76
standards or certain quota)
Fund appropriation charges for non-financial entities included in current
3,097,500.00
profit and loss
Gains from the margin between the investment cost of the Company for
acquisition of subsidiaries, joint ventures and joint operation enterprises and
the recognizable fair value of net assets of invested units at the time of
acquisition
Loss from transfer of non-monetary assets
profit and loss from entrusting investment or managing assets
Provision for assets impairment withheld for Force Majeure
profit and loss from debt restructuring
Expenditures for corporate restructuring, such as expenses for relocation of
-1,439,958.00
employees and for integration
profit and loss from unfairly priced transactions in which the transaction
value exceeds the fair value
Net current profit and loss of a subsidiary due to the merger of enterprises
under common control from the beginning of period to the date of merger
profit and loss from contingency items irrelevant with regular operation of the
Company
Profit and loss 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 available-for-sale
financial assets
Transferred-back impairment provision for accounts receivable, for which
separate impairment tests are carried out
Profit and loss for external entrusted loans
profit and loss from fair value changes of investment properties, whose
subsequent measurement is carried out based on the fair value mode
Influence on current profit and loss by one-off adjustment according to tax
and accounting laws and regulations
Trustee fee from entrusted operation 188,679.24
Other non-operating income and expenses except the above-mentioned items -3,068,241.76
271
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Item Amount Notes
Other profit and loss fitting the definition of non-recurring profit and loss
Influenced amount of income tax -19,072,980.69
Amount of influence of minority shareholders' equity (after tax) -1,138,203.55
Total 77,854,853.78
(II) ROE and EPS
Weighted average return on Earnings per share
Profit in current report period
equity (ROE) (%) Basic EPS Diluted EPS
Net profit attributable to common shareholders
of the Company 7.11 0.1371 0.1371
Net profit attributable to common shareholders
of the Company after deduction of
non-recurring losses and gains 1.96 0.0379 0.0379
(III) Abnormalities in items of main financial statements and reasons
Closing balance Opening balance
Item (/amount of the (/amount of the Change ratio Reason for change
current period) previous period)
In the report period, the Company's funds were
Monetary fund 183,094,815.84 276,863,429.10 -33.87% mainly used to invest in Nantong SEG Times
Plaza, resulting in decrease of this item.
The Company sold the equity of its subsidiary
SEG E-Commerce in the report period, and the
Accounts receivable 50,870,545.72 98,212,422.87 -48.20% balance sheet statement of SEG E-Commerce
was not consolidated at the end of the period,
resulting in decrease of this item.
The Company sold the equity of its subsidiary
SEG E-Commerce in the report period, and the
Prepayment 47,387,004.02 129,044,887.26 -63.28% balance sheet statement of SEG E-Commerce
was not consolidated at the end of the period,
resulting in decrease of this item.
In the report period, Suzhou SEG terminated
cooperation with Zongheng International, and
Other receivables 63,183,612.96 27,352,784.33 131.00%
the prepaid rent was transferred in, resulting in
increase of this item.
In the report period, project construction
Inventory 602,098,738.92 450,809,934.72 33.56% expenditure was incurred by Nantong SEG
Times Plaza, resulting in increase of this item.
In the report period, the decoration expenditure
Long-term deferred
94,320,491.68 49,235,999.86 91.57% of Nantong SEG Times Plaza was incurred,
expense
resulting in increase of this item.
Other non-current In the report period, the upfront expense of the
13,804,660.46 5,103,811.14 170.48%
assets new hotel was incurred.
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Closing balance Opening balance
Item (/amount of the (/amount of the Change ratio Reason for change
current period) previous period)
The Company sold the equity of its subsidiary
SEG E-Commerce in the report period, and the
Accounts payable 20,282,611.08 89,908,781.98 -77.44% balance sheet statement of SEG E-Commerce
was not consolidated at the end of the period,
resulting in decrease of this item.
The Company sold the equity of its subsidiary
SEG E-Commerce in the report period, the
Advance receipt 116,529,761.27 190,430,121.05 -38.81% balance sheet statement of SEG E-Commerce
was not consolidated at the end of the period,
and the advance rent receipt decreased.
In the report period, the total profit increased
Tax payable 46,917,032.07 34,645,030.07 35.42%
and the corporate income tax increased.
In the report period, the dividend payable by
Dividend payable 17,019,185.19 2,218,224.58 667.24% subsidiaries was not paid, resulting in increase
of this item.
The lawsuit related to estimated liabilities
Estimated liabilities - 7,000,000.00 -100.00% accrued in the previous period is settled,
resulting in decrease of this item.
In the report period, due to the program of
replacing business tax with value-added tax,
Tax and surtax 18,517,765.23 27,804,172.86 -33.40%
the business tax of the current period
decreased, resulting in decrease of this item.
In the report period, Nantong Times Plaza
began trial operation and the newly-established
Sales expense 13,846,141.59 4,585,434.23 201.96% Suzhou SEG Intelligent Technology Co., Ltd.
incurred sales expenses, resulting in the
increase of this item.
In the report period, intermediary service fees
Management cost 60,042,027.31 44,222,779.09 35.77% were paid for major asset restructuring,
resulting in the increase of this item.
In the report period, equities of Huakong SEG
Investment income 99,145,904.44 17,647,493.77 461.81% and the subsidiary SEG E-Commerce were
disposed of.
In the report period, Nantong Times Plaza
Non-operating
10,897,524.02 2,367,546.40 360.29% received government subsidies, resulting in
income
increase of this item.
Non-operating Large sum of estimated liabilities were accrued
4,366,432.31 14,687,757.38 -70.27%
expense in the previous year.
In the report period, the total profit of the
Income tax expenses 45,306,572.11 35,099,837.65 29.08% Company increased year-on-year, resulting in
increase of this item.
Shenzhen SEG Co., Ltd.
(Official seal)
April 18, 2017
273
