SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
SHENZHEN ZHONGHENG HUAFA CO., LTD.
SEMI-ANNUAL REPORT 2013
August 2013
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of SHENZHEN ZHONGHENG HUAFA CO., LTD. (hereinafter
referred to as the Company) hereby confirm that there are no any fictitious
statements, misleading statements, or important omissions carried in this report,
and shall take all responsibilities, individual and/or joint, for the reality,
accuracy and completion of the whole contents.
All directors are attended the Board Meeting for report deliberation.
The Company has no plans of cash dividend distributed, no bonus shares and
has no share converted from capital reserve either.
Li Zhongqiu, principal of the Company, Cao Li, person in charger of accounting
works and Wu Aijie, person in charge of accounting organ (accounting principal)
hereby confirm that the Financial Report of Semi-Annual Report 2013 is
authentic, accurate and complete.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Content
Section I. Important Notice, Contents and Paraphrase ................................................. 2
Section II. Company profile .......................................................................................... 5
Section III. Accounting data and summary of financial indexes .................................. 7
Section IV. Report of the Board of Directors ................................................................ 9
Section VIII. Financial Report .................................................................................... 24
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Paraphrase
Items Refers to Definition
Company, Shen Huafa Refers to Shenzhen Zhongheng Huafa Co., Ltd.
Hengfa Technology company Refers to Wuhan Hengfa Technology Co., Ltd.
Huafa Property Company Refers to Shenzhen Zhongheng Huafa Property Co., Ltd
Huafa Lease Company Refers to Shenzhen Huafa Property Lease Management Co., Ltd
Huafa Trade Co., Ltd. Refers to Wuhan Zhongheng Huafa Trade Co., Ltd.
Wuhan Zhongheng Group Refers to Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd.
HK Yutian Company Refers to Hong Kong Yutian International Investment Co., Ltd.
Hengsheng Photoelectricity Company Refers to Wuhan Hengsheng Photoelectricity Industry Co., Ltd.
Hengsheng Yutian Company Refers to Wuhan Hengsheng Yutian Industrial Co., Ltd.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Section II Company profile
I. Company Profile
Short form for share SHEN HUAFA-A, SHEN HUAFA- B Code for share 000020 200020
Listing stock exchange Shenzhen Stock Exchange
Chinese name of the Company 深圳中恒华发股份有限公司
Abbr. of Chinese name of the
深华发
Company(if applicable)
English name of the
SHENZHEN ZHONGHENG HUAFA CO., LTD.
Company(if applicable)
Legal Representative Li Zhongqiu
II. Contact person and ways
Secretary of the Board Rep. of securities affairs
Name Weng Xiaojue Niu Yuxiang
6/F, East Tower, Huafa (N) Road, Futian 6/F, East Tower, Huafa (N) Road, Futian
Contact adds.
District, Shenzhen District, Shenzhen
Tel. (0755) 83352206 (0755) 61389198
Fax. (0755) 61389001 (0755) 61389001
E-mail hwafainvestor@126.com.cn hwafainvestor@126.com.cn
III. Others
1. Way of contact
Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or
not
□ Applicable √ Not applicable
Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period,
found more details in Annual Report 2012.
2. Information disclosure and preparation place
Whether information disclosure and preparation place changed in reporting period or not
□ Applicable √ Not applicable
The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation
place for semi-annual report have no change in reporting period, found more details in Annual Report 2012.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
3. Registration changes of the Company
Whether registration has changed in reporting period or not
□ Applicable √ Not applicable
Date/place for registration of the Company, registration number for enterprise legal license, number of taxation registration and
organization code have no change in reporting period, found more details in Annual Report 2012.
4. Other relevant information
Whether other relevant information has changed in reporting period or not
□ Applicable √ Not applicable
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Section III. Accounting data and summary of financial indexes
I. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting
error correction or not
□Yes √ No
Increase/decrease in this
Current period Same period of last year
report y-o-y (%)
Operating revenue (RMB) 302,732,823.42 383,517,298.55 -21.06%
Net profit attributable to shareholders of
1,967,980.43 6,426,237.82 -69.38%
the listed company(RMB)
Net profit attributable to shareholders of
the listed company after deducting 2,817,846.22 6,253,946.75 -54.94%
non-recurring gains and losses(RMB)
Net cash flow arising from operating
-28,557,957.20 74,868,494.91 -138.14%
activities(RMB)
Basic earnings per share (RMB/Share) 0.007 0.0227 -69.16%
Diluted earnings per share (RMB/Share) 0.007 0.0227 -69.16%
Weighted average ROE (%) 0.7% 2.29% 1.59 percentage points down
Increase/decrease in this
End of current period End of last period report-end over that of last
period-end (%)
Total assets (RMB) 731,717,709.81 681,645,093.97 7.35%
Net assets attributable to shareholder of
282,149,031.34 280,181,050.91 0.7%
listed company(RMB)
II. Items and amounts of extraordinary profit (gains)/loss
In RMB
Item Amount Note
Gains/losses from the disposal of non-current asset (including the
4,987.17
write-off that accrued for impairment of assets)
Governmental subsidy reckoned into current gains/losses (not Obtained RMB 200,000 fiscal subsidy for
including the subsidy enjoyed in quota or ration according to tax payment over one million, and
450,000.00
national standards, which are closely relevant to enterprise’s obtained RMB 250,000 fiscal subsidy for
business) energy- saving and
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
consumption-reduction
Accrual liability RMB 2362203.26 was
withdrawal for lawsuit case of Shangxi
Other non-operating income and expenditure except for the
-1,777,129.39 Linghua; accrual liability RMB 473097.55
aforementioned items
for lawsuit case of Wangshang was
released, and income from penalty etc.
Less: Impact on income tax -472,276.43
Total -849,865.79 --
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Section IV. Report of the Board of Directors
I. Introduction
In the first half year of 2013, domestic economy growth continued to decline, stimulus growth patterns have become the past, and it
has gradually stepped into the critical period of economic transition of adjusting structure and stabilizing the growth simultaneously.
In the economy weakening situation, all staff of the company boost their spirits, face the difficulties, and increase income and reduce
expenditure so that ensured the whole operating performance of industrial businesses basically keep the same as the same period last
year, but the sharp decrease in the own property rental income because the investment of some areas is not yet completed has greatly
affected the semi-annual outstanding achievements of the company: during the report period, the company has achieved operation
revenue of 302.73 million Yuan, a fall of 21 percent compared with the same period of last year; and achieved net profits of 1.97
million Yuan, with a fall of 21 percent compared with the same period of last year.
Industrial production: The injection molding division has started importing the new customer - Gree Electric Appliances Inc since the
second half year of last year, and both sides have been running successfully, the strict requirements for quality and favorable delivery
records have gained high levels of the customer’s satisfaction, the Company is honored as the leading enterprise of injection products,
loyal partner, and is ranked as ―Annual Outstanding Supplier‖, the order quota increases substantially so that it covers the insufficient
caused by the decrease in the order quantity of other main cooperative clients, the operation revenue of injection molding increases
by 15.73% on a year-on-year basis, and the operating profits increase by 25.83% on a year-on-year basis; even though some clients
have re-tendered and re-priced for reducing purchasing costs, Expandable Polystyrene business division continues to maintain more
than 80% of the bidding, and keeps rather good market shares, the operation revenue increases by 10.82% compared with the same
period of last year, but affected by the product price reduction, the operating profits declines a little compared with the same period
of last year; because of the double pressure of the sluggish economy and the white-hot market competition, and also the sharp
decrease in the order quantity of the major customers, the video division invests more energy in the planning and development of
new products in the premise of ensuring the basic production, extends the production projects to the large-size screen monitors like
the electronic whiteboard for multimedia interaction teaching and the multi-functional and small–screen products like touch tablet
PCs, and introduces the self-owned brand to the E-commerce trading platform and district retail channels.
Property rental: the company owns the area from first to third floor of Huafa Building, which is under the refitting for leasing since
the tenancy contract expired in the third quarter of last year; the unfavorable business environment caused by the construction of
No.7 subway line near ―Huangqiang Bei‖ business area makes the leasing bristle with difficulties to a certain extent. During the
report period, the company has specially adjusted the investment strategies, tried to introduce the main businesses suitable for the
surrounding electronic business area and living facilities so as to form a good interaction and promotion effectiveness with other
commercial tenants, which is still under discuss for the time being, the short-term non-occupation results in the sharp decline in the
property rental income and profits of the company in the first half year.
II. Main business analysis
Introduction
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
The major business of the Company was production and sales of injection molding pieces, foam pieces (light material package) and
LCD whole sets. Sales are mainly focused in Central China and Hong Kong.
Y-o-y changes of main financial data
In RMB
Y-o-y
Current period Same period of last year Reasons for changes
increase/decrease (%)
Operation revenue 302,732,823.42 383,517,298.55 -21.06%
Operation cost 263,513,507.38 336,861,526.85 -21.77%
External temporary workers
of injection molding business
Sales expenses 4,557,574.73 3,466,307.56 31.48%
increased and salaries of
sales staff raised slightly
Administrative expenses 21,074,358.43 21,570,404.40 -2.3%
Financial cost 9,523,053.98 10,220,006.16 -6.82%
Operating profit decreased
Income tax expense 369,738.80 2,334,435.96 -84.16% and offset the previous
income tax that has accrual
Net cash flow arising
-28,557,957.20 74,868,494.91 -138.14% Operating income decreased
from operation activities
Net cash flow arising
from investment -1,476,896.06 -1,983,565.01 25.54%
activities
Net cash flow arising
40,161,342.42 39,444,490.54 1.82%
from financing activities
Net increase of cash and
7,635,602.30 112,327,516.59 -93.2% Operating income decreased
cash equivalent
Major changes on profit composition or profit resources in reporting period
□ Applicable √ Not applicable
No major changes on profit composition or profit resources occurred in reporting period
The future development and planning extended to reporting period that published in disclosure documents as prospectus, private
placing memorandum and recapitalize statement
□ Applicable √ Not applicable
No future development and planning extended to reporting period that published in disclosure documents as prospectus, private
placing memorandum and recapitalize statement
Review on the previous business plan and its progress during reporting period
Nil
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
III. Constitution of main business
In RMB
Increase or Increase or
Increase or decrease
decrease of decrease of
Operating Gross profit ratio of gross profit ratio
Operating cost operating revenue operating cost
revenue (%) over same period of
over same period over same period
last year (%)
of last year (%) of last year (%)
According to industries
Plastic injection 0.09 percentage
113,391,058.85 100,752,264.75 11.15% 15.73% 15.61%
hardware points up
0.14 percentage
LCD monitors 133,625,436.61 128,521,016.37 3.82% -41.63% -41.55%
points down
Foam pieces 1.67 percentage
37,075,875.80 31,514,478.13 15% 10.82% 13.04%
(Styrofoam) points down
According to products
Plastic injection 0.09 percentage
113,391,058.85 100,752,264.75 11.15% 15.73% 15.61%
hardware points up
0.14 percentage
LCD monitors 133,625,436.61 128,521,016.37 3.82% -41.63% -41.55%
points down
Foam pieces 1.67 percentage
37,075,875.80 31,514,478.13 15% 10.82% 13.04%
(Styrofoam) points down
According to region
0.39 percentage
Central China 150,466,934.65 132,266,742.88 12.1% 14.48% 14.99%
points down
0.14 percentage
Hong Kong 133,625,436.61 128,521,016.37 3.82% -41.63% -41.55%
points down
IV. Core competitive-ness analysis
1. All industrial lands of the Company located in Shenzhen were taken into the first batch of plan under 2010 Shenzhen urban
upgrade unit planning formulation plan. In future, development and operation of self-owned land resources would become the
income source of the Company on a long-term and stable basis and new profit growth point.
2. The Company has three plants in Wuhan economic technology park with an area of nearly 90,000 square meters where various
famous enterprises are located in this area. Benefiting from radiation radius requirements for processing matching services, the
Company enjoys superior and stable customer resources and has formed a good long-term cooperative relationship; in particular, its
injection molding business and polystyrene businesses have been operated for almost 10 years with steady management group and
abundant production experiences, which makes the Company enjoying high recognition and annual production capacity and scale in
the forefront of Central China.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
V. Investment analysis
1. Main subsidiaries and joint-stock companies analysis
Main subsidiaries and joint-stock companies
In RMB
Main
Industry Registered Operation Operation
Name Type products or Total assets Net assets Net profit
involved capital revenue profit
service
R&D,
production,
sales of
Hengfa
Production products
Technology Subsidiary 181,643,111.00 546,696,644.88 205,308,312.36 284,004,581.24 1,801,389.79 1,722,904.91
sales and import
company
and export
business
etc.
Sales of
Photoelectri
city
Huafa Trade Co.,
Subsidiary Sales products, 100,000.00 1,152,186.79 -904,025.24 25,641.03 -2,723.77 -2,723.77
Ltd.
Imp&Exp
business of
goods
Property
leasing and
Huafa Property Property managemen
Subsidiary 1,000,000.00 1,125,590.29 -473,959.54 613,682.92 -153,416.11 -152,816.11
Company management t of
self-owned
property
Property
leasing and
Huafa Lease Property managemen
Subsidiary 1,000,000.00 1,900,692.20 -5,026,990.71 0.00 0.00 0.00
Company management t of
self-owned
property
VI. Prediction of business performance from January – September 2013
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
VII. Implementation of profit distribution in reporting period
Implementation or adjustment of profit distribution plan in reporting period, cash dividend plan and shares converted from capital
reserve in particular
□Applicable √Not applicable
The Company has no profit distribution and shares converted from capital reserve either, which was deliberated and approved in
annual shareholders’ general meeting of 2012
VIII. In the report period, reception of research, communication and interview
Contents discussed and
Time Place Way Type Reception
material provided
Communicating operation
Headquarter of the Telephone situation of the Company,
Jan-Jun 2013 Individuals Individual investor
Company communication assets status and process of
city update projects
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Section V. Important Events
I. Corporate governance
In the first half year of 2013, domestic economy growth continued to decline, stimulus growth patterns have become the past, and it
has gradually stepped into the critical period of economic transition of adjusting structure and stabilizing the growth simultaneously.
In the economy weakening situation, all staff of the company boost their spirits, face the difficulties, and increase income and reduce
expenditure so that ensured the whole operating performance of industrial businesses basically keep the same as the same period last
year, but the sharp decrease in the own property rental income because the investment of some areas is not yet completed has greatly
affected the semi-annual outstanding achievements of the company: during the report period, the company has achieved operation
revenue of 302.73 million Yuan, a fall of 21 percent compared with the same period of last year; and achieved net profits of 1.97
million Yuan, with a fall of 21 percent compared with the same period of last year.
Industrial production: The injection molding division has started importing the new customer - Gree Electric Appliances Inc since the
second half year of last year, and both sides have been running successfully, the strict requirements for quality and favorable delivery
records have gained high levels of the customer’s satisfaction, the Company is honored as the leading enterprise of injection products,
loyal partner, and is ranked as ―Annual Outstanding Supplier‖, the order quota increases substantially so that it covers the insufficient
caused by the decrease in the order quantity of other main cooperative clients, the operation revenue of injection molding increases
by 15.73% on a year-on-year basis, and the operating profits increase by 25.83% on a year-on-year basis; even though some clients
have re-tendered and re-priced for reducing purchasing costs, Expandable Polystyrene business division continues to maintain more
than 80% of the bidding, and keeps rather good market shares, the operation revenue increases by 10.82% compared with the same
period of last year, but affected by the product price reduction, the operating profits declines a little compared with the same period
of last year; because of the double pressure of the sluggish economy and the white-hot market competition, and also the sharp
decrease in the order quantity of the major customers, the video division invests more energy in the planning and development of
new products in the premise of ensuring the basic production, extends the production projects to the large-size screen monitors like
the electronic whiteboard for multimedia interaction teaching and the multi-functional and small–screen products like touch tablet
PCs, and introduces the self-owned brand to the E-commerce trading platform and district retail channels.
Property rental: the company owns the area from first to third floor of Huafa Building, which is under the refitting for leasing since
the tenancy contract expired in the third quarter of last year; the unfavorable business environment caused by the construction of
No.7 subway line near ―Huangqiang Bei‖ business area makes the leasing bristle with difficulties to a certain extent. During the
report period, the company has specially adjusted the investment strategies, tried to introduce the main businesses suitable for the
surrounding electronic business area and living facilities so as to form a good interaction and promotion effectiveness with other
commercial tenants, which is still under discuss for the time being, the short-term non-occupation results in the sharp decline in the
property rental income and profits of the company in the first half year.
II. Significant lawsuits and arbitrations of the Company
□Applicable √Not applicable
The Company has no significant lawsuits and arbitrations in reporting period
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
III. Question from media
□ Applicable √ Not applicable
No universal questioned by media in reporting period
IV. Significant related transaction
1. Related transaction related to daily operation
Amount of Ration in
Type of Pricing Accounts-
Parties of Related Contents Price of related trade amount of
related principle settlement Available market prices Date of Index of
related relationshi of related related (10 similar
trade of related of related of similar transactions disclosure disclosure
trade p trade trade thousand related
trade trade
Yuan) trade (%)
The average market price
refers to the price of same
specifications which is
searched from through
Confirme http://ww
the world famous
d with 1% w.cninfo.
Hengsheng Sharing professional market
Purchasin of current com.cn/fi
Photoelect the same Telegraph survey company website 2013-04-
Purchase g LCD market － 544.09 2.06% nalpage/2
ricity parent ic transfer http://www.witsview.com 24
monitors average 013-04-2
Company company recognized authority in
price in 4/624158
the industry and LCD
principle 57.PDF
professional market
survey company website
http://www.witsview.com
.
Purchasin
Sharing g LCD Synchroni
HK Yutian the same overall zed with Telegraph 2013-04- Same as
Purchase － 10,130.93 36.15% ——
Company parent monitor the ic transfer 24 above
company machine market
set
Sales Accordin
Sharing LCD g to the
HK Yutian the same overall customer Telegraph 2013-04- Same as
Sales － 12,418.06 43.72% ——
Company parent monitor sales ic transfer 24 above
company machine order
set price sure
Hengsheng Sharing Sales of Reference
Photoelect the same LCD TVs to the Telegraph
Sales － 2.23 0.01% —— N/A N/A
ricity parent and market ic transfer
Company company computer price
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
s
Total -- -- 23,095.31 -- -- -- -- --
Details of returned large sales N/A
Predict on total amount of daily related trade In the reporting period, Hengfa Technology Company purchased LCD from Hengsheng Photoelectricity
on the way in this period according to Company with RMB 5,440, 000 approximately, 9% of the annual amount predicted at the beginning of
classification, as well as actual the year; purchased LCD from HK Yutian Company with RMB 101,310, 000, approximately, 25% of the
implementation in reporting period (if annual amount predicted at the beginning of the year; sold LCD whole machine to HK Yutian Company
applicable) with RMB 124,180,000 approximately, 25% of the annual amount predicted at the beginning of the year.
V. Significant contracts and its implementation
1. Guarantees
In 10 thousand Yuan
Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries)
Guarante
Related Actual date of
Complete e for
Announcem happening
Name of the Actual Guarantee implemen related
ent Guarantee limit (Date of Guarantee type
Company guaranteed guarantee limit term tation or party
disclosure signing
not (Yes or
date agreement)
no)
Guarantee of the Company for the subsidiaries
Guarante
Related Actual date of
Complete e for
Announcem happening
Name of the Actual Guarantee implemen related
ent Guarantee limit (Date of Guarantee type
Company guaranteed guarantee limit term tation or party
disclosure signing
not (Yes or
date agreement)
no)
Wuhan Hengfa Joint liability
2013-04-24 30,000 2013-01-01 14028 1 year No No
Technology Co., Ltd. guarantee
Wuhan Hengfa $ 10 million / Joint liability
2010-10-15 2010-11-01 0 2 years Yes No
Technology Co., Ltd. month guarantee
Total amount of approving Total amount of actual occurred
guarantee for subsidiaries in 30,000 guarantee for subsidiaries in 25,940
report period (B1) report period (B2)
Total amount of approved Total balance of actual
guarantee for subsidiaries at the 67,080 guarantee for subsidiaries at the 14,028
end of reporting period (B3) end of reporting period (B4)
Total amount of guarantee of the Company( total of two abovementioned guarantee)
Total amount of approving Total amount of actual occurred
guarantee in report period 30,000 guarantee in report period 25,940
(A1+B1) (A2+B2)
Total amount of approved 67,080 Total balance of actual 14,028
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
guarantee at the end of report guarantee at the end of report
period (A3+B3) period (A4+B4)
The proportion of the total amount of actually guarantee in the net
49.72%
assets of the Company (that is A4+ B4) (%)
Including:
Amount of guarantee for shareholders, actual controller and its
0
related parties(C)
The debts guarantee amount provided for the guaranteed parties
0
whose assets-liability ratio exceed 70% directly or indirectly(D)
Proportion of total amount of guarantee in net assets of the
0
Company exceed 50%(E)
Total amount of the aforesaid three guarantees(C+D+E) 0
Explanations on possibly bearing joint and several liquidating
N/A
responsibilities for undue guarantees (if applicable)
Explanations on external guarantee against regulated procedures (if
N/A
applicable)
Explanation on details of guarantee by complex method
①To ensure the wholly-owned subsidiaries - Hangfa Technology Company can fully pay the payments for goods occurred during the
transaction to Shanghai Catic Optoelectronics Co., Ltd., the company provides payment guarantees for Hangfa Technology Company
for its debts to Shanghai Catic Optoelectronics Co., Ltd. in accordance with the master contract, the principle amount is subject to the
real transaction amount which is less than US$ 10 million per month.
In the first half year of 2013, the company has totally provided guarantee of US$ 1,286,800 for above-mentioned transactions of
Hangfa Technology Company, and totally relieved guarantee of US$ 1,513,200, the balance of guarantee is US$ 0 up to 30th, June,
2013.
②To ensure the funds needed for the production and management of the wholly-owned subsidiaries – Hangfa Technology Company,
the company plans to provide the joint liability guarantees for the bank loans of Hangfa Technology Company in 2013 according to
the actual situation, and the total guarantee amount is less than RMB 0.3 billion.
During the report period, as the guarantor for Hangfa Technology Company to apply for credit line of RMB 80 million (or equivalent
foreign currency)from China Minsheng Banking Corp, and the guarantor for Hangfa Technology Company to apply for credit line of
RMB 50 million (or equivalent foreign currency)from Bank of Communications, and the guarantor for Hangfa Technology Company
to apply for credit line of US$ 10 million from Hankou Bank, the company takes the joint liability guarantee.
In the first half year of 2013, the company has totally provided guarantee of RMB 33 million, 35,246,900 US Dollars for the bank
loans of Hangfa Technology Company, and totally relieved guarantee of RMB 22 million, and 31,939,600 US Dollars, the balance of
guarantee is RMB 50 million and US$ 14,607,300 up to 30th, June, 2013.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
VI. Commitments from the Company or shareholders (with over 5% shares held) in or occurred in the
previous period but continued to reporting period
Commitment Dated for Commitment
Commitments Contents Implementation
party commitment term
The commitment have been implemented
on 18 May 2010; considering all
116,489,894 shares of the Company are
in the situation of being pledged, till the
Share Merger Wuhan Zhongheng May 18,2007 to
Share Merger Reform 2006-10-20 end of this report period, Wuhan
Reform Group May 17,2010
Zhongheng Group have not applied the
released procedure to Shenzhen Stock
Exchange for the abovementioned
restricted shares.
1. On 5 June 2008, approving by the 3rd
Extraordinary Meeting of Board of
Directors 2008, the Company
purchased relevant assets of plastic
injection products from Wuhan
Within 1 year after
Zhongheng Group by cash of RMB 27
transferred of this
million, the commitment have been
equity acquisition: 1.
implemented;
Injected relevant capital
2. In the first 10 days of May, 2008, the
of plastic injection
Wuhan Company officially started off the
Commitments in report of business into the April 12,2007 to
Zhongheng 2007-03-29 significant asset restructures work of
acquisition or equity change Company; 2.70% April 11,2008
Group purchasing the 70% equities of
equity of the
Hengsheng Photoelectricity.; engaged
Hengsheng
financial consultant and law consultant to
Photoelectricity will
carry out earnest investigation on the
inject into the
restructure assets that may be involved,
Company.
and negotiated with relevant departments
which were in charge of this. However,
due to that relevant condition was not
mature; there still remain obstacles in
material asset restructure.
Commitments in assets
No
reorganization
Commitments in initial
No
public offering or refinancing
Other commitments to
minority shareholders of the No
Company
18
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Completed on time or not No
Detail reasons for
un-complement and further Found in ―Implementation‖
plan (if applicable)
VII. Engagement and non-reappointment of CPA
Whether the semi-annual report was audited or not
□ Yes √ No
VIII. Explanation on other significant events
The Company signed Asset Exchange Contract with Wuhan Zhongheng Group on 29 April 2009 (details were referred to in the
announcement dated 30 April 2009), and the contract was executed well (details were set out in the 2010 annual report). Pursuant to
the contract, since part of the assets of the Company (namely two parcel of industrial lands located at Huafa road, Gongming town,
Guangming new district, Shenzhen (the property certificate No. were SFDZ No.7226760 and SFDZ No.7226763, No. of parcels were
A627-005 andA627-007, and the aggregate area was 48,200 sq.m)) were the lands listed in the first batch of plan for 2010 Shenzhen
urbanization unit planning preparation plan. For promotion of such urbanization project and joint cooperation, the Company has not
completed the transfer procedures in respect of the aforesaid land.
19
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Section VI. Changes in Shares and Particulars about Shareholders
I. Number of shares and shares held
In Share
Total shareholders at period-end 26,645 (including 17,938 shareholders of A share)
Shareholders with over 5% shares held
Number of Changes Amount of Amount of Number of share pledged/frozen
Nature of Proportion of shares held in the the
Shareholders
shareholder shares held (%) at reportin restricted restricted
State of share Amount
period-end g period shares held shares held
Wuhan Zhongheng
New Science & Domestic
Technology non-state-owned 41.14% 116,489,894 N/A 116,489,894 0 Pledged 116,489,894
Industrial Group legal person
Co., Ltd.
SEG (HONG Overseas legal N/A
5.85% 16,569,560 0 16,569,560 Pledged/frozen 0
KONG) CO., LTD. person
GOOD HOPE
CORNER Overseas legal
4.9% 13,900,000 N/A 0 13,900,000 Pledged/frozen 0
INVESTMENTS person
LTD
Domestic nature
Zeng Ying 0.35% 1,000,000 0 1,000,000 Pledged/frozen 0
person
Overseas nature
BINGHUA LIU 0.31% 876,213 0 876,213 Pledged/frozen 0
person
Domestic nature
Li Jianfeng 0.29% 831,300 0 831,300 Pledged/frozen 0
person
Domestic nature
Jia Wenjun 0.26% 736,514 0 736,514 Pledged/frozen 0
person
Domestic nature
Zhu Ming 0.22% 611,348 0 611,348 Pledged/frozen 0
person
Specific account for
agreed to State-owned legal
0.21% 600,000 0 600,000 Pledged/frozen 0
repurchase of Caida person
Securities Co., Ltd.
Domestic nature
Su Wansu 0.2% 580,000 0 580,000 Pledged/frozen 0
person
Strategy investors or general corporate N/A
20
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
becomes top 10 shareholders due to
rights issued (if applicable)
Among the top ten shareholders, Wuhan Zhongheng New Science & Technology Industrial Group Co.,
Ltd. neither bears associated relationship with other shareholders, nor belongs to the consistent actor that
Explanation on associated relationship are prescribed in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed
among the aforesaid shareholders Companies. The Company neither knew whether there exists associated relationship among the other
tradable shareholders, nor they belong to consistent actors that are prescribed in Measures for the
Administration of Disclosure of Shareholder Equity Changes of Listed Companies.
Particular about top ten shareholders with un-restrict shares held
Type of shares
Shareholders’ name Amount of listed shares held at period-end
Type Amount
Domestically
SEG (HONG KONG) CO., LTD. 16,569,560 listed foreign 16,569,560
shares
Domestically
GOOD HOPE CORNER
13,900,000 listed foreign 13,900,000
INVESTMENTS LTD
shares
Domestically
Zeng Ying 1,000,000 listed foreign 1,000,000
shares
Domestically
BINGHUA LIU 876,213 listed foreign 876,213
shares
Domestically
Li Jianfeng 831,300 listed foreign 831,300
shares
RMB common
Jia Wenjun 736,514 736,514
share
Domestically
Zhu Ming 611,348 listed foreign 611,348
shares
Specific account for agreed to
RMB common
repurchase of Caida Securities Co., 600,000 600,000
share
Ltd.
RMB common
Su Wansu 580,000 580,000
share
RMB common
Xu Chengfang 548,470 548,470
share
Expiation on associated relationship or Among the top ten unrestricted shareholders, the Company neither knew whether there exists associated
relationship among the other tradable shareholders, nor they belong to consistent actors that are
consistent actors within the top 10 prescribed in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed
un-restrict shareholders and between Companies. Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. neither bears
associated relationship with the top 10 un-restrict shareholders, nor belongs to the consistent actor that are
21
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
top 10 un-restrict shareholders and top prescribed in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed
Companies.
10 shareholders
Explanation on shareholders involving
N/A
margin business (if applicable)
Whether has a buy-back agreement dealing in reporting period
√Yes □No
In the reporting period, among the top 10 shareholders of the Company, Mr. Jia Wenjun exercise security dealings with specific
account for agreed to repurchase of Caida Securities Co., Ltd. by way of agreed to repurchase, transaction object was the shares of
the Company amounting as to 400,000 shares, a 0.14 percent in toatl shares of the Company; as of the reporting period, Jia Wenjun
holds 736,514 shares of the Company, representing 0.26 percent of the total shares of the Company.
II. Changes of controlling shareholders or actual controller
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
Changes of actual controller in reporting period
□ Applicable √ Not applicable
22
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
Section VII. Directors, Supervisors and Senior Executives
I. Changes of shares held by directors, supervisors and senior executives
□ Applicable √ Not applicable
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report
2012.
II. Change of directors, supervisors and senior executives
□ Applicable √ Not applicable
There is no change of directors, supervisors and senior executives of the Company in the period.
23
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Section VIII. Financial Report
I. Audit reports
Whether the semi-annual report was audited or not
□ Yes √ No
The financial report of this semi-annual report was unaudited
II. Financial statements
Units in Notes of Financial Statements is RMB
1. Consolidated balance sheet
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 120,470,443.69 112,834,841.39
Settlement funds
Lending funds
Tradable financial assets
Notes receivable 36,918,778.87 43,000,217.81
Accounts receivable 139,733,489.69 161,782,907.79
Prepayments 51,045,390.75 14,168,016.74
Premium receivable
Reinsurance accounts receivable
Reinsurance contract reserve receivable
Interest receivable
Dividend receivable
Other account receivable 11,445,290.29 9,563,505.01
Buying back the sale of financial assets
Inventory 74,553,605.39 42,771,061.45
Non-current assets due within one year
Other current assets
Total current assets 434,166,998.68 384,120,550.19
24
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Non-current assets:
Issuance of loans and advances
Financial assets available for Sale
Held-to-maturity investment
Long-term receivables
Long term equity investment
Investment real estate 33,156,799.36 33,784,177.90
Fixed asset 200,842,486.24 202,743,248.34
Project in progress 2,570,439.59 2,043,356.00
Project materials
Liquidation of fixed asset
Productive biological asset
Oil and gas asset
Intangible asset 50,183,126.99 50,538,067.80
Development expenditure
Goodwill
Long-term deferred expenditure 2,933,874.92 806,724.98
Deferred income tax asset 7,863,984.03 7,608,968.76
Other non-current asset
Total non-current asset 297,550,711.13 297,524,543.78
Total Assets 731,717,709.81 681,645,093.97
Current Liabilities:
Short-term borrowing 165,645,678.40 109,694,640.00
Borrowing from the central bank
Deposits and interbank deposit
Borrowed capital
Transaction financial liabilities
Notes payable 30,299,234.71 34,511,327.39
Accounts payable 46,845,938.53 48,952,915.87
Account received in advance 1,110,445.49 764,493.92
Financial assets sold for repurchase
Fees and commissions payable
Salary payable 3,572,281.05 4,609,188.91
Taxes payable 10,178,134.45 16,502,523.22
25
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Interest payable
Dividend payable
Other payables 25,579,446.03 21,280,539.65
Reinsurance payables
Reserves for insurance contracts
Agency securities trading
Agency securities underwriting
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 283,231,158.66 236,315,628.96
Non-current liabilities
Long-term loans 163,018,800.00 163,718,800.00
Bonds payable
Long-term payables
Special payables
Accrued liabilities 3,318,719.81 1,429,614.10
Deferred income tax liability
Other non-current liability
Total non-current liability 166,337,519.81 165,148,414.10
Total liability 449,568,678.47 401,464,043.06
Owners’ equity (or Shareholder’s equity):
Paid-in capital(share capital) 283,161,227.00 283,161,227.00
Capital surplus 109,496,837.33 109,496,837.33
Less: treasury stock
Special reserve
Surplus reserve 77,391,593.25 77,391,593.25
Reserve for general risks
Retained profit -187,900,626.24 -189,868,606.67
Converted difference in foreign currency Statements
Total owner’s equity attributable to parent company 282,149,031.34 280,181,050.91
Interest of minority shareholders
Total owners’ equity (or shareholders equity) 282,149,031.34 280,181,050.91
Total liabilities and owners’ equity (or shareholders equity) 731,717,709.81 681,645,093.97
Legal Representative: Li Zhongqiu Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
26
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
2. Balance Sheet of Parent Company
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Item Closing balance Opening balance
Current assets:
Monetary fund 7,706,858.10 10,555,114.25
Tradable financial assets
Notes receivable 139,935.89 1,790,000.00
Accounts receivable 45,131,079.87 45,179,657.87
Prepayments 1,964,203.62 3,576,103.62
Interest receivable
Dividend receivable
Other account receivable 94,591,086.06 64,735,528.50
Inventory 14,806.50 14,806.50
Non-current assets due within one year
Other current assets
Total current assets 149,547,970.04 125,851,210.74
Non-current assets:
Financial assets available for Sale
Held-to-maturity investment
Long-term receivables
Long term equity investment 184,708,900.00 184,708,900.00
Investment real estate 33,156,799.36 33,784,177.90
Fixed assets 106,217,643.12 108,512,126.65
Project in progress 2,323,356.00 2,043,356.00
Project materials
Liquidation of fixed assets
Productive biological asset
Oil and gas asset
Intangible assets 5,495,856.42 5,568,329.28
Development expenditure
Goodwill
Long-term deferred expenditure 2,848,533.29 710,933.33
Deferred income tax asset 8,392,663.12 8,137,647.85
27
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Other non-current assets
Total non-current assets 343,143,751.31 343,465,471.01
Total assets 492,691,721.35 469,316,681.75
Current liabilities:
Short-term borrowing 25,365,000.00 250,000.00
Transaction financial liabilities
Notes payable
Accounts payable 10,283,176.69 11,719,031.31
Account received in advance 836,845.99 332,823.92
Salary payable 567,439.39 667,119.57
Taxes payable 10,647,288.06 11,766,728.78
Interest payable
Dividend payable
Others payables 9,964,308.73 11,143,036.79
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 57,664,058.86 35,878,740.37
Non- current liabilities:
Long-term loans 163,018,800.00 163,718,800.00
Bonds payable
Long-term payables
Special payables
Accrued liabilities 3,318,719.81 1,429,614.10
Deferred income tax liability
Other non-current liability
Total non-current liability 166,337,519.81 165,148,414.10
Total liabilities 224,001,578.67 201,027,154.47
Owners’ equity (or Shareholder’s equity):
Paid-in capital(share capital) 283,161,227.00 283,161,227.00
Capital surplus 109,496,837.33 109,496,837.33
Less: treasury stock
Special reserve
Surplus reserve 77,391,593.25 77,391,593.25
Reserve for general risks
28
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Retained profit -201,359,514.90 -201,760,130.30
Converted difference in foreign currency
Total owners’ equity (or shareholders equity) 268,690,142.68 268,289,527.28
Total liabilities and owners’ equity (or shareholders equity) 492,691,721.35 469,316,681.75
Legal Representative: Li Zhongqiu Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
3. Consolidated Income Statements
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Amount of the
Item Current Amount
Previous Period
I. Total operation revenue 302,732,823.42 383,517,298.55
Including: Operating revenue 302,732,823.42 383,517,298.55
Interest income
Earned premium
Fee and commission income
II Total Operating cost 299,072,961.97 374,986,346.19
Including: Operating costs 263,513,507.38 336,861,526.85
Interest costs
Fee and commission costs
Cash surrender
Net compensation expenses
Net extraction reserves for insurance contracts
Policy dividend payout
Reinsurance expense
Business tax and surcharge 1,273,512.07 1,655,984.64
Sales expenses 4,557,574.73 3,466,307.56
Administrative expenses 21,074,358.43 21,570,404.40
Financial expenses 9,523,053.98 10,220,006.16
Asset impairment losses -869,044.62 1,212,116.58
Add: gains from changes of fair value (Loss is listed with ―-‖)
Investment gain (Loss is listed with ―-‖)
Including: Investment gains on affiliated Company and joint venture
29
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Exchange gains (Loss is listed with ―-‖)
III. Operating profits (Loss is listed with ―-‖) 3,659,861.45 8,530,952.36
Add: Non-operating income 718,320.79 229,821.42
Less: Non-operating expenditure 2,040,463.01 100.00
Including: Disposal loss on non-current liability
IV Total profits (Total loss is listed with ―-‖) 2,337,719.23 8,760,673.78
Less: Income tax expenses 369,738.80 2,334,435.96
V. Net profit (Net loss is listed with ―-‖) 1,967,980.43 6,426,237.82
Including: Net profit generated by combined party before merged
Net profit attribute to owners of parent company 1,967,980.43 6,426,237.82
Minority interest
VI. Earnings per share(EPS) -- --
(i) Basic Earnings per share(EPS) 0.007 0.0227
(ii) Diluted Earnings per share(EPS) 0.007 0.0227
VII. Other consolidated income
VIII. Total consolidated income 1,967,980.43 6,426,237.82
Total consolidated income attributable to owners of parent company 1,967,980.43 6,426,237.82
Total consolidated income attributable to minority shareholders
Legal Representative: Li Zhongqiu Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
4. Profit Statement of parent company
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Items Current Amount Amount of the Previous Period
I. Operation revenue 18,088,918.23 25,442,959.65
Less: Operating costs 2,725,748.13 4,803,869.50
Business tax and surcharge 1,239,814.83 1,593,263.20
Sales expenses 139,350.72 157,599.62
Administrative expenses 10,055,927.41 10,980,472.57
Financial expenses 2,782,510.22 4,153,425.53
Asset impairment losses -869,044.62 845,974.14
Add: gains from changes of fair value(Loss is listed with ―-‖)
Investment gain(Loss is listed with ―-‖)
30
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Including: Investment gains on affiliated Company and joint venture
III. Operating profits (Loss is listed with ―-‖) 2,014,611.54 2,908,355.09
Add: Non-operating income 20,094.30 164,779.00
Less: Non-operating expenditure 1,889,105.71 20.00
Including: Disposal loss on non-current liability
III. Total profit (Loss is listed with ―-‖) 145,600.13 3,073,114.09
Less: Income tax expenses -255,015.27 768,283.52
IV. Net profit (net loss is listed with ―-‖) 400,615.40 2,304,830.57
V. Earnings per share(EPS): -- --
(i) Basic Earnings per share(EPS) 0.0014 0.0081
(ii) Diluted Earnings per share(EPS) 0.0014 0.0081
VI. Other consolidated income
VII. Total consolidated income 400,615.40 2,304,830.57
Legal Representative: Li Zhongqiu Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
5. Consolidated Cash Flow Statement
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Items Current Amount Amount of the Previous Period
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services 276,036,573.06 417,965,876.17
Net increase of customer deposit and interbank deposit
Net increase of loan from central bank
Net increase of capital borrowed from other financial institution
Cash received from original insurance contract fee
Net cash received from reinsurance business
Net increase of insured savings and investment
Net increase of disposal of transaction financial asset
Cash received from interest, commission charge and commission
Net increase of capital borrowed
Net increase of returned business capital
Write-back of tax received 3,999.97 16,881,021.33
Other cash received concerning operating activities 10,881,179.42 20,074,140.41
31
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Subtotal of cash inflow arising from operating activities 286,921,752.45 454,921,037.91
Cash paid for purchasing commodities and receiving labor service 271,478,416.68 321,575,178.15
Net increase of customer loans and advances
Net increase of deposits in central bank and interbank
Cash paid for original insurance contract compensation
Cash paid for interest, commission charge and commission
Cash paid for bonus of guarantee slip
Cash paid to/for staff and workers 25,565,420.41 26,880,503.47
Taxes paid 5,855,226.92 6,093,709.12
Other cash paid concerning operating activities 12,580,645.64 25,503,152.26
Subtotal of cash outflow arising from operating activities 315,479,709.65 380,052,543.00
Net cash flows arising from operating activities -28,557,957.20 74,868,494.91
II. Cash flows arising from investing activities:
Cash received from recovering investment
Cash received from investment income
Net cash received from disposal of fixed, intangible and other long-term assets
Net cash received from disposal of subsidiaries and other units
Other cash received concerning investing activities
Subtotal of cash inflow from investing activities
Cash paid for purchasing fixed, intangible and other long-term assets 1,476,896.06 1,983,565.01
Cash paid for investment
Net increase of mortgaged loans
Net cash paid for obtaining subsidiaries and other units
Other cash paid concerning investing activities
Subtotal of cash outflow from investing activities 1,476,896.06 1,983,565.01
Net cash flows arising from investing activities -1,476,896.06 -1,983,565.01
III. Cash flows arising from financing activities
Cash received from absorbing investment
Including: Cash received from absorbing minority shareholders’ investment by
subsidiaries
Cash received from loans 166,842,751.16 144,728,932.31
Cash received from issuing bonds
Other cash received concerning financing activities
Subtotal of cash inflow from financing activities 166,842,751.16 144,728,932.31
32
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Cash paid for settling debts 116,810,646.02 94,907,740.34
Cash paid for dividend and profit distributing or interest paying 9,870,762.72 10,376,701.43
Including: Dividend and profit of minority shareholder paid by subsidiaries
Other cash paid concerning financing activities
Subtotal of cash outflow from financing activities 126,681,408.74 105,284,441.77
Net cash flows arising from financing activities 40,161,342.42 39,444,490.54
IV. Influence on cash and cash equivalents due to fluctuation in exchange rate -2,490,886.86 -1,903.85
V. Net increase of cash and cash equivalents 7,635,602.30 112,327,516.59
Add: Balance of cash and cash equivalents at the period -begin 112,834,841.39 141,426,712.65
VI. Balance of cash and cash equivalents at the period -end 120,470,443.69 253,754,229.24
Legal Representative: Li Zhongqiu Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
6. Cash Flow Statement of parent company
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
In RMB
Item Current Amount Amount of the Previous Period
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services 16,811,461.89 27,872,770.71
Write-back of tax received
Other cash received concerning operating activities 14,384,915.17 17,641,385.73
Subtotal of cash inflow arising from operating activities 31,196,377.06 45,514,156.44
Cash paid for purchasing commodities and receiving labor service 1,177,778.17 1,633,075.63
Cash paid to/for staff and workers 2,740,597.93 5,039,553.20
Taxes paid 3,011,607.86 3,188,605.17
Other cash paid concerning operating activities 44,744,466.91 22,332,905.98
Subtotal of cash outflow arising from operating activities 51,674,450.87 32,194,139.98
Net cash flows arising from operating activities -20,478,073.81 13,320,016.46
II. Cash flows arising from investing activities:
Cash received from recovering investment
Cash received from investment income
Net cash received from disposal of fixed, intangible and other long-term assets
Net cash received from disposal of subsidiaries and other units
Other cash received concerning investing activities
33
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
Subtotal of cash inflow from investing activities
Cash paid for purchasing fixed, intangible and other long-term assets 557,629.50 1,293,235.50
Cash paid for investment
Net cash paid for obtaining subsidiaries and other units
Other cash paid concerning investing activities
Subtotal of cash outflow from investing activities 557,629.50 1,293,235.50
Net cash flows arising from investing activities -557,629.50 -1,293,235.50
III. Cash flows arising from financing activities
Cash received from absorbing investment
Cash received from loans 26,000,000.00
Cash received from issuing bonds
Other cash received concerning financing activities
Subtotal of cash inflow from financing activities 26,000,000.00
Cash paid for settling debts 1,485,000.00 12,230,400.00
Cash paid for dividend and profit distributing or interest paying 6,276,583.74 6,265,464.86
Other cash paid concerning financing activities
Subtotal of cash outflow from financing activities 7,761,583.74 18,495,864.86
Net cash flows arising from financing activities 18,238,416.26 -18,495,864.86
IV. Influence on cash and cash equivalents due to fluctuation in exchange rate -50,969.10 -1,903.85
V. Net increase of cash and cash equivalents -2,848,256.15 -6,470,987.75
Add: Balance of cash and cash equivalents at the period –begin 10,555,114.25 26,428,341.78
VI. Balance of cash and cash equivalents at the period -end 7,706,858.10 19,957,354.03
Legal Representative: Li Zhongqiu Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
34
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
.
7. Consolidated Statement on Changes of Owners' Equity
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
Current Amount
In RMB
Current Amount
Owners' equity attributable to the parent company
Interest of
Item Paid-in Less: Reserve for Total owners’
Special Surplus minority
capital(share Capital surplus treasury general Retained profit Other equity
reserve reserve shareholders
capital) stock risks
I. Balance at the end of last year 283,161,227.00 109,496,837.33 77,391,593.25 -189,868,606.67 280,181,050.91
Add: Changes of accounting policy
Error correction of previous period
Others
II. Balance at the beginning of this year 283,161,227.00 109,496,837.33 77,391,593.25 -189,868,606.67 280,181,050.91
III. Increase/ Decrease in this year
1,967,980.43 1,967,980.43
(Decrease is listed with'"-")
(i) Net profit 1,967,980.43 1,967,980.43
(ii) Other consolidated income
Subtotal of (i)and (ii) 1,967,980.43 1,967,980.43
(III) Owners' devoted and decreased
capital
1. Owners' devoted capital
2. Amount calculated into owners' equity
paid in shares
3. Others
(IV)Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)
4. Others
(V) Carrying forward internal owners'
equity
1. Capital reserves conversed to capital
(share capital)
2. Surplus reserves conversed to capital
(share capital)
3. Remedying loss with surplus reserve
4. Others
(VI) Special reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the report period 283,161,227.00 109,496,837.33 77,391,593.25 -187,900,626.24 282,149,031.34
35
SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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Amount in last year
In RMB
Amount in last year
Owners’ equity attributable to the parent company
Interest of
Items Paid-in Less: Total owners’
Special Surplus Reserve for minority
capital(share Capital surplus treasury Retained profit Other equity
reserve reserve general risks shareholders
capital) stock
I. Balance at the end of last year 283,161,227.00 109,496,837.33 77,391,593.25 -193,110,504.37 276,939,153.21
Add: retroactive adjustment arising from
enterprise consolidation under the same
control
Add: Changes of accounting policy
Error correction of previous period
Other
II. Balance at the beginning of this year 283,161,227.00 109,496,837.33 77,391,593.25 -193,110,504.37 276,939,153.21
III. Increase/ Decrease in this year (Decrease
3,241,897.70 3,241,897.70
is listed with’‖-‖)
(i) Net profit 3,241,897.70 3,241,897.70
(II) Other consolidated income
Subtotal of (i)and (ii) 3,241,897.70 3,241,897.70
(III) Owners’ devoted and decreased capital
1. Owners’ devoted capital
2. Amount calculated into owners’ equity
paid in shares
3. Others
(IV)Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)
4. Others
(V) Carrying forward internal owners’ equity
1. Capital reserves conversed to capital (share
capital)
2. Surplus reserves conversed to capital
(share capital)
3. Remedying loss with surplus reserve
4. Others
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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( VI) Special reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the report period 283,161,227.00 109,496,837.33 77,391,593.25 -189,868,606.67 280,181,050.91
Legal Representative: Li Zhongqiu Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
8. Statement on Changes of Owners' Equity of Parent Company
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
Current Amount
In RMB
Current Amount
Paid-in
Items Less: treasury Reserve for Total owners’
capital(share Capital surplus Special reserve Surplus reserve Retained profit
stock general risks equity
capital)
I. Balance at the end of last year 283,161,227.00 109,496,837.33 77,391,593.25 -201,760,130.30 268,289,527.28
Add: Changes of accounting policy
Error correction of previous period
Other
II. Balance at the beginning of this year 283,161,227.00 109,496,837.33 77,391,593.25 -201,760,130.30 268,289,527.28
III. Increase/ Decrease in this year (Decrease is listed
400,615.40 400,615.40
with’‖-‖)
(i) Net profit 400,615.40 400,615.40
(II) Other consolidated income
Subtotal of (i)and (ii) 400,615.40 400,615.40
(III) Owners’ devoted and decreased capital
1. Owners’ devoted capital
2. Amount calculated into owners’ equity paid in
shares
3. Others
(IV)Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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4. Others
(V) Carrying forward internal owners’ equity
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with surplus reserve
4. Others
(VI) Special reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the report period 283,161,227.00 109,496,837.33 77,391,593.25 -201,359,514.90 268,690,142.68
Amount in last year
In RMB
Amount in last year
Paid-in
Item Less: treasury Reserve for Total owners’
capital(share Capital surplus Special reserve Surplus reserve Retained profit
stock general risks equity
capital)
I. Balance at the end of last year 283,161,227.00 109,496,837.33 77,391,593.25 -201,873,896.87 268,175,760.71
Add: Changes of accounting policy
Error correction of previous period
Other
II. Balance at the beginning of this year 283,161,227.00 109,496,837.33 77,391,593.25 -201,873,896.87 268,175,760.71
III. Increase/ Decrease in this year (Decrease
113,766.57 113,766.57
is listed with’‖-‖)
(i) Net profit 113,766.57 113,766.57
(II) Other consolidated income
Subtotal of (i)and (ii) 113,766.57 113,766.57
(III) Owners’ devoted and decreased capital
1. Owners’ devoted capital
2. Amount calculated into owners’ equity paid
in shares
3. Others
(IV)Profit distribution
1. Withdrawal of surplus reserves
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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2. Withdrawal of general risk provisions
3. Distribution for owners (shareholders)
4. Others
(V) Carrying forward internal owners’ equity
1. Capital reserves conversed to capital (share
capital)
2. Surplus reserves conversed to capital (share
capital)
3. Remedying loss with surplus reserve
4. Others
(VI) Special reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the report period 283,161,227.00 109,496,837.33 77,391,593.25 -201,760,130.30 268,289,527.28
Legal Representative: Li Zhongqiu Person in Charge of Accounting: Cao Li
Person in Charge of Accounting Department: Wu Aijie
III．Basic information of the Company
Shenzhen Zhongheng Hwafa Co, Ltd. (hereinafter referred to as the Company, or, in case any of its subsidiary companies is
implied, the Group; its former name was "Shenzhen Huafa Electronics Co., Ltd..) was established on Dec. 8, 1981; it is a Sino-joint
venture jointly established by Shenzhen SEG Group Co., Ltd., China Zhenhua Electronics Co., Ltd. and H.K. Luks Industrial Co.,
Ltd. In 1991, the Company was reorganized into a limited liability company, its corporate business license No. being
440301501120670; in the same year, it issued 53130000 shares of common stock, each share with a face value of 1 Yuan, the shares
including 29630000 A Shares and 23500000 B Shares. In 1992, the A shares and B shares got listed on the Shenzhen Securities
Exchange; 53130000 shares were tradable shares, and 159203000 shares were non-tradable shares.
In November 1996, H.K. Luks Industrial Co., Ltd. transferred as agreed 12% of the shares in the Company, or 25,500,000
shares, to the SEG (H.K.) Co., Ltd. That transfer was ratified by Shenzhen Securities Administration Office, and, on Mar. 5, 1997,
was registered with Shenzhen Securities Clearing Co. Ltd. After the transfer, the H.K. Luks Industrial Co., Ltd.'s shares in the
Company was reduced to 25,796,663 shares, accounting for 12.16% of the shares of the Company, and the SEG (H.K.) Co., Ltd.
holds 25,500,000 shares, or 12%, of the Company's shares.
In December 1997, the Company conducted shares allotment program, issuing extra 63,699,895 shares to all shareholders by
the ratio of 10:3 against the total 212,332,989 shares before the allotment, among which, 30,777,997 shares were alloted to domestic
corporate shareholders and 3,600,000 shares were subscribed, with the remaining 27,177,997 shares assigned to public shareholders
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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on paid basis, 15,388,998 shares were allotted to foreign corporate shareholders and 1,800,000 shares were subscribed with
13,588,998 shares abandoned, and also 9,777,900 shares allotted to public shareholders and 7,755,000 shares to domestic-listed
foreign shareholders.
In January 1998, the Company carried out the capital reserve-to-capital program for year 1996, i.e. based on the total
212,332,989 shares ended 1996, 2 shares will be increased to per 10 shares for all shareholders, and based on the total 240,701,488
shares ended 1997 after allocation, 1.764 shares will be increased to each 10 shares for all shareholders.
On January 05, 2001, upon ratification, the increased shares of the Company, totaling 6,394,438 shares, went public in
Shenzhen Stock Exchange.
On May 29, 2001, upon the approval of CSRC, the non-listed foreign capital totaling 62,462,914 shares of the Company were
transferred as listed circulating stock, marking the circulation of entire foreign capital.
On Nov. 30 and Dec. 7 of 2001, H.K. Luks Industrial Co., Ltd. reduced its B Shares in the Company by 14,158,000 shares and
14,159,000 shares respectively. By Dec. 17, 2001, the SEG (H.K.) Co., Ltd. reduced a total of 14,487,400 foreign shares in the
Company, or 5.12% of the Company's total shares.
On June 06, 2005, the Company bulletined that original shareholder SEG and China Zhenhua Group assigned the state-owned
corporate capital they held in the Company totaling 124,920,000 shares to Wuhan Zhongheng New Tech Industry Group Co., Ltd.
(Wuhan Zhongheng for short), which was ratified by the State-owned Assets Committee, the State Ministry of Commerce and CSRC
with relevant assignment procedures completed on April 11, 2007.
On November 13, 2006, the Board of Shareholders of the Company passed the Equity Division Reform Program of Shenzhen
Huafa Electronics Co., Ltd. In line the program, Wuhan Zhongheng Group carried out assets reorganization to the Company,
including bestowing assets and integrating industries covered by the Company, also paying 1.5 shares as consideration for per 10
shares to all A-share shareholders enrolled as at the equity registration day for the program, totaling 8,435,934 shares which may be
tradable since the first business day after the implementation of the program. On May 17, 2007, the Company had completed the
equity division reform program, and the consideration shares had been at market to circulate on May 18, 2007. The Company also
had completed the equity division reform program with ceding procedures for bestowed assets completed in 2007.
As of June 30, 2013, the aggregate shares of the Company are 28,316,000 shares, among which, restricted shares total to
116,489,894 shares, accounting for 41.14% of total shares, and unrestricted shares total to 166,671,333 shares, accounting for
58.86% of total shares. Among the unrestricted shares, there are 64,675,497 A shares and 101,995,836 B shares, accounting for
22.84% and 36.02% of total shares respectively.
The business scope: manufacturing & operating each kind of color TV, LCD monitor, LCD screen (subject to branch offices),
hi-fi equipment, digital watch, TV game player and computer as well as auxiliary circuit boards, precise injection moulding ware,
light packing materials (manufacturing & operating in Wuhan), hardware (including molds), electroplate and solder stick, real estate
development and operation (ref. S.F.D.C.No. 7226760), property management. Establishing affiliate companies in Wuhan and Jilin,
branch offices in each capital city (excluding Lhasa) and cities directly under jurisdiction of the Central Government.
Main business is processing and selling of precision injection parts; processing and selling of liquid crystal display; processing,
selling of light packaging materials and property leasing business.The Company is registered at Block 411, Huafabei Road, Futian
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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District, Shenzhen Cty; legal representative is Li Zhongqiu.
Controlling shareholder of the company is Wuhan Zhongheng Group, and the shareholders meeting is its agency of power,
which executes the decision right on material matter such as operation guildlines, funding, investment and profit distribution. Board
of directors shall answer for shareholders meeting, which implements operation and decision right of the company according to laws;
Managers take charge for organizing and executing the decisions made in shareholders meeting and board of directors meeting, as
well as presiding the production and operation management work of the company. The functional management departments include
Enterprise Planning Department, Financial Department, Comprehensive Management Department, Business Center, Video Business
Department, Circuit Panel Business Department, Plastic Injection Business Department, Auditing Department, Office of Board of
Directors etc., the branches include Wuhan branch etc., and subsidiaries mainly include Shenzhen Huafa Property Lease Management
Co., Ltd. (hereinafter referred to as Huafa Lease Company), Shenzhen Zhongheng Huafa Property Management Co., Ltd. (hereinafter
referred to as Huafa Property Company), and Wuhan Hengfa Scientific and Technology Co., Ltd. (hereinafter referred to as Hengfa
Technology Company), Wuhan Zhongheng Huafa Trade Co.,Ltd.(hereinafter referred to as Huafa Trade Company) etc.
IV. Main accounting policies, accounting estimates and previous errors
1. Basis of Preparation of Financial Statements
The Group's financial statements were prepared on the basis of the actual transactions or businesses occurred in its continuous
operation according to the Enterprise Accounting Principle promulgated by the Ministry of Finance and according to the "important
accounting policies and accounting evaluation and financial statement preparation methods".
2. Statement regarding Following Business Accounting Standards
The Financial Statement prepared by the Group complies with the requirements of Business Accounting Standards, and reflect
such information regarding enterprise financial situation, operation result and cash flows, etc. on the factual and complete basis.
3. Accounting Period
The accounting period of the Group is from each 01 January to 31 December in the Gregorian calendar.
4. Standard Currency
RMB is adopted as standard currency by the Group.
5．Accounting processes of business mergers under the same control and those not under the same control
（1）Business mergers under the same control
In a business combination under the same control, the assets and liabilities that the combining party obtains in a business
combination shall be measured on the basis of their carrying amount in the combined party on the combining date. The additional
paid-in capital shall be adjusted according to the balance between the carrying amount of the net assets obtained by the combining
party and the carrying amount of the consideration paid by it; if the additional paid-in capital is not sufficient to be offset, the retained
earnings shall be adjusted.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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（2）Business mergers not under the same control
In a business combination not under the same control, the combination costs shall be the fair values, on the acquisition date, of
the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on the
acquiree. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net
assets it obtains from the acquiree as good will; if the combination costs are less than the fair value of the identifiable net assets it
obtains from the acquiree, it shall record the balance into the profits and losses of the current period after reexamination.
6. Preparation of Consolidated Financial Statement
（1）Preparation of Consolidated Financial Statement
The Group has prepared for the Consolidated Financial Statement in line with the Business Accounting Standards No.33-
Consolidated Financial Statement and its relevant regulations, with all key internal trades and transactions within the scope of
consolidation offset. Among the shareholders equity of subsidiaries, the part that does not belong to the parent company shall be
presented under shareholders equity as minority interest in the consolidated financial statement.
Where the accounting policy or accounting period adopted by subsidiaries and the Company is inconsistent, it shall make
necessary adjustment on subsidiaries’ financial statements according to the accounting policy or accounting period adopted by the
Company when prepare consolidated financial statement.
As to the subsidiary acquired through business combination not under the same control, when prepare consolidated financial
statement, it shall make adjustment on individual financial statement based on the fair value of the net assets recognized on the
purchasing day; As to the subsidiary acquired through business combination under the same control, it will be regarded existing since
the begin of the year of the current period of combination, and its assets, liabilities, operating results and cash flows will be included
into the consolidated financial statement based on its original carrying value since the begin of the year of the current period of
combination.
7. Determination criteria of cash and cash equivalents
The cash referred to in the Cash Flow Statement of the Group means stocked cash and deposit available for payment at any
time. The cash equivalents therein refer to investment due within 3 months since purchasing day, strong fluidity, small risk in value
variation and easy to converted into cash of predictable sum.
8. Conversion in foreign currency transactions and Conversion of foreign currency statements
（1）Conversion in foreign currency transactions
Foreign currency amount of the group’s foreign currency business is converted into Renminbi amount in accordance with
market exchange rate published by the People’s Bank of China at the beginning of the current month. At the reporting day of Balance
Sheet, the monetary assets in foreign currencies are translated at the instant exchange rate of the reporting day of Balance sheet. As to
the exchange loss and profit occurred, except for that of special loan for the purchase or production of assets which meet the
conditions of capitalization, which shall be treated according to the principles of capitalization, others shall be accrued into loss and
profit in current term. Those non-monetary assets measured by fair value are translated into RMB at the instant exchange rate of the
recognizing day of fair value, with translation different occurred accrued into loss and profit in current term as change of fair value.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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Those non-monetary foreign assets measured by history cost, shall still be translated at the instant exchange rate of the day when
business occurred, and shall not change the amount of RMB.
（2）Conversion of foreign-currency financial statement
Assets and debt items in foreign-currency balance shall be converted with spot rate on the date of balance sheet; ownership
items except “undistributed profit” shall be converted according to spot rate; income and fee item in profit statement shall be
converted according to market exchange rate issued by People’s Bank of China at the beginning of the month when transaction is
made. Converted differences incurred in conversion of foreign-currency statement shall be independently listed under owner benefit
item. Foreign-currency cash flow adopts in conversion market exchange rate issued by People’s Bank of China at the beginning of
the month when cash flow is incurred. Change amount due to influence from change of exchange rate to cash shall be listed
independently in cash flow sheet.
9. Financial instruments
（1）Classification of financial instruments
Based on investment purpose and economic substance, the group classifies its financial assets into 4 major classes: financial
assets measured at fair value with changes included into current profits and losses, held to maturity investments, loans and
receivables, and financial assets available for sale.
Financial assets measured at fair value with changes included into current profits and losses refer to the financial assets held for
the main purpose of selling in short term, which is listed as held for trading financial assets in Balance Sheet.
Held to maturity investments refer to non-derivative financial assets with fixed maturity, fixed recoverable amount or that can
be confirmed, or that the management has clear intention and capacity to hold to maturity.
Loans and receivables refer to non-derivative financial assets having no quote in active market, fixed recoverable amount or
that can be confirmed.
Financial assets available for sale including non-derivative financial assets defined to be available for sale upon initial
confirmation and financial assets having been classified as other assets.
（2）Confirmation basis and measurement methods of financial instruments
Financial assets will be confirmed as per fair value in Balance Sheet when the group becoming one party of the financial
instrument contract. Relevant trading fees occurred at the time of obtaining financial assets measured at fair value with changes
included into current profits and losses will be included in current profits and losses, while those of other financial assets will be
included into initially confirmed amount.
Financial assets measured at fair value with changes included into current profits and losses and financial assets available for
sale will be measured subsequently at fair value. Loans and receivables, as well as held to maturity investments will be listed as
amortized cost calculated by effective interest method.
Changes in the fair value of financial assets measured at fair value with changes included into current profits and losses will be
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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included into profits and losses on the changes in fair value; interests or cash dividends gained during asset-holding period will be
confirmed as investment income; at time of disposal, the balance between its fair value and initial recorded amount will be confirmed
as investment gains and losses, and the profits and losses on changes in fair value will be adjusted at the same time.
Except for the exchange gains and losses generated via impairment losses and foreign currency financial assets, changes in the
fair value of financial assets available for sale will be directly included into shareholders' equity, and till the time of confirming that
financial asset finally, the accumulated amount of changes in fair value directly included into equity will be transferred to current
profits and losses. Interest of available-for- sale debt instruments in its holding period will be calculated by effective interest method,
and, together with the cash dividends related to the available-for- sale debt instruments declared to issue by investee unit will be
included into current profits and losses.
（3）Confirmation basis and measurement methods for transfer of financial assets
Financial assets meeting one of the following conditions shall be confirmed for termination: ①Contractual rights of charging
the cash flow of that financial asset are terminated; ② The financial asset has been transferred, and the group has transferred all
risks and returns on the ownership of that financial asset to the other party; ③The financial asset has been transferred, and the group
has given up its control over that financial asset although it neither transfers nor retains almost all risks and returns on the ownership
of that financial asset.
In case the enterprise neither transfers nor retains almost all risks and returns on the ownership of or hasn’t given up its control
over that financial asset, relevant financial asset shall be confirmed as per the degree of financial assets it transferred as it further
involves, and relevant liabilities shall also be confirmed correspondingly. The degree of financial assets it transferred as it further
involves refers to the risk level facing by enterprise due to changes in the value of financial assets.
For overall transfer of financial assets meeting termination confirming conditions, the balance between the book value of
transferred financial assets and the total accumulative amount of consideration received due to transfer and changes in fair value of
other consolidated income previously included will be included in current profits and losses.
For partial transfer of financial assets meeting termination confirming conditions, the book value of transferred financial assets
will be apportioned as per relative fair value respectively between the part confirming termination and the part unconfirmed; and the
balance among the total accumulative amount of consideration received due to transfer and previously included changes in fair value
of other consolidated income being apportioned to the part confirming termination, as well as the foresaid apportioned book value
shall be included in current profits and losses.
（4）Termination confirming conditions of financial assets
Financial liabilities of the group are classified into financial liabilities measured at fair value with changes included into
current profits and losses and other financial liabilities upon initial confirmation.
Financial liabilities measured at fair value with changes included into current profits and losses include trading financial
liabilities and those defined as financial liabilities measured at fair value with changes included into current profits and losses upon
initial confirmation, which will be measured subsequently at fair value, and the profits and losses formed due to changes in fair value
as well as the dividends and interest expenses related to that financial liability shall be included in current profits and losses.
Other financial liabilities will be measured subsequently as per amortized cost calculated by effective interest method.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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In case the current obligation of financial liabilities is entirely or partially dissolved, the dissolved part of that financial liability
or obligation shall be confirmed for termination. Balance between the book value of the part confirmed termination and the
consideration paid shall be included into current profits and losses.
（5）Confirmation method of the fair value of financial assets and financial liabilities
For financial instruments existing in active mark, the quote prices in that active market will be used for confirming its fair
value. In active market, financial assets already held or financial liabilities to be born by the group will take the current offering price
as fair vale of corresponding assets or liabilities; financial assets to be bought or financial liabilities already born by the group will
take the current asking price as fair vale of corresponding assets or liabilities. For financial assets or financial liabilities without
current offering and asking prices, if there are no important changes to the recent economic environment after trading day, the market
price of the latest transaction shall be adjusted referring to the current price or interest rate of similar financial assets or financial
liabilities, so as to confirm the fair value of that financial assets or financial liabilities. For those the group has enough evidence to
proof that the market price of the latest transaction is not fair value, the market price of the latest transaction shall be appropriately
adjusted so as to confirm the fain value of that financial assets or financial liabilities.
For financial instruments not existing in active mark, the fair value shall be confirmed by valuation techniques which including
taking reference of the used price in the latest marketing transaction of each party that being familiar with and willing to trade, taking
reference of the current fair value of other financial assets with the same substance, discounted cash flow method, and Option Pricing
Model and so on.
（6）Impairment test method and impairment provision accrual method of financial assets (excluding
receivables)
Except for financial assets measured at fair value with changes included into current profits and losses, the group checks the
book value of other financial assets upon the date of balance sheet; if there are objective evidences proofing that a financial asset is
impaired, withdraw impairment provision.
In impairment incurred to financial assets measured at amortized cost, impairment provision shall be withdrawn as per the
balance between the current value of estimated future cash flow (excluding future credit losses that have not yet occurred) and the
book value. If there are objective evidences proofing that the value of that financial assets has been recovered, and it is related to the
affairs occurred after confirming that losses, the originally confirmed impairment losses shall be returned and included into current
profits and losses.
In the fair value of financial assets available for sale is greatly or non-temporarily declining, the accumulative losses previously
included into shareholder’s equity and formed due to decline of fair value shall be transferred and included into impairment losses.
For available-for- sale debt instruments with impairment losses already confirmed, if the fair value rises after expiration and it is
objectively related to the affairs occurred after confirming the original impairment losses, the previously confirmed impairment
losses shall be transferred and included into impairment losses. For available-for- sale debt instruments with impairment losses
already confirmed, the fair value rises after expiration shall be directly included into shareholder’s equity.
（7）For undue held -to-maturity investments reclassified as financial assets available for sale, intention of
holding or evidence for changes in abilities shall be defined
a. The duration of holding the financial asset is uncertain；
b. The financial asset will be sold upon occurrence of changes in market interest rates, changes in liquidity needs, changes in
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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alternative investment opportunities and other investment yield, changes in financing sources and conditions, changes in foreign
currency exchange risk and so on;
c Issuer of the financial asset can pay off at the amount obviously lower than its amortized cost;
d. No financial resources that can be used to continuously provide financial support for that financial asset investment so as to
ensure holding to maturity of the financial asset;
e. Restriction of laws and administrative regulations makes it difficult for enterprise to hold the financial asset to maturity;
f. Other conditions indicate that the enterprise has no intention or ability to hold the financial asset with fixed duration to
maturity.
10. Recognition criteria and accrual method of bad debt reserves for account receivables
（1）Bad debt reserves for account receivables with major individual amount
Judgment criteria or amount standard of material specific amount or Non-connected party amount with specific amount exceeding
amount criteria 500 thousand yuan is viewed as material accounts receivable
Provision bad debt preparation in accordance with the
Provision method with material specific amount and provision of
difference of present value of future cash flow below the
specific bad debt preparation
book value
（2）Accounts receivable with bad debt preparation provisioned in accordance with portfolio
Provision method with
Combination name provisioning bad debt in The evidence of confirming portfolio
accordance with portfolio
Classify portfolio with aging of accounts receivable as credit risk
Aging portfolio Aging analysis method
character
Bad debt reserve accrued by aging analysis method in the combination
√ Applicable □ Inapplicable
Accrual proportion of account
Account ageing Accrual proportion of other receivables (%)
receivables (%)
≤ 1 year 0% 0%
1-2 year (s) 5% 5%
2-3 year (s) 10% 10%
Over 3 years 30% 30%
3-4 year (s) 30% 30%
4-5 year (s) 30% 30%
Over 5 years 100% 100%
Bad debt reserve accrued by balance percentage method in the combination
□ Applicable √ Inapplicable
Bad debt reserve accrued by other method in the combination
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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□ Applicable √ Inapplicable
（3）Accounts receivable that were not significant but have been provisioned bad debt preparation
separately
Reason of specific bad debt preparation Accounts receivable with non-material specific amount and being not able to reflect
provision its risk character by provisioning bad debt preparation in accordance with portfolio
Provision method of bad debt preparation Bad debt preparation will be provisioned
Provision method of bad debt preparation in accordance with the difference of present value of its future cash flow below its
book value.
11. Inventories
（1）Classification of inventory
Inventories of the Group includes raw materials, product in progress, goods in stock, turnover material, Self-made semi-finished
product and consigned processing material, etc..。
（2）Valuation method of delivered inventory
Valuation method: first-in first-out method
Purchasing is priced at the actual cost; procurement or delivery of inventory shall be made by adopting first-in-first-out method
to confirm the actual cost. Low-value consuming goods and packing materials are amortized by one-off write-off method.
（3）Determination basis of net realizable value of inventory and accrual method of inventory falling price
reserve
The provisions for inventories depreciation shall be drawn against the predicted uncollectible cost caused by inventories
damage, part or entire out-of-fashion or selling price lower than cost. The provisions depreciation of finished products and large bulk
of raw materials shall be drawn against the excess part between the cost of single inventory item and its net realizable value. The
provisions depreciation of the other raw and auxiliary materials with various kinds and low unit price shall be drawn as per category.
For such stocked goods directly for sales as products in stocks, products in progress and materials for sales, their net realizable
value shall be recognized after deducting the estimated sales expenses and relevant taxes from estimated sales price of such
inventories. For stocked materials for production use, their net realizable value shall be recognized after deducting estimated cost
occurring at completion, sales expenses and relevant tax from estimated sales price of products to be manufactured.
（4）Inventory system
Inventory system: perpetual inventory system
（5）Amortization method of low value consumables and packages
Low-value consuming products
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Amortization method: one-off amortization method
Packages
Amortization method: one-off amortization method
12. Long-term Equity Investment
（1）Determination of investment cost
Long-term equity investment mainly includes the equity investment held by the Group that may produce control, joint control or
significant influence over invested entity, and the equity investment that does not have control, joint control or significant influence
on the invested entry, and has no offer in active market and its fair value cannot be reliably measured. If the long-term equity
investment is acquired via business merger under the same control, it shall, on the day of merger, regard the share of the carrying
amount of the owner's equity of the merged enterprise as the cost of the long-term equity investment. As for the long-term equity
investment acquired via business merger under different control, the merger cost shall be, shall be the fair values, on the merger
(acquiring) date, of the assets given, the liabilities incurred or assumed, and the equity securities issued by the acquirer, in exchange
for the control of the merged (acquired) enterprise, which will be, on the merger (acquiring) date, further regarded as the initial
investment cost of long-term equity investment. Apart from the aforesaid long-term equity investment acquired through business
merger, those long-term equity investment, if acquiring through paying cash, shall consider its purchasing price actually paid as the
investment cost, if acquired by issuing equity securities, shall consider the fair value of issuing equity securities as the investment
cost; if invested by investors, shall consider the value agreed in the investment contract or agreement as the investment cost; if
acquiring from debt reorganization or non-monetary assets exchange, shall confirm the investment cost according to the regulation of
relevant accounting rule.
（2）Subsequent measurement and profit and loss recognition
The investment of the Group to its subsidiaries shall be calculated through cost method and shall be adjusted through equity
method in the Financial Statement; the investment to its associated companies shall be calculated through equity method; For the
long-term equity investment without any control, joint control or serious influence for which there is no offer in the active market and
of which the fair value cannot be reliably measured, the Group adopts cost method to calculate it; For the long-term equity
investment without any control, joint control or serious influence for which there is offer in the active market and of which the fair
value can be reliably measured, the Group shall calculate it under the entry of ―Financial Assets for Sales‖ When adopting a cost
method to calculate, long-term shareholding investment will be calculated cost in accordance with its initial investment cost, and the
cost of long-term shareholding investment will be adjusted at the time of adding or recovering investment. When adopting an equity
method, current period investment profit/loss shall be the share of net profit/loss realized in the current year of the invested
organization that shall be enjoyed or burdened. When confirming the share of net profit/loss of the invested organization that shall be
enjoyed, based on a foundation of the fair value of various identifiable assets of the invested organization at the time of obtaining
investment, according to accounting policies and accounting period of the group, the portion belonging to the investing company
shall be calculated in accordance with the company’s accounting policies after offsetting internal transaction profit/loss incurred
with collective-owned enterprises and joint-owned enterprises, and the invested organization’s net profit will be confirmed after
adjustment. For shareholding investment in collective-owned enterprises and joint-owned enterprises already held before the first
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execution date, if there is shareholding investment debit difference in relation to this investment, the shareholding investment debit
difference shall be deducted in accordance with straight-line amortization of the remaining period to confirm investment profit/loss.
The group no longer possesses joint control or significant influence over the invested organization due to reasons such as reducing
investment, and for which there is no price quotation in the active market and the fair value can not be reliably measured, the group
will change to a cost method to calculate; for long-term shareholding investment that the group can implement control over the
invested organization due to reasons such as increasing investment, the group will also change to a cost method to calculate; for
long-term investment that the group can implement joint control or significant influence over the invested organization but can not
implement control due to reasons such as increasing investment, or the group no longer possesses control over the invested
organization but can implement joint control or significant influence over the invested organization due to reasons such as disposing
investment, the group will change to an equity method to calculate. For long-term shareholding investment disposal, the difference
between its book value and the actual obtained amount value shall be recorded into current period investment profit. For long-term
shareholding investment calculated with an equity method, if it is recorded into owners’ equity due to other changes of owners equity
except for the net profit/loss of the invested organization, the group will transfer the original portion which has been recorded into
owners’ equity into current period investment profit at the time of disposing this investment.
（3）Determination basis of common control and significant influence on the invested unit
Common control means the shared control on certain economic activity according to contract provisions. Determination basis
of common control mainly includes any partner can’t separately control the production operations of a joint enterprise, decision
making involving basic business operations of joint enterprise is subject to the consensus of all partners, etc. Significant influence
means a partner has the right to participate in the decision making on the financial and business policies of the invested unit, but is
unentitled to control or control the formulation of such policies together with other parties. Determination basis of significant
influence mainly includes the group directly or via a subsidiary indirectly owns the invested unit’s voting power share of not less than
20% but below 50%, nevertheless, if any clear evidence shows the disqualification for participating in the decision making on the
production operations of the invested unit, such share can’t form significant influence.
(4) Impairment test method and impairment reserve accrual method
The Group has, on each reporting day of Balance Sheet, checked the long-term equity investment, fixed assets, project in
progress and intangible assets, etc.. In case of any of the following circumstances, possible impairment has occurred to assets. We
will conduct impairment test at each year end over good will and those intangible assets without fixed beneficiary term. If difficult to
test the recoverable amount of a single asset item, the test may be applied to the asset group or combined asset group containing such
asset. After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference
shall be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after
being recognized. The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the
disposal expenses, and the current value of the expected future cash flow of the asset, whichever is higher. The following
circumstances may constitute a sign of possible asset impairment: a. The current market price of an asset declines drastically, and the
price drop is obviously higher than the expected drop over time or due to the normal use; b. The economic, technological or legal
environment in which the enterprise conducts its business operations, or the market where an asset is situated has or will have any
significant change in the current period or in the near future, and thus has or will have an adverse impact on the enterprise; c. The
market interest rate or any other market investment return rate has risen in the current period, and the enterprise' calculation of
capitalization rate of the current value of the expected future cash flow of the asset is affected and thus leads to a big fall in the
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recoverable amount of asset; d. Any evidence shows that an asset has become obsolete or it has been damaged substantially; e. An asset
has been or will be left unused, or the use of an asset has been or will be terminated, or an asset has been or will be disposed of ahead of
schedule; f. Any evidence in the internal report of the enterprise shows that the economic performances of an asset has been or will be
lower than the expected performances, for example, the net cash flow created by an asset or business profit (or loss) realized (incurred)
an asset is lower (higher) than the excepted amount, etc.; g. Other evidence that indicates that an asset impairment has probably
occurred.
13. Property of Investment
Property of investment of the Group includes the right to use any land which has already been rented; the right to use any land
which is held and prepared for transfer after appreciation; the right to use any houses & building which has already been rented.
Property of investment is priced as per its cost. The cost of purchased property of investment includes purchasing payment,
relevant taxes and other expenditures which may be directly ascribed to such assets. The cost of building such property of investment
is composed of all necessary expenditures occurred prior to that such property has reached the projected service status.
The Company adopts cost mode to follow measurement of property of investment, for which, depreciation or amortization
composite life method applied will be drawn aiming to the building and land-use right against the predictable service life and net
salvage value. The following shows the net salvage value and annual depreciation (amortization) rate:
Type Depreciation Term Expected Salvage Rate Annual Depreciation Rate
(Year) (%) (%)
Land-use Right 50 10.00% 1.80%
Houses & Buildings 5—50 10.00% 1.80%—18.00%
In case the property of investment is taken for self-use, such property shall be recorded as fixed assets or intangible assets since
the date of taking. If the self-use property is taken for rent or capital appreciating, such fixed assets or intangible assets shall be
recorded as property of investment since the date of taking. For such recording, the book value before it shall be taken as the
recording value after that.
If the property of investment is disposed of, or if it withdraws permanently from use and if no economic benefit will be obtained
from the disposal, the recognition of it as property of investment shall be terminated. Such revenues of disposal of the property of
investment as sales, transfer, discard, or being damaged or destroyed, after deducting the book value of such property as well as the
relevant taxes, shall be accrued into the current profits and losses.
14. Fixed Assets
（1）Recognition conditions of fixed assets
Fixed assets of the Group refer to the tangible assets that simultaneously possess the following features. They are held for the
sake of producing commodities, rendering labor service, renting or business management; their useful life is in excess of one fiscal
year; and unit value has exceeded 2,000 Yuan.
（2）Recognition basis and valuation method of financial lease fixed assets
Fixed Assets include houses & buildings, machinery equipment, mould equipment, transport equipment, apparatus equipment,
tooling equipment and office equipment. Fixed assets shall be measured at their cost, among which, the cost of a purchased fixed
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asset includes the purchase price, import duties and relevant taxes as well as other disbursements that bring the fixed asset to the
expected conditions for use and that may be attributed to the fixed asset; the cost of self-constructed fixed assets shall be formed by
the necessary disbursements incurred for bringing the asset to the expected conditions for use. The cost put into fixed assets by the
investor shall be determined according to the value as stipulated in the investment contract or agreement, with the exception of those
of unfair value as is stipulated in the contract or agreement. The costs of fixed assets acquired through financial leasing shall be
determined at an amount equal to the fair value of the leased asset or the present value of the minimum lease payments, whichever is
lower. The subsequent disbursement relevant to fixed assets mainly composes of repair expense, renovation expense etc., where the
expenses meet the condition to be recognized as fixed assets, it shall be accrued into cost of fixed assets; for the substituted part, its
book value shall be terminating from recognition; where it does not meet the condition to be recognized as fixed assets, it shall be
accrued into current loss and profit at occurring.
（3）Depreciation methods of various fixed assets
The Group shall draw previsions for all fixed assets except for those having fully drawn provisions and under normal service as
well as the land recorded separately. It adopts computing life method to draw depreciation and is included in the cost of the relevant
assets or in the expenses in current term in accordance with the purposes of the fixed assets.
Type Depreciation Term (Year) Rate of salvage value (%) Annual Depreciation Rate (%)
Houses & buildings 20-50 Years 10%
Machinery equipment 10 Years 10% 9%
Transport equipment 5 Years 10% 18%
Apparatus equipment 5 Years 10% 18%
Tooling equipment 5 Years 10% 18%
Office equipment 5 Years 10% 18%
Mould equipment 3 Years 10% 30%
（4）Impairment test method and impairment reserve accrual method of fixed assets
The Group has, on each reporting day of Balance Sheet, checked the long-term equity investment, fixed assets, project in
progress and intangible assets, etc... In case of any of the following circumstances, possible impairment has occurred to assets. We
will conduct impairment test at each year end over good will and those intangible assets without fixed beneficiary term. If difficult to
test the recoverable amount of a single asset item, the test may be applied to the asset group or combined asset group containing such
asset.
After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference shall
be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after
being recognized. The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the
disposal expenses, and the current value of the expected future cash flow of the asset, whichever is higher.
The following circumstances may constitute a sign of possible asset impairment:
(1) The current market price of an asset declines drastically, and the price drop is obviously higher than the expected drop over
time or due to the normal use;
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(2) The economic, technological or legal environment in which the enterprise conducts its business operations, or the market
where an asset is situated has or will have any significant change in the current period or in the near future, and thus has or will have
an adverse impact on the enterprise;
(3) The market interest rate or any other market investment return rate has risen in the current period, and the enterprise'
calculation of capitalization rate of the current value of the expected future cash flow of the asset is affected and thus leads to a big
fall in the recoverable amount of asset;
(4) Any evidence shows that an asset has become obsolete or it has been damaged substantially;
(5) An asset has been or will be left unused, or the use of an asset has been or will be terminated, or an asset has been or will be
disposed of ahead of schedule;
(6) Any evidence in the internal report of the enterprise shows that the economic performances of an asset has been or will be
lower than the expected performances, for example, the net cash flow created by an asset or business profit (or loss) realized (incurred)
an asset is lower (higher) than the excepted amount, etc.;
(7) Other evidence that indicates that an asset impairment has probably occurred.
（5）Other explanations
The Group will, at the end of each year, have a check on the useful life, estimated net residue value, and the depreciation method
of the fixed assets, and if there is any change, it will be treated as the change of accounting estimation.
Where the fixed asset is in a state of disposal or unable to generate any economic benefits through use or disposal as expected,
the recognition of it as a fixed asset shall be terminated. When an enterprise sells, transfers or discards any fixed asset, or when any
fixed asset of an enterprise is damaged or destroyed, the Company shall deduct the book value and relevant taxes from the disposal
income through disposal, transfer, discard or being damaged or destroyed, and then include the remaining in the current profits and
losses.
15. Project in Process
（1）Type of construction in progress
Project in process shall be measured at the actual cost. The self-operating project shall be measured in line with direct materials,
direct salary and direct construction expenses, etc.; The out-contracted project shall be measured in line with project price payable,
etc.; Equipment installation project shall determine its cost as per the occurring disbursements as equipment value, installation charge
and project trial running, etc. The cost of project in progress also includes borrowing costs to be capitalized and exchange loss and
profit.
（2）Criteria and time point for transfer of construction in progress into fixed asset
Since the day when project in process reaching the expected service status, carry over the estimated value of the project to fixed
assets in line with project budget, construction cost or actual cost, etc. with depreciation drawn since the preceding month. After the
completion procedures have been completed, an adjustment shall be made to the difference of original fixed assets value.
（3）Impairment test method and impairment reserve accrual method of construction in progress
The Group has, on each reporting day of Balance Sheet, checked the long-term equity investment, fixed assets, project in
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progress and intangible assets, etc.. In case of any of the following circumstances, possible impairment has occurred to assets. We
will conduct impairment test at each year end over good will and those intangible assets without fixed beneficiary term. If difficult to
test the recoverable amount of a single asset item, the test may be applied to the asset group or combined asset group containing such
asset.
After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference
shall be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after
being recognized. The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the
disposal expenses, and the current value of the expected future cash flow of the asset, whichever is higher.
The following circumstances may constitute a sign of possible asset impairment:
a. The current market price of an asset declines drastically, and the price drop is obviously higher than the expected drop over
time or due to the normal use;
b. The economic, technological or legal environment in which the enterprise conducts its business operations, or the market
where an asset is situated has or will have any significant change in the current period or in the near future, and thus has or will have
an adverse impact on the enterprise;
c. The market interest rate or any other market investment return rate has risen in the current period, and the enterprise'
calculation of capitalization rate of the current value of the expected future cash flow of the asset is affected and thus leads to a big
fall in the recoverable amount of asset;
d. Any evidence shows that an asset has become obsolete or it has been damaged substantially;
e. An asset has been or will be left unused, or the use of an asset has been or will be terminated, or an asset has been or will be
disposed of ahead of schedule;
f. Any evidence in the internal report of the enterprise shows that the economic performances of an asset has been or will be lower
than the expected performances, for example, the net cash flow created by an asset or business profit (or loss) realized (incurred) an
asset is lower (higher) than the excepted amount, etc.;
g. Other evidence that indicates that an asset impairment has probably occurred.
16. Borrowing Costs
（1）Recognition principle of capitalization of borrowing cost
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary
expenses, and exchange balance on foreign currency borrowings. The borrowing costs incurred to an enterprise that can be directly
attributable to the acquisition and construction or production of assets eligible for capitalization, shall be capitalized after the asset
disbursements have already incurred, the borrowing costs have already incurred, and the acquisition and construction or production
activities which are necessary to prepare the asset for its intended use or sale have already started; When the qualified asset under
acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be
ceased. The remaining borrowing costs shall be recognized as expenses.
（2）Capitalization period of borrowing cost
Asset qualified for the capitalization conditions refers to the fixed assets, property of investment and inventory which must
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spend long term (usually above 1 year) to purchase, build or produce before reaching expected service or sales status.
（3）Capitalization suspension period
Where the acquisition or construction of assets that meet the capitalization conditions is interrupted abnormally for more than 3
consecutive months, such borrowing costs shall be suspended capitalizing till the acquisition or construction of the asset restarts.
（4）Calculation method of capitalized amount of borrowing cost
As for specifically borrowed loans, the to-be-capitalized amount of interests shall be determined in light of the actual cost
incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a
deposit in the bank or as a temporary investment. As for the general borrowing; for ordinary borrowings, the capitalized amount is
determined by multiplying the capitalization rate of ordinary borrowings by the weighted average of the accumulative asset
expenditure in excess of the special borrowings.
17. Intangible Assets
（1）Valuation method of intangible assets
The major intangible assets of the Group include land-use right, patented technologies and non-patented technologies, etc., and
shall be measured according to the actual cost when acquired. The acquired intangible assets shall be recorded as per actual price and
relevant other disbursements. The intangible assets invested by investors shall be priced as per the value agreed in investment
contract or agreement, with the exception of those of unfair value as is stipulated in such contract or agreement.
（2）Estimate of service life of intangible assets with a limited service life
The land-use right shall be averagely amortized based on its useful years since the beginning date of use; the patented
technologies, non-patented technologies and other intangible assets will be averagely amortized by installments depending the
shortest one among predicted service years, benefiting years set out in the contract and legal effective years. The amortized amount
shall be accrued into relevant assets cost and current loss and profit as per their beneficiary objects.
（3）Judgment basis of intangible assets with an uncertain service life
The estimated life of and amortization method for the intangible assets with limited life is to be reviewed at the end of every
financial year. In case of any change, it will be handled as accounting estimate change. It shall also check the service life of
intangible assets with uncertain service life during each accounting period, where there are evidences to prove the intangible assets
have limited service life, it shall be estimated of its service life, and be amortized within such estimated life.
（4）Accrual of impairment reserve for intangible assets
The Group has, on each reporting day of Balance Sheet, checked the long-term equity investment, fixed assets, project in
progress and intangible assets, etc.. In case of any of the following circumstances, possible impairment has occurred to assets. We
will conduct impairment test at each year end over good will and those intangible assets without fixed beneficiary term. If difficult to
test the recoverable amount of a single asset item, the test may be applied to the asset group or combined asset group containing such
asset.
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After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference
shall be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after
being recognized. The recoverable amount shall be determined according to the net amount of the fair value of an asset minus the
disposal expenses, and the current value of the expected future cash flow of the asset, whichever is higher.
The following circumstances may constitute a sign of possible asset impairment:
a. The current market price of an asset declines drastically, and the price drop is obviously higher than the expected drop over
time or due to the normal use;
b. The economic, technological or legal environment in which the enterprise conducts its business operations, or the market
where an asset is situated has or will have any significant change in the current period or in the near future, and thus has or will have
an adverse impact on the enterprise;
c. The market interest rate or any other market investment return rate has risen in the current period, and the enterprise'
calculation of capitalization rate of the current value of the expected future cash flow of the asset is affected and thus leads to a big
fall in the recoverable amount of asset;
d. Any evidence shows that an asset has become obsolete or it has been damaged substantially;
e. An asset has been or will be left unused, or the use of an asset has been or will be terminated, or an asset has been or will be
disposed of ahead of schedule;
f. Any evidence in the internal report of the enterprise shows that the economic performances of an asset has been or will be
lower than the expected performances, for example, the net cash flow created by an asset or business profit (or loss) realized (incurred)
an asset is lower (higher) than the excepted amount, etc.;
g. Other evidence that indicates that an asset impairment has probably occurred.
（5）Criteria for division of R&D stages of internal R&D projects
The expenses occurred in the development process and meet the following conditions are determined as intangible assets:
a. In respect of the technology, it is feasible to finish the intangible asset for use or sale;
b. It is intended to finish and use or sell the intangible asset;
c. There is a potential market for the products manufactured by applying this intangible asset or that there is a potential market
for the intangible asset itself;
d. With the support of sufficient technologies, financial resources and other resources, it is able to finish the development of the
intangible asset, and it is able to use or sell the intangible asset;
e. The disbursements attributable to the development of the intangible asset can be reliably measured.
（6）Accounting of expenditures for internal R&D projects
The expenditures for its internal research and development projects of the Company shall be classified into research
expenditures and development expenditures depending on the project property and the degree of uncertainty of the intangible assets
finally brought out. The expenses occurred in research process is determined as profit or loss of the period;
The development disbursement not meeting the above conditions will be accrued into current loss and profit at occurring. The
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development disbursement accrued into loss and profit in previous term will not be recognized as assets as term thereafter. The
development disbursement capitalized will be presented as ―Development Disbursement‖ in the Balance Sheet and then be brought
forward to intangible assets since such project has reached the expected service status.
18. Long-term Deferred Expenses
The group’s long term deferred expense refers to expenses such as decoration expense of houses and constructions and
decoration expense of rented office sites with amortization period of above one year(excluding one year) that should be undertaken in
the current period and various periods later, such expenses shall be amortized averagely during the beneficial period. Where the
long-term deferred expenses will not benefit the later accounting period, the remaining amount to-be-amortized shall be recorded into
the loss or profits of current period.
19. Predictable Liabilities
（1）Recognition criteria of estimated liabilities
In case all the obligations in relation to such contingent items as external guaranty, suspensive lawsuit or arbitration, product
quality guarantee, staff cutback plan, loss contract, restructuring obligation and fixed assets discarding obligation, etc. comply with
the following conditions simultaneously, the Group will recognize them as liabilities. Such obligations are constant burdened by the
Group; the execution of such obligations will possibly result in the outflowing of economic benefit from the Group; the amount of
such obligations can be reliably measured.
（2）Measuring method of estimated liabilities
The predictable liabilities shall be initially measured as per the best estimated amount to be paid for executing relevant instant
obligations in combination with such factors as risk, uncertainty and time value of money regarding contingent issues. If the time
value of money exerts serious effect, the best estimated amount shall be determined through discounting relevant cash outflows in the
future. On the date of Balance Sheet, the Company shall double check the book value of predictable liabilities and make adjustment
to it so as to reflect the best estimated amount at present.
20. Share-based payment and equity instrument
（1）Type of share-based payment
The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments.
（2）Determination method of fair value of equity instrument
Equity Instruments refer to the contract which may proves holding all remain equity of the Company after deducting all
liabilities. During business combination, the transactional expenses for issuing the equity instrument by combining party offset the
premium revenue of equity instruments, if it is not enough to offset, reduce the reserve profits. Other equity instruments, the
consideration received at issuing will increase shareholder’s equity after deducting transactional expenses. The consideration and
transactional expenses paid for purchasing back the equity instruments will decrease shareholder’s equity. It will not recognize profits
and losses when issuing, purchasing back, selling or writing off the equity instruments.
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The distribution (excluding dividend) to the party who owns the equity instrument by the Company shall decrease shareholder’s
equity. The Company does not recognize the change of fair value of equity instruments.
（3）Recognition basis of optimal estimate of vested equity instrument
On every balance sheet date in the waiting period, optimal estimate is made according to the latest acquired change of number of
vested employees and other subsequent information, and then number of estimated vested equity instruments is corrected accordingly.
（4）Accounting processes related to implementation, modification and termination of share-based
payment plan
a. Implementation of share-based payment
Where share-based payment adopting equity settlement changes for employee’s service, its measurement accords with the fair
value of equity instrument granted to the employee. Where share-based payment adopting equity settlement is immediately vested
after granting to change for employee’s service, it is recorded in related cost or expense according to the fair value of equity
instrument on the grant date, and capital surplus is increased accordingly. Where share-based payment adopting equity settlement
can’t be vested to change for employee’s service until service in waiting period is finished or specified performance condition is met,
on every balance sheet date in the waiting period, on the basis of the optimal estimate of number of vested equity instruments, the
service acquired in current period is recorded in related cost or expense and capital surplus according to the fair value on the grant
date of equity instrument. On a balance sheet date, where subsequent information shows the number of vested equity instruments is
different from previous estimate, adjustment is made, and such number is adjusted to the number of actually vested equity
instruments on the vesting date. For share-based payment taking specified service period as vesting condition, its waiting period is
from grant date to vesting date; for share-based payment taking specified performance as vesting condition, the length of waiting
period is estimated according to the most possible performance result on the grant date. After the vesting date, the enterprise doesn’t
adjust recognized total amount of related cost or expense or owner’s equity any more.
Where share-based payment adopting equity settlement changes for the service of other parties, the accounting process shall be
pertinent to the circumstances as follows:
Where the fair value of other party’s service can be reliably measured, such service is recorded in related cost or expense
according to its fair value on the acquisition date of service, and owner’s equity is increased accordingly. Where the fair value of
other party’s service can’t be reliably measured, but that of equity instrument can be reliably measured, such service is recorded in
related cost or expense according to the fair value of equity instrument on the acquisition date of service, and owner’s equity is
increased accordingly. On the exercise date, the enterprise calculates and determines the amount that shall be transferred to paid-in
capital or capital stock according to the number of actually exercised equity instruments, and transfers it to paid-in capital or capital
stock.
Share-based payment adopting cash settlement
The measurement accords with the fair value of liabilities borne by the enterprise and determined through the calculation based
on share or other equity instruments. Where share-based payment adopting cash settlement is immediately vested after granting, it’s
recorded in related cost or expense as per the fair value of liabilities borne by the enterprise on the grant date, and liabilities are
increased accordingly. Where share-based payment adopting cash settlement can’t be vested until service in waiting period is
finished or specified performance condition is met, on every balance sheet date in the waiting period, the service acquired in current
period is recorded in cost or expense and relevant liability according to the amount of fair value of liabilities borne by the enterprise
and based on the optimal estimate of vesting condition. On a balance sheet date, where subsequent information shows the fair value
of liabilities borne by the enterprise is different form previous estimate, adjustment is made, and such adjustment is to the actually
vested level on the vesting date. The enterprise remeasures the fair value of liabilities and record its change in current profit and loss
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on every balance sheet date before related liability settlement and the settlement date.
b. Modification of share-based payment
Where modification increases the fair value of granted equity instrument, acquired service is increased accordingly. Where
modification occurs in the waiting period, the recognition of fair value of service acquired from modification date to the vesting date
after modification includes both the service amount determined on the basis of fair value of original equity instrument on its grant
date in the remaining of original waiting period and the increment of fair value of equity instrument. Where modification occurs after
the vesting date, the increase of fair value of equity instrument is recognized immediately. If share-based payment agreement requires
that an employee can acquire modified equity instrument only if longer time service is finished, increase of fair value of equity
instrument is recognized in the whole waiting period. Where modification increases the number of granted equity instruments, the
fair value of increased equity instrument is recognized as increment of acquired service accordingly. If modification occurs in the
waiting period, the recognition of fair value of service acquired from modification date to the vesting date of increased equity
instrument includes both the service amount determined on the basis of fair value of original equity instrument on its grant date in the
remaining of original waiting period and the increment of fair value of equity instrument. If vesting condition is modified in a way
favorable for employees, e.g. shortening of waiting period, modification or cancellation of performance condition (rather than market
condition), when vesting condition is processed, post-modification vesting condition is considered. Where modification decreases the
fair value of granted equity instrument, the amount of acquired service is recognized still on the basis of the fair value of equity
instrument on its grant date, regardless of decrement of fair value of equity instrument. Where modification decreases the number of
granted equity instruments, the decrement is viewed as cancellation of relevant granted equity instruments. Where vesting condition
is modified in a way unfavorable for employees, e.g. extension of waiting period, increase or modification of performance condition
(rather than market condition), post-modification vesting condition isn’t taken into account when processing vesting condition.
c. Termination of share-based payment
Cancellation or settlement is viewed as accelerated vesting, and the amount that should be recognized in the remaining of
original waiting period is immediately recognized. All payments to an employee at the time of cancellation or settlement shall be
viewed as equity repurchase, the excess of repurchase cost above the equity instrument’s fair value on the repurchase date is recorded
in current expenses. Where new equity instrument is granted to an employee, and it’s recognized that the new equity instrument
replaces for the cancelled one on the grant date of the new one, the enterprise processes the granted substitute equity instrument in a
way the same as that for processing the modification of original equity instrument provision and condition. Where the enterprise
purchases an employee’s vested equity instrument, owner’s equity is debited, and the excess of repurchase cost above the equity
instrument’s fair value on the repurchase date is recorded in current expenses.
21. Repurchase of shares of the company
22．Income
（1）Judgment criteria for recognition time of sales income
When the Group has transferred the significant risks and rewards of ownership of the goods to the buyer; the Group retains
neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; The
relevant amount of revenue can be measured in a reliable way; The relevant economic benefits may flow into the enterprise; The
relevant costs incurred or to be incurred can be measured in a reliable way, it may recognize the realization of revenue.
（2）Recognition basis of income from transfer of right to use asset
The revenue from abalienating of right to use assets may be recognized on the condition that the relevant economic benefits are
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likely to flow into the Company and the amount of revenues can be measured in a reliable way.
（3）Recognition basis of service income
When total revenue and total cost from labor service can be measured in a reliable way; the relevant economic benefits are
likely to flow into the enterprise; the schedule of completion under the transaction can be confirmed in a reliable way; it may
recognize the realization of revenue from labor service.
（4）Determination basis and method of degree of completion of contract for the recognition of service
income and construction contract income by completion percentage method
On the date of Balance Sheet, where the result of a transaction concerning the providing of labor service can be measured in a
reliably way, it shall recognize relevant revenue according to the schedule of completion; Percentage of completion is the percentage
of incurred costs in the total costs; where the result of a transaction concerning the providing of labor service cannot be measured in a
reliably way and the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor services
shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost of labor services shall be
carried forward at the same amount; where the result of a transaction concerning the providing of labor service cannot be measured in
a reliably way and the cost of labor services incurred is not expected to compensate, the cost incurred should be included in the
current profits and losses, and no revenue from the providing of labor services may be recognized.
23. Government Grants
（1）Type
The government grant may be recognized on the condition that the Group complies with the conditions for the government grant
and that the Group can receive the government grant. If a government grant is a monetary asset, it shall be measured on the basis of
the amount received, or that receivable if such grant is appropriated as fixed quota standard. If a government grant is a non-monetary
asset, it shall be measured at its fair value, or at its nominal amount (1 Yuan) if its fair value cannot be obtained reliably.
（2）Accounting process
A government grant pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the
relevant assets, and included in the current profits and losses. The government grant pertinent to incomes, if used for compensating
the related future expenses or losses of the Company, shall be recognized as deferred income and shall included in the current profits
and losses during the period when the relevant expenses are recognized; or if used for compensating the related expenses or losses
incurred to the Company, shall be directly included in the current profits and losses.
24. Deferred Income Tax Assets & Deferred Income Tax Liabilities
（1）Recognition basis of deferred income tax assets
The group’s deferred income tax assets are recognized through the calculation of the balance between the tax base of assets and
liabilities and their book value (deductible temporary difference) Deductible loss and tax deduction that can write off taxable income
in future fiscal year according to provisions of tax law are viewed as temporary difference and recognized as relevant deferred
income tax assets. On a balance sheet date, deferred income tax assets are measured according to the tax rate applicable to the
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expected recovery of the assets. The Company shall recognize the deferred income tax assets arising from a deductible temporary
difference to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the
deductible temporary difference. For the determined deferred income tax assets, if it is unlikely to obtain sufficient taxable income to
offset against the benefit of the deferred income tax asset, the carrying amount of the deferred income tax assets shall be written
down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will be
available.
（2）Recognition basis of deferred income tax liabilities
The group’s deferred income tax liabilities are recognized through the calculation of the balance between the tax base of assets
and liabilities and their book value (taxable temporary difference). Deferred income tax liabilities are measured according to
applicable tax rate of the expected payoff period of such liability on the balance sheet date.
25. Operating lease and financial lease
（1）Accounting process of operating lease
Operating lease refers to a lease other than a financing lease. Where the Group is lessee, the rents shall be recorded in the
relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the lease term.
Where the Group is lessor, the rents shall be recorded in the profits and losses of the current period by using the straight-line method
over each period of the lease term.
（2）Accounting process of financial lease
Financing lease refers to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset.
On the lease beginning date, the Group as lessee shall record the lower one of the fair value of the leased asset and the present value
of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the
minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the
recorded amount of the leased asset and the long-term account payable as unrecognized financing charges.
26. Held assets on sale
（1）Recognition criteria of held assets on sale
Noncurrent assets meeting the following conditions synchronously are recognized as held assets on sale: I. A resolution has
been made on the proposal of the noncurrent asset; II. An irrevocable transfer agreement has been signed with the transferee; III. The
transfer will be finished within 1 year.
Intangible assets and other noncurrent assets meeting the conditions of held assets on sale are processed on the principle above.
But such assets exclude deferred income tax assets, financial assets specified in Accounting Standards for Enterprises
No.22–Recognition and Measurement of Financial Instruments, investment real estates and biological assets measured by fair value
and contractual rights arising from insurance contract.
（2）Accounting process of held assets on sale
Such assets are transferred out of noncurrent assets and viewed as current assets, their accrual of depreciation or amortization
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are stopped, and they are measured according to the lower one between book value and fair value minus selling expense. The excess
of book value than fair value minus selling expense is recorded in current profit and loss.
27. Changes in significant accounting policies and accounting estimates
Whether there are any changes in the significant accounting policies and accounting estimates in this reporting period?
□ Yes √ No
（1）Changes in significant accounting policies
Whether there are any changes in the significant accounting policies in this reporting period?
□ Yes √ No
（2）Changes in accounting estimates
Whether there are any changes in the significant accounting estimates in this reporting period?
□ Yes √ No
28. Correction of previous accounting errors
Whether there are any previous accounting errors found in this reporting period?
□ Yes √ No
（1）Retroactive restatement method
Whether there are any changes in previous accounting errors by retroactive restatement method found in this reporting period?
□ Yes √ No
（2）Prospective recognition method
Whether there are any changes in previous accounting errors by prospective recognition method found in this reporting period?
□ Yes √ No
V. Taxes
1. Main tax types and rates
Tax type Tax basis Tax rate
VAT Sales amount of commodities for the home market 17%
Business Tax Turnover of taxable service 5%
Urban Maintenance & Construction Tax Circulating tax payable 7%
Enterprise Income Tax Corporate taxable income 25%
Income tax rate executed by every branch company or factory
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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a. Enterprise Income Tax
For the Company and its subsidiary Huafa Lease Company, former applicable enterprise income tax rate was 15%. According
to the regulation of Enterprise Income Tax Law of the People's Republic of China put in force from January 1, 2008, the enterprise
income tax rate will gradually transit to 25% from 2008 to 2012, and that in this year is 25%
For the Company's Wuhan Branch, subsidiary Huafa Property Company and Hengfa Technology Company, Huafa Trade
Company the enterprise income tax rate is 25%.
b. VAT
VAT is applied to the sales of goods of the Group, among which, the input VAT rate of domestically-sold goods is 17%.
The input VAT paid for purchasing raw materials, etc. may offset against output VAT at the rate of 17%, among which, the
input VAT paid for import may be refunded upon application.
VAT payable refers to the balance after deduction between the output VAT and input VAT at current term.
c. Business Tax
The applicable tax rate of business tax of the Company is 5%.
d. Urban Construction Tax & Educational Surcharge
Tax calculation basis of the company’s urban construction tax and surtax for education expense shall be based on payable
turnover tax, applicable tax rate is 7% and 3% respectively.
e. Property Tax
The Company applies 70% of original value of properties as tax basis with the rate of 1.2%.
VI. Business Merger and Consolidated Financial Stateent
1. Conditions of subsidiary
Subsidiaries mainly include Shenzhen Huafa Property Lease Management Co., Ltd. (hereinafter referred to as "Huafa Lease
Company"), Shenzhen Zhongheng Huafa Property Management Co., Ltd. (hereinafter referred to as "Huafa Property Company"), and
Wuhan Hengfa Scientific and Technology Co., Ltd. (hereinafter referred to as "Hengfa Technology Company"), Wuhan Zhongheng
Huafa Trade Co.,Ltd.(hereinafter referred to as ―Huafa Trade Company‖) etc.
（1）Subsidiaries acquired by means of foundation, investment, etc.
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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Unit: RMB
Amount of
Materially The balance produced by subtracting
minority
Actual constitutes the the parent company's equities from the
Share Proportion of Statements are interests for
Full name of Type of Registered Business Registered investment balance of other Minority loss of the period shared by the minority
Business Scope proportion voting rights consolidated or setting off
subsidiary subsidiary Address Nature Capital amount at the items of the net Interests shareholders of the company in excess
（%） （%） not minority
end of period investment in of the theirs in equities of the subsidiary
shareholders
subsidiary at the beginning of the subsidiary
profits or losses
Company of Lease and
Huafa Lease Property
limited Shenzhen 1000000.00 management of 600,000.00 60% 60% Yes
Company Management
liabilities self-owned property
Huafa Company of Lease and
Property
Property limited Shenzhen 1000000.00 management of 1,000,000.00 100% 100% Yes
Management
Company liabilities self-owned property
R&D, production
Hengfa Company of
Production and and selling and
Technology limited Wuhan 18,1643100 181,643,100.00 100% 100% Yes
Sale import and export
Company liabilities
business of product
Selling, goods
Company of import and export
Huafa Trade
limited Wuhan Sale 100000.00 business of 100,000.00 100% 100% Yes
Company
liabilities optoelectronic
products
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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VII、Note to Major Items in the Consolidated Financial Statement
1. Monetary Fund
Unit: RMB
Amount at the end of period Amount at the beginning of period
Items In foreign Exchange In foreign Exchange
In RMB In RMB
currency Rate currency Rate
Cash -- -- 710,507.18 -- -- 272,718.79
RMB -- -- 530,161.30 -- -- 263,662.92
HKD 99,030.75 0.796 78,842.34 134.43 0.81 109.08
USD 16,422.93 6.181 101,503.54 1,422.45 6.29 8,946.79
Bank Deposit -- -- 119,759,936.51 -- -- 99,975,784.63
RMB -- -- 93,921,794.38 -- -- 93,759,499.42
HKD 114,405.92 0.796 91,083.13 114,406.00 0.81% 92,834.71
USD 4,165,851.17 6.181 25,747,059.00 974,110.57 6.29% 6,123,450.50
Other Monetary Fund -- -- 0.00 -- -- 12,586,337.97
RMB -- -- 0.00 -- -- 12,586,337.97
Total -- -- 120,470,443.69 -- -- 112,834,841.39
2. Notes Receivable
（1）Classification of bills receivable
Unit: RMB
Type Amount at the end of period Amount at the beginning of period
Bank acceptance bill 35,613,538.31 40,215,239.33
Commercial Acceptance Bill 1,305,240.56 2,784,978.48
Total 36,918,778.87 43,000,217.81
（2）Bills receivable already pledged at the end of period
Unit: RMB
Issuer Issuing Date Due Date Amount Note
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Jan. 15, 2013 Jul. 15 ,2013 3,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Feb. 17, 2013 Aug. 17, 2013 3,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Feb. 17, 2013 Aug. 17, 2013 1,000,000.00
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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Qingdao Hai’er Spare Parts Procurement Co., Ltd. Feb. 17, 2013 Aug. 17, 2013 1,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Feb. 17, 2013 Aug. 18, 2013 1,000,000.00
Hefei Haier Logistics Co.,Ltd. Mar. 7, 2013 Sep. 7, 2013 565,274.81
TCL Air-conditioner (Wuhan) Co., Ltd. Mar. 15, 2013 Sep. 15, 2013 400,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Mar. 15, 2013 Sep. 15, 2013 1,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Mar. 15, 2013 Sep. 15, 2013 1,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Mar. 15, 2013 Sep. 15, 2013 1,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Mar. 15, 2013 Sep. 15, 2013 1,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Mar. 15, 2013 Sep. 15, 2013 4,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Mar. 15, 2013 Sep. 15, 2013 1,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Mar. 15, 2013 Sep. 15, 2013 492,217.61
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Apr. 15, 2013 Oct. 15, 2013 1,319,027.53
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Jun. 17, 2013 Dec. 17, 2013 453,915.11
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Jun. 17, 2013 Dec. 17, 2013 4,000,000.00
Qingdao Hai’er Spare Parts Procurement Co., Ltd. Jul. 2 ,2013 Aug. 18, 2013 1,000,000.00
Total -- -- 26,230,435.06 --
3. Notes Receivable
（1）Disclosure of accounts receivable according to type
Unit: RMB
Amount at the end of period Amount at the beginning of period
Type Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Amount Proportion (%) Amount Proportion (%) Amount Proportion (%) Amount Proportion (%)
Accounts receivable with
significant specific amount that
6,424,462.96 4.27% 4,982,771.64 47.15% 7,630,192.43 4.41% 6,208,097.79 54.28%
were provisioned bad debt
preparation separately
Other receivables with accrual of bad debt reserve according to combination
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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Within 1 year 137,952,780.23 91.78% 160,021,795.01
1-2 year (s) 94,252.98 0.06% 4,712.65 0.04% 94,252.98 5% 4,712.65 0.04%
2-3 year (s) 5,021.50 10% 502.15
Over 3years 356,396.87 0.24% 106,919.06 1.01% 356,396.87 30% 106,919.06 0.93%
Subtotal of combination 138,403,430.08 111,631.71 160,472,444.86 92.64% 111,631.71 0.07%
Accounts receivable that were
not significant but have been
5,473,119.53 3.64% 5,473,119.53 51.79% 5,116,838.00 2.95% 5,116,838.00 44.74%
provisioned bad debt
preparation separately
Total 150,301,012.57 -- 10,567,522.88 -- 173,219,475.29 -- 11,436,567.50 --
Description of types of other receivables
Other receivables with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Provision for Bad
Content of accounts receivable Book balance Percent Drawn（%） Reason of provision
Debts
Shenzhen Boteman Bowling Club Co., Ltd. 2,555,374.75 2,555,374.75 100% Can not be taken back
H. K. Haowei Industry Co., Ltd. 1,870,887.18 448,792.54 24% Can not be taken back
TCL Wangpai Electric Appliance (Huizhou) Co., Ltd. 1,325,431.75 1,325,431.75 100% Can not be taken back
Skyworth Multimedia(Shenzhen) Co.,Ltd. 672,769.28 653,172.60 97% Can not be taken back
Total 6,424,462.96 4,982,771.64 -- --
Accounts receivable with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable □ Inapplicable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Book balance Book balance
Account ageing Provision for Bad Provision for Bad
Proportion Proportion
Amount Debts Amount Debts
(%) (%)
Within 1 year
Among it： -- -- -- -- -- --
Subtotal within 1 year 137,952,780.23 160,021,795.01
1-2 year (s) 94,252.98 5% 4,712.65 94,252.98 5% 4,712.65
Over 3years 356,396.87 30% 106,919.06 356,396.87 30% 106,919.06
Total 138,403,430.08 -- 111,631.71 160,472,444.86 -- 111,631.71
Accounts receivable with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
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Accounts receivable with accrual of bad debt reserve by other method in the combination
□ Applicable √ Inapplicable
Accounts receivable without major individual amount but with separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of accounts receivable Book balance Provision for Bad Debts Percent Drawn（%） Reason of provision
Shenzhen Huixin Video Science and Technology
381,168.96 381,168.96 100% Account age over 5 years
Co.,Ltd.
Qingdao Hai’er Spare Parts Procurement Co., Ltd. 356,281.53 356,281.53 100% Can not be taken back
Shenzhen Wandial Number Science and
351,813.70 351,813.70 100% Account age over 5 years
Technology Co.,Ltd.
Shenzhen Dalong Electric Co.,Ltd. 344,700.00 344,700.00 100% Account age over 5 years
Shenzhen Qunpin Electric Co.,Ltd. 304,542.95 304,542.95 100% Account age over 5 years
China Galaxy Electric(Hong Kong) Co.,Ltd. 288,261.17 288,261.17 100% Account age over 5 years
Dongguan Weite Electric Co.,Ltd. 274,399.80 274,399.80 100% Account age over 5 years
Hong Kong New Century Electric Co.,Ltd. 207,409.40 207,409.40 100% Account age over 5 years
Shenyang Beitai Electric Co.,Ltd. 203,304.02 203,304.02 100% Account age over 5 years
Bejing Xinfanweiye Science and Technology
193,000.00 193,000.00 100% Account age over 5 years
Co.,Ltd.
TCL Electric(Hong kong) Co.,Ltd. 145,087.14 145,087.14 100% Account age over 5 years
Huizhou TCL New and Special Electronics Co.,
142,707.14 142,707.14 100% Account age over 5 years
Ltd.
Shenzhen Skyworth-RGB Electric Co.,Ltd. 125,215.13 125,215.13 100% Account age over 5 years
Shenzhen Xinfa Electronics Co., Ltd. 119,094.78 119,094.78 100% Account age over 5 years
Other 2,036,133.81 2,036,133.81 100% Can not be taken back
Total 5,473,119.53 5,473,119.53 -- --
（2）Conditions of top 5 units among the amounts of accounts receivable
Unit: RMB
As a percentage in
Unit name Relation with this company Amount Years
accounts receivable (%)
Hong Kong Yutian company The same controlling shareholder 66,295,180.16 Within 1 year 44.11%
Qingdao Hai’er Spare Parts
Nonaffiliated parties 54,103,767.79 Within 1 year 36%
Procurement Co., Ltd.
Gree Electric Appliance
Nonaffiliated parties 4,674,018.56 Within 1 year 3.11%
(Wuhan) Co., Ltd
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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TCL Air-conditioner
Nonaffiliated parties 2,849,526.11 Within 1 year 1.9%
(Wuhan) Co., Ltd.
Shenzhen Boteman Bowling
Nonaffiliated parties 2,555,374.75 Over 3 years 1.7%
Club Co., Ltd.
Total -- 130,477,867.37 -- 86.82%
（3）About the accounts receivable from the related parties
Unit: RMB
As a percentage in accounts
Unit name Relation with this company Amount
receivable (%)
Hong Kong Tianyu International
The same controlling shareholder 66,295,180.16 44.11%
Investment Co.,Ltd.
Total -- 66,295,180.16 44.11%
4. Other Receivables
（1）Disclosure of other receivables according to type
Unit: RMB
Amount at the end of period Amount at the beginning of period
Type Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Amount Proportion (%) Amount Proportion (%) Amount Proportion (%) Amount Proportion (%)
Accounts receivable with
significant specific amount
10,112,441.44 46.63% 6,219,285.23 60.72% 7,404,690.78 37.39% 6,219,285.23 83.99%
that were provisioned bad
debt preparation separately
Other receivables with accrual of bad debt reserve according to combination
Within 1 year 3,162,778.11 14.58% 6,515,934.15
1-2 year (s) 628,495.27 2.9% 31,424.76 0.31% 628,495.27 5% 31,424.76
2-3 year (s) 245,400.32 1.13% 24,540.03 0.24% 245,400.32 10% 24,540.03
Over 3years 1,491,763.59 6.88% 447,529.08 4.37% 1,491,763.59 30% 447,529.08
Subtotal of combination 5,528,437.29 25.49% 503,493.87 4.92% 8,881,593.33 44.84% 503,493.87
Accounts receivable that were
not significant but have been
6,047,238.66 27.88% 3,520,048.00 34.37% 3,520,048.00 17.77% 3,520,048.00 100%
provisioned bad debt
preparation separately
Total 21,688,117.39 -- 10,242,827.10 -- 19,806,332.11 -- 10,242,827.10 --
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SHENZHEN ZHONGHENG HUAFA CO., LTD. SEMI-ANNUAL REPORT 2013
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Description of types of other receivables
Other receivables with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of other receivables Book balance Bad debts Percent Drawn（%） Cause
Shenzhen Boteman Bowling Club Co., Ltd. 4,021,734.22 4,021,734.22 100% Can not be taken back
Wanshang Youyi Department Store Co., Ltd. 1,830,727.75 182,390.20 9.96%
Zhao Baomin 939,354.00 939,354.00 100% Can not be taken back
Hubei Electric Power Company Wuhan
845,902.65
Power Supply Company
Hengfa Complex Building 760,416.01
Xu Jun 638,500.00
Traffic incident indemnity 555,785.81 555,785.81 100% Can not be taken back
Hebei Botou Court 520,021.00 520,021.00 100% Can not be taken back
Total 10,112,441.44 6,219,285.23 -- --
Other receivables with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable □ Inapplicable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account ageing Book balance Provision for Book balance Provision for Bad
Amount Proportion Bad Debts Amount Proportion Debts
Within 1 year
Among it：
Subtotal within 1 year 3,162,778.11 3,399,177.38
1-2 year (s) 628,495.27 5% 31,424.76 304,892.00 5% 15,244.60
2-3 year (s) 245,400.32 10% 24,540.03 188,786.00 10% 18,878.60
Over 3years 1,491,763.59 30% 447,529.08 1,310,977.59 30% 393,293.44
Total 5,528,437.29 -- 503,493.87 5,203,832.97 -- 427,416.64
Other receivables with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
Other receivables with accrual of bad debt reserve by other method in the combination
□ Applicable √ Inapplicable
Other receivables without major individual amount but with separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
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Unit: RMB
Content of other receivables Book balance Provision for Bad Debts Percent Drawn（%） Reason of provision
Employee canteen ect. 796,041.46 796,041.46 100% Can not be taken back
Total of individual debt and withdrawal 3,046,936.40 519,745.74 17% Can not be taken back
Trade Union 253,315.05 253,315.05 100% Can not be taken back
Chuangjing workshop 192,794.00 192,794.00 100% Can not be taken back
Weili Electric Corporation Co.,Ltd,
112,335.62 112,335.62 100% Can not be taken back
Zhangzhou City, Fujian Province
Shenzhen Lotus Island Restaurant
85,253.80 85,253.80 100% Can not be taken back
Co.,Ltd
Others 1,560,562.33 1,560,562.33 100% Can not be taken back
Total 6,047,238.66 3,520,048.00 -- --
（2）Conditions of top 5 units in the amount of other receivables
Unit: RMB
Relation with this Proportion in other
Unit name Amount Years
company receivables (%)
Shenzhen Boteman
Nonaffiliated parties 4,021,734.22 Over 3years 18.54%
Bowling Club Co., Ltd.
Wanshang Company Nonaffiliated parties 1,830,727.75 Over 3years 8.44%
Zhao Baomin Nonaffiliated parties 939,354.00 Over 3years 4.33%
Hubei Electric Power
Company Wuhan Power Nonaffiliated parties 845,902.65 Within 1 year 3.9%
Supply Company
Hengfa Complex
Nonaffiliated parties 760,416.01 Within 1 year 3.51%
Building
Total -- 8,398,134.63 -- 38.72%
5. Advance payment
（1）List of advance payments according to aging
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account ageing
Amount Proportion Amount Proportion
Within 1 year 51,045,390.75 100% 14,168,016.74 100%
Total 51,045,390.75 -- 14,168,016.74 --
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（2）Conditions of top 5 units in the amount of advance payments
Unit: RMB
Unit name Relation with this company Amount Account ageing Reason of non-settlement
The same controlling
Hengshen Photoelectric Company 30,320,701.78 Within 1 year Not to settlement period
shareholder
The same controlling
Hongkong Yutian Company 16,717,451.99 Within 1 year Not to settlement period
shareholder
China Resources Vanguard Co., Ltd. Nonaffiliated parties 630,000.00 Within 1 year Not to settlement period
Shengzhen iSolution Technologies Ltd Nonaffiliated parties 346,574.50 Within 1 year Not to settlement period
Huipu Electronic (Shenzhen) Co., Ltd. Nonaffiliated parties 293,826.15 Within 1 year Not to settlement period
Total -- 48,308,554.42 -- --
6、Inventories
（1）Type of Inventories
Unit: RMB
Amount at the end of period Amount at the beginning of period
Items Depreciation Depreciation
Book balance Book Value Book balance Book Value
Provisions Provisions
Raw Materials 28,868,220.36 4,386,909.15 24,481,311.21 27,067,307.45 4,386,909.15 22,680,398.30
Finishing Product 1,782,962.71 1,782,962.71 117,486.79 117,486.79
Stocked Goods 40,924,759.68 2,737,764.97 38,186,994.71 16,686,427.68 2,737,764.97 13,948,662.71
Turnover materials 1,167,262.24 363,236.79 804,025.45 1,402,567.61 363,236.79 1,039,330.82
Consumable
0.00
biological assets
Self-made
5,777,738.19 250,244.88 5,527,493.31 4,666,920.93 250,244.88 4,416,676.05
semi-finished product
Processed Materials
3,770,818.00 3,770,818.00 568,506.78 568,506.78
upon entrustment
Total 82,291,761.18 7,738,155.79 74,553,605.39 50,509,217.24 7,738,155.79 42,771,061.45
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（2）Provision for Depreciation of Inventories
Unit: RMB
Book balance at the Current accrual Current decrement Book balance at the
Inventory type
beginning of period amount Carryover Resale end of period
Raw Materials 4,386,909.15 4,386,909.15
Stocked Goods 2,737,764.97 2,737,764.97
Turnover materials 363,236.79 363,236.79
Self-made
250,244.88 250,244.88
semi-finished product
Total 7,738,155.79 7,738,155.79
7. Property of Investment
（1）Real property as an investment measured by cost
Unit: RMB
Book balance at the Book balance
Items Increment This Year Decrement This Year
beginning of period at the end of period
I. Total original book value 107,661,686.94 107,661,686.94
1. Houses & Buildings 107,661,686.94 107,661,686.94
II. Sum of accumulated
depreciation and 71,930,961.91 1,946,547.13 73,877,509.04
accumulated amortization
1.Houses & Buildings 71,930,961.91 1,946,547.13 73,877,509.04
III. Total net book value of
35,730,725.03 -1,946,547.13 33,784,177.90
investment real estate
1.Houses & Buildings 35,730,725.03 33,784,177.90
V. Total book value of
35,730,725.03 -1,946,547.13 33,784,177.90
investment real estate
1.Houses & Buildings 35,730,725.03 35,730,725.03
Unit: RMB
Current period
Current depreciation and amortization amount 627,378.54
Current accrual amount of impairment provision of investment real estate 0.00
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8. Fixed Assets
（1）Condition of Fixed Assets
Unit: RMB
Book balance at the Book balance at
Items Current increment Current decrement
beginning of period the end of period
I. Total original book value: 342,607,701.72 6,185,027.90 883,992.71 347,908,736.91
Among it：Houses & Buildings 217,145,765.84 217,145,765.84
Machinery Equipment 81,515,896.95 4,418,604.93 600,573.90 85,333,927.98
Means of conveyance 4,075,185.59 4,075,185.59
Office Equipment 6,285,341.28 77,698.44 6,363,039.72
Apparatus Equipment 13,807,388.74 63,589.74 13,870,978.48
Tooling Equipment 8,813,884.61 319,904.88 9,133,789.49
Mould Equipment 10,964,238.71 1,305,229.91 283,418.81 11,986,049.81
Counting and
Book balance at the Current
-- drawing In this Current decrement --
beginning of period increment
period
II. Total accumulated depreciation 136,978,919.16 7,381,142.45 179,345.16 144,180,716.45
Among it：Houses & Buildings 57,452,659.27 2,740,344.82 60,193,004.09
Machinery Equipment 46,223,871.77 2,483,678.32 142,990.47 48,564,559.62
Means of conveyance 2,482,424.40 182,722.22 2,665,146.62
Office Equipment 5,445,547.45 80,735.33 5,526,282.78
Apparatus Equipment 11,730,696.38 85,932.10 11,816,628.48
Tooling Equipment 4,600,416.97 864,358.22 5,464,775.19
Mould Equipment 9,043,302.92 943,371.44 36,354.69 9,950,319.67
Book balance at the Book balance at
-- --
beginning of period the end of period
III. Total net book value of fixed assets 205,628,782.56 -- 203,728,020.46
Among it：Houses & Buildings 159,693,106.57 -- 156,952,761.75
Machinery Equipment 35,292,025.18 -- 36,769,368.36
Means of conveyance 1,592,761.19 -- 1,410,038.97
Office Equipment 839,793.83 -- 836,756.94
Apparatus Equipment 2,076,692.36 -- 2,054,350.00
Tooling Equipment 4,213,467.64 -- 3,669,014.30
Mould Equipment 1,920,935.79 -- 2,035,730.14
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IV. Total provisions for impairment 2,885,534.22 -- 2,885,534.22
Among it：Houses & Buildings
Machinery Equipment 1,499,613.30 -- 1,499,613.30
Means of conveyance 104,388.91 -- 104,388.91
Office Equipment 72,480.11 -- 72,480.11
Apparatus Equipment 1,088,204.88 -- 1,088,204.88
Tooling Equipment 120,847.02 -- 120,847.02
Mould Equipment --
V. Total book value of fixed assets 202,743,248.34 -- 200,842,486.24
Among it：Houses & Buildings 159,693,106.57 -- 156,952,761.75
Machinery Equipment 33,792,411.88 -- 35,269,755.06
Means of conveyance 1,488,372.28 -- 1,305,650.06
Office Equipment 767,313.72 -- 764,276.83
Apparatus Equipment 988,487.48 -- 966,145.12
Tooling Equipment 4,092,620.62 -- 3,548,167.28
Mould Equipment 1,920,935.79 -- 2,035,730.14
The depreciation allowance of the current period is RMB7,381,142.45; the original price of fixed assets transferred from construction
in process in the current period is RMB 0.00.
（2）Condition of temporarily idle fixed asset
Unit: RMB
Original value of Accumulated Impairment
Items Net book value Note
book value Depreciation Provision
Machinery Equipment 10,536,246.84 8,855,113.13 1,233,761.45 447,372.26
Means of conveyance 974,141.00 876,124.50 77,380.58 20,635.92
Office Equipment 607,530.00 539,672.74 46,730.39 21,126.87
Apparatus Equipment 9,889,839.43 8,859,031.97 741,885.93 288,921.53
Tooling Equipment 906,097.99 806,627.01 64,619.55 34,851.43
Mould Equipment 8,190,427.36 7,377,235.81 813,191.55
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9. Project in Progress
（1）Condition of construction in process
Unit: RMB
Amount at the end of period Amount at the beginning of period
Items Impairment Impairment
Book balance Book Value Book balance Book Value
Provision Provision
Huafa building renovation project 654,356.00 0.00 654,356.00 654,356.00 0.00 654,356.00
Gongming Electronics Town
1,669,000.00 0.00 1,669,000.00 1,389,000.00 0.00 1,389,000.00
renovation project
Renovation project of the
247,083.59 0.00 247,083.59 0.00
infrastructure of foam factory
Total 2,570,439.59 0.00 2,570,439.59 2,043,356.00 0.00 2,043,356.00
（2）Changes in important projects in process
Unit: RMB
Including:
Proportion of Proportion of
Accumulated accumulated
Project Budget Beginning-of-p Current Transfer to project Job capitalization of Source of End-of-
Other reduction capitalization capitalization of
name amounts eriod amounts increment fixed assets investment in schedule interest in the capital period amounts
of interest interest in the
the budget (%) current period (%)
current period
Huafa
building
654,356.00 654,356.00
renovation
project
Gongming
Electronics
Town 1,389,000.00 280,000.00 1,669,000.00
renovation
project
Renovation
project of the
infrastructure 247,083.59 247,083.59
of foam
factory
Total 2,043,356.00 527,083.59 -- -- -- -- 2,570,439.59
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10. Intangible Assets
（1）Condition of intangible assets
Unit: RMB
Book balance at the Book balance at the end
Items Current increment Current decrement
beginning of period of period
I. Total original book value: 55,540,235.25 268,444.44 55,808,679.69
Land-use Right 55,187,826.36 55,187,826.36
Software cost 352,408.89 268,444.44 620,853.33
II. Total accumulated
5,002,167.45 623,385.25 5,625,552.70
amortization
Land-use Right 4,758,839.30 613,915.81 5,372,755.11
Software cost 243,328.15 9,469.44 252,797.59
III. Total net book value of
50,538,067.80 -354,940.81 50,183,126.99
intangible assets
Land-use Right 50,428,987.06 -613,915.81 49,815,071.25
Software cost 109,080.74 258,975.00 368,055.74
Land-use Right
Software cost
Total book value of
50,538,067.80 -354,940.81 50,183,126.99
intangible assets
Land-use Right 50,428,987.06 -613,915.81 49,815,071.25
Software cost 109,080.74 258,975.00 368,055.74
The amortization amount of the current period is RMB 623,385.25.
11、Long-term deferred charges
Unit: RMB
Amount at The amortization
Current Other reduction Amount at the Cause for other
Items the beginning amount of the
increment amounts end of period decrease
of period current period
Financial consulting fees
125,000.00 125,000.00 0.00
for the Construction Bank
Golf membership fee 585,933.33 37,400.04 548,533.29
Renovation expenditures 95,791.65 2,300,000.00 10,450.02 2,385,341.63
Total 806,724.98 2,300,000.00 172,850.06 2,933,874.92 --
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12、Deferred Income Tax Assets & Deferred Income Tax Liabilities
（1）Deferred income tax assets and deferred income tax liabilities not to be presented with the net amount
after offsetting
Recognized deferred income tax assets and deferred income tax liabilities
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Deferred income tax assets：
Deferred income tax assets formed by bad debts
4,414,369.37 4,631,630.52
allowance
Deferred income tax assets formed by inventory
1,898,551.15 1,898,551.15
depreciation allowance
Deferred income tax assets formed by fixed-asset
721,383.56 721,383.56
depreciation allowance
Deferred tax assets produced by estimated liabilities 829,679.95 357,403.53
Subtotal 7,863,984.03 7,608,968.76
Deferred income tax liabilities:
Deferred tax assets that have not been confirmed
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Deductible loss 34,599,230.81 34,412,217.28
Provision for bad debt impairment 3,152,872.52 3,153,172.51
Provision for Fixed Assets Impairment 143,951.20 143,951.20
Total 37,896,054.53 37,709,340.99
The deductible loss of the unrecognized deferred income tax assets will become due in the following years.
Unit: RMB
Year Amount at the end of period Amount at the beginning of period Note
2013 3,458.00 3,458.00
2014 210,527.72 210,527.72
2015 290,960.95 290,960.95
2016 556,637.59 556,637.59
2017 33,537,646.55 33,350,633.02
Total 34,599,230.81 34,412,217.28 --
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Schedule of taxable differences and deductible differences
Unit: RMB
Amount of temporary difference
Items
Amount at the end of period Amount at the beginning of period
Difference project that tax shall be paid.
Deductible difference project
Provision for bad debt impairment 17,657,477.46 18,526,222.09
Provision for Fixed Assets Impairment 7,594,204.60 7,594,204.59
Provision for Fixed Assets Impairment 2,885,534.24 2,885,534.22
Estimated liabilities 3,498,517.36 1,429,614.10
Subtotal 31,635,733.66 30,435,575.00
（2）Deferred income tax assets and deferred income tax liabilities to be presented with the net amount
after offsetting
Items making up the offset deferred income tax assets and deferred income tax liabilities
Unit: RMB
Deferred income tax Deductible or taxable Deferred income tax Deductible or taxable
assets and liabilities temporary differences assets and liabilities after temporary differences after
Items
after offset at the end of after offset at the end of offset at the beginning of offset at the beginning of the
the reporting period the reporting period the reporting period reporting period
Deferred income tax assets 7,863,984.03 7,608,968.76
13. Schedule of provisions for impairment of assets
Unit: RMB
Book balance at the Current decrement Book balance at
Items Current increment
beginning of period Carryover Resale the end of period
I. Provision for Bad Debts 21,679,394.60 869,044.62 20,810,349.98
II. Provision for Depreciation
7,738,155.79 7,738,155.79
of Inventories
VII. Provision for Fixed
2,885,534.22 2,885,534.22
Assets Impairment
IV. Provisions for impairment
0.00 0.00
of construction in process
Total 32,303,084.61 869,044.62 31,434,039.99
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14. Short-term Borrowings
（1）Classification of Short-term Borrowings
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Pledged loan 33,649,895.00
Mortgage Loan 50,000,000.00 75,794,745.00
Guaranteed loan 90,280,678.40
Credit loan 25,365,000.00 250,000.00
Total 165,645,678.40 109,694,640.00
15. Notes Payable
Unit: RMB
Type Amount at the end of period Amount at the beginning of period
Bank acceptance bill 30,299,234.71 34,511,327.39
Total 30,299,234.71 34,511,327.39
Amounts to be matured at the next accounting period will be RMB 6958420.34.
16. Accounts Payable
（1）Condition of accounts payable
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Within 1 year 36,828,586.78 38,677,487.67
Over 1year 10,017,351.75 10,275,428.20
Total 46,845,938.53 48,952,915.87
（2）Description of significant accounts payable with account age exceeding one year
Large amount of payables aged over 1 year are mainly payables of the company’s PCB Division stopped running already and
payables of the Original Shenzhen Video Division that has been transferred into operation of the subsidiary – Hengfa Technologies
Company.
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17. Advance receipts
（1）Conditions of advance receipts
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Among it：Over 1year 1,110,445.49 764,493.92
Total 1,110,445.49 764,493.92
（2）Description of significant accounts advance receipts with account age exceeding one year
Large amount of payables aged over 1 year are mainly unpaid goods payment of suppliers left from the original industrial
business, and the suppliers fail to settle with the group timely.
18. Salary Payable to Employees
Unit: RMB
Book balance at the Book balance
Items Current increment Current decrement
beginning of period at the end of period
I. Salary, bonus, allowance & subsidies 3,756,905.54 17,718,207.73 18,607,113.24 2,868,000.03
II. Staff Welfare Treatment Fund 113,000.00 2,101,327.64 2,101,327.64 113,000.00
III. Social Insurance Premium 42,943.65 1,834,781.40 1,847,860.24 29,864.81
Among it: Medical insurance premium 20,981.62 367,764.55 385,937.21 2,808.96
Basic retirement insurance premium -7,779.97 1,262,541.27 1,257,447.45 -2,686.15
Unemployment Insurance Premium 23,896.00 142,905.83 142,905.83 23,896.00
Industrial Injury Insurance Premium 5,846.00 28,846.58 28,846.58 5,846.00
Birth Insurance Premium 32,723.17 32,723.17 0.00
IIII. Public Housing Fund 24,310.00 438,950.60 440,218.62 23,041.98
V. Termination benefits 0.00 0.00 0.00
VI. Others 672,029.72 0.00 133,655.49 538,374.23
Total 4,609,188.91 22,093,267.37 23,130,175.23 3,572,281.05
Those amounts in arrears among the payrolls payable is RMB 0.00.
Union funds and employee education expenses is RMB538, 374.23, amounts of non-monetary benefits is RMB 0, and compensations
for terminating the labor relation is RMB 112,483.50.
Arrangements such as expected payment time and amounts of the payrolls payable. Monthly payment based on actual situation
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19. Taxes Payable
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
VAT -315,304.63 4,339,120.74
Consumption Tax 0.00
Business Tax 1,150,941.67 1,090,583.21
Enterprise Income Tax 8,491,995.99 10,271,431.90
Personal Income Tax 10,841.26 65,991.03
Urban Maintenance & Construction Tax 18,811.65 17,085.57
Property Tax 535,245.54 535,244.94
Land use tax 271,015.66 155,516.59
Educational Surcharge 9,093.03 6,986.60
Price adjustment funds 0.00 8,479.42
Education costs (local) attached 5,494.28 4,303.72
Others 7,779.50
Total 10,178,134.45 16,502,523.22
20. Other accounts Payables
（1）Conditions of other accounts payable
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Within 1 year 19,521,392.88 11,066,321.01
Over 1year 6,058,053.15 10,214,218.64
Total 25,579,446.03 21,280,539.65
21. Estimated liabilities
Unit: RMB
Amount at the beginning Amount at the end of
Items Current increment Current decrement
of period period
Pending legal action 1,429,614.10 2,362,203.26 473,097.55 3,318,719.81
Total 1,429,614.10 2,362,203.26 473,097.55 3,318,719.81
Description of estimated liabilities. See ―Contingencies‖ for details
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22. Long-term borrowings
（1）Classification of long-term borrowings
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
Mortgage Loan 163,018,800.00 163,718,800.00
Total 163,018,800.00 163,718,800.00
Description of classification of long-term borrowings
On Mar. 12, 2009, the Company borrowed 230,000,000 Yuan from China Construction Bank Shangbu branch (contract
referenced JIE 2009 SHANG 0181008R) with a term of 7 years from Mar. 12, 2009 to Mar. 11, 2016, and with a floating interest rate.
According to the contract, the 20th of every month is interest payment date. The contract stipulates that, with the second, third and
fourth floors (property ownership No.: SHEN FANG DI ZI NOS. 3000522977, 3000522975 and 3000522976) of the Huafa Mansion
mortgaged, 140,000,000 Yuan borrowing is made on Mar. 12, 2009, with the 1st, 5th and 6th floors (property ownership certificate
No: SHEN FANG DI CHAN NO. 3000503696, 3000503720, 3000511945) of the Mansion mortgaged, 90,000,000 borrowings is
made on Apr. 3, 2009, where 140,000,000 Yuan is to be repaid by constant-principal method, 90,000,000 Yuan is to be repaid by
monthly-interest method, wherein full payment is to be made when due.
（2）Top five long-term borrowings
Unit: RMB
Amount at the beginning of
Amount at the end of period
period
Borrower Starting date Ending date Currency Interest rate (%)
In foreign Amount of In foreign Amount of
currency foreign currency currency foreign currency
China Construction
Mar.12, 2009 Mar. 11, 2016 RMB 6.55% 73,018,800.00 73,718,800.00
Bank Shangbu branch
China Construction
Mar.12, 2009 Mar. 11, 2016 RMB 6.55% 90,000,000.00 90,000,000.00
Bank Shangbu branch
Total -- -- 163,018,800.00 -- 163,718,800.00
23. Capital Stock
Unit: RMB
Amount at the Increase and decrease of change in the current period (+, -)
Amount at the
beginning of Sharetransferofpublic
Issuingnewshares Donatehare Others Total end of period
period accumulation fund
Total shares 283,161,227.00 283,161,227.00
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24. Capital Reserves
Unit: RMB
Items Amount at the beginning of period Current increment Current decrement Amount at the end of period
Capital premium (Shares Premium) 96,501,903.02 96,501,903.02
Other Capital Reserves 12,994,934.31 12,994,934.31
Total 109,496,837.33 109,496,837.33
25. Surplus Reserves
Unit: RMB
Amount at the Amount at the end of
Items Current increment Current decrement
beginning of period period
Statutory Surplus Reserves 21,322,617.25 21,322,617.25
Any Surplus Reserves 56,068,976.00 56,068,976.00
Total 77,391,593.25 77,391,593.25
26. Undistributed profits
Unit: RMB
Items Amount Proportion retained or distributed
Beginning-of-year undistributed profits after adjustment -189,868,606.67 --
End-of-period undistributed profits -187,900,626.24 --
Schedule of beginning-of-year undistributed profits:
1) Influence over the beginning-of-year undistributed profits RMB 0.00 due to retroactive adjustment of Accounting Standards for
Business Enterprises and relevant new provisions;
2) Influence over the beginning-of-year undistributed profits RMB 0.00 due to change in the accounting policy;
3) Influence over the beginning-of-year undistributed profits RMB 0.00 due to change in significant accounting errors;
4) Influence over the beginning-of-year undistributed profits RMB 0.00 due to change of consolidated range caused by business
merger of the same control;
5) Influence over the beginning-of-year undistributed profits RMB 0.00 due to other adjustments.
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27. Business Revenues & Business Cost
（1）Business Revenues & Business Cost
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Revenues from Major Business 284,004,581.24 360,369,143.18
Revenues from Other Business 18,728,242.18 23,148,155.37
Business revenues 263,513,507.38 336,861,526.85
（2）Main Businesses(By industries)
Unit: RMB
Accruals of the current period Accruals of the previous period
Products
Business revenues Business cost Business revenues Business cost
Display 133,537,646.59 128,492,605.17 228,931,374.36 219,869,406.77
Injection moulded pieces 113,391,058.85 100,752,264.75 97,981,143.65 87,147,320.47
Foamed pieces 37,075,875.80 31,514,478.13 33,456,625.17 27,879,111.12
Total 284,004,581.24 260,759,348.05 360,369,143.18 334,895,838.36
（3）Main Businesses(By products)
Unit: RMB
Accruals of the current period Accruals of the previous period
Product name
Business revenues Business cost Business revenues Business cost
Display 133,537,646.59 128,492,605.17 228,931,374.36 219,869,406.77
Injection moulded pieces 113,391,058.85 100,752,264.75 97,981,143.65 87,147,320.47
Foamed pieces 37,075,875.80 31,514,478.13 33,456,625.17 27,879,111.12
Total 284,004,581.24 260,759,348.05 360,369,143.18 334,895,838.36
（4）Main Businesses(By regions)
Unit: RMB
Accruals of the current period Accruals of the previous period
Region name
Business revenues Business cost Business revenues Business cost
Hong Kong 133,537,646.59 128,492,605.17 228,931,374.36 219,869,406.77
Central China 150,466,934.65 132,266,742.88 131,437,768.82 115,026,431.59
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Total 284,004,581.24 260,759,348.05 360,369,143.18 334,895,838.36
（5）Business revenues of the top five clients of the Company
Unit: RMB
Proportion among the total Business
Name of customer Revenues from Major Business
revenues of the company (%)
Yutian International 124,180,555.69 41.02%
Qingdao Hai’er Spare Parts Procurement Co., Ltd. 94,812,739.08 31.32%
Gree Electric Appliance (Wuhan) Co., Ltd 43,677,077.04 14.43%
TCL Air-conditioner (Wuhan) Co., Ltd. 10,148,547.11 3.35%
TPV Display Technology(Wuhan) Co., Ltd 3,511,887.38 1.16%
Total 276,330,806.30 91.28%
28. Business Tax & Surcharges
Unit: RMB
Items Accruals of the current period Accruals of the previous period Calculation and payment criteria
Business Tax 831,077.84 1,282,579.93 5%
Urban Maintenance & Construction Tax 59,429.19 182,712.73 7%
Educational Surcharge 24,514.42 38,797.29 3%
Resource Tax 0.00
Property Tax 221,129.28 0.12%
Land use tax 119,997.05
Local education development fees 15,785.72 2%
Price adjustment funds 0.00 141,059.91 0.1%
Others 1,578.57 10,834.78
Total 1,273,512.07 1,655,984.64 --
29. Sales costs
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Transportation expenses 1,316,383.46 967,885.01
Payroll 2,172,728.83 1,238,921.64
Commodity inspection expenses 136,796.25 95,732.56
Customs affairs fee 116,758.97 101,713.00
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Commodity wastage 179,834.93 41,649.03
Others 635,072.29 1,020,406.32
Total 4,557,574.73 3,466,307.56
30. Management costs
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Payroll 4,318,164.71 4,503,320.05
Depreciation costs 2,904,543.90 3,100,405.82
Social Insurance Premium 3,162,084.85 2,413,137.67
Social contact fees 1,120,131.60 1,224,260.21
Tax and surcharges 1,939,037.30 963,483.47
Staff Welfare Treatment Fund 794,739.73 1,899,304.39
Business trip costs 744,453.52 853,437.13
Amortization of intangible assets 731,673.84 764,025.48
Transportation fees 728,160.71 604,728.26
Consulting fees 450,087.44 506,167.78
Safety protection fee 698,491.28 575,737.29
Repair costs 756,716.03 386,531.85
Auditing costs 826,562.25 570,000.00
Office costs 385,633.38 455,208.95
Communication fees 163,143.76 152,430.64
Amortization of low-value, perishable goods 197,904.86 114,589.84
Securities information disclosure fees 128,000.00 24,926.18
Legal action costs 65,810.60 506,841.46
Others 959,018.67 1,951,867.93
Total 21,074,358.43 21,570,404.40
31. Financial Expenses
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Interest Expenditures 7,740,367.06 10,222,677.02
Exchange loss 1,738,993.25 -287,811.08
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Other expenditures 43,693.67 285,140.22
Total 9,523,053.98 10,220,006.16
32. Assets Impairment Loss
Unit: RMB
Items Accruals of the current period Accruals of the previous period
I. Provision for Bad Debts -869,044.62 1,212,116.58
Total -869,044.62 1,212,116.58
33. Non-business Revenues
（1）Condition of non-Business revenues
Unit: RMB
Accruals of the current Accruals of the previous Amount recorded in current
Items
period period nonrecurring profit and loss
Gains of Disposal of non-current assets 140,940.18
Donations received 102,293.06
Government grants 450,000.00
Penalty fine income 18,836.00 164,779.00
Penalty income 6,251.55 65,042.42
Total 718,320.79 229,821.42
（2）Governmental allowance breakdown
Unit: RMB
Accruals of the current Accruals of the previous
Items Description
period period
Special funds for enterprise technology
50,000.00
innovation and development
Special funds to support servo system
200,000.00
transformation
Others 200,000.00
Total 450,000.00
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34. Non-business Expenditures
Unit: RMB
Amount recorded in
Accruals of the current Accruals of the previous
Items current nonrecurring
period period
profit and loss
Among it: Loss from fixed-assets disposition 135,953.01
Litigation indemnity 1,889,105.71
Penalty charge 15,404.29 100.00
Total 2,040,463.01 100.00
35. Expenses of Income Tax
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Current income taxes computed in accordance with the tax law
624,754.07 2,637,465.11
and related regulations.
Adjustment of deferred income taxes -255,015.27 -303,029.15
Total 369,738.80 2,334,435.96
36. Calculation Process of Basic Earning per Share and Diluted Earning per Share
Items No. Amount of Amount of last
current year year
1 1,967,980.43 6,426,23.85
Net profit ascribed to mother company
2 -849,865.79 172,291.07
Incidental loss & profit ascribed to mother company
3=1-2 2,817,846.22 6,253,946.75
Net profit ascribed to shareholder of mother company after
deducting incidental loss & profit
4 283,161,227.00 283,161,227.00
Total shares at term beginning
5
Shares increased through capital reserve-to-shares or dividends
distribution (I)
6
Shares increased through issuing new shares or debt-to-stock (II)
7
Number of months since next month after shares increasing (II) till
term end of reporting period
8
Shares decreased due to counter purchased or share shrinking
9
Number of months since next month after shares Decreasing till
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term end of reporting period
Share number decrease for shares deduction 10
11 6 6
Number of months during reporting period
12=4+5+6×7÷11 283,161,227.00 283,161,227.00
Averagely weighted common shares issued
-8×9÷11-10
13=1÷12 0.0070 0.0227
Basic earning per share (I)
14=3÷12 0.0100 0.0221
Basic earning per share (II)
15
Diluted potential common stock interest switch expenses which
are recognized as expenses
16
Replacement expenses
17
Income tax rate
Subscription warrant, option Weighted average of the common 18
stocks produced by exercise and convertible debenture
19=[1+(15-16)×(1-17)] 0.0070 0.0227
Diluted earning per share (I)
÷(12+18)
19=[3+(15-16)×(1-17)] 0.0100 0.0221
Diluted earning per share (II)
÷(12+18)
37. Annotations to cash flow statement
（1）Other Cash Received Related to Operation Activities
Unit: RMB
Items Amount
Other Cash Received Related to Operation Activities 10,881,179.42
Total 10,881,179.42
Description of other cash received related to operation activities
Cash received relating to other operating activities in current period mainly includes collection utilities and management fees,
personal intercourse credit, security deposit, other intercourse credit and so on.
（2）Other Paid Related to Operation Activities
Unit: RMB
Items Amount
Other Cash Received Related to Operation Activities 12,580,645.64
Total 12,580,645.64
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Description of other paid cashes related to operating activities
Cash paid relating to other operating activities in current period mainly includes management fees paid in cash, selling expenses,
personal intercourse credit, security deposit, collection utilities and management fees, etc.
38、Supplementary information of cash flow statement
（1）Supplementary information of cash flow statement
Unit: RMB
Supplementary information Current amount Previous amount
1. Convert net profit to cash flow from operating activities: -- --
Net Profit 1,967,980.43 6,426,237.82
Add: provision drawn for assets impairment -869,044.62 1,212,116.58
Depreciation of fixed assets, depletion of oil and gas, depreciation of
8,014,558.68 7,105,763.61
production materials or equipment
Amortization of Intangible Assets 354,940.81 764,025.48
Amortization of Long-term Expenses to be Apportioned 172,850.06 412,400.00
Loss from Disposal of Fixed Assets, Intangible Assets & Other
-18,790.60 -873.70
Long-term Assets (Proceeds indicated by ―-‖)
Financial Expenses (Proceeds indicated by ―-‖) 9,522,859.70 10,220,006.16
Decrement of Deferred Income Tax Assets (Addition indicated by ―-‖) -255,015.27 -303,029.14
Decrement of Inventories (Addition indicated by ―-‖) -31,782,543.94 4,696,020.93
Decrement of Operative Receivables (Addition indicated by ―-‖) -8,578,463.49 -19,131,734.21
Increment of Operative Payables (Decrease indicated by ―-‖) -7,087,288.96 63,467,561.38
Net Cash Flow Provided by Operating Activities -28,557,957.20 74,868,494.91
2. Important investment and fund raising activities involving no cash： -- --
3. Net Variation of Cash and Cash Equivalent： -- --
Year-end balance of cash 120,470,443.69 253,754,229.24
Less: year-beginning balance of cash 112,834,841.39 141,426,712.65
Net increase of cash and cash equivalent 7,635,602.30 112,327,516.59
（2）Composition of cash and cash equivalents
Unit: RMB
Items Amount at the end of period Amount at the beginning of period
I. Cash 120,470,443.69 112,834,841.39
III. Balance of Cash & Cash Equivalents at Term End 120,470,443.69 112,834,841.39
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VIII. Connected parties and connected transactions
1、Condition of parent company of the Enterprise
Unit: RMB
Shareholdi
Percentage of
ng
voting rights
proportion
held by the Ultimate
Name of of the Code of
Company Registered Legal Business parent controlling
parent Affiliation Registered capital parent Organizati
type place representative scope company party of the
company company on
over the Enterprise
over the
Enterprise
Enterprise
(%)
(%)
Wuhan Company
Controlling Production Li
Zhongheng of limited Wuhan Li Zhongqiu 138,000,000.00 41.14% 41.14% 711954601
shareholder and sale Zhongqiu
Group liabilities
2、Condition of subsidiaries of the Enterprise
Unit: RMB
Legal Share Vote as a
Names of Type of Company Registered Business Registered Code of
representati proportion percentage
Subsidiary subsidiaries type place scope capital Organization
ve (%) (%)
Huafa
Holding Company of Liu Property
Lease Shenzhen 1,000,000.00 60% 60% 70843859-3
subsidiary limited Zuodong management
Company
Huafa
Holding Company of Li Property
Property Shenzhen 1,000,000.00 100% 100% 68378841-4
subsidiary limited Zhongqiu management
Company
Hengfa
Holding Company of Li Production
Technology Wuhan 181,643,111.00 100% 100% 67911516-1
subsidiary limited Zhongqiu and sale
Company
Huafa Trade Holding Company of Tang
Wuhan Sale 100,000.00 100% 100% 56233214-6
Company subsidiary limited Ganyu
3、Condition of the other affiliates of the Enterprise
Name of other affiliates Relation with this company Code of Organization
Wuhan Hengsheng Yutian Industry Co., Ltd. The same controlling shareholder or actual controller 73108664-5
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Wuhan Hengsheng Optoelectronic Industry Co., Ltd. The same controlling shareholder or actual controller 59454567-2
Shenzhen Zhongheng Huafa Technology Co., Ltd. The same controlling shareholder or actual controller 68536237-X
Wuhan Xindongfang Real Estate Development Co., Ltd. The same controlling shareholder or actual controller 74476047-5
Wuhan Zhongheng Property Management Co.,Ltd. The same controlling shareholder or actual controller 75180426-1
Wuhan Optic Valley Display System Co.,Ltd The same controlling shareholder or actual controller 75510305-9
Yutian Property(Wuhan) Co.,Ltd The same controlling shareholder or actual controller 66348637-1
Wuhan Yutian Industrial Land Co., Ltd. The same controlling shareholder or actual controller 05571411-5
Wuhan Yutian Donfang Land Co., Ltd. The same controlling shareholder or actual controller 05571415-8
Wuhan Xiahua Zhongheng Electronic Co., Ltd. The same controlling shareholder or actual controller 27186154-X
Wuhan Zhongheng Yutian Trade Co., Ltd. The same controlling shareholder or actual controller 56559237-3
Wuhan Yutian Hongguang Real Estate Co., Ltd. The same controlling shareholder or actual controller 56234774-3
Shengzhen Zhongheng Huayu Investment Holdings Limited The same controlling shareholder or actual controller 58918224-8
Hong Kong Tianyu International Investment Co.,Ltd The same controlling shareholder or actual controller
Famous Sky Capital Limited The same controlling shareholder or actual controller
Famous Sky International Limited The same controlling shareholder or actual controller
Hong Kong Zhongheng Famous Sky Limited The same controlling shareholder or actual controller
4. Associated Transactions
（1）Fact statement of procurement of goods and acceptance of labor
Unit: RMB
Accruals of the current period Accruals of the previous period
Ratio of the
Pricing method and Ratio of the
amount of the
Affiliated party Affiliated transaction decision-making process of amount of the
Amount Amount same
affiliated transaction same
transactions
transactions (%)
(%)
Hongkong Yutian Procurement of LCD Synchronous with market
101,309,262.65 36.15% 302,879,584.49 73.26%
Company screen condition
Transaction price shall be
Hengshen Photoelectric Procurement of LCD confirmed about 1% lower
5,440,928.29 2.06% 1.9%
Company screen than current average
market price on principle
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Fact statement of sales of goods and provisions of labor
Unit: RMB
Accruals of the current period Accruals of the previous period
Pricing method and Ratio of the Ratio of the
Affiliated party Affiliated transaction decision-making process amount of the amount of the
Amount Amount
of affiliated transaction same same
transactions (%) transactions (%)
Confirmed with price of
Hongkong Yutian Sales of liquid crystal
customers’ sales order as 124,180,555.69 43.72% 227,378,382.27 59.35%
Company display
cardinal number
Hengsheng Yutian Sales of LCD TVs, Take reference to the
22,254.90 0.01% 0.00 0%
Company computers market price
5． Receivables and payable of related party
Receivables of listed company from related party
Unit: RMB
Ending Initial
Project name Associated party
Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Notes Receivable Hongkong Yutian Company 66,295,180.16 0.00 84,085,697.15 0.00
Prepayments Hongkong Yutian Company 16,717,451.99 0.00 0.00 0.00
Prepayments Hengsheng Photoelectric 30,320,701.78 0.00 0.00 0.00
Prepayments Hengsheng Yutian 0.00 0.00 9,344,987.88 0.00
IV. Contingent Affairs
1、Pending action or contingent liabilities formed by arbitration and its financial impact
（1）Contract disputes between the Company and Shaanxi Linghua Electronic Co., Ltd.
The contract dispute case filed by Shaanxi Linghua Electronic Co., Ltd. (hereinafter ―Shaanxi Linghua‖) (2007SDDMC 2441):
Shaanxi Linghua made a claim for damages to the printed circuit board with potential quality problems that were sold to it during the
period May 30, 2006 to May 9, 2007. The amount at issue is RMB 3,100,773.20. The company received summons from Futian
District People’s Court on Jan. 14, 2008. The first hearing was opened for cross examination of evidence on March 6, 2008. The case
was not completed by the balance sheet date.
The company lodged a counter claim for the overdue freight fee and the interest accrued to Shaanxi Linghuaon November 12,
2007. The amount at issue is RMB 1,054,290.19. The first court session is on March 6, 2008 and the cross examination of evidence
was completed.
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On Jul. 25, 2009, Shenzhen Futian People's Law Court settled the above cases (No. 2007 SHEN FU FA MIN ER CHU ZI NO.
2441), ruling that, the Company pay 1,797,975.48 Yuan of compensation to Shaanxi Linghua within 10 days of the settlement, and
that Shaanxi Linghua pay to the Company the balance of payment for goods (1,797,975.48 Yuan) within 10 days of the settlement as
well as interests associated thereto.
For that legal settlement, the Company brought an appeal to the Shenzhen intermediate People's Court on Aug. 31, 2009. The
Shenzhen Intermediate People's Court settlement appeal on Mar. 22, 2010 (rule No. (2009) SHEN ZHONG FA MIN ER ZHONG ZI
NO. 2227), ruling that the original settlement has no convincing evidences and that case shall be re-settled by the Shenzhen Futian
People's Law Court. Canceling the civil judgment No. Shen Fu Zi Min Er Chu 2441 (2007) made by the People's Court of Futian
District Shenzhen City, and remand to the People's Court of Futian District Shenzhen City for retrial.
As of the issue date of the financial report, there is no settlement of the case. According to the Introduction to the Case
Settlement of the Work Contract Dispute between the Shenzhen Zhongheng Huafa Co., Ltd. and Shaanxi Linghua Electronics Co., Ltd.
released by the Licensed Lawyer Zhang Guozhi’s Branch in Shenzhen of the Guangdong Jiangshanhong Lawyers’ Firm on April 22,
2010 and relevant evidence, the Company has the higher chance to win the case where the case may be reheard by the Futian District
People’s Court of Shenzhen Municipality. The Company has prepared 179,797.55 Yuan as the litigation fee and confirmed the fee as
the estimated liability in the case.
On May 5th 2013, the People's Court of Futian District, Shengzhen adjudged our company paying Shaanxi ADLINK RMB
2,542,000.81 yuan as compensation in the first instance, but our company has appealed. According to the result of judgment of the
Court in the first instance, our company confirms the estimated liability of RMB 2,542,000.81 yuan.
As of the approval and submission date of this financial report, this case has not been completed legal proceedings.
（2）Contract dispute in which Wanshan Company files a lawsuit against the Company as to decoration
Contract dispute in which Wanshang Company files a lawsuit against the Company as to decoration [case No.:
(2012)SFFMSCZD No. 2469]: Wanshang Company and Hwafa Leasing Company (subsidiary of the Company) signed the
Agreement as to external wall decoration of Huafa Building on December 20, 2004 and both parties agreed that Hwafa Leasing
Company shall bear 49% of renovation costs. Afterwards, both parties had disputes over the settlement of total construction costs and
agreed to employ a Shenzhen audit institution with authoritative qualification for evaluation and assessment. However, both parties
failed to reach an agreement on engineering assessment. On November 14, 2011, Wanshang Company filed a lawsuit with people’s
court of Futian District, Shenzhen, claiming that the Company shall bear 49% of total construction costs, totaling RMB 2,026,014.62.
As the Company believed that total construction costs involved were too high, both plaintiff and defendant proposed that the
people’s court select an authoritative audit institution to assess the project involved and such audit institution had conducted field
measurement towards the companies involved and drawn a conclusion on assessment. The construction costs without disputes were
RMB 2,085,192.24 and the construction costs over which both parties had disputes were RMB 334,002.76. Total construction costs
were RMB 2,419,195.00.
On July 1st 2013, the People's Court of Futian District, Shengzhen adjudged our company paying RMB 742,308.00 yuan
construction payments. At the beginning of the year, the company withdrawn RMB 1,185,405.55 yuan non-operating expenses for
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the case and confirmed it as estimated liability based on the Description on the Case of Decoration Contract Dispute that Shengzhen
Wanshang Friendship Department Store Co., Ltd, accuses Shenzhen Zhongheng Huafa Co., Ltd., the current refunding estimated
liability is RMB 443,097.55yuan, and the final confirmed estimated liability is RMB 742,308.00 yuan.
As of the approval and submission date of this financial report, this case has not been completed legal proceedings.。
（3）Labor disputes that have been confirmed estimated liability in previous years but have not been executed till now.
According to the Notice on Judgment Enforcement (2008 SFFZZ NO. 522-529) issued by the Shenzhen People’s Court of
Guangdong Province concerning the 14 persons’(including Cai Yaoqiang and others) labor dispute case, the SLZC [2007] NO.
1069-1077, 1079, 1081, 1085-1087 arbitration awards have started to take legal effect. And according to the Corporate Basic
Information and Credit Report, the Company has the unperformed labor dispute object of 38,386.00 Yuan in total, which has been
confirmed as the estimated liability by the Company.
The former employees Yang Guangze of the Company filed a claim for their unpaid salary, allowance, overtime, public reserve
fund, festival allowance, etc. by the Company, totaling107,339.01 Yuan. And according to the judgment of People’s Court, the
Company has confirmed the claimed damages of 23,851.00 Yuan as its estimated liability.
X. Notes of main items of parent company’s financial statements
1、Notes Receivable
（1）Notes Receivable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Type Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Amount Proportion (%) Amount Proportion (%) Amount Proportion (%) Amount Proportion (%)
Accounts receivable with
significant specific amount that
3,869,088.21 7.32% 2,427,396.89 31.44% 5,074,817.68 9.44% 3,652,723.03 42.52%
were provisioned bad debt
preparation separately
Other receivables with accrual of bad debt reserve according to combination
Within 1 year 258,617.53 0.49% 326,792.20 0.61%
1-2 year (s) *1 455,510.84 0.86% 455,510.84 0.85%
2-3 years *1 6,334,652.51 11.78%
Over 3years *1 43,080,799.25 81.51% 105,539.07 1.37% 36,746,146.74 68.34% 105,539.07 1.23%
Subtotal of combination 43,794,927.62 82.86% 105,539.07 43,863,102.29 105,539.07 1.23%
Accounts receivable that were
not significant but have been 5,188,576.66 9.82% 5,188,576.66 67.2% 4,832,295.13 8.99% 4,832,295.13 56.25%
provisioned bad debt
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preparation separately
Total 52,852,592.49 -- 7,721,512.62 -- 53,770,215.10 -- 8,590,557.23 --
Description of type of accounts receivable
Other receivables with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of accounts receivable Book balance Provision for Bad Debts Percent Drawn（%） Reason of provision
H. K. Haowei Industry Co., Ltd. 1,870,887.18 448,792.54 24% Can not be taken back
TCL Wangpai Electric Appliance ( Huizhou)Co., Ltd. 1,325,431.75 1,325,431.75 100% Can not be taken back
Skyworth Multimedia(Shenzhen) Co.,Ltd. 672,769.28 653,172.60 97% Can not be taken back
Total 3,869,088.21 2,427,396.89 -- --
In the combination, aging analysis method is used to accrue the receivables of bad debt reserves
√ Applicable □ Inapplicable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account ageing Book balance Provision for Bad Book balance
Provision for Bad Debts
Amount Proportion (%) Debts Amount Proportion (%)
Within 1 year
Among it: -- -- -- -- -- --
Subtotal within 1 year 258,617.52 0.59% 326,792.20 0.75%
1-2 year (s) 455,510.84 1.04% 455,510.84 1.04%
2-3 year (s) 6,334,652.51 14.44%
Over 3years 43,080,799.25 98.37% 105,539.07 36,746,146.74 83.77% 105,539.07
Total 43,794,927.61 -- 105,539.07 43,863,102.29 -- 105,539.07
Accounts receivable with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
Accounts receivable with accrual of bad debt reserve by other method in the combination
□ Applicable √ Inapplicable
Accounts receivable without major individual amount but with separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of accounts receivable Book balance Provision for Bad Debts Percent Drawn（%） Reason of provision
Shenzhen Huixin Video Science and
381,168.96 381,168.96 100% Account age over 5 years
Technology Co.,Ltd.
Qingdao Hai’er Spare Parts
356,281.53 356,281.53 100% Can not be taken back
Procurement Co., Ltd.
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Shenzhen Wandial Number Science
351,813.70 351,813.70 100% Account age over 5 years
and Technology Co.,Ltd.
Shenzhen Dalong Electric Co.,Ltd. 344,700.00 344,700.00 100% Account age over 5 years
Shenzhen Qunpin Electric Co.,Ltd. 304,542.95 304,542.95 100% Account age over 5 years
China Galaxy Electric(Hong Kong)
288,261.17 288,261.17 100% Account age over 5 years
Co.,Ltd.
Dongguan Weite Electric Co.,Ltd. 274,399.80 274,399.80 100% Account age over 5 years
Hong Kong New Century Electric
207,409.40 207,409.40 100% Account age over 5 years
Co.,Ltd.
Shenyang Beitai Electric Co.,Ltd. 203,304.02 203,304.02 100% Account age over 5 years
Bejing Xinfanweiye Science and
193,000.00 193,000.00 100% Account age over 5 years
Technology Co.,Ltd.
TCL Electric(Hong kong) Co.,Ltd. 145,087.14 145,087.14 100% Account age over 5 years
Huizhou TCL New and Special
142,707.14 142,707.14 100% Account age over 5 years
Electronics Co., Ltd.
Shenzhen Skyworth-RGB Electric
125,215.13 125,215.13 100% Account age over 5 years
Co.,Ltd.
Shenzhen Xinfa Electronics Co., Ltd. 119,094.78 119,094.78 100% Account age over 5 years
Others 1,751,590.94 1,751,590.94 100% Account age over 5 years
Total 5,188,576.66 5,188,576.66 -- --
（2）Conditions of top 5 units among the amounts of accounts receivable
Unit: RMB
Relation with this As a percentage in
Unit name Amount Years
company accounts receivable (%)
Hengfa Technology Company Subsidiary 43,184,934.79 1-4year (s) 81.71%
H. K. Haowei Industry Co., Ltd. Nonaffiliated parties 1,870,887.18 Over 3years 3.54%
TCL Wangpai Electric Appliance
Nonaffiliated parties 1,325,431.75 Over 3years 2.51%
(Huizhou) Co., Ltd.
Skyworth Multimedia(Shenzhen) Co.,Ltd. Nonaffiliated parties 653,172.60 Over 3years 1.24%
Shenzhen Huixin Video Science and
Nonaffiliated parties 381,168.96 Over 4years 0.72%
Technology Co.,Ltd.
Total -- 47,415,595.28 -- 89.72%
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（3）Receivables from related party
Unit: RMB
As a percentage in accounts
Unit name Relation with this company Amount
receivable (%)
Hengfa Technology Company Subsidiary 43,184,934.79 81.71%
Total -- 43,184,934.79 81.71%
2. Other Receivables
（1）Other Receivables
Unit: RMB
Amount at the end of period Amount at the beginning of period
Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Type
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts receivable with
significant specific amount that
12,426,481.93 11.39% 10,778,144.38 74.39% 11,963,549.93 15.1% 10,778,144.38 74.39%
were provisioned bad debt
preparation separately
Other receivables with accrual of bad debt reserve according to combination
Within 1 year 31,684,709.75 29.05% 3,939,877.14 4.97%
1-2 year(s) 225,172.18 0.21% 11,258.61 0.08% 225,172.18 0.28% 11,258.61 0.08%
2-3 year(s) *1 19,889,835.01 18.23% 8,969.19 0.06% 19,889,835.01 25.11% 8,969.19 0.06%
Over 3years *1 40,619,375.33 37.24% 1,103,908.91 7.62% 40,619,375.33 51.27% 1,103,908.91 7.62%
Subtotal of combination 92,419,092.27 84.73% 1,124,136.71 7.76% 64,674,259.66 81.63% 1,124,136.71 7.76%
Accounts receivable that were not
significant but have been
4,233,943.22 3.88% 2,586,150.27 17.85% 2,586,150.27 3.26% 2,586,150.27 17.85%
provisioned bad debt preparation
separately
Total 109,079,517.42 -- 14,488,431.36 -- 79,223,959.86 -- 14,488,431.36 --
Description of types of other receivables
Other receivables with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
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Unit: RMB
Content of other receivables Book balance Bad debts Percent Drawn（%） Cause
Huafa Lease Company 4,558,859.15 4,558,859.15 100% Account age over 5 years
Shenzhen Boteman Bowling
4,021,734.22 4,021,734.22 100% Account age over 5 years
Club Co., Ltd.
Wanshang Department Store 1,830,727.75 182,390.20 9.96%
Zhao Baomin 939,354.00 939,354.00 100% Can not be taken back
Traffic incident indemnity 555,785.81 555,785.81 100% Account age over 5 years
Hebei Botou Court 520,021.00 520,021.00 100% Account age over 5 years
Total 12,426,481.93 10,778,144.38 -- --
Other receivables with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable □ Inapplicable
Unit: RMB
Amount at the end of period Amount at the beginning of period
Account ageing Book balance Provision for Bad Book balance Provision for Bad
Amount Proportion (%) Debts Amount Proportion (%) Debts
Within 1 year
Among it: -- -- -- -- -- --
Subtotal within 1 year 31,684,709.75 34.28% 3,939,877.14 6.09%
1-2 year (s) 225,172.18 0.24% 11,258.61 225,172.18 0.35% 11,258.61
2-3 year (s) 19,889,835.01 21.52% 8,969.19 19,889,835.01 30.75% 8,969.19
Over 3years 40,619,375.33 43.95% 1,103,908.92 40,619,375.33 62.81% 1,103,908.92
Total 92,419,092.27 -- 1,124,136.71 64,674,259.66 -- 1,124,136.71
Other receivables with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
Other receivables with accrual of bad debt reserve by other method in the combination
□ Applicable √ Inapplicable
Other receivables without major individual amount but with separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Content of other receivables Book balance Provision for Bad Debts Percent Drawn（%） Reason of provision
Employee canteen ect. 796,041.46 796,041.46 100% Can not be taken back
Total of individual debt and withdrawal 2,167,538.69 519,745.74 100% Can not be taken back
Trade Union 253,315.05 253,315.05 100% Can not be taken back
Chuangjing workshop 192,794.00 192,794.00 100% Can not be taken back
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Weili Electric Corporation Co.,Ltd,
112,335.62 112,335.62 100% Can not be taken back
Zhangzhou City, Fujian Province
Shenzhen Lotus Island Restaurant
85,253.80 85,253.80 100% Can not be taken back
Co.,Ltd
Others 626,664.60 626,664.60 100% Can not be taken back
Total 4,233,943.22 2,586,150.27 -- --
（2）Conditions of top 5 units in the amount of other receivables
Unit: RMB
Relation with this Proportion in other
Unit name Amount Years
company receivables (%)
Hengfa Technology Company Subsidiary 84,830,297.65 1-4 year(s) 76.33%
Huafa Lease Company Subsidiary 4,558,859.15 Over 3years 4.1%
Shenzhen Boteman Bowling
Nonaffiliated parties 4,021,734.22 Over 3years 3.62%
Club Co., Ltd.
Wanshang Department Store Nonaffiliated parties 1,830,727.75 Within 1 year 1.65%
Zhao Baomin Nonaffiliated parties 939,354.00 Over 3years 0.85%
Total 96,180,972.77 86.55%
（3）Other receivables from affiliated parties
Unit: RMB
Proportion in other receivables
Unit name Relation with this company Amount
(%)
Hengfa Technology Company Subsidiary 84,830,297.65 76.33%
Huafa Lease Company Subsidiary 4,558,859.15 4.1%
Total -- 89,389,156.80 80.43%
3. Long-term Equity Investment
Unit: RMB
Description about
Proportion inconsistency between
Change- Proportion of Provision for
of voting proportion of Cash bonus of
Accounting Beginning increase shareholding in Depreciation impairment loss
Invested unit Investment costs Ending balance right in the shareholding in the the current
method balance or the invested unit reserves in the current
invested invested unit and period
decrease (%) period
unit (%) proportion of voting
right in the invested unit
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Huafa Lease
Cost method 600,000.00 600,000.00 600,000.00 60% 60% 600,000.00
Company
Huafa Property
Cost method 1,000,000.00 1,000,000.00 1,000,000.00 100% 100%
Company
Hengfa Technology
Cost method 183,608,900.00 183,608,900.00 183,608,900.00 100% 100%
Company
Huafa Trade
Cost method 100,000.00 100,000.00 100,000.00 100% 100%
Company
Total -- 185,308,900.00 185,308,900.00 185,308,900.00 -- -- -- 600,000.00
4. Business Revenues & Business Cost
（1）Business Revenues
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Revenues from Major Business 3,111,682.22
Revenues from Other Business 18,088,918.23 22,331,277.43
Total 18,088,918.23 25,442,959.65
Business cost 2,725,748.13 4,803,869.50
（2）Main business(By industries)
Unit: RMB
Accruals of the current period Accruals of the previous period
Industry names
Business revenues Business cost Business revenues Business cost
Display 3,111,682.22
Total 3,111,682.22
（3）Main business(By products)
Unit: RMB
Accruals of the current period Accruals of the previous period
Product name
Business revenues Business cost Business revenues Business cost
Display 3,111,682.22
Total 3,111,682.22
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（4）Operating income of the top 5 clients of the Company
Unit: RMB
Proportion among the
Name of customer Total business income total Business revenues
of the company (%)
Zhenxing Branch of China Merchants Bank 3,468,000.00 19.17%
Dijie Entertainment 1,282,005.00 7.09%
Dai Qiangbo (Orient Fashion Hotel) 1,200,000.00 6.63%
Duan Lintao 968,082.00 5.35%
Li Chunzheng 493,416.00 2.73%
Total 7,411,503.00 40.97%
5、Supplementary information of cash flow statement
Unit: RMB
Supplementary Materials Current amount Previous amount
1. Convert net profit to cash flow from operating activities: -- --
Net Profit 400,615.40 2,304,830.57
Plus: provision drawn for assets impairment 400,615.40 845,974.14
Depreciation of fixed assets, depletion of oil and gas, depreciation of
4,238,517.65 4,216,250.75
production materials or equipment
Amortization of Intangible Assets 72,472.86 72,472.86
Amortization of Long-term Expenses to be Apportioned 162,400.04 412,400.04
Financial Expenses (Proceeds indicated by ―-‖) 2,782,510.22 6,267,368.71
Decrement of Deferred Income Tax Assets (Addition indicated by ―-‖) -299,964.66 211,493.54
Decrement of Inventories (Addition indicated by ―-‖) 3,333,040.38
Decrement of Operative Receivables (Addition indicated by ―-‖) -28,495,500.60 -3,235,896.58
Increment of Operative Payables (Decrease indicated by ―-‖) 360,910.61 -1,107,917.95
Net Cash Flow Provided by Operating Activities -20,478,073.81 13,320,016.46
2. Important investment and fund raising activities involving no cash -- --
3. Net Variation of Cash and Cash Equivalent -- --
Year-end balance of cash 7,706,858.10 19,957,354.03
Less: year-beginning balance of cash 10,555,114.25 26,428,341.78
Net increase of cash and cash equivalent -2,848,256.15 -6,470,987.75
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XI. Supplementary Materials
1. Current Irregular Profits and Losses Schedule
Unit: RMB
Item Amount Description
Gains and losses on disposal of non-current assets (including
4,987.17
elimination withdrawn assets impairment provision)
Government grants included into current profits and losses Gaining 200000 yuan financial subsidy
(excluding government grants closely related to company payments for paying taxes over a million
450,000.00
business and enjoyed as per national standard fixedly or and 250000 yuan for energy saving and
quantitatively) consumption reduction
Accrual estimated liability 2362203.26 yuan
for the lawsuit by Shaanxi ADLINK,
non-operating income and cost except for the above items -1,777,129.39 estimated liability 473097.55 yuan for the
lawsuit by Wanshang, and other liquidated
damages, etc.
Less: impact amount of income tax -472,276.43
Total -849,865.79 --
The company shall explain the reasons for its defined irregular profits and losses items according to the definition of Explanatory
Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public - Irregular Profits and Losses,
and for it defines the irregular profits and losses items listed in Explanatory Announcement No.1 on Information Disclosure for
Companies Offering Their Securities to the Public - Irregular Profits and Losses as regular profits and losses items.
□ Applicable √ Inapplicable
2. Return on Net Assets and Earnings Per Share
Unit: RMB
Averagely-weighted Earning per Share
Profit during Reporting Period
return on net asset（%） Earning per Share Earning per Share
Net profit ascribed to shareholder of mother company 0.01% 0.007 0.007
Net profit belonging to parent company shareholders
0.01% 0.01 0.01
after excluding non-recurring items
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Section IX. Documents available for Reference
I. Text of semi-annual report carrying signature of the Chairman;
II. Text of financial report carrying signature and seal of person in charge of the Company, person in charge of accounting works and
person in charge of accounting institution;
III. All files disclosed on China Securities Journal, Securities Times and Hong Kong Commercial Daily appointed by CSRC;
IV. Article of Association;
V. Other relevant files
[Note]: This Report is prepared respectively both in Chinese and English. Should be there any difference in interpretation of these
two versions, the Chinese version shall prevail.
Board of Directors of
SHENZHEN ZHONGHENG HUAFA CO., LTD.
27 August 2013
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