2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2014
April 2015
1
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
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.
Other directors attended the board meeting on deliberating the report except for the following
directors:
Name of absent director Position of absent director Reason for absence Attorney
Li Xiaodong Independent Director On a business trip Zhang Zhaoguo
The Company has no plan of cash dividends carried out, bonus issued and capitalizing of
common reserves 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 2014 Annual Report is authentic, accurate and complete.
Concerning the forward-looking statements with future planning involved in the Report, they
do not constitute a substantial commitment for investors. Majority investors are advised to
exercise caution of investment risks.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Contents
Section I Important Notice, Contents and Paraphrase ................................................................. 2
Section II Company Profile ............................................................................................................... 6
Section III Accounting data and summary of finnaical indexes .................................................. 9
Section IV Report of the Board of Directors ................................................................................ 11
Section V Important Events .......................................................................................................... 27
Section VI Changes in shares and particular about shareholders............................................... 30
Section VII Preferredstock………………………………………………………………………..35
Section VIII Particulars about Directors, Supervisors,Senior Executives and Employees ...... 36
Section IX Corporate Governance ................................................................................................. 48
Section X Internal Control .............................................................................................................. 49
Section XI Financial Report ............................................................................................................ 50
Section XII Documents available for reference ........................................................................... 131
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Paraphrase
Items Refers to Contents
Company, Shen Huafa Refers to SHENZHEN ZHONGHENG HUAFA CO., LTD.
Hengfa Technology Refers to Wuhan Hengfa Technology Co., Ltd.
Huafa Property Refers to Shenzhen Zhongheng Huafa Property Co., Ltd
Huafa Lease Refers to Shenzhen Huafa Property Lease Management Co., Ltd
Huafa Trade Refers to Wuhan Zhongheng Huafa Trade Co., Ltd.
Wuhan Zhongheng Group Refers to Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd.
HK Yutian Refers to Hong Kong Yutian International Investment Co., Ltd.
Hengsheng Photoelectricity Refers to Wuhan Hengsheng Photoelectricity Industry Co., Ltd.
Hengsheng Yutian Refers to Wuhan Hengsheng Yutian Industrial Co., Ltd.
Yutian Henghua Refers to Shenzhen Yutian Henghua Co., Ltd.
Huafa Hengtian Refers to Shenzhen Huafa Hengtian Co., Ltd.
Huafa Hengtai Refers to Shenzhen Huafa Hengtai Co., Ltd.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Warning of major risks
Please pay attention to the risks factors the Company facing, that well-described
in section IV “Report of the Board of Directors”
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section II Company profile
I. Company information
Short form of the stock SHEN HUAFA Stock code 000020 200020
Stock exchange for listing Shenzhen Stock Exchange
Name of the Company (in Chinese) 深圳中恒华发股份有限公司
Short form of the Company (in Chinese) 深华发
Foreign name of the Company(if applicable) SHENZHEN ZHONGHENG HUAFA CO., LTD.
Legal representative Li Zhongqiu
Registrations add. 411 Bldg., Huafa (N) Road, Futian District, Shenzhen
Code for registrations add 518031
Offices add. 6/F, East Tower of 411 Bldg., Huafa (N) Road, Futian District, Shenzhen
Codes for office add. 518031
Website of company http://www.hwafa.com.cn
E-mail hwafainvestor@126.com.cn
II. Person/Way to contact
Secretary of the Board Rep. of security affairs
Name Weng Xiaojue Niu Yuxiang
6/F, East Tower, Huafa (N) Road, Futian 6/F, East Tower, Huafa (N) Road, Futian
Contact add.
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. Information disclosure and preparation place
Newspaper appointed for information disclosure China Securities Journal; Securities Times; Hong Kong Commercial Daily
Website for annual report publish appointed by CSRC http://www.cninfo.com.cn
Preparation place for annual report Office of the Board of SHENZHEN ZHONGHENG HUAFA CO., LTD.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
IV. Registration changes of the Company
Registration NO. for
No. of taxation
Date for registration Place for registration enterprise legal Organization code
registration
license
411 Bldg., Huafa (N)
Initial registration 1981-12-08 Road, Futian 440301501120670 440301618830372 61883037-2
District, Shenzhen
411 Bldg., Huafa (N)
Registration at end
2007-11-23 Road, Futian 440301501120670 440301618830372 61883037-2
of report period
District, Shenzhen
Before the change of controlling shareholders: the main business was production and
sales of color TV, printed circuit board and injection molded parts etc.
Changes of main business since listing (if
After the change of controlling shareholders: the main business gradually adjusted to
applicable)
production and sales of injection molded parts, foam part (light packaging materials) and
LCD whole machine.
The Company‘s predecessor was Shenzhen Huafa Electronic Co., LTD, which was
founded in 1981, initiated and established by three legal persons-- Shenzhen Electronics
Group Co., LTD, China Zhenhua Electronic Group Co., LTD and Hong Kong Luks
Industrial Co., LTD. In June 2005, Wuhan Zhongheng Group transferred the 44.12%
Previous changes for controlling
equity of company, held by original first and second largest shareholder of the Company
shareholders (if applicable)
Shenzhen Electronics Group Co., LTD and China Zhenhua Electronic Group Co., LTD,
and equity transfer formalities completed in April 2007; Wuhan Zhongheng Group
became the controlling shareholder of the Company. In September 2007, the company
officially changed its name to ―Shenzhen Zhongheng Huafa Co., Ltd‖.
V. Other relevant information
CPA engaged by the Company
Name of CPA Shinewing Certified Public Accountants LLC
9/F, Block A, Fu Hua Mansion No.8 Chaoyang Men, Bei da jie, Dong Cheng District, Beijing,
Offices add. for CPA
P.R.China
Signing Accountants Zhang Weijian, Zhang Yongde
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
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
2014 2013 Changes over last year 2012
Operating income (RMB) 694,839,760.10 626,821,044.64 10.85% 723,891,496.54
Net profit attributable to shareholders
7,687,620.27 -6,517,401.44 217.96% 3,241,897.70
of the listed company(RMB)
Net profit attributable to shareholders
of the listed company after deducting 2,322,082.33 -5,934,309.10 139.13% 3,856,768.38
non-recurring gains and losses(RMB)
Net cash flow arising from operating
119,492,159.01 -69,353,440.38 272.29% 18,419,090.98
activities(RMB)
Basic earnings per share
0.0271 -0.0230 217.96% 0.0114
(RMB/Share)
Diluted earnings per share
0.0271 -0.0230 217.96% 0.0114
(RMB/Share)
Weighted average ROE 2.77% -2.35% 3.51 percentage points up 1.16%
Changes over end of last
End of 2014 End of 2013 End of 2012
year
Total assets (RMB) 1,162,740,984.93 731,348,499.86 58.99% 681,645,093.97
Net assets attributable to shareholder
281,351,269.74 273,663,649.47 2.81% 280,181,050.91
of listed company (RMB)
II. Items and amounts of extraordinary profit (gains)/loss
√Applicable □Not applicable
In RMB
Item Amount in 2014 Amount in 2013 Amount in 2012 Note
Gains/losses from the disposal of
non-current asset (including the write-off 1,587,819.80 104,043.85 3,843.23
that accrued for impairment of assets)
Governmental subsidy reckoned into current
4,159,795.00 1,652,600.00
gains/losses (not including the subsidy
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
enjoyed in quota or ration according to
national standards, which are closely
relevant to enterprise‘s business)
Other non-operating income and expenditure
149,500.69 -1,736,569.94 -978,232.33
except for the aforementioned items
Other gain/loss items satisfying the
983,612.12
definition of nonrecurring gain/loss account
Less: impact on income tax 1,515,189.67 603,166.25 -359,518.42
Total 5,365,537.94 -583,092.34 -614,870.68 --
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section IV. Report of the Board of Directors
I. Introduction
In 2014, the differentiation of the world economic recovery intensified, the growth of the developing economic entities slowed down;
despite the downward pressure, China's economy has still remained the smooth and steady development with progress and quality
improved, the economic development has entered a new normal which changes from the extensive growth in scope and speed to the
intensive growth in quality and efficiency, the personalized and diversified consume is becoming the mainstream, the importance to
ensure the product quality and safety and activate the needs by innovative supply rises significantly. Under the current political and
economic environment that the downward pressure of macro economy increases and the demands for home-appliance industry are in
downturn and no favorable policy is released, the sales growth of most home-appliance categories has slowed down, some are even
in negative growth, the sales volume of refrigerators and air conditioners is weak, the traditional home-appliance manufacturers
transform to the new business mode and the products transform to the smart home, and the consumption upgrade is in a clear trend.
As an industrial manufacturing and processing enterprise providing the supporting products and services for the home-appliance
industry, the Company has withstood the market pressure and maintained a stable situation, though the gross margin of some
businesses has slid down because of the undercut price competition in sales and increase of production costs, the overall business
performance has fundamentally kept the same as the same period of last year; the leasing business of own property has grown
substantially as most of the unused places are leased. In 2014, the company achieved the operating income of 694,839,800 Yuan, an
increase of 10.85% compared to the same period last year; and net profits of 7.6876 million Yuan, which turned losses into gains.
●The injection molding business has realized the annual operating income of 275,568,100 Yuan, an increase of 12.90% compared to
the same period last year. In the case of poor overall market, the injection business division has taken measures in time to decisively
readjust the product mix, significantly reduce the costs by saving the energy and strengthening the internal management, and has
made new achievements. The company has focused on maintaining the customer relations, appropriately adjusted the strategy to
receive orders, reduced the order shares of the products with small gross margin, increased the cooperation businesses with high
profitability, and undertaken the orders for new products; the company has strengthened the fine management, strictly controlled the
production site, and improved the product quality so as to well withstand the well-known manufacturers and customers to make
excessive demands for the quality and repeated spot checks, and continued to maintain a good quality reputation and has been
honored as a leading enterprise of injection products and the annual excellent supplier; the company also has updated some old
injection molding machines based on the previously introduced injection molding machine manipulator and servo system which
made the energy-saving effects continue to show, the automation improvement and process optimization progress have greatly
reduced the waste of human input and manufacturing materials, and the production efficiency has been significantly enhanced.
●The Styrofoam business has achieved the annual revenue of 75,274,200 Yuan, a decrease of 2.02% compared to the same period last
year. Under the severe challenges of constantly rising costs, increasingly fierce market competition, and sharply shrinking profit
margin, the Styrofoam division constantly develops and innovates, seizes the opportunity of customer product modification,
cooperates with the customer to accomplish the design and optimization of product structure, 150 kinds of new products have been
increased in 2014; the company has paid more attention to the details of management, improved ISO9001: 2008 quality management
system, completed the basic work of production management, enhanced the execution, controlled and prevented the wastes in the
production process, decreased the ineffective work, further reduced production cost, updated the equipments and technologies in
the slack season, implemented the index of consumption reduction to the relevant departments, classified the improvement to product
quality, the reduction of rejection rate, the decrease of raw material loss and the productivity improvement as the major assessment
items, grasped the details, focused on the implementation, managed the assessment, and all staff worked together to achieve the good
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
results.
●LCD monitor business has achieved the annual revenue of 264,125,900 Yuan, which is almost equivalent to the last year. In the
premise of ensuring the basic production, the video division shall invest more energies into the design and development of new
products, make new attempts to optimize the monitors‘ costs, adjust the models and improve the structures, increase new series of
monitors with various sizes and cost advantages and realize the mass production, and develop from the single brand OEM to the
multi-brand production; at the same time, the video division has tried to explore OEM cooperative business in other product fields
from the business computer, all-in-one machine, tablet PC, desktop computer to the air-conditioning assembly and aroma products,
actively learned and developed, and laid the foundation of undertaking the new tasks and objects.
●The property rental business has realized the annual revenue of 49,938,600 Yuan, an increase of about 50.10% compared to the last
year. The company owns the area from first to third floor of Hwafa Building, which is under the refitting for leasing since the tenancy
contract expired in the third quarter of 2012; 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 continued to actively discuss with the suitable shops and accelerate the leasing work, and has achieved a great progress,
most of the places have been leased and the shops have successively opened, so the idle places significantly have reduced. Although
the average rental price has grown, the whole rental income of tenement is similar to the normal years before readjustment as the new
leases have the rent-free period.
II. Main business analysis
1. Introduction
Review and summary of the progress of development strategy and operation plan as disclosed in previous period during the reporting
period
Nil
Reasons for difference of actual operation performance has 20% lower or higher than profit forecast of the Year disclosed
□ Applicable √ Not applicable
Changes of main operation mode
□ Applicable √ Not applicable
2. Revenue
Statement
The Company achieved operation income amounting as RMB 694,839,800 in report period, a 10.85% up over same period of last
year
Whether income from physical sales larger than income from labors or not
√ Yes □ No
Increase/decrease
Industries Item Unit 2014 2013
y-o-y
Sales Set 536,764 502,233 7.00%
Display Production Set 546,253 511,444 7.00%
Inventory Set 21,215 11,726 81.00%
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Sales Ton 13,187.24 12,353.58 7.00%
Plastic injection
Production Ton 13,330.52 12,080.10 10.00%
hardware
Inventory Ton 562.13 418.85 34.00%
Sales Ton 3,647 3,794.44 -4.00%
Foam Production Ton 3,789 3,774.04 0.40%
Inventory Ton 378.89 236.89 60.00%
Reasons for y-o-y relevant data with over 30% changes
√Applicable □Not applicable
Inventory of display increased: the amount of stock at the end of the year increased.
Inventory of plastic injection hardware increased: the amount of stock at the end of the year increased.
Inventory of foam increased: the amount of stock at the end of the year increased.
Material orders in hands
□ Applicable √ Not applicable
Material changes or adjustment for products or services of the Company in reporting period
□ Applicable √ Not applicable
Major sales of the Company
Total top five clients in sales (RMB) 570,868,162.89
Proportion in total annual sales volume for top five clients 82.16%
Information of top five clients of the Company
√Applicable □Not applicable
Serial Name Sales (RMB) Proportion in total annual sales
1 Hong Kong Yutian International Investment Co., Ltd. 234,811,940.55 33.79%
2 Qingdao Haier Part Purchasing Co., Ltd. 210,588,571.24 30.31%
3 Gree Electric Appliances (Wuhan) Co.,Ltd. 69,268,366.23 9.97%
4 TCL Air –conditioner (Wuhan) CO., Ltd. 28,597,617.69 4.12%
5 Qingdao Haidayuan Procurement Service Co., Ltd. 27,601,667.18 3.97%
Total -- 570,868,162.89 82.16%
Other situation of main clients
□ Applicable √ Not applicable
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
3. Cost
Industry classification
In RMB
2014 2013
Industry
Item Ratio in operation Ratio in operation Y-o-y changes
classification Amount Amount
cost cost
Display Raw materials 238,361,408.90 96.59% 251,201,871.47 97.91% -1.32%
Display Labor wages 4,277,251.56 1.73% 1,931,843.00 0.75% 0.98%
Display Depreciation 1,228,205.02 0.50% 1,929,800.62 0.75% -0.25%
Display Energy 0 0 0 0 0
Plastic injection
Raw materials 212,169,010.71 84.66% 146,166,295.88 65.98% 18.68%
hardware
Plastic injection
Labor wages 14,220,363.10 5.67% 11,853,602.41 5.35% 0.32%
hardware
Plastic injection
Depreciation 5,275,408.51 2.11% 5,227,232.53 2.36% -0.25%
hardware
Plastic injection
Energy 0 0 0 0 0
hardware
Foam Raw materials 44,025,375.89 65.64% 42,841,798.19 63.40% 2.24%
Foam Labor wages 4,224,487.03 6.30% 2,950,691.36 4.37% 1.93%
Foam Depreciation 1,858,016.51 2.77% 1,409,523.51 2.09% 0.68%
Foam Energy 7,144,911.48 10.65% 6,244,789.00 9.24% 1.41%
Statement
The Company‘s main business cost was RMB 564,457,891.72, including display RMB 246,787,271.6, plastic injection hardware
RMB 250,600,705.25, and foam RMB 67,069,914.87.
Main suppliers of the Company
Total purchase amount from top five suppliers (RMB) 360,274,417.88
Proportion in total annual purchase amount for top five
63.83%
suppliers
Information of top five suppliers of the Company
√Applicable □Not applicable
Proportion in total annual purchase
Serial Name Purchase amount (RMB)
amount
Hong Kong Yutian International Investment
1 136,379,457.77 24.16%
Co., Ltd.
2 Qingdao Haier Part Purchasing Co., Ltd. 122,720,474.29 21.74%
3 Gree Electric Appliances (Wuhan) Co.,Ltd. 50,241,765.72 8.90%
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Wuhan Hengsheng Photoelectricity Industry
4 27,985,217.75 4.96%
Co., Ltd.
5 Jingdongfang Technology (HK) Co., Ltd. 22,947,502.35 4.07%
Total -- 360,274,417.88 63.83%
Other notes of main suppliers of the Company
□ Applicable √ Not applicable
4. Expenses
Item 2014 2013 Y-o-y changes
Sales expenses 11,512,229.16 10,021,716.98 14.87%
Management expenses 39,200,279.02 39,240,424.34 -0.10%
Financial expenses 39,784,553.27 21,454,338.85 85.44%
Income tax expenses 2,956,031.00 -1,077,769.12 374.27%
Main reasons of financial expenses increased: interest generated from long-term loans.
Main reasons of income tax expenses increased: deferred income tax expenses generated from preparation of assets depreciation
written off
5. Cash flow
In RMB
Item 2014 2013 Y-o-y changes
Subtotal of cash in-flow from
559,888,802.08 408,744,234.62 36.98%
operation activity
Subtotal of cash out-flow from
440,396,643.07 478,097,675.00 -7.89%
operation activity
Net cash flow from operation activity 119,492,159.01 -69,353,440.38 272.29%
Subtotal of cash in-flow from
1,925,000.00 147,000.00 1,209.52%
investment activity
Subtotal of cash out-flow from
506,526,605.58 10,138,667.85 4,895.99%
investment activity
Net cash flow from investment
-504,601,605.58 -9,991,667.85 -4,950.22%
activity
Subtotal of cash in-flow from
971,853,411.47 488,889,296.63 98.79%
financing activity
Subtotal of cash out-flow from
617,002,557.02 457,333,878.70 34.91%
financing activity
Net cash flow from financing activity 354,850,854.45 31,555,417.93 1,024.53%
Net increased amount of cash and -28,312,172.74 -49,544,183.56 42.85%
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
cash equivalent
Reasons for y-o-y relevant data with over 30% changes
√Applicable □Not applicable
Y-o-y increased of cash in-flow from operation activitiy: sales receivables increased over same period of last year;
Y-o-y increased of net cash flow from operation activity: sales receivables increased over same period of last year;
Y-o-y increased of cash in-flow from investment activitiy: cash in-flow from fixed assets disposal in the year increased over same
period of last year;
Y-o-y increased of cash out-flow from investment activitiy: purchasing financial products in the Period;
Cash in-flow from financing activity increased y-o-y: loans increased over the same period of last year.
Y-o-y increased of cash out-flow from financing activitiy: loans increased over same period of last year, thus interest expenditure
increased correspondingly;
Net cash flow from financing activity increased y-o-y: loans increased over the same period of last year.
Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
□ Applicable √ Not applicable
III. Composition of main business
In RMB
Increase/decrease Increase/decrease Increase/decrease of
Operating
Operating cost Gross profit ratio of operating of operating cost gross profit ratio
revenue
revenue y-o-y y-o-y y-o-y
According to industries
3.68 percentage
Display 264,125,902.82 246,787,271.60 6.56% -0.02% -3.81%
points up
Plastic injection 0.18 percentage
275,568,139.15 250,600,705.25 9.06% 12.90% 13.12%
hardware points down
1.15 percentage
Foam 75,274,165.11 67,069,914.87 10.90% -2.02% -0.74%
points down
According to products
3.68 percentage
Display 264,125,902.82 246,787,271.60 6.56% -0.02% -3.81%
points up
Plastic injection 0.18 percentage
275,568,139.15 250,600,705.25 9.06% 12.90% 13.12%
hardware points down
1.15 percentage
Foam 75,274,165.11 67,069,914.87 10.90% -2.02% -0.74%
points down
According to region
3.68 percentage
Hong Kong 264,125,902.82 246,787,271.60 6.56% -0.02% -3.81%
points up
Central China 350,842,304.26 317,670,620.12 9.45% 9.32% 9.88% 0.46 percentage
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
points down
Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on
latest one year‘s scope of period-end
□ Applicable √ Not applicable
IV. Assets and liability analysis
1. Major changes of assets
In RMB
End of 2014 End of 2013
Ratio in total Ratio in total Ratio changes Notes of major changes
Amount Amount
assets assets
Monetary fund 28,819,357.68 2.48% 54,251,456.20 7.42% -4.94%
Account
112,425,468.57 9.67% 162,278,705.83 22.19% -12.52%
receivable
Inventory 30,880,050.55 2.66% 47,119,303.85 6.44% -3.78%
Investment real
31,274,663.74 2.69% 32,529,420.82 4.45% -1.76%
estate
Long-term equity
0 0.00% 0 0.00% 0.00%
investment
Fix assets 186,438,814.34 16.03% 195,542,067.03 26.74% -10.71%
Construction in
2,853,356.00 0.25% 2,323,356.00 0.32% -0.07%
progress
2. Major changes of liability
In RMB
2014 2013
Ratio
Ratio in total Ratio in total Notes of major changes
Amount Amount changes
assets assets
Short-term loans 138,114,376.32 11.88% 162,140,601.13 22.17% -10.29%
Long-term loans 585,300,000.00 50.34% 162,418,800.00 22.21% 28.13%
V. Core competence analysis
1. All industrial lands of the Company located in Shenzhen were taken into the first batch of plan under 2010 Shenzhen urban
upgrade planning. In the future, development and operation of self-owned land resources would become the income source of the
Company on a long-term and stable basis.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
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 established a good long-term cooperative relationship; in particular,
its injection molding business and polystyrene businesses have been operated for many years with steady management group and
abundant production experiences, which makes the Company enjoying high recognition and annual production capacity and scale in
the forefront of Central China.
VI. Investment analysis
1. Trust financing, investment of derivatives and entrustment loan
(1) Trust financing
√Applicable □Not applicable
In 10 thousand Yuan
Amount
Amount of reserve
of for
Relate Whether Determin Actual
Amount Start date of End date of principal devaluati
Name of d related ation Estimated gains/loss
Type of trust trust trust actual on of
trustee relatio trade or method of income es in
financing financing financing taking withdrawi
nship not reward period
back in ng (if
period applicable
)
Accordin
Trust financial
CITIC Trust N/A No 10,000 2014-12-26 2015-12-25 g to the 0 0 1,200 0
products
contract
Accordin
Trust financial
CITIC Trust N/A No 10,000 2014-12-26 2015-12-25 g to the 0 0 1,200 0
products
contract
Accordin
Trust financial
CITIC Trust N/A No 10,000 2014-12-26 2015-12-25 g to the 0 0 1,200 0
products
contract
Accordin
Trust financial
CITIC Trust N/A No 10,000 2014-12-26 2015-12-25 g to the 0 0 1,200 0
products
contract
Accordin
Trust financial
CITIC Trust N/A No 10,000 2014-12-26 2015-12-25 g to the 0 0 1,200 0
products
contract
Total 50,000 -- -- -- 0 0 6,000 0
Capital resource Own capital
Overdue un-received principal and accumulated
0
earnings amount
Lawsuit involved (if applicable) N/A
Disclosure date for approval from the Board for
2014-07-22
trust financing (if applicable)
Disclosure date for approval from board of 2014-08-09
17
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
shareholders for trust financing (if applicable)
2. Main subsidiaries and stock-jointly companies
√Applicable □Not applicable
Particular about main subsidiaries and stock-jointly companies
In RMB
Company Main products Register Operating Operating
Type Industries Total assets Net Assets Net profit
name or service capital revenue profit
R&D,
Hengfa production,
Technolo Production sales of products
Subsidiary 181,643,111.00 435,568,994.48 201,868,257.67 618,669,459.33 -2,173,367.33 897,972.26
gy sales and import and
company export business
etc.
Property leasing
Huafa and
Property
Property Subsidiary management 1,000,000.00 497,547.76 -518,815.06 1,996,124.80 359,086.47 327,676.70
management
Company of self-owned
property
Property leasing
Huafa and
Property
Lease Subsidiary management 1,000,000.00 1,900,692.20 -5,026,990.71 0 0 0
management
Company of self-owned
property
Property leasing
Yutian and
Property
Henghua Subsidiary management 1,000,000.00 999,940.00 999,940.00 0 -60.00 -60.00
management
Company of self-owned
property
Property leasing
Huafa and
Property
Hengtian Subsidiary management 1,000,000.00 999,940.00 999,940.00 0 -60.00 -60.00
management
Company of self-owned
property
Property leasing
Huafa and
Property
Hengtai Subsidiary management 1,000,000.00 999,940.00 999,940.00 0 -60.00 -60.00
management
Company of self-owned
property
Notes of main subsidiaries and stock-jointly companies
Nil
18
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Particular about subsidiaries obtained or disposed in report period
√Applicable □Not applicable
Purpose of getting and treating The way of getting and treating Influence on overall product
Name of company
subsidiary in the reporting subsidiary in the reporting and performance
Huafa Trade Company Integration of the business Sales No significant impact
Huafa Hengtai Company Integration of the business Newly established No significant impact
VII. Prospect for future development of the Company
(I) The industry development and market analysis
Looking ahead to 2015, the global economy will remain in a state of gradually climbing from the bottom of the crisis, the domestic
economy will still be under the downward pressure, the demand will still be in the attenuation stage, the consumer growth points will
continue to turn to the service consumption and information consumption, the technology revolution will accelerate the upgrade of
products like communication equipments, etc., and the innovation enthusiasm will rise obviously. The economy is preparing and
waiting, the economic structure is being optimized, the industry structure is changing, the information, health, high-end equipment
manufacturing, new energy and environmental protection, and business services may become the new dominant force, and the
traditional industries may revitalize after "downsizing".
Under the circumstances that the state ministries united to save the real estate market and the mortgage policy is rather loose, the
home appliance industry is expected to bring about the new demand growth by decorating the new homes, the high-end, intelligent
and energy-saving home appliances shall become the new ―benchmark‖ in the home appliance industry in 2015.The Company's
industrial production and processing businesses belong to the labor-intensive and technology-intensive combined and semi-automatic
production mode, the product orders are mainly from many well-known and large-scale home appliance manufacturers in domestic
which are with large scale and have the stable businesses. As a traditional industry under the fierce market competition, the core
choice to solve the developing dilemma is promoting the additional value or profitability of technology by technology upgrading.
Under the background of downstream consumer demand upgrade, it will be one of the strategic targets of the company‘s industrial
business development to further consolidate the industry position by adjusting and improving the product structure, increasing the
development efforts to the new products, improving the production processes, enhancing the productivity, expanding the downstream
channels, cultivating its own brands, and actively seeking for the transformation and upgrading.
Over the years, the Company has focused on both manufacturing and property management, except for producing and selling the
LCD monitors, injection molding, and foam parts, the property leasing has always been the key pillar of business, the own property is
the company's core assets, the operating profits of property leasing business has always been greater than the industrial business
profits. It is the company‘s long-term strategic goal to make full use of the existing property and land assets to continue to expand
and upgrade the operation, leasing and service businesses of the commercial real estate, and further become the long-term and stable
source of incomes for the company step by step.
(II) The new annual business plan
◆Continue to promote the urban renewal project
The renewal project of Hwafa area at Gongming streets in Guangming new district Shenzhen joins hands with the controlling
shareholders to seek for the beneficial cooperation with the real estate developers with well-known brands and the developing
abilities so as to accelerate and propel the project implementation process together, hurry up and accomplish the development process
at an earlier stage, and strive for starting the construction and implementation of the first-stage project in the recent two years; the
renewal project of Hwafa building at Huaqiang Bei street, Futian district, Shenzhen shall continue to coordinate with some small
owners to finish the compensation and resettlement of removal, and strive to make achievements for the subject declaration at an
19
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
early date.
◆Plan the implement the non-public offering of A shares
To further optimize the company's capital structure, improve the financial situation and provide the necessary capital and liquidity
support for the company‘s transformation and upgrading of the industrial business, the professionalization and scale development of
the real estate management, the company plans to issue the non-public offering of A shares, the controlling shareholders subscribe
with cash, the raised funds are used for refunding and supplementing the circulating fund, which lays a solid foundation for the
company‘s sustainable development.
◆Continue to steadily develop the industrial business
Firstly, ensure the stability of the existing customers, continue to maintain the existing order quotas from Haier, Gree, AOC, and TCL,
comprehensively continue and introduce the customer to make more orders for the newly developed products, strive for more market
shares; secondly, seek for the new business growth points, entirely expand the scope of business, actively develop the markets, and
selectively and targetedly carry on and develop the new OEM businesses in order to achieve the annual tasks based on the rich OEM
experience over the years, the current resources for industrial production, the superior geographic position of central China, and the
study and attempts in 2014.
◆Continue to focus on the production management
Carry the energy-saving and cost-reducing through to the end, accelerate the technical transformation progress of production
equipment, further carry out the automated management, improve the production processes, reduce the energy consumption, and cut
the payroll to improve efficiency so as to reduce the production costs, enhance the productivity, improve the product quality, and
ensure the product quality, costs and delivery can better meet the customers‘ requirements; In the market environment that the
demands for end products are upgrading, focus on the development and promotion of new products, enlarge the product categories
and product lines, enhance the product diversification as needed, utilize the factory cost advantage and internet channel of
e-commerce, and comprehensively promote its own brand in the market expansion and marketing.
◆Positively reinforce the property business
In the situation that the industrial business is transforming and upgrading and the profitability weaker than expected in recent years,
the company actively develops the property business, revitalizes the stock assets, refits its own property – Hwafa building, and
attracts the investment, the property business contributes good profits to the company and becomes the company‘s important strategic
business. In order to enhance the profitability, the company will further promote the specialty of property business, explore the
diversified property management modes, and timely enlarge the property leasing scale.
(III) Fund demand, using plan and sources
To further promote the company's business development strategy to meet the needs for the growing business, the company will focus
on the annual operating and investment plans to continue working with the existing banks, combine the different credit terms of these
banks, comprehensively use the financial instruments to reduce the use cost of funds, actively clean up the accounts receivable,
reduce the inventory, control the daily expenses, and accelerate the cash flow; continue to negotiate and explore the new financing
channels, consolidate and strengthen the strategic cooperation between the banks and enterprises, establish the special financing plan
according to the implementation progress of the urban transformation and renovation project, timely deploy the stock and working
funds to maintain the current business, and accelerate the future growth.
(IV) The risks of the company’s production and management and the countermeasures to be taken in 2015
1. The operational risks of industrial business: the industrial structure adjustment, the fluctuations in raw material prices, the
reduction in market demand, the obstruction to the promotion of new products, etc.
Countermeasures to be taken: see "The new annual business plan".
2.Financial risks: large quantity demands for funds and exchange rate fluctuations resulting in the substantial increase or decrease in
financial costs, tense bank credit caused by the changes in macroeconomic policies, etc.
20
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Countermeasures to be taken: pay close attention to the macroeconomic policy trend, actively expand the financing channels,
establish a virtuous cycle mechanism for funding, improve the efficiency, and use the financial instruments to avoid the exchange rate
risks.
VIII. Explanation on changes of accounting policy, accounting estimation and settlement
method compared with the last year’s financial report
√Applicable □Not applicable
Ministry of Finance revised the follow "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investments‖,
"Accounting Standards for Business Enterprises No. 9 - Employee Remuneration", " Accounting Standards for Business
Enterprises No. 30 - Presentation of Financial Statements " and " Accounting Standards for Business Enterprises No. 33 -
Consolidated Financial Statements " in 2014, and issued specific standards as "Accounting Standards for Business Enterprises No. 39
- Fair Value Measurements ", "Accounting Standards for Business Enterprises No. 40 - Joint Arrangement" and "Accounting
Standards for Business Enterprises No. 41 - Disclosure of Interests in Other Entities", and executed since 1 July 2014; the
―Accounting Standards for Business Enterprises – Basic Norms‖ has been revised and carried into effect since 23 July, the date
announced for amendment; the "Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments‖ has
been revised and carried into effect on the financial reports since 2014. The Company executed the above mentioned accounting
standards since the corresponding time point in line with the regulations. Changed of the accounting standards show no impact on
consolidates financial statement of the Company and no need to carry out the retroactive treatment.
IX. Compare with last year’s financial report; explain changes in consolidation statement’s
scope
√Applicable □Not applicable
Compared with last year, Huafa Hengtai Company was newly established in the Year, and Huafa Trading Company was sold.
X. Profit and dividend distribution
Determination, execution or adjustment of the profit distribution policy in the reporting period
□ Applicable √ Not applicable
The profit distribution plan or scheme and capital reserve capitalization plan or scheme of the Company for the last 3 years (reporting
period included)
In recent three years the Company accumulated retained net profit is negative and it did not have the conditions for profit distribution,
so the Company did not undertake profit allocation in recent years and no capital reserve shall be converted into share capital either.
Cash dividend in latest three years
In RMB
Net profit
Ratio of net profit
attributable to
attributable to
Amount of cash shareholders of Proportion of the
Year for bonus shareholders of Amount reckoned
amount reckoned
bonus listed company in into cash bonus from
distribution listed company in into cash bonus from
(tax included) consolidated cash repurchase
cash repurchase
consolidated
statement of bonus
statement
year
21
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
2014 0.00 7,687,620.27 0.00% 0.00 0.00%
2013 0.00 -6,517,401.44 0.00% 0.00 0.00%
2012 0.00 3,241,897.70 0.00% 0.00 0.00%
The Company gains profits in reporting period and the retained profit of parent company is positive but no plan of cash dividend
proposed
√Applicable □Not applicable
Reasons of cash dividend distribution plan was not proffered while the Company
Utilization plan for the retained profit
profited and parent company‘s undistributed profits were positive in the reporting
Being audited and confirmed by ShineWing CPA pursuit to the accounting principles of
China, the net profit achieved by the Company for year of 2014 was 7.6876 million
Yuan, however, the cumulative retained profit at end of 2014 was -188.6984 million
Make up the annual losses of previous
Yuan, in accordance with the relevant regulations of Article of Association and
years
Rewards Program of Bonus for Shareholders of the Company, combine the above
financial status and actual operation condition of the Company, the Company did not
possess the condition of profit distribution.
XI. Profit distribution and plan of capitalization from capital public reserve
□ Applicable √ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the year
XII. In the report period, reception of research, communication and interview
√Applicable □Not applicable
Contents discussed and
Time Place Way Type Reception
material provided
Communicating operation
situation of the Company,
January to December Headquarter of Telephone Some individual
Individual assets status and process of
2014 the Company communication investors
city update projects and
private placement etc.
22
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section V. Important Events
I. Significant related transaction
1. Related transaction related to daily operation
√Applicable □Not applicable
Amount
Type Ration in Account
Parties Relate Price of
of Pricing amount of s-settlem
of d Contents of of related Market price of similar Date of Index of
related principle of similar ent of
related relatio related trade related trade (10 transaction available disclosure disclosure
trade related trade related related
trade nship trade thousand
trade trade
Yuan)
Sharin
g the
same Purchasing Synchronized Telegrap
HK Purcha 2014-
control LCD with the 14,513 14,513 58.81% hic —
Yutian se 04-22
ling monitors market transfer
shareh
older
The average market price
refers to the price of
same specifications
Confirmed
which is searched from
Sharin with 1% of
through the world
g the current market
Hengshe famous professional http://www.cni
same Purchasing average price Telegrap
ng Purcha market survey company 2014- nfo.com.cn/fin
control LCD in principle, 2,799 2,799 11.34% hic alpage/2014-0
Photoele se website 04-22 4-22/6388875
ling monitors and refer to transfer
ctricity http://www.witsview.com 0.PDF
shareh both their
recognized authority in
older bargaining
the industry and LCD
power
professional market
survey company website
http://www.witsview.com
Sharin
g the
Sales LCD According to
same Telegrap
HK overall the customer 2014-
control Sales 23,481 23,481 88.90% hic —
Yutian monitor sales order 04-22
ling transfer
machine set price sure
shareh
older
Total -- -- 40,793 -- -- -- -- --
Details of returned large sales N/A
23
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Essentiality and persistence of related
trade, as well as reason for choosing Daily related trade could reduce production cost of overall LCD monitor and improve sustainable
trading with related parties (not other development of the Company
traders in market)
The company and related party in business, personnel, assets, institutions and financial aspects separates
Impact on individuality of listed
completely, the independent complete autonomy in operation ability, connected transaction does not affect
companies from related trade
the independence of the company
Dependence on related parties from
the Company, as well as related The Company and related parties were cooperation relationship, existing no dependence
measurements (if applicable)
Predict on total amount of daily In the reporting, Hengfa Technology purchased LCD from Hengsheng Photoelectricity with $ 4,573,500
related trade on the way in this period approximately, 38.11% of the annual amount predicted at the beginning of the year; purchased LCD from
according to classification, as well as HK Yutian with $ 23,717,700 approximately, 47.44% of the annual amount predicted at the beginning of the
actual implementation in reporting year; sold LCD whole machine to HK Yutian with $ 38,374,200 approximately, 69.77% of the annual
period (if applicable) amount predicted at the beginning of the year.
Reason of the greater difference
between trade price and market N/A
reference price (if applicable)
2. Major related transactions of mutual outward investment
□ Applicable√ Not applicable
The Company has no major related transactions of mutual outward investment in the Period
3. Contact of related credit and debt
√Applicable □Not applicable
Whether has non-operating contact of related credit and debt or not
□ Yes √ No
The Company has no non-operating contact of related credit and debt in the Period
II. Significant contracts and its implementation
1. Guarantees
√Applicable □Not applicable
In 10 thousand Yuan
Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries)
Related
Actual date of Complete Guarante
Announcem
Name of the Company Guarantee happening (Date Actual Guarantee implemen e for
ent Guarantee type
guaranteed limit of signing guarantee limit term tation or related
disclosure
agreement) not party
date
N/A
Guarantee of the Company for the subsidiaries
24
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Related
Actual date of Complete Guarante
Announcem
Name of the Company Guarantee happening (Date Actual Guarantee implemen e for
ent Guarantee type
guaranteed limit of signing guarantee limit term tation or related
disclosure
agreement) not party
date
Wuhan Hengfa Joint liability
2015-04-22 50,000 10,331.44 1 year No No
Technology Co., Ltd. guarantee
Total amount of actual occurred
Total amount of approving guarantee
50,000 guarantee for subsidiaries in 25,482.86
for subsidiaries in report period (B1)
report period (B2)
Total amount of approved guarantee Total balance of actual
for subsidiaries at the end of reporting 50,000 guarantee for subsidiaries at the 10,311.44
period (B3) end of reporting period (B4)
Total amount of guarantee of the Company( total of two abovementioned guarantee)
Total amount of actual occurred
Total amount of approving guarantee
50,000 guarantee in report period 25,482.86
in report period (A1+B1)
(A2+B2)
Total balance of actual
Total amount of approved guarantee at
50,000 guarantee at the end of report 10,311.44
the end of report period (A3+B3)
period (A4+B4)
The proportion of the total amount of actually guarantee in the net
36.65%
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 Company
0
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: Nil
(1) Guarantee outside against the regulation
□Applicable √Not applicable
No guarantee outside against the regulation in Period.
25
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
III. Implementation of commitments
1. Commitments from the Company or shareholders (with over 5% shares held) in or occurred in the
previous period but continued to reporting period
√Applicable □Not applicable
Commitment Dated for
Commitments Contents Commitment term Implementation
party commitment
Share Merger Reform
Within 1 year after transferred of this equity
From April 12, 2007
Wuhan acquisition: 1. Injected relevant capital of
to April 11, 2008;
Zhongheng plastic injection business into the Company; 2007-03-29 Implementing
From May 13, 2014
Group 2.70% equity of the Hengsheng
to May 12, 2015
Photoelectricity will inject into the Company.
The enterprise and its subsidiaries will not
participate directly or indirectly in operation
of the business with competitive of Shen
Wuhan Implement since 12
Huafa and its controlling subsidiary
Zhongheng 2007-03-29 April 2007 Implementing
concerned, and not to damage the interest of
Group throughout the year
the Shen Huafa and its controlling subsidiary
by making use of the potential
controlling-ship of the Shen Huafa either
The enterprise and its subordinate enterprise
shall avoid a related transaction as far as
Commitments in
possible with Shen Huafa and its controlling
report of
subsidiary, as for the related dealings occurred
acquisition or equity
inevitable or have reasonable cause, the
change
enterprise promise to follow the principle of
Wuhan fair-ness, justice and open-ness, signed the Implement since 12
Zhongheng agreement in line with the laws, perform legal 2007-03-29 April 2007 Implementing
Group program, fulfill information disclosure throughout the year
obligation and relevant approval procedures
according to the relevant laws, regulations and
―Listing Rules‖ of the Shenzhen Stock
Exchange, guarantee not to damage the legal
interest of Shen Huafa and its shareholders
through related transactions
After acquisition and assets restructuring,
Wuhan guarantee to have an independent staff, owns Implement since 12
Zhongheng independent and completed assets, and 2007-03-29 April 2007 Implementing
Group independent in aspect of business, financial throughout the year
and institution from Shen Huafa
26
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Commitments in
assets reorganization
Commitments in
initial public offering
or refinancing
Other commitments to
minority shareholders
of the Company
Completed on time or
No
not
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 Zhongheng Group by cash of RMB 27 million, the
commitment have been implemented;
2. In the first 10 days of May, 2008, the Company officially started off the significant asset restructures work of
purchasing the 70% equities of Hengsheng Photoelectricity.; engaged financial consultant and law consultant to carry
out earnest investigation on the restructure assets that may be involved, 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 and suspended.
Detail reasons for
In April 2014, considering unpleasant operation of Hengsheng Photoelectricity, as well avoid causing loss to listed
un-complement and
companies due to forced commitment fulfillment, holding shareholder Wuhan Zhongheng Group raised proposal of
further plan (if
changing the commitment from perspective of maintaining long-term interests of listed company, which was changed
applicable)
to: within 1 year since the General Shareholders‘ Meeting approved, Wuhan Zhongheng Group sold its underneath
street shops located in property of the 1st phase of Yutian Happy Sea in cash. The revised commitment has been
approved in Shareholders‘ General Meeting of 2013 held on 13th May 2014.
The 2nd extraordinary meeting of 2015 of the Board was held on 17 March 2015, agreed to purchase the underlying
shops along the street of the Phase I ―Yutian Xingfuhai‖ real estate project developed and constructed by Wuhan
Xindongfang Real Estate Development Co., Ltd. (the wholly-owned subsidiary of Wuhan Zhongheng New Technology
Industry Group Co., Ltd., controlling shareholder of the Company) with 25 million Yuan in cash, found more in the
notice released on 19 March 2015 and 17 April 2015.
IV. Appointment and non-reappointment (dismissal) of CPA
Accounting firm appointed
Name of domestic accounting firm Shine Wing Certified Public Accountants LLC
Remuneration for domestic accounting firm (10
48
thousand Yuan)
Continuous life of auditing service for domestic
9 years
accounting firm
Name of domestic CPA Zhang Weijian, Zhang Yongde
Name of foreign accounting firm (if applicable) N/A
Remuneration for foreign accounting firm (10 0
27
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
thousand Yuan) (if applicable)
Continuous life of auditing service for foreign
N/A
accounting firm (if applicable)
Name of foreign CPA N/A
Whether re-appointed accounting firms in this period or not
□ Yes √ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable □Not applicable
In 2014, the Company employed Shine Wing Certified Public Accountants LLC as internal control audit institutions and the expense
of internal control audit was RMB 140,000.
V. Other material events
√Applicable □Not applicable
(I)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.
The Company convoked the first extraordinary meeting of the Board in 2015 on February 16, 2015 and the first extraordinary general
meeting of the Board in 2015 on March 4, 2015, which considered and approved the ―Motion on promoting and implementing the
urban renewal project for the renewal units of Hwafa area at Gongming street, Guangming new district, Shenzhen‖, specified that the
Company and Wuhan Zhongheng Group shall obtain the corresponding compensatory consideration for removal from the
respectively owned project plots and the respectively contributed and constructed above-ground buildings in accordance with
Shenzhen urban renewal policies and regulations and the provision of relevant governmental departments before the land
development, it is estimated that the compensatory consideration obtained by the Company accounts for 50.5% of the total
consideration and Wuhan Zhongheng Group accounts for 49.5% by calculation.
(II) With purpose of further optimize the capital structure, improve financial status of the Company and providing necessary caital
condition and liquidity for the upgrade of industry business transformation, specialization of the property operation and development
of large-scale, the Company plans to private offering A-share. Controlling shareholder - Wuhan Zhongheng New Technology
Industry Group Co., Ltd. subscribe 87.6 million shares at most in cash, fund raised no more than 599.184 million Yuan (issuance cost
included) in total, the fund are raised for debt payment and supplement current capital in order to laying a solid foundation of the
sustainable development of the Company. Relevant private placment of A-share has been deliberated and approved by third
extraordinary meeting fo 2015 of the Board, and shall submite for approval by general meeting and implemente after verify by CSRC,
found more in notice released on 20 March 2015.
(III) In order to further integrate the resources of the group and adjust the industrial distribution, the company‘s controlling
shareholder - Wuhan Zhongheng Group has been separated into "Wuhan Zhongheng New Technology Industry Group Co., Ltd." and
"Wuhan Zhongheng Huaxin Industry Co., Ltd.": "Wuhan Zhongheng New Technology Industry Group Co., Ltd." is the remainder
28
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
enterprise after separation, keeps the original name of Wuhan Zhongheng Group, and possesses the assets and interests of real estate
belonging to Wuhan Zhongheng Group; "Wuhan Zhongheng Huaxin Industry Co., Ltd." is the newly established company, possesses
the assets and interests of properties except for the real estate belonging to Wuhan Zhongheng Group, including the Company‘s
41.14% stock rights held by Wuhan Zhongheng Group. Huaxin Industry has got the ―Official reply for approving Wuhan Zhongheng
Huaxin Industry Co., Ltd. to announce the acquisition report of Shenzhen Zhongheng Hwafa Co., Ltd. and exempt its tender offer
obligation from China Securities Regulatory Commission‖ (CSRC permission No [2013] 1503). Through this acquisition, the
controlling shareholder of the Company will be changed to Huaxin Industry without changing the actual control and the company‘s
general capital, which doesn‘t constitute a substantial impact on the Company.
As the Company has started planning and preparing the non-public offering of shares since June, 2014, at that time, Wuhan
Zhongheng Group intended to subscribe the Company‘s non-public offering of shares with its real estate properties in Wuhan, after
the subscription, Wuhan Zhongheng Group shall increase the possession of the Company‘s stock rights. If the separation transfers the
current 41.14% of the Company‘s stock rights to Huaxin Industry shall result in that both Wuhan Zhongheng Group and Huaxin
Industry hold the Company‘s stock rights, which don‘t comply with the commercial object of the separation to Wuhan Zhongheng
Group, the significance and necessity of the separation is insufficient. Therefore, Huaxin Industry has decided to terminate this
acquisition, 41.14% of the Company‘s stock rights held by Wuhan Zhongheng Group shall not be transferred to Huaxin Industry, and
Wuhan Zhongheng Group shall continue to hold the Company‘s stock rights and be the Company‘s controlling shareholder. See
details on the company‘s announcement on December 10, 2014.
(IV) The controlling shareholder - Wuhan Zhongheng Group shares held 116,489,894 shares of the Company‘s stock, accounting for
41.14% of the Company's total share capital, because of involving in the debt dispute and creditor‘s application for the property
preservation, Wuhan Zhongheng Group has been frozen by judicial office on October 14, 2014 and has not yet been released, see
details on the company‘s announcement on November 22, 2014.
29
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section VI. Changes in Shares and Particulars about Shareholders
I. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
In shares
Total preference
Total common shareholders with
Total common shareholders ended voting rights
th
shareholders in 24,690 as the 5 trading day 22816 recovered at end of 0
reporting period-end before annual report reporting period (if
disclosed applicable) (see
note8)
Particulars about shares held above 5% by shareholders or top 10 shares holding
Total Number of share pledged/frozen
shareholders Changes Amount of Amount of
Proportion
Full name of Nature of
of shares at the end in report the restricted the restricted
Shareholders shareholder
held State of share Amount
of report period shares held shares held
period
Domestic Pledged 116,489,894
Wuhan
non-state-ow
Zhongheng 41.14% 116,489,894 0 116,489,894 0
ned legal Frozen 116,489,894
Group
person
SEG (HONG Pledged 0
Overseas
KONG) CO., 5.58% 16,569,560 0 0 16,569,560
legal person Frozen 0
LTD.
GOOD HOPE Pledged 0
CORNER Overseas
4.91% 13,900,000 0 0 13,900,000
INVESTMENTS legal person Frozen 0
LTD
Domestic Pledged 0
BINGHUA LIU 0.31% 876,213 0 876,213
nature person Frozen 0
Domestic Pledged 0
Xie Deqing 0.28% 780,100 0 780,100
nature person Frozen 0
Domestic Pledged 0
Shi Feng 0.25% 714,273 0 714,273
nature person Frozen 0
Domestic Pledged 0
Wang Jianguang 0.23% 651,849 0 651,849
nature person Frozen 0
Domestic Pledged 0
Li Jianfeng 0.23% 637,600 0 637,600
nature person Frozen 0
30
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Domestic Pledged 0
Zhu Ming 0.22% 611,348 0 611,348
nature person Frozen 0
Domestic Pledged 0
Jia Wenjun 0.20% 557,232 0 557,232
nature person Frozen 0
Strategy investors or general
legal person becomes top 10
N/A
shareholders due to rights issued
(if applicable)
Among the top ten shareholders, Wuhan Zhongheng Group neither bears associated relationship
with other shareholders, nor belongs to the consistent actor that are prescribed in Measures for the
Explanation on associated
Administration of Disclosure of Shareholder Equity Changes of Listed Companies. The Company
relationship among the
neither knew whether there exists associated relationship among the other tradable shareholders, nor
aforesaid shareholders
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
BINGHUA LIU 876,213 listed foreign 876,213
shares
Domestically
Xie Deqing 780,100 listed foreign 780,100
shares
RMB common
Shi Feng 714,273 714,273
share
Domestically
Wang Jianguang 651,849 listed foreign 651,849
shares
Domestically
Li Jianfeng 637,600 listed foreign 637,600
shares
Domestically
Zhu Ming 611,348 611,348
listed foreign
31
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
shares
RMB common
Jia Wenjun 557,232 557,232
share
RMB common
Wu Jingmin 491,786 491,786
share
Among the top ten unrestricted shareholders, the Company neither knew whether there exists
Expiation on associated relationship or associated relationship among the other tradable shareholders, nor they belong to consistent
consistent actors within the top 10 actors that are prescribed in Measures for the Administration of Disclosure of Shareholder
un-restrict shareholders and between Equity Changes of Listed Companies. Among the top ten shareholders, Wuhan Zhongheng
top 10 un-restrict shareholders and top Group neither bears associated relationship with other shareholders, nor belongs to the
10 shareholders consistent actor that are prescribed in Measures for the Administration of Disclosure of
Shareholder Equity Changes of Listed Companies.
Explanation on top 10 shareholders In top ten shareholders, 714,273 shares of the Company were hold by Shifeng through the
involving margin business (if guarantee securities account of client credit trading under the name of China Merchants
applicable)(see note4) Securities Co., Ltd., representing 100 percent of the Company‘s stock held by himself
Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement
dealing in reporting period
□ Yes √ No
The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy-back
agreement dealing in reporting period.
2. Particulars about controlling shareholder of the Company
Legal person
Legal
Controlling Date Organization
rep./person in Register capital Main business
shareholder established code
charge of unit
Production, sales of computers, TV set, display,
other hardware and computer software;
development of internal data communication
network, building of packing materials and light
weight building material for packaging;
Wuhan
management of exports business for the own
Zhongheng New
products and technologies for the Company and
Science & RMB 34,500,000
Li Zhongqiu 1996-03-21 71195460-1 member enterprise; management of export
Technology (after splitting)
business on raw material, apparatus and
Industrial Group
instrument, machinery equipments, spare parts and
Co., Ltd.
technologies (not including goods and
technologies that import and export are national
restricted or prohibited ); dry clean and steam iron
service; copy & print; business information
consulting; house tenancy; property management;
32
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
wholesale and retails of the hardware metal
products, plastic products, audio electronic
products, electronic equipment, textile, toys,
clothing & shoes, luggage, bedding article, general
merchandise, curtain, household appliances and
building materials; development of real-estate and
sales of commercial housings (projects with
special provision of the state can be operation after
approval)
Future
development N/A
strategy
Operation result, Ended as 31 December 2014, total assets of Wuhan Zhongheng Group amounting as 1.507 billion Yuan
financial status approximately; the operation income for year of 2014 was approximately 309 million Yuan and net profit was
and cash flow 17.4177 million Yuan.(The above data unaudited)
Equity
controlling and
jointly of other
foreign/domestic
N/A
listed company
by controlling
shareholder in
reporting period
Controlling shareholder changes in reporting period
□ Applicable √ Not applicable
Controlling shareholder of the Company has no changed in the Period
3. Particulars about actual controller of the Company
Nature person
Enjoy the residence rights in the other country or area
Actual controller‘s name Nationality
(Y/N)
Li Zhongqiu P.R.C N
He serves as the Chairman for Wuhan Zhongheng Group since 1996 and serves as
Occupation or position in latest five years
Chairman and GM of the Company since 2007.
Listed companies in and out of China that
N/A
controlled in last 10 years
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
Actual controllers of the Company has no changed in reporting period
Property right and controlling relationship between the actual controller and the Company is as follow:
33
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Li Zhongqiu
99%
Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd
41.14%
Shenzhen Zhongheng Huafa Co., Ltd.
Actual controller controlling the Company by entrust or other assets management
□ Applicable √ Not applicable
34
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company had no preferred stock in the reporting.
35
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section VIII. Particulars about Directors, Supervisors and Senior
Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
Shares held Increasing Decreasing Shares
Working Start dated of End date of at shares held shares held held at
Title Sex Age
Name status office term office term period-begin in this period in this period period-end
(Share) (Share) (Share) (Share)
Li Chairman& Currently
M 52 2007-07-18 2016- 08-22 0 0 0 0
Zhongqiu GM in office
Li Vice Currently
M 57 2013-08-23 2016- 08-22 0 0 0 0
Yongping chairman in office
Chen Director Currently
M 41 2007-07-18 2015- 04-22 0 0 0 0
Zhigang in office
Wang Currently
Director M 62 2013-08-23 2016- 08-22 0 0 0 0
Feng in office
Independent Leave
Li Dingan M 69 2008-06-27 2014- 05-12 0 0 0 0
director office
Independent Leave
Zhang Yi M 44 2008-09-04 2014- 05-12 0 0 0 0
director office
Li Independent Currently
M 48 2010-08-11 2016- 08-22 0 0 0 0
Xiaodong director in office
Qiu Independent Currently
M 48 2014-05-23 2016- 08-22 0 0 0 0
Daliang director in office
Zhang Independent Currently
M 59 2014-05-23 2016- 08-22 0 0 0 0
Zhaoguo director in office
Chairman of
Huang Currently
the F 52 2012- 01-16 2016- 08-22 0 0 0 0
Yanbo in office
Supervisory
Supervisor Currently
Geng Qu F 45 2012- 04-09 2016- 08-22 0 0 0 0
in office
Zhao Currently
Supervisor M 41 2013-08-23 2016- 08-22 0 0 0 0
Xiangfeng in office
Tang Currently
Deputy GM F 37 2013-08-23 2016- 08-22 0 0 0 0
Ganyu in office
Weng Secretary of Currently
F 34 2012-04-11 2016- 08-22 0 0 0 0
Xiaojue the Board in office
36
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Currently
Cao Li CFO F 44 2013-08-23 2016- 08-22 0 0 0 0
in office
Total -- -- -- -- -- -- 0 0 0 0
II. Post-holding
Major working experience of directors, supervisors and senior executive at the present in latest five years
Li Zhongqiu: Male, was born in 1962 with Master of Engineering. He is representative to the tenth session of NPC of Hubei Province,
May the first of labor medalist of Wuhan. He serves as Chairman of Wuhan Zhongheng New Science & Technology Industrial Group
Co., Ltd. since 1996. And serves as Chairman and the General Manager of the Company since July of 2007.
Li Yongping: Male, born in 1957, member of the CPC, a vice researcher. He served as director and vice director in industry & traffic
office of Hubei Statistics Bureau from December 1978 to May 1984; head of comprehensive group of worker office of Hubei
Province from May 1984 to September 1988; vice director of scientific research institute of Hubei Statistics Bureau from September
1988 to July 1992; took post of standing deputy editor of Reform Horizontal magazine of Hubei Commission for Economic
Restructuring from July 1992 to September 1994; served as research assistant in comprehensive office of Shenzhen Economic
Restructuring Office from September 1994 to September 1999, investigator of Shenzhen Economic Restructuring Office from
September 1999 to January 2001; served as secretary of research society of Shenzhen Economic Restructuring Office from January
2001 to December 2002; and a head of policy group of Shenzhen Enterprise Reform and Development Office from January 2003 to
June 2004; investigator of assessment office of Shenzhen SASAC Statistics from June 2004 to December 2004; director of Inspection
Office of Shenzhen SASAC from December 2004 to June 2006; he also served as deputy GM of Shenzhen Dachanwan Port
Investment & Development Co., Ltd. from July 2006 to December 2010, and he serves as deputy Gm and member of Party
Committee of Shenzhen Electronics Group Co., Ltd. since January 2011 and a deputy chairman of the Company since August 2013.
Chen Zhigang: Male, born in 1973, Master of Business Administration. From 2002 to 2005, he was supervisor, investment manager,
securities representative of Wuhan Huaxin Hi-Tech Co., Ltd. He is CFO and secretary of the board of directors of Wuhan Zhongheng
New Science & Technology Industrial Group Co., Ltd. from June 2005 to Aug. 2008, the Executive Deputy General Manager of
Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. from Aug. 2008 to Dec. 2014, and he works as Director of
the Company from July 2007 to April 2015.
Wang Feng: Male, born in 1952, owes a bachelor degree and a senior economist. He engaged in technical work in Wuhan Tractor
Factory from July 1981 to February 1984 and hold deputy chairman of the Factory from March 1984 to May 1992 and chairman of
the Factory from June 1992 to May 1995; he served as GM of Wuhan Cable Group Co., Ltd. from June 1995 to July 1997; took post
as director of the Board Office of WSAMC from August 1997 to August 1998; from September 1998 to April 2008, he served as
Chairman and GM of Wuhan Huanghe Lou Wine Industry Group Co., Ltd.; served as manager of the Economic Operation
Department of WSAMC from May 2008 to April 2013; he works in the Company since May 2013 and serves as Director and special
Assistant to the GM of the Company since August 2013.
Li Xiaodong: male, born in 1967, MBA and economist title. He graduated from Beihang University and then worked in China
Commercial and Industrial Bank Xi‘an North Avenue Branch as deputy director in north branch office of the bank; in Oct. of 1998,
he was called in China Commercial Bank Xi‘an Branch; in 2003 he joined Shenzhen Walkers Technology Co., Ltd. (short code:
002351) and worked as assistant of general manager, vice general manager in succession. And presently he serves as vice general
manager and secretary of the board of Shenzhen Walkers Technology Holding Co., Ltd. he serves as independent director of the
37
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Company since August 2010.
Qiu Daliang: Male, born in 1966, a legum magister and graduated from Northwest Institute of Politics. He respectively worked in
Shenzhen Special Economic Zone Branch of People‘s Bank of China, Shenzhen Securities Management Office and Shenzhen
Regulatory Authority(Shenzhen Inspection Department) of CSRC from July 1992 to September 2007; he successively worked as
audit staff of the share issuance, chief of regulatory section of the listed company, deputy chief of the inspection office, director of
the information research department etc.; acts as deputy president of Zhongshan Securities Co., Ltd. since December 2008; serves as
executive director and GM of the Beichuan Qianglin Eco-Agriculatural Development Co., Ltd. and Beichun Qiuchu Chicken
Ecological Farm Co., Ltd. since October 2011. He served as members of fiscal & taxation finacne committee of the first and second
session of Shenzhen Advisory Committee for Policy Decision; now he serves as independent directors of Shenzhen Han‘s Laser
Polytron Technologies Inc. (stock code 002008) and Shenzhen Sunlord Electronics Co., Ltd.
Zhang Zhaoguo, male, born in 1956, a professor (secondary) and doctoral supervisor. He worked as chief of the accounting teaching
& research section of Yichang Finance & Trading School from August 1978 to November 1993, served as deputy head of financial
department of Wuhan University Business College from December 1993 to August 2004, serves as director of the accounting
department of School of Management of the Huazhong University of Science and Technology since Septtember 2004. He
successively acted as part-time professor in China University of Geosciences, Harbin University of Commerce, Huazhong
Agricultural University and Huazhong University of Wuchang Branch, School of Manageemtn dean of the Wuhan Yangtze Business
University, independent director and outside director of the large-scale company as Wuhan P&S, Beijing Dawn, Fuhan Group and
HRTN, member of the review committee of Advanced Level Accountant of Hubei Province and Wuhan City, Director of Institute of
Chinese Accounting, council member of Demonstartion Accounting Society of China and vice-chairman of the Accounting
Association of Colleges & Universities for Science & Technology, act as the academic advivises of the magazine as Finance and
Accounting, Finance and Accounting Monthly, Financial Supervision and International Finance and Accounting.
Huang Yanbo: female, born in 1962, a university background and a senior accountant. She served as financial director of Wuhan
Zhongda Shopping Mall since 1985 to 1998; and worked as financial manager of Wuhan Zhongheng New Science & Technology
Industrial Group Co., Ltd. from 1998 to 2007 and GM assistant in charge of auditing supervise from 2007 to 2011; she serves as
CFO of the Company since 2012; she serves as supervisor of the Company since January 2012, and she serves as chairman of the
Supervisory of the Company since August 2013.
Zhao Xiangfeng: Male, born in 1973, graduate from junior college, an accountant and CPA. He served as PM of Wuhan Yinjian Real
Estate Development Co., Ltd. from September 1994 to April 2001; a broker in Ping An Securities from April 2001 to April 2003;
served as financial advisor of Hubei Financial Advisory Co., Ltd. from June 2003 to April 2006; from April 2006 to May 2007 he
served as head of the Finance in Wuhan Fuershi Food Co., Ltd.; served as PM of Hubei Jinye CPA Co., Ltd. from May 2007 to
March 2009; a head of the Finance in Wuhan Tongji Modern Pharmacy Co., Ltd. from March 2009 to August 2009; hold post of
financial manager of Wuhan Fashion Homes Co., Ltd. from August 2009 to April 2010; he works in the Company since April 2010
and successively served as deputy director and director of the auditing department and serves as supervisor of the Company since
August 2013.
Geng Qu: female, born in 1969, is graduated from Beihang University, the first quality engineer, a real estate economist, a human
resources economist and an engineer. She worked for the Company since 1990 and successively served as director of quality standard,
director of comprehensive management department and deputy chief of office of the Company. She serves as employee supervisory
of the Company since April 2012.
Weng Xiaojue: Female, was born in 1980. She graduated from Zhongshan University. She was engaging in securities work in the
38
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
office of board of directors of Guangzhou Friendship Co., Ltd. from July 2002 to August 2006 and became Representative for
Securities Affairs of the Company from January 2007 to 10 April 2012; she served as supervisor of the Company from July 2007 to 9
April 2012; and serves as Vice Chairman of Labor Union of the Company since July 2007; and since Mar. of 2010 she has taken post
of office director of the board of directors of the Company; secretary of the board of the Company since April 2012; at the same time
serves as director of Wuhan Hengfa Technology Co., Ltd and supervisor of Shenzhen Zhongheng Huafa Property Co., Ltd.
Tang Ganyu: Female, born in 1977, graduate from junior college. She served as assistant to Plant Manager of Wuhan Hengsheng
Photovoltaic Industry Co., Ltd. from August 2003 to July 2005 and manager of project department from August 2005 to July 2006;
act as deputy project manager of general office and production manager from August 2006 to December 2011; she served as
supervisor of the Company from July 2007 to January 2012 and GM assistant of the Company from January 2012 to August 2013,
she serves as deputy GM of the Company since August 2013.
Cao Li: Female, born in 1970, on-job postgraduates and an accountant. She act as CFO of Wuhan Zhongheng New Science &
Technology Industrial Group Co., Ltd. from 2000 to May 2005, a member of work group of the transitional period in the Company
from June 2005 to Jun e2006; GM assistant of the Company from July 2006 to October 2007 and secretary of the Board of the
Company from October 2006 to July 2007; served as GM of procurement center from May 2007 to October 2007, a chairman of
supervisory committee of the Company from July 2007 to August 2013 and serves as CFO of the Company since August 2013.
Post-holding in shareholder‘s unit
√Applicable □Not applicable
Weather receiving
Start dated of office End date of
Name Name of shareholder‘s unit Position remuneration from
term office term
shareholder‘s unit
Li Zhongqiu Wuhan Zhongheng Group Chairman 1996-03-21 No
Chen Zhigang Wuhan Zhongheng Group Executive Deputy GM 2008-08-18 Yes
Deputy GM, party
Li Yongping Shenzhen SEG Group Co., Ltd. 2011-01-03 Yes
committee
Huang Yanbo Wuhan Zhongheng Group CFO 2012-05-16 Yes
Statement of
post-holding in
N/A
shareholder‘s
unit
Post-holding in other unit
√Applicable □Not applicable
Weather receiving
Start dated of End date of
Name Name of other units Position remuneration from
office term office term
other units
Director& Deputy
Li Xiaodong Shenzhen Walkers Technology Co., Ltd. GM & Secretary
of the Board
Qiu Daliang Beichuan Qianglin Eco-Agriculatural Executive director
39
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Development Co., Ltd. and GM
Shenzhen Han‘s Laser Polytron Independent
Qiu Daliang
Technologies Inc. director
accounting department of School of
Zhang Zhaoguo Management of the Huazhong University Director
of Science and Technology
Zhang Zhaoguo Institute of Chinese Accounting Council member
Financial management Committee of
Zhang Zhaoguo Experts of the Accounting Society of Council member
China
Higher Accounting Association of Science
Zhang Zhaoguo and Technology of the Accounting Society Vice-chairman
of China
School of Management of the Wuhan
Zhang Zhaoguo Dean
Yangtze Business University
Beiojing Dawn Aerospace Bio-Tech Co., Independent
Zhang Zhaoguo
Ltd. director
Wuhan P&S Information Technology Co., Independent
Zhang Zhaoguo
Ltd. director
Independent
Zhang Zhaoguo Wuhan Fuhan Group
director
Hubei Radio and Television Information Independent
Zhang Zhaoguo
Network Co., Ltd. director
Statement of
post-holding in N/A
other unit
III. Remuneration of directors, supervisors and senior management
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives
Remuneration of directors and supervisors are determined by general meeting, and the allowance standard for each independent
director is RMB60, 000 per year (tax included).
Remuneration of senior management is determined by the board based on the unified remuneration management system and actual
completion of operational targets, and the ―Proposal of Basic Remuneration for High-ranking Managers of the Company‖ was
deliberated and approved in 2nd extraordinary meeting of the Board for year of 2012.
40
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
Total
Total Remuneration
remuneration
remuneration actually
Name Title Sex Age Post-holding status obtained from
obtained from obtained at
shareholder‘s
the Company period-end
unit
Chairman&
Li Zhongqiu M 52 Currently in office 48 0 48
GM
Li Yongping Vice chairman M 57 Currently in office 0 74.82 74.82
Chen Zhigang Director M 41 Currently in office 0 26.4 26.4
Wang Feng Director M 62 Currently in office 20.9 0 20.9
Independent
Li Dingan M 69 Leave office 2.5 0 2.5
director
Independent
Zhang Yi M 44 Leave office 2.5 0 2.5
director
Independent
Li Xiaodong M 48 Currently in office 6 0 6
director
Independent
Qiu Daliang M 48 Currently in office 3.5 0 3.5
director
Zhang Independent
M 59 Currently in office 3.5 0 3.5
Zhaoguo director
Huang Yanbo Supervisory F 52 Currently in office 0 18 18
Geng Qu Supervisor F 45 Currently in office 7.48 0 7.48
Zhao
Supervisor M 41 Currently in office 8.4 0 8.4
Xiangfeng
Tang Ganyu Deputy GM F 37 Currently in office 29.76 0 29.76
Secretary of
Weng Xiaojue F 34 Currently in office 20.9 0 20.9
the Board
Cao Li CFO F 44 Currently in office 20.9 0 20.9
Total -- -- -- -- 174.34 119.22 293.56
Delegated equity incentive for directors, supervisors and senior executives in reporting period
□ Applicable √ Not applicable
IV. Post-leaving and dismissals for directors, supervisors and senior executives
Name Title Type Date Reasons
Li Dingan Independent director End-of-term leave 2014-05-12 Leave the post when office terms expires
41
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Zhang Yi Independent director End-of-term leave 2014-05-12 Leave the post when office terms expires
Qiu Daliang Independent director Be elected 2014-05-13 Be elected as independent director of the Company
Zhang Zhaoguo Independent director Be elected 2014-05-13 Be elected as independent director of the Company
V. Particulars of workforce
The Company has1, 059 employees at end of reporting period, and no retired employees should stand the expenses by the Company
Professional composition
Type Numbers Ratio
Production staff 818 77.24%
Sales man 21 1.98%
Technician 73 6.89%
Financial staff 17 1.61%
Administration staff 130 12.28%
Educational background
Type Numbers Ratio
Master and on-job
postgraduates 3 0.28%
Undergraduate 42 3.97%
Junior college 115 10.86%
Other 899 84.89%
42
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section IX. Corporate Governance
I. Corporate governance of the Company
During the reporting period, in accordance with the laws and regulations of the "Company Law", "Securities Law", and "Governance
Norms of Listed Companies", and the relevant rules and requirements promulgated by the China Securities Regulatory Commission,
the company has constantly improved the corporate governance structure, established a sound internal control system, enhanced the
level of standard operation, strictly followed the provisions of the production and management control and the financial management
and control and the information disclosure and control, carried out the work on the basis of the "Articles of Association", "Rules of
Procedure of the Board of Directors‖, "Rules of Procedure of the Board of Supervisors‖, ―Working System of the Independent
Directors‖, and ―Working Rules of the General Manager‖, and ensured that the shareholders' meeting, the board of directors and the
board of supervisors can perform their duties and responsibilities normally. The company's governance meets the requirements on the
documents of governance norms of listed companies issued by China Securities Regulatory Commission.
During the reporting period, in order to improve the profit distribution policy and further protect the interests of the medium and small
investors, the company has revised the corresponding contents on the "Articles of Association" and "Rules of the Shareholders'
Meeting" according to the requirements of ―Supervision Guidelines for the Listed Companies No.3 - cash dividends of listed
companies" established by China Securities Regulatory Commission in 2013, "Statutes Guidelines for the Listed Companies" (CSRC
announcement No. [2014]19) revised in 2014, and ―Rules of the Shareholders' Meeting of the Listed Companies‖ and
combining with the actual situation.
Is there any difference between the corporate governance and the relevant requirements as provided by the Company Law and the
CSRC
□ Yes √ No
There is no difference between the corporate governance and the relevant requirements as provided by the Company Law and the
CSRC.
Implementation of special corporate governance activity and preparation and implementation of inside information registration
management system
1.According to the requirements of the "Notice to complete the investor protection and propaganda work of the listed companies"
issued by China Securities Regulatory Commission Shenzhen Bureau, the company has carried out the investor protection and
propaganda work to communicate with the investors by establishing a special column for the ―Investor Relations‖ on the official
website and replying the investors‘ questions on the interaction platform of Shenzhen Stock Exchange so as to enhance the investors‘
understanding to the company and maintain the legitimate rights and interests of the medium and small shareholders; On November 6,
2014, the company organized the directors, supervisors, senior executives and the staff in key positions, a total of 30 people, to
participate in the second caution and education exhibition of insider trading held by China Securities Regulatory Commission
Shenzhen Bureau to strengthen the discipline consciousness of insider information and complete the prevention and control work of
insider trading.
2.The company has always attached importance to the standardization to the insider information management, strengthened the
confidentiality of insider information and maintained the principle of fair information disclosure in order to improve the insider
information management system; the second extraordinary meeting of the board of directors in 2012 has deliberated and revised the
"Insider Registration Management System". During the reporting period, the company has strictly implemented the relevant system,
taken effective measures before the major and sensitive information disclosure, controlled the insiders to a minimum, propagandized
the insiders‘ duty of confidentiality, and practically avoided the disclosure of insider information and insider trading. Through the
43
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
self-examination, the company did not find the insiders use the insider information to illegally buy or sell the Company's shares, nor
the supervision department takes supervision measures and administrative penalties to the insider trading.
II. In the report period, the Company held annual general meeting (AGM) and extraordinary
shareholders’ general meeting
1. Annual General Meeting (AGM) in the report period
Session of
Date Name of meeting motion Situation Date of disclosure Index of disclosure
meeting
1. Report from the Board for year of 2013
2. Report from Supervisory Committee for
year of 2013
3. Financial Result Report for year of
2013
4. Profit Distribution Plan of 2013
5. ―Annual report of 2013‖ and Summary
6. ―Financial Result Report for year of
2014‖
7. ―Bank Loans Limit for year of 2014‖
Deliberated and http://www.cninfo.co
8. ―Guarantee Limit for Bank Loans of
AGM of 2013 2014-05-13 approved all 2014-05-14 m.cn/finalpage/2014-
Wholly-owned subsidiary for year of
proposals 05-14/64023103.PDF
2014‖
9.―Prediction of Daily related transaction
of Video Business for year of 2014‖
10. ―Engagement of auditing institute for
financial report and internal control for
year of 2014‖
11. ―Independent Director Resignation and
Supplement of the Independent Director‖;
12. ―Change the Commitment of Assets
Injection by Controlling Shareholder‖
2. Extraordinary shareholders’ general meeting in the report period
Session of Date of
Date Name of meeting motion Situation Index of disclosure
meeting disclosure
1. ―proposal of purchasing financial
The first
products‖;
extraordinary Deliberated and http://www.cninfo.com.cn/
2. ―Amendment of Article of
shareholders‘ 2014-08-08 approved all 2014-08-09 finalpage/2014-08-09/120
Association‘‖;
general meeting proposals 0112760.PDF
3. Amendment of Rules of Procedure
2014
for the Shareholder‘ Meeting‘‖
44
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
III. Responsibility performance of independent directors in report period
1. The attending of independent directors to Board meetings and shareholders’ general meeting
The attending of independent directors
Times of Board
Absent the
meeting Times of Times of
Name of independent Times of Times of Meeting for the
supposed to attending by entrusted
director Presence Absence second time in a
attend in the communication presence
row (Y/N)
report period
Li Xiaodong 5 2 3 0 0 N
Qiu Daliang 3 1 2 0 0 N
Zhang Zhaoguo 3 1 2 0 0 N
Li Dingan 2 1 1 0 0 N
Zhang Yi 2 1 1 0 0 N
Times of independent directors
attending to shareholders‘ general 2
meeting
Explanation of absent the Board Meeting for the second time in a row
Nil
2. Other explanation about responsibility performance of independent directors
Whether the opinions from independent directors have been adopted or not
√Yes □ No
Explanation on advice that accepted/not accepted from independent directors
During the reporting period, the independent directors of the company have performed their duties seriously, taken their professional
advantages and combined with the actual situation to put forward the reasonable proposals for the company's operational
management and standard operation which have been adopted, and given many professional suggestions to the company's future
sound development at the same time; during the reporting period, the independent directors have made independent, objective and
impartial judgments to the company‘s internal controls, related transactions, profits distribution, employ of audit agency, the
controlling shareholders and related parties‘ occupation to the funds of listed company and the external security, changes of the
controlling shareholder and the asset injection commitments, issued the independent opinions, and really maintained the interests of
the company and the shareholders.
IV. Responsibility performance of subordinate special committee of the Board in report
period
During the reporting period, the company has adjusted the special committee members of the board of directors, the company‘s
former independent directors Mr. Li Dingan and Mr. Zhangyi have resigned their posts as the company‘s independent directors and
the special committee members of the board of directors due to the expiration of six years tenure, the company‘s eighth board of
directors has nominated and 2013 annual general meeting of stockholders has elected Mr. Qiu Daliang and Mr. Zhang Zhaoguo as
the independent directors of the company‘s eighth board of directors. Hereby, the special committee members of the board of
directors have been adjusted accordingly: Mr. Qiu Daliang is supplemented as the member of nominations committee and
compensation & appraisal committee, and holds the post of director in the nominations committee; Mr. Zhang Zhaoguo is
supplemented as the member of strategy committee, nominations committee and audit committee, and holds the post of director in
audit committee.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Committee Date Proposals
2014-4-8 ―Financial Report of 2013‖
―Conclusion of Audit for year of 2013 from Shine Wing Certified Public
Audit committee Accountants ‖
‖Engagedment of the audit organ for financial reprot of 2014 and internal
control of the Company‖
Remuneration and 2014-4-8 ‖Remuneration Plan of Directors, Supervisors and Senior Executives for year
appraisal committee of 2013‖
2014-4-8 ―Independent Director Resignation and Supplement of the Independent
Nomination committee
Director‖
1. Duty performance of the audit committee
During the reporting period, the work carried out by the audit committee mainly included: listening to the company's annual operating,
financial and internal audit work, continuing to concern and guide the company‘s financial affairs and internal audit supervision,
carrying forward the audit work to the company‘s annual financial report, sending a letter to urge the audit report to be submitted on
time, communicating with the certified public accountants time after time during the annual audit, objectively evaluating the annual
audit work of the accounting firm, and making the resolution to agree to re-appoint the accounting firm.
2. Remuneration & appraisal committee
During the reporting period, the remuneration & appraisal committee has audited 2013 annual remuneration of the company‘s
directors, supervisors and senior management which was considered to be consistent with the actual situation and in line with the
provisions of relevant laws and the regulations of remuneration and appraisal system.
3. The nominations committee
During the reporting period, the nominations committee has investigated the proposal for the supplement of independent directors,
and made the decision to agree to submit to the board of directors for consideration.
V. Works from Supervisory Committee
Whether the Company has risks or not in reporting period that found in supervisory activity from supervisory committee
□ Yes √ No
Supervisory committee has no objection about supervision events in reporting period
VI. Independency of the Company relative to controlling shareholders’ in aspect of businesses,
personnel, assets, organization and finance
During the reporting period, the company‘s controlling shareholder - Wuhan Zhongheng Group has separated the business, personnel,
assets, organization and finance from the controlling shareholders in accordance with the laws and regulations of the "Company Law"
and "Articles of Association", and had the independent and complete business system and the capabilities of independent management.
1.Personnel: The company fully and independently operates in the labor, personnel and salary management systems and has
established the independent management system, all of the company's senior executives are working in the Company and receive the
salaries, no senior executive has held a post in both the Company and the controlling shareholder‘s company, and no financial staff
has held a post in two or more of the related companies.
2. Assets: The company has the clear property rights with the controlling shareholders and the capabilities of independent
management, possesses the full rights to control the production system, supporting facilities and land use rights, no major shareholder
has occupied or dominated the assets.
3. Finance: The company has established the independent, complete, standardized financial accounting system and financial
management system, and the corresponding internal control system and internal audit system in accordance with the requirements of
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
the "Accounting Standards for Business Enterprises" to make the independent financial decisions.
4. Organization: the board of directors, the board of supervisors, and other internal organizations are sound and operate independently,
the organization is completely separated from the controlling shareholders, all organizations of the company are set up based on the
norms and requirements of the listed company and the company‘s actual business features which have the independent office
addresses and there is no mixed operation or co-working, and the controlling shareholders legally exercise the investors‘ rights and
undertake the corresponding obligations.
5. Business: the company has the completely independent business operation system, the capabilities of independent management, the
independent purchasing system, production system and marketing system, doesn‘t depend on the controlling shareholders to gain
profits or have the horizontal competition relationship with the controlling shareholders or the subsidiaries.
VII. Appraisal and incentives for senior management
During the reporting period, in order to enable the senior management to better perform their duties and maintain the interests of the
company and its shareholders, the company has floatingly paid the remuneration to urge the company's management to work more
diligently and ensure the realization of the company's development strategy and operation target accordingly to the ―Staff rank and
basic salary system‖ and the performance assessment and combining with the company's actual operating conditions.
47
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section X. Internal control
I. Construction of internal control (IC)
During the reporting period, the company has further strengthened the training to relevant personnel, further sorted out the business,
posts, functions and matching status of personnel, combined with the further requirements of the "Fundamental Norms of the
Enterprise Internal Control ", and checked the conformity of the company‘s existing rules and regulations and program files (such as
ISO9000, TS16949) so as to make the company‘s internal controls stipulation have the unified logic and the orderly rights and
liabilities and form a complete management system, and so that there are laws to abide by; in the daily management, the company has
fully implemented the awareness of risk control, required to make corresponding countermeasures for the management to the existing
matters or the development of new items based on the risk assessment and the company‘s actual situations so that the company
management could be constantly optimized according to the PDCA circle. The continuous optimization of the management is the
result of joint efforts of both the company and the staff, in view of the operational process and results of the current management
processes, we think the design of the company‘s internal controls is reasonable and the implementation is effective.
II. Statement from the board on responsibility for internal control
Internal control system is the controlling process that implemented together with the Board, supervisory committee, managements
and whole staffs, aims at guarantee a legal operation management reasonably, assets safety, the real and completion of the financial
report and relevant information. Board of the Directors are responsible for continues to established and improved Company‘s IC
system according to Basic Internal Control Standard for Enterprise and supporting guidelines, furthermore, to promoted the effective
implementation of IC, and take important responsibilities for the completion and rationality of the IC system establishment. The
supervisory committee supervises the establishment and implementation of IC by the board; managers are in charge of normal
operation of the internal control.
The target of the company‘s internal control is to reasonably guarantee the legality and compliance of operating management, the
assets safety, the financial reports and the sincerity and integrity of relevant information, improve the operating efficiency and effects,
and promote the realization of development strategy. Moreover, as the situation changes may result in the inappropriate internal
controls or reduce the degree of following the control policies and procedures, there are certain risks to speculate the availability of
future internal controls according to the evaluation results of internal controls.
III. Basis of IC establishment of financial report
According to the Basic Internal Control Standard for Enterprise and its supporting guidelines jointly issued by the ministry of finance,
CSRC and other three authorities, Standard Operation Guidance for Company Listed on the Main board of Shenzhen Stock Exchange,
as well as requirement of normative documents of Accounting Law and Accounting Standards for Business Enterprises, the Company
established financial report internal control system based on its actual conditions.
IV. Appraisal Report of internal control
Details of major defects in appraisal report that found in reporting period
No major defect has been found in the report period
Disclosure date of internal control
2015-04-28
appraisal report (full-text)
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Index of internal control appraisal
Full text found Notice published on Juchao Website(www.cninfo.com.cn) dated 28 April 2015
report disclosed (full-text)
V. Audit report of internal control or verification report
Audit report of internal control
Auditing comments section for audit report of internal control
According to relevant regulations and ―Basic Internal Control Standard for Enterprise‖, Zhongheng Huafa Company maintained an
efficiency internal control of financial report, in all material aspects dated 31 December 2014.
Disclosure date of audit report of
2015-04-28
internal control (full-text)
Index of audit report of internal
Full text found Notice published on Juchao Website(www.cninfo.com.cn) dated 28 April 2015
control disclosed (full-text)
Is the CPA carries out qualified opinion for audit report of the internal control
□ Yes √ No
Is the internal control audit report, issued by CPA, consistent with the opinions of self appraisal report issued from the Board
√ Yes □ No
VI. Establishment and enforcement of Accountability Mechanism for Major Errors in Annual
Report
。In order to further improve the quality and transparency of information disclosure of annual report, thus to increase the truthfulness,
accuracy, completeness and promptness of information disclosed in annual report, the Company established Responsibility
Accounting System for Material Mistakes in Annual Report Information Disclosure in 2010. The detail conditions, affirmation and
treatment procedures and accountability of major errors for annual information disclosure are well-defined. During the reporting
period, the Company observed the system. There is no correction for material accounting errors, supplement for material omissions
and amendment to results prediction.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section XI. Financial Report
I. Audit report
Type of audit opinion Standard unqualified opinion
Signing date of audit report 2015-04-24
Name of audit institute Shine Wing Certified Public Accountants (LLP)
Document serial of audit report XYZH/2014SZA2013
Name of CPA Zhang Weijian, Zhang Yongde
Text of Auditor‘s Report
To all shareholders of Shenzhen Zhongheng Huafa Co., Ltd.:
We have audited the companying consolidated and parent Company‘s financial statements of Shenzhen
Zhongheng Huafa Co., Ltd (―Zhongheng Huafa Company‖), including balance sheet of 31 December 2014, and
profit statement, and cash flow statement, and statement on changes of shareholders‘ equity for the year ended,
and notes to the financial statements for the year ended.
I. Management’s responsibility for the financial statements
Management of the Company is responsible for prepare and present financial statement of the Company, which
including: (1) Prepare financial statements with fair presentation in line with Accounting Standards for Business
Enterprises; (2) Designing, executed and maintaining necessary internal control in order to prevent fundamental
miscarrying in financial statement from fraudulent or errors.
II. Auditor's responsibility
Our responsibility is to express an audit opinion on these financial statements based on our audit. We performed
our audit in accordance with Chinese Certified Public Accountants' Auditing Standards. Those standards require
us to comply with professional ethics, and to plan and perform our audit so as to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures of the
financial statements. The selective audit procedures depend on auditor's judgment, including the evaluation of the
risk of material misstatement of the consolidated financial statements due to frauds or errors. When evaluating
risk, we consider internal control related to financial statements, in order to design auditing procedures. An audit
also includes assessing the appropriateness of the accounting policies adopted and the reasonableness of the
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
We believe that we have obtained sufficient and appropriate audit evidences to provide a basis for our audit
opinion.
III. Auditing opinion
In our opinion, in all material aspects, Zhongheng Huafa‘s financial statements have been prepared in accordance
with the Enterprises Accounting Standards and Enterprises Accounting System, and they fairly present the
financial status of the consolidated and parent company‘s as of December 31, 2014, and its operation results and
cash flows for the year ended.
II．Financial statement
Currency used in note of financial statement is RMB (Yuan)
1. Consolidated Balance Sheet
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
2014-12-31
In RMB
Items Closing balance Opening balance
Current assets:
Monetary funds 28,819,357.68 54,251,456.20
Settlement provisions
Capital lent
Financial liability measured by fair value and with
variation reckoned into current gains/losses
Derivative financial liability
Notes receivable 100,821,063.85 154,375,936.49
Accounts receivable 112,425,468.57 162,278,705.83
Accounts paid in advance 5,669,119.87 13,483,243.19
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance receivable
Interest receivable
Dividend receivable
Other receivables 109,094,812.29 9,623,767.78
Purchase restituted finance asset
Inventories 30,880,050.55 47,119,303.85
Divided into assets held for sale
Non-current asset due within one year
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Other current assets 500,000,000.00
Total current assets 887,709,872.81 441,132,413.34
Non-current assets:
Loans and payments on behalf
Finance asset available for sales
Held-to-maturity investment
Long-term account receivable
Long-term equity investment
Investment property 31,274,663.74 32,529,420.82
Fixed assets 186,438,814.34 195,542,067.03
Construction in progress 2,853,356.00 2,323,356.00
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 47,866,685.21 49,360,979.93
Expense on Research and Development
Goodwill
Long-term expenses to be apportioned 345,658.24 1,773,524.86
Deferred income tax asset 6,251,934.59 8,686,737.88
Other non-current asset
Total non-current asset 275,031,112.12 290,216,086.52
Total assets 1,162,740,984.93 731,348,499.86
Current liabilities:
Short-term loans 138,114,376.32 162,140,601.13
Loan from central bank
Absorbing deposit and interbank deposit
Capital borrowed
Financial liability measured by fair value and with
variation reckoned into current gains/losses
Derivative financial liability
Notes payable 39,994,397.62 34,646,052.79
Accounts payable 65,547,836.32 52,206,342.81
Accounts received in advance 727,331.06 1,572,324.29
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Selling financial asset of repurchase
Commission charge and commission payable
Wage payable 6,208,793.90 4,760,822.51
Taxes payable 18,552,046.85 14,943,081.06
Interest payable
Dividend payable
Other accounts payable 24,179,349.31 22,392,413.99
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Divided into liability held for sale
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 293,324,131.38 292,661,638.58
Non-current liabilities:
Long-term loans 585,300,000.00 162,418,800.00
Bonds payable
Including: preferred stock
Perpetual capital securities
Long-term account payable
Long-term wages payable
Special accounts payable
Projected liabilities 2,765,583.81 2,604,411.81
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 588,065,583.81 165,023,211.81
Total liabilities 881,389,715.19 457,684,850.39
Owner‘s equity:
Share capital 283,161,227.00 283,161,227.00
Other equity instrument
Including: preferred stock
Perpetual capital securities
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Capital public reserve 109,496,837.33 109,496,837.33
Less: Inventory shares
Other comprehensive income
Reasonable reserve
Surplus public reserve 77,391,593.25 77,391,593.25
Provision of general risk
Retained profit -188,698,387.84 -196,386,008.11
Total owner‘s equity attributable to parent company 281,351,269.74 273,663,649.47
Minority interests
Total owner‘s equity 281,351,269.74 273,663,649.47
Total liabilities and owner‘s equity 1,162,740,984.93 731,348,499.86
Legal representative: Li Zhongqiu Person in charge of accounting works: Cao Li
Person in charge of accounting institution: Wu Aijie
2. Balance Sheet of Parent Company
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 14,802,258.59 18,575,925.94
Financial liability measured by fair value and with variation
reckoned into current gains/losses
Derivative financial liability
Notes receivable
Accounts receivable 1,857,222.07 38,718,332.28
Account paid in advance 1,005,472.83 1,004,976.83
Interest receivable
Dividends receivable
Other receivables 106,214,702.41 100,394,931.80
Inventories 14,806.50 14,806.50
Divided into assets held for sale
Non-current assets maturing within one year
Other current assets 500,000,000.00
Total current assets 623,894,462.40 158,708,973.35
Non-current assets:
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Available-for-sale financial assets
Held-to-maturity investments
Long-term receivables
Long-term equity investments 187,608,900.00 186,708,900.00
Investment property 31,274,663.74 32,529,420.82
Fixed assets 100,029,320.14 104,096,997.92
Construction in progress 2,853,356.00 2,323,356.00
Project materials
Disposal of fixed assets
Productive biological assets
Oil and natural gas assets
Intangible assets 5,278,437.84 5,423,383.56
Research and development costs
Goodwill
Long-term deferred expenses 291,666.67 1,698,633.25
Deferred income tax assets 7,056,901.94 8,485,262.26
Other non-current assets
Total non-current assets 334,393,246.33 341,265,953.81
Total assets 958,287,708.73 499,974,927.16
Current liabilities:
Short-term borrowings 20,000,000.00 36,180,000.00
Financial liability measured by fair value and with variation
reckoned into current gains/losses
Derivative financial liability
Notes payable
Accounts payable 10,745,840.16 10,745,344.16
Accounts received in advance 420,611.24 126,522.29
Wage payable 724,418.36 655,258.44
Taxes payable 11,286,781.44 10,616,750.61
Interest payable
Dividend payable
Other accounts payable 56,873,489.93 11,799,762.43
Divided into liability held for sale
Non-current liabilities due within 1 year
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Other current liabilities
Total current liabilities 100,051,141.13 70,123,637.93
Non-current liabilities:
Long-term loans 585,300,000.00 162,418,800.00
Bonds payable
Including: preferred stock
Perpetual capital securities
Long-term account payable
Long-term wages payable
Special accounts payable
Projected liabilities 2,765,583.81 2,604,411.81
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 588,065,583.81 165,023,211.81
Total liabilities 688,116,724.94 235,146,849.74
Owners‘ equity:
Share capita 283,161,227.00 283,161,227.00
Other equity instrument
Including: preferred stock
Perpetual capital securities
Capital public reserve 109,496,837.33 109,496,837.33
Less: Inventory shares
Other comprehensive income
Reasonable reserve
Surplus reserve 77,391,593.25 77,391,593.25
Retained profit -199,878,673.79 -205,221,580.16
Total owner‘s equity 270,170,983.79 264,828,077.42
Total liabilities and owner‘s equity 958,287,708.73 499,974,927.16
3. Consolidated Profit Statement
In RMB
Item Current Period Last Period
I. Total operating income 694,839,760.10 626,821,044.64
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Including: Operating income 694,839,760.10 626,821,044.64
Interest income
Insurance gained
Commission charge and commission income
II. Total operating cost 691,076,836.44 634,436,289.11
Including: Operating cost 593,998,799.18 556,598,949.78
Interest expense
Commission charge and commission expense
Cash surrender value
Net amount of expense of compensation
Net amount of withdrawal of insurance contract reserve
Bonus expense of guarantee slip
Reinsurance expense
Operating tax and extras 5,655,209.84 5,047,372.25
Sales expenses 11,512,229.16 10,021,716.98
Administration expenses 39,200,279.02 39,240,424.34
Financial expenses 39,784,553.27 21,454,338.85
Losses of devaluation of asset 925,765.97 2,073,486.91
Add: Changing income of fair value(Loss is listed with ―-‖)
Investment income (Loss is listed with ―-‖) 983,612.12
Including: Investment income on affiliated company and joint venture
Exchange income (Loss is listed with ―-‖)
III. Operating profit (Loss is listed with ―-‖) 4,746,535.78 -7,615,244.47
Add: Non-operating income 6,490,823.59 2,575,851.50
Including: Disposal gains of non-current asset 1,752,028.49 267,153.14
Less: Non-operating expense 593,708.10 2,555,777.59
Including: Disposal loss of non-current asset 164,208.69 163,109.29
IV. Total Profit (Loss is listed with ―-‖) 10,643,651.27 -7,595,170.56
Less: Income tax expense 2,956,031.00 -1,077,769.12
V. Net profit (Net loss is listed with ―-‖) 7,687,620.27 -6,517,401.44
Net profit attributable to owner‘s of parent company 7,687,620.27 -6,517,401.44
Minority shareholders‘ gains and losses
VI. Net after-tax of other comprehensive income
Net after-tax of other comprehensive income attributable to owners of
57
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
parent company
(I) Other comprehensive income items which will not be reclassified
subsequently to profit of loss
1. Changes as a result of re-measurement of net defined benefit
plan liability or asset
2. Share of the other comprehensive income of the investee
accounted for using equity method which will not be reclassified
subsequently to profit and loss
(II) Other comprehensive income items which will be reclassified
subsequently to profit or loss
1. Share of the other comprehensive income of the investee
accounted for using equity method which will be reclassified subsequently
to profit or loss
2. Gains or losses arising from changes in fair value of
available-for-sale financial assets
3. Gains or losses arising from reclassification of
held-to-maturity investment as available-for-sale financial assets
4. The effect hedging portion of gains or losses arising from
cash flow hedging instruments
5. Translation differences arising on translation of foreign
currency financial statements
6. Other
Net after-tax of other comprehensive income attributable to minority
shareholders
VII. Total comprehensive income 7,687,620.27 -6,517,401.44
Total comprehensive income attributable to owners of parent
7,687,620.27 -6,517,401.44
Company
Total comprehensive income attributable to minority shareholders
VIII. Earnings per share:
(i) Basic earnings per share 0.0271 -0.0230
(ii) Diluted earnings per share 0.0271 -0.0230
Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and
realized 0 Yuan at last period for combined party
Legal representative: Li Zhongqiu Person in charge of accounting works: Cao Li
Person in charge of accounting institution: Wu Aijie
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
4. Profit Statement of Parent Company
In RMB
Item Current Period Last Period
I. Operating income 57,459,329.67 38,573,827.05
Less: Operating cost 10,236,937.60 10,063,936.59
Operating tax and extras 3,204,860.53 2,494,875.84
Sales expenses 138,440.72
Administration expenses 19,086,085.26 18,144,318.27
Financial expenses 18,513,856.94 8,751,126.52
Losses of devaluation of asset 975,765.97 839,574.18
Add: Changing income of fair value(Loss is listed with ―-‖)
Investment income (Loss is listed with ―-‖)
Including: Investment income on affiliated company and
joint venture
II. Operating profit (Loss is listed with ―-‖) 5,441,823.37 -1,858,445.07
Add: Non-operating income 1,756,470.00 409,661.28
Including: Disposal gains of non-current asset 1,600,000.00 107,000.00
Less: Non-operating expense 427,026.68 2,360,280.48
Including: Disposal loss of non-current asset
III. Total Profit (Loss is listed with ―-‖) 6,771,266.69 -3,809,064.27
Less: Income tax expense 1,428,360.32 -347,614.41
IV. Net profit (Net loss is listed with ―-‖) 5,342,906.37 -3,461,449.86
V. Net after-tax of other comprehensive income
(I) Other comprehensive income items which will not be
reclassified subsequently to profit of loss
1. Changes as a result of re-measurement of net defined
benefit plan liability or asset
2. Share of the other comprehensive income of the
investee accounted for using equity method which will not be
reclassified subsequently to profit and loss
(II) Other comprehensive income items which will be
reclassified subsequently to profit or loss
1. Share of the other comprehensive income of the
investee accounted for using equity method which will be reclassified
subsequently to profit or loss
2. Gains or losses arising from changes in fair value of
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
available-for-sale financial assets
3. Gains or losses arising from reclassification of
held-to-maturity investment as available-for-sale financial assets
4. The effect hedging portion of gains or losses arising
from cash flow hedging instruments
5. Translation differences arising on translation of
foreign currency financial statements
6. Other
VI. Total comprehensive income 5,342,906.37 -3,461,449.86
VII. Earnings per share:
(i) Basic earnings per share
(ii) Diluted earnings per share
5. Consolidated Cash Flow Statement
In RMB
Item Current Period Last Period
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services 531,329,345.21 382,754,162.28
Net increase of customer deposit and interbank deposit
Net increase of loan from central bank
Net increase of capital borrowed from other financial institution
Cash received from original insurance contract fee
Net cash received from reinsurance business
Net increase of insured savings and investment
Net increase of amount from disposal financial assets that measured
by fair value and with variation reckoned into current gains/losses
Cash received from interest, commission charge and commission
Net increase of capital borrowed
Net increase of returned business capital
Write-back of tax received 3,999.97
Other cash received concerning operating activities 28,559,456.87 25,986,072.37
Subtotal of cash inflow arising from operating activities 559,888,802.08 408,744,234.62
Cash paid for purchasing commodities and receiving labor service 317,306,581.05 368,039,415.49
Net increase of customer loans and advances
Net increase of deposits in central bank and interbank
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
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 60,699,398.41 51,347,044.11
Taxes paid 15,885,699.17 15,391,325.19
Other cash paid concerning operating activities 46,504,964.44 43,319,890.21
Subtotal of cash outflow arising from operating activities 440,396,643.07 478,097,675.00
Net cash flows arising from operating activities 119,492,159.01 -69,353,440.38
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
1,925,000.00 147,000.00
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 1,925,000.00 147,000.00
Cash paid for purchasing fixed, intangible and other long-term assets 6,482,152.86 10,138,667.85
Cash paid for investment 500,000,000.00
Net increase of mortgaged loans
Net cash received from subsidiaries and other units obtained
Other cash paid concerning investing activities 44,452.72
Subtotal of cash outflow from investing activities 506,526,605.58 10,138,667.85
Net cash flows arising from investing activities -504,601,605.58 -9,991,667.85
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 971,853,411.47 488,889,296.63
Cash received from issuing bonds
Other cash received concerning financing activities
Subtotal of cash inflow from financing activities 971,853,411.47 488,889,296.63
Cash paid for settling debts 576,115,233.45 437,643,335.50
Cash paid for dividend and profit distributing or interest paying 40,887,323.57 19,690,543.20
Including: Dividend and profit of minority shareholder paid by
subsidiaries
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Other cash paid concerning financing activities
Subtotal of cash outflow from financing activities 617,002,557.02 457,333,878.70
Net cash flows arising from financing activities 354,850,854.45 31,555,417.93
IV. Influence on cash and cash equivalents due to fluctuation in exchange
1,946,419.38 -1,754,493.26
rate
V. Net increase of cash and cash equivalents -28,312,172.74 -49,544,183.56
Add: Balance of cash and cash equivalents at the period -begin 50,704,319.86 100,248,503.42
VI. Balance of cash and cash equivalents at the period -end 22,392,147.12 50,704,319.86
6. Cash Flow Statement of Parent Company
In RMB
Item Current Period Last Period
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor
54,826,654.35 33,328,094.89
services
Write-back of tax received
Other cash received concerning operating activities 575,856,964.00 20,752,882.11
Subtotal of cash inflow arising from operating activities 630,683,618.35 54,080,977.00
Cash paid for purchasing commodities and receiving labor
7,677,862.85 1,177,778.17
service
Cash paid to/for staff and workers 5,118,552.72 5,415,040.53
Taxes paid 5,814,559.80 5,528,215.33
Other cash paid concerning operating activities 489,120,594.10 53,369,786.85
Subtotal of cash outflow arising from operating activities 507,731,569.47 65,490,820.88
Net cash flows arising from operating activities 122,952,048.88 -11,409,843.88
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
1,600,000.00 147,000.00
long-term assets
Net cash received from disposal of subsidiaries and other units 100,000.00
Other cash received concerning investing activities
Subtotal of cash inflow from investing activities 1,700,000.00 147,000.00
Cash paid for purchasing fixed, intangible and other long-term
1,042,600.00 1,067,935.00
assets
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Cash paid for investment 501,000,000.00 2,000,000.00
Net cash received from subsidiaries and other units
Other cash paid concerning investing activities
Subtotal of cash outflow from investing activities 502,042,600.00 3,067,935.00
Net cash flows arising from investing activities -500,342,600.00 -2,920,935.00
III. Cash flows arising from financing activities
Cash received from absorbing investment
Cash received from loans 632,000,000.00 39,000,000.00
Cash received from issuing bonds
Other cash received concerning financing activities
Subtotal of cash inflow from financing activities 632,000,000.00 39,000,000.00
Cash paid for settling debts 225,298,800.00 4,270,000.00
Cash paid for dividend and profit distributing or interest
33,088,836.69 12,330,056.23
paying
Other cash paid concerning financing activities
Subtotal of cash outflow from financing activities 258,387,636.69 16,600,056.23
Net cash flows arising from financing activities 373,612,363.31 22,399,943.77
IV. Influence on cash and cash equivalents due to fluctuation in
4,520.46 -48,353.20
exchange rate
V. Net increase of cash and cash equivalents -3,773,667.35 8,020,811.69
Add: Balance of cash and cash equivalents at the period -begin 18,575,925.94 10,555,114.25
VI. Balance of cash and cash equivalents at the period -end 14,802,258.59 18,575,925.94
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
7. Statement of Changes in Owners’ Equity (Consolidated)
This Period
In RMB
This Period
Owners‘ equity attributable to parent company
Other
Item Other Provision
equity instrument Minority Total owners‘
Less: Reasona
compre of interests equity
Share capital Capital reserve Inventor ble Surplus reserve Retained profit
Prefer Perpetual hensive general
y shares reserve
red capital Other income risk
stock securities
I. Balance at the end of the last year 283,161,227.00 109,496,837.33 77,391,593.25 -196,386,008.11 273,663,649.47
Add: Changes of accounting
policy
Error correction of the last
period
Enterprise combine under
the same control
Other
II. Balance at the beginning of this
283,161,227.00 109,496,837.33 77,391,593.25 -196,386,008.11 273,663,649.47
year
III. Increase/ Decrease in this year
7,687,620.27 7,687,620.27
(Decrease is listed with ―-‖)
(i) Total comprehensive income 7,687,620.27 7,687,620.27
(ii) Owners‘ devoted and decreased
capital
1.Common shares invested by
shareholders
2. Capital invested by holders of other
equity instruments
3. Amount reckoned into owners
equity with share-based payment
4. Other
(III) Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk
provisions
3. Distribution for owners (or
shareholders)
4. Other
(IV) Carrying forward internal
owners‘ equity
1. Capital reserves conversed to
capital (share capital)
2. Surplus reserves conversed to
capital (share capital)
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
3. Remedying loss with surplus
reserve
4. Other
(V) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VI)Others
IV. Balance at the end of the report
283,161,227.00 109,496,837.33 77,391,593.25 -188,698,387.84 281,351,269.74
period
Last Period
In RMB
Last Period
Owners‘ equity attributable to the parent Company
Other
Item Other Provisi
equity instrument Minority Total owners‘
Less: Reasona
compre Surplus on of interests equity
Share capital Capital reserve Inventory ble Retained profit
Perpetual hensive reserve general
Preferred shares reserve
capital Other income risk
stock
securities
I. Balance at the end of the 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 the last
period
Enterprise combine under
the same control
Other
II. Balance at the beginning of this
283,161,227.00 109,496,837.33 77,391,593.25 -189,868,606.67 280,181,050.91
year
III. Increase/ Decrease in this year
-6,517,401.44 -6,517,401.44
(Decrease is listed with ―-‖)
(i) Total comprehensive income -6,517,401.44 -6,517,401.44
(ii) Owners‘ devoted and decreased
capital
1.Common shares invested by
shareholders
2. Capital invested by holders of
other equity instruments
3. Amount reckoned into owners
equity with share-based payment
4 Other
(III) Profit distribution
1. Withdrawal of surplus reserves
2. Withdrawal of general risk
provisions
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
3. Distribution for owners (or
shareholders)
4. Other
(IV) Carrying forward internal
owners‘ equity
1. Capital reserves conversed to
capital (share capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserve
4. Other
(V) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VI)Others
IV. Balance at the end of the report
283,161,227.00 109,496,837.33 77,391,593.25 -196,386,008.11 273,663,649.47
period
8. Statement of Changes in Owners’ Equity (Parent Company)
This Period
In RMB
This Period
Other
Other
Item equity instrument Less:
compre Reasonable Surplus
Share capital Capital reserve Inventory Retained profit Total owners‘ equity
Perpetual hensive reserve reserve
Preferred shares
capital Other income
stock
securities
I. Balance at the end of the last year 283,161,227.00 109,496,837.33 77,391,593.25 -205,221,580.16 264,828,077.42
Add: Changes of accounting
policy
Error correction of the last
period
Other
II. Balance at the beginning of this
283,161,227.00 109,496,837.33 77,391,593.25 -205,221,580.16 264,828,077.42
year
III. Increase/ Decrease in this year
5,342,906.37 5,342,906.37
(Decrease is listed with ―-‖)
(i) Total comprehensive income 5,342,906.37 5,342,906.37
(ii) Owners‘ devoted and decreased
capital
1.Common shares invested by
shareholders
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
2. Capital invested by holders of
other equity instruments
3. Amount reckoned into owners
equity with share-based payment
4. Other
(III) Profit distribution
1. Withdrawal of surplus reserves
2. Distribution for owners (or
shareholders)
3. Other
(IV) Carrying forward internal
owners‘ equity
1. Capital reserves conversed to
capital (share capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserve
4. Other
(V) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VI)Others
IV. Balance at the end of the report
283,161,227.00 109,496,837.33 77,391,593.25 -199,878,673.79 270,170,983.79
period
Last period
In RMB
Last period
Other
equity instrument
Other
Item Less:
Perpet compreh Reasonable
Share capital Capital reserve Inventory Surplus reserve Retained profit Total owners‘ equity
ual ensive reserve
Preferred shares
capital Other income
stock
securit
ies
I. Balance at the end of the 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 the last
period
Other
II. Balance at the beginning of this
283,161,227.00 109,496,837.33 77,391,593.25 -201,760,130.30 268,289,527.28
year
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
III. Increase/ Decrease in this year
-3,461,449.86 -3,461,449.86
(Decrease is listed with ―-‖)
(i) Total comprehensive income -3,461,449.86 -3,461,449.86
(ii) Owners‘ devoted and decreased
capital
1.Common shares invested by
shareholders
2. Capital invested by holders of
other equity instruments
3. Amount reckoned into owners
equity with share-based payment
4. Other
(III) Profit distribution
1. Withdrawal of surplus reserves
2. Distribution for owners (or
shareholders)
3. Other
(IV) Carrying forward internal
owners‘ equity
1. Capital reserves conversed to
capital (share capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserve
4. Other
(V) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
(VI)Others
IV. Balance at the end of the report
283,161,227.00 109,496,837.33 77,391,593.25 -205,221,580.16 264,828,077.42
period
Ⅲ. Basic information of the Company
Shenzhen Zhongheng Hwafa Co, Ltd. (hereinafter referred to as ―the Company‖ or referred to as ―the Group‖ when it includes
the subsidiary) was founded on Dec. 8, 1981, with the business license number being 440301501120670. The legal representative of
the Company is Mr. Li Zhongqiu and the Company‘s registered address is at No. 411 Building, Huafa North Road, Futian District,
Shenzhen.
The Company is specialized in manufacturing the computer, communication and other electronic equipment, 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
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
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.
The Company has established the shareholders‘ meeting, board of directors and board of supervisors. The shareholders‘ meeting
is the organ of authority of the Company that is responsible for exercising the right to decide the significant matters such as the
Company‘s management guideline, financing, investing and profit distribution according to laws. The board of directors is
responsible for the shareholders‘ meeting and has the right to exercise the Company‘s right of management and decision-making
according to laws; the management layer is responsible for organizing the shareholders‘ meeting, implementing the resolutions of the
board of directors and presiding over the Company‘s production, operation and management.
The approved release date of the financial report: April 24, 2015.
When compared with last year, Huafa Hengtai Company is newly established in this year as the sales to Huafa Trade Company
are reduced. See the Note ―VIII. Change in the Consolidation Scope‖ and the Note ―IX. Rights and Interests in Other Entities‖ for
details.
IV. Preparation Basis of Financial Statements
1. Preparation Basis
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".
2. Going Concern
The Group has the sustainable operation ability within at least 12 months since the end of the reporting period and has no
significant matters that will affect such sustainable operation ability.
Ⅴ. Significant Accounting Policy and Accounting Estimate
Specific accounting policy and accounting estimate tips:
The specific accounting policy and accounting estimate prepared by the Group according to actual production and operation
characteristics include operating cycle, recognition and measurement of bad debt provisions over account receivable, measurement of
delivered inventories, fixed asset classification and depreciation method, intangible assets amortization, income recognition and
measurement.
1. 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.
2. Accounting Period
The accounting period of the Group is from each 01 January to 31 December in the Gregorian calendar.
3. Operating Cycle
The operating cycle of the Group is 12 months and the operating cycle is treated as the classification standard for the liquidity of
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
the assets and liabilities.
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
The assets and liabilities obtained by the Group, as the combining party, during the business merger under common control
shall be measured based on the book value of the combined party in the consolidated statements of the final controlling party on the
merger date. Where there is any difference between the book value of obtained net assets and the book value of paid merger
consideration, the capital reserve shall be adjusted; where the capital reserve is not sufficient for writing down, the retained earnings
shall be adjusted.
The acquiree‘s identifiable assets, liabilities or contingent liabilities obtained during business merger under non-common
control shall be measured based on the fair value in the acquisition date. The merger cost is the sum of the fair value of the cashes or
non-cash assets paid by the Group on the acquisition date for obtaining the control right of the acquire, liabilities issued or assumed
and equity securities issued and direct related expenses occurred in the business merger (for the business merger achieved step by
step through several times of transaction, the merger cost shall be the sum of the costs of all single transactions). The difference
between the merger cost and the fair value of identifiable net assets of the acquiree obtained in the merger shall be recognized as the
goodwill; where the merger cost is lower than the fair value of identifiable net assets of the acquiree obtained in the merger, the fair
value of various identifiable assets, liabilities or contingent liabilities obtained in the merger and the fair value of the non-cash assets
of the merger consideration or the equity securities issued shall be reviewed. Upon review, where the merger cost is still less than the
fair value of the identifiable net assets of the acquiree obtained in the merger, the difference shall be recorded in the non-business
income on the same period of the merger.
6. Preparation of Consolidated Financial Statement
The Group incorporates all controlled subsidiaries into the scope of the consolidated financial statements.
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.
All significant internal transactions, balance of current accounts and unrealized profit within the scope of merger shall be offset
when preparing the consolidated financial statements. The shares in the ownership interest of the subsidiary that don‘t belong to the
parent company and the shares in the current net profits and losses, other comprehensive incomes and total comprehensive incomes
that belong to the minority stockholder‘s interest shall be listed respectively in the item of ―minority stockholder‘s interest, minority
interest income, other comprehensive incomes belonging to the minority shareholder and total comprehensive incomes belonging to
the minority shareholder‖ in the consolidated financial statement.
The operating result and cash flow of the subsidiary obtained during the business merger under common control shall be
incorporated into the consolidated financial statements at the beginning of the merger period. When preparing the consolidated
financial statement, relevant items in the financial statement of last year shall be adjusted and the report entity formed after merger
shall be deemed to exist always since the final controlling party starts control.
Where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step
via several times of transactions, the handling method in the consolidated financial statement shall be supplemented and disclosed
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
during the reporting period when obtaining the control right. For instance: where the business merger is finally realized by obtaining
the equity of the invested unit under common control step by step via several times of transactions, when preparing the consolidated
financial statement, it shall be deemed as being adjusted according to the current status when the final controlling party starts control;
when preparing the comparison statement, relevant assets and liabilities of the acquiree shall be incorporated into the comparison
statement of the consolidated financial statement of the Group not earlier than the period when the Group and the acquiree are under
the common control of the final controlling party, and the net assets increased due to merger shall be adjusted in the comparison
statement as the relevant items under the item of ownership benefit. In order to avoid repeated calculation of the value of net assets of
the acquiree, the long-term equity investment held by the Group before merger, relevant profits and losses recognized from the date
when obtaining the original equity and the date when the Group and the acquiree are under the common final control (whichever is
later) to the merger date, other comprehensive income and change in other net asset shall be written down to compare the retained
earnings at the beginning of the period and the profits and losses at the current period during the comparison statement period.
Where the subsidiary is obtained via business merger under non-common control, the operating result and cash flow shall be
incorporated into the consolidated financial statement since the date when the Group obtains the control right. When preparing the
consolidated financial statement, the financial statement of the subsidiary shall be adjusted based on the fair value of various
identifiable assets, liabilities and contingent liabilities determined on the acquisition date.
Where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step
via several times of transactions, the handling method in the consolidated financial statement shall be supplemented and disclosed
during the reporting period when obtaining the control right. For instance: where the business merger is finally realized by obtaining
the equity of the invested unit under common control step by step via several times of transactions, when preparing the consolidated
financial statement, the equity of the acquiree held before the acquisition date shall be re-measured according to the fair value of the
equity on the acquisition date; the difference between the fair value and the book value shall be recorded in the current investment
income; where the relevant equity of the acquiree held before the acquisition date involves other comprehensive income under the
accounting based on equity method and other ownership benefit change other than the net profit and loss, other comprehensive
income and profit distribution, the equity shall be transferred to the profit and loss on investments on the current period of the
acquisition date, with an exception of the other comprehensive income generated from the change in the net liabilities or net assets
under the benefit plan set based on the re-measurement by the investee.
Where the Group disposes part of the long-term equity investment on the subsidiary without losing the control right, in the
consolidated financial statement, the difference between the disposal cost and the shares of the net assets of the subsidiary
continuously calculated since the acquisition date or the merger date to which the disposal cost of long-term equity investment
corresponds shall be adjusted as the capital premium or stock premium; where the capital reserve is not sufficient for write-downs,
the retained earnings shall be adjusted.
Where the Group loses the control over the investee due to reasons such as disposal of partial equity investment, when
preparing the consolidated financial statement, the remaining equity shall be re-measured based on its fair value on the date when it
loses the control right. The sum of the consideration obtained from disposal of the equity and the fair value of remaining equity, after
deducting the difference between the shares of the net assets of the original subsidiary continuously calculated since the acquisition
date or merger date and calculated based on the original shareholding ratio, shall be recorded in the profit and loss on the investment
on the current period when losing the control right and shall be used to write down the goodwill. The other comprehensive income
related to the equity investment of original subsidiary shall be transferred to the profit and loss on investment on current period when
losing the control right.
Where the Group disposes the equity investment on subsidiary step by step via several times of transactions until the Group
loses the control right, if several transactions about disposal of the equity investment on subsidiary till loss of the control right belong
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
to package deals, various transactions shall be treated as a transaction disposing the subsidiary and losing the control right for
accounting handling; however, before loss of the control right, the difference between each disposal price and the share in the net
assets of the subsidiary which corresponds to the disposed investment shall be recognized as other comprehensive income in the
consolidated financial statement, which shall be transferred into the profit and loss on investment on the current period when the
control right is lost.
7. Joint Venture Arrangement and Classification and Joint Operation Accounting Handling Method
The joint venture arrangement of the Group includes the joint operation and joint venture. For joint operation project, the
Group, as the cooperative enterprise in the joint operation, shall have the right to confirm the separately held assets and assumed
liabilities and shall confirm the held assets and assumed liabilities according to shares and confirm relevant income and expense
separately according to relevant agreement or based on shares. Where the joint operation related procurement and sales doesn‘t
constitute the business asset transaction, only the part of the profit and loss generated from the transaction that belongs to the other
participants under joint operation shall be recognized.
8. 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.
9. Conversion in foreign currency transactions and Conversion of foreign currency statements
(1) Foreign currency transaction
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.
(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. The
translation difference in the foreign currency statement generated due to above translation shall be listed in the item of other
comprehensive income. 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.
10. Financial Instruments
When the Group becomes a party to the financial instrument contract, one financial asset or financial liability shall be
recognized.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(1) Financial asset
1) Financial asset classification, recognition basis and measurement method
The Group divides its owned financial assets, based on the investment purpose and economic nature, into the financial assets
which are measured based on fair value and which changes are recorded in current loss and profit, held-to-maturity investment,
accounts receivables and available-for-sale financial assets.
The financial assets that are measured based on the fair value and which change is recorded in current profit and loss shall
include the trading financial assets and the financial assets which are designated at the initial recognition as assets which are
measured based on the fair value and which change is recorded in current profit and loss. The Group divides the financial assets
meeting one of the following conditions into the trading financial assets: the purpose for obtaining the financial asset is for sales
within a short term period; which belong to a part of the identifiable financial instrument portfolio under centralized management and
there is an objective evidence showing that the company adopts short-term profit method in recent period to manage the portfolio;
which also belong to the derivative instrument, but the derivative instrument that are designated and that belong to effective arbitrage
instrument, the derivative instrument within the scope of financial guarantee contract, the equity instrument that is not quoted in the
active market and which fair value cannot be reliably measured and the derivative instrument that is settled via delivery of equity
instrument are not included. The Group requires designating the financial instrument meeting one of the following conditions as the
financial asset which is measured based on fair value and which change is recorded in the current profit and loss at the time of initial
recognition: such designation can eliminate or obviously reduce the discrepancy in the recognition or measurement of relevant profit
or loss caused by different measurement basis of financial instrument; the official written document of company‘s risk management
or investment strategy has specified that the financial instrument portfolio shall be managed, evaluated and reported to the key
management personnel based on the fair value; include the mixed instruments with one or several embedded derivative instruments,
unless that the embedded derivative instrument doesn‘t significantly change the cash flow of the mixed instruments, or the embedded
derivative instrument shall not be separated from relevant mixed instruments obviously; include the mixed instruments of embedded
derivative instruments to be separated but that cannot be separately measured on the date of acquisition date or on the subsequent
balance sheet date. The financial assets designated by the Group mainly include the trading financial assets. Such financial assets
shall be measured subsequently based on fair value. The change in the fair value shall be recognized in profit or loss; the interest or
cash dividends obtained during the period when the assets are held shall be recognized as income from investment; at the time of
disposal, the difference between the fair value and the initial recorded amount shall be recognized as the profit and loss on investment.
Meanwhile, the profit and loss on the change in fair value shall be adjusted.
Held-to-maturity investment refers to non-derivative financial asset with fixed maturity, fixed or confirmable returnable
amount and that can be held to maturity according to the Group‘s clear intention and ability. The held-to-maturity investment shall be
subsequently measured based on the amortized cost according to the effective interest method. And the amortized or reduced amount
and the profit or loss generated at the time of final recognition shall be recorded in current profit and loss.
Accounts receivables refer to the non-derivative financial assets that have no quotation in active market and that have fixed or
confirmable recoverable amount. Accounts receivables shall be subsequently measured based on the amortized cost according to the
effective interest method. And the amortized or reduced amount and the profit or loss generated at the time of final recognition shall
be recorded in current profit and loss.
Available-for-sale financial assets refer to the non-derivative financial assets which are designated as the available-for-sale
financial assets at the time of initial recognition and the financial assets that are not divided into other categories. In such assets, the
equity instrument investment that have no quotation in the active market and that fair value cannot be reliably measured and the
derivative financial assets that are linked to the equity instrument and that shall be settled via delivery of the equity instrument shall
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
be measured subsequently according to cost; other assets that have quotation in active market or that have no quotation in active
market but have fair value that can be reliably measured shall be measured based on fair value and the change in fair value shall be
recorded in the other comprehensive income. Such financial assets shall be subsequently measured based on fair value; except for the
impairment loss and the exchange gain or loss generated by the foreign currency financial assets, the change in fair value of the
available-for-sale financial assets shall be directly recorded in the stockholders‘ equity. When the financial assets are finally
recognized, the accumulated changes in fair value that are directly recorded in the equity shall be transferred into the current profit
and loss. The interest of the available-for-sale debt instrument investment calculated based on effective interest method during the
holding period and the cash dividends to be distributed according to the announcement of the invested unit that are related to the
available-for-sale equity instrument shall be recorded in the current profit and loss as the income from investment. The equity
instrument investment that has no quotation in the active market and that fair value cannot be reliably measured shall be measured
based on the cost.
2) Recognition basis and measurement method of financial asset transfer
The financial assets meeting one of the following conditions shall be derecognized: (1) the contractual right for collecting the
cash flow of the financial asset shall be terminated; (2) the financial asset has been transferred and the Group transfers almost all
risks and remunerations on the ownership of financial asset to the carrying party; (3) the financial asset has been transferred, even
though the Group neither transfers nor retains almost all risks and remunerations on the ownership of the financial assets, but waives
the control right over the financial asset.
Where the enterprise neither transfers nor retains almost all risks and remunerations on the ownership of the financial asset and
doesn‘t waive the control right over the financial asset, relevant financial asset shall be recognized according to its involvement
degree in the transferred financial asset and relevant liabilities shall be recognized accordingly.
Where the overall transfer of the financial asset can meet the condition of derecognition, the difference between the book value
of transferred financial assets and the sum of the consideration received due to transfer and the accumulated changes in fair value that
are originally recorded in other comprehensive income shall be recorded in current profit and loss.
Where partial transfer of the financial asset can meet the condition of derecognition, the overall book value of transferred
financial assets shall be shared based on respective relative fair value between the derecognized part and the non-derecognized part;
and the difference between the sum of the consideration received due to transfer and the accumulated changes in fair value that are
originally recorded in other comprehensive income and the above shared book value shall be recorded in the current profit and loss.
3) Test method and accounting treatment method of financial assets impairment
Except for the financial assets that are measured based on fair value and which changes are recorded in current profit and loss,
the Group shall inspect the book value of other financial assets on the balance sheet date. If there is any objective evidence showing
that a certain financial asset is impaired, the provision for impairment shall be withdrawn.
Where the financial assets measured based on amortized cost are impaired, the provision for impairment shall be withdrawn
based on the difference between the present value of estimated future cash flow (excluding the future credit loss that has not yet
occurred) and the book value. If there is any objective evidence showing that the value of the financial asset has been recovered,
which is related to the matter occurred after the loss is confirmed objectively, the originally recognized impairment loss shall be
transferred back and recorded in current profit and loss.
Where the available-for-sale financial assets are impaired, the accumulated losses caused due to decrease in fair value that are
originally and directly recorded in the ownership interest shall be transferred out and recorded in the impairment loss. For the
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available-for-sale debt instrument investment which impairment loss has been recognized, if the future fair value increases and it is
related to the matter occurred after recognition of original impairment loss objectively, the originally recognized impairment loss
shall be transferred back and recorded in current profit and loss. For the available-for-sale equity instrument investment which
impairment loss has been recognized, the increased in future fair value shall be directly recorded in the ownership interest.
(2) Financial liabilities
1) Classification, recognition basis and measurement method of financial liabilities
The financial liabilities of the Group shall, at the time of initial recognition, be classified as the financial liabilities that are
measured based on fair value and which changes are recorded in current profit and loss and other financial liabilities.
The financial liabilities that are measured based on the fair value and which change is recorded in current profit and loss shall
include the trading financial liabilities and the financial assets which are designated at the initial recognition as liabilities which are
measured based on the fair value and which change is recorded in current profit and loss. The financial liabilities shall be
subsequently measured based on the fair value and the profit or loss generated from change in fair value and the dividend and interest
expense related to the financial liabilities shall be recorded in current loss and profit.
Other financial liabilities shall be subsequently measured based on the amortized cost according to the effective interest
method.
2) Condition for derecognition of the financial liabilities
When the current obligations of financial liabilities have been removed fully or partially, the part of the financial liabilities or
obligations that has been removed shall be derecognized. Where the Company and the creditor enter into an agreement to replace
current financial liabilities by assuming new financial liabilities and where the contractual terms with regard to new financial
liabilities and the current financial liabilities are different in substance, the current financial liabilities shall be derecognized and the
new financial liabilities shall be recognized. Where the Company makes substantial amendment to all or part of the contractual terms
for the current financial liabilities, all or part of the current financial liabilities shall be derecognized and the financial liabilities
which terms are amended shall be recognized as new financial liabilities. The difference between the book value of the part that is
derecognized and the paid consideration shall be recorded in current profit and loss.
(3) Determination method of the fair value of financial assets and financial liabilities
The Group measures the fair value of financial assets and financial liabilities according to the price of the main market. If there
is no main market, the Group will measure the fair value of financial assets and financial liabilities according to the price that is most
favorable to the market and adopt the suitable valuation technique that is supported by sufficient available data and other information.
The input value used for measurement of fair value can be divided into three levels: for the first level, the input value is the
unadjusted quotation of the same asset or liability in the active market that can be obtained in the measurement date; for the second
level, the input value refers to the input value of relevant asset or liability that can be observed directly or indirectly other than the
input value at first level; for the third level, the input value refers to the input value of relevant asset or liability that cannot be
observed. The Group preferentially uses the input value at first level and then uses the input value at third level. The level of the
measurement result of fair value shall be determined based on the lowest level of the input value that is significant to the overall
measurement of the fair value.
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11. Accounts Receivables
(1) Accounts receivables with large single amount which bad debt provision is withdrawn separately
Judgment criteria or amount standard of material specific The accounts receivables with the single amount being larger than
amount or amount criteria RMB 500000 are treated as the significant accounts receivables
Provision method with material specific amount and Provision bad debt preparation in accordance with the difference of
provision of specific bad debt preparation present value of future cash flow below the book value
(2) Accounts receivable which bad debt provision is withdrawn according to the credit risk characteristics
Combination name Methods for withdrawing the bad debt provision
Aging portfolio Aging analysis method
Bad debt reserve accrued by aging analysis method in the combination
√ Applicable □ Inapplicable
Accrual proportion of Other Accounts
Account ageing Accrual proportion of account receivables
Receivable
< 1 year 0.00% 0.00%
1-2 year (s) 5.00% 5.00%
2-3 year (s) 10.00% 10.00%
Over 3 years 30.00% 30.00%
Bad debt reserve accrued by balance percentage method in the combination
□ Applicable √ Inapplicable
Bad debt reserve accrued by other method in the combination
□ 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 portfoio
Bad debt preparation will be provisioned in accordance with the difference of present
Provision method of bad debt preparation
value of its future cash flow below its book value.
12. Inventories
The inventories of the Group mainly include the raw materials, goods in process, commodities in stock, low priced and easily
worn articles, self-made and semi-finished products and outsourced materials.
The perpetual inventory system is implemented for inventories. The inventories shall be valued based on actual cost at the time
of acquisition; for reception or delivery of inventories, the actual cost of the inventories shall be determined based on the first-in and
first-out method. The low priced and easily worn articles and packing materials shall be amortized based on the one-ff amortization
method.
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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.
13. Long-term Equity Investment
The Group‘s long-term equity investment mainly refers to the investment in subsidiaries, joint ventures and cooperative
enterprises.
The judgment basis of the Group on common control: all participants or the participating groups collectively control the
arrangement and the policy of the arrangement-related activity shall be consistently agreed by the participants who collectively
control such arrangement.
When the Group directly or indirectly owns the voting rights larger than 20% of the total voting rights of the invested unit
(inclusive) but lower than 50% of the total voting rights via subsidiaries, it is often considered a significant influence on the invested
unit. Where the Group holds less than 20% of the voting rights of the invested unit, whether it has a significant influence on the
invested unit shall be judged after comprehensively considering the facts and situations that the Group assign representatives to the
invested unit‘s board of directors or similar organs of power, the Group participates in the financial and operation policy preparation
process of the invested unit, the Group has important transactions with the invested unit, the Group assigns management personnel to
the invested unit or the Group provides the invested unit with key technical information and materials.
The unit controlling the invested unit shall be the subsidiary of the Group. For the long-term equity investment obtained from
the business merger under common control, the shares of the book value of the net assets of the acquiree in the consolidated financial
statement of the final controlling party obtained in the merger date shall be treated as the initial investment cost of the long-term
equity investment. Where the book value of the net assets of the acquiree on the merger date is negative, the long-term equity
investment cost shall be determined as zero.
Where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step
via several times of transactions, the handling method of long-term equity investment in the parent company‘s consolidated financial
statement shall be supplemented and disclosed during the reporting period when obtaining the control right. For instance: where the
business merger is finally realized by obtaining the equity of the invested unit under common control step by step via several times of
transactions, which belongs to the package deal, the Group shall conduct accounting treatment by treating various transactions as a
transaction obtaining the control right. Where it doesn‘t belong to a package deal, on the merger date, the shares of the book value of
the net assets of the acquiree in the consolidated financial statement of final controlling party after merger shall be treated as the
initial investment cost of the long-term equity investment. The difference between the initial investment cost and the sum of the book
value of long-term equity investment before the merger and the book value of new payment consideration of shares further obtained
on the merger date shall be used to adjust the capital reserves. Where the capital reserves are not sufficient for write-downs, the
retained earnings shall be written down.
Where the long-term equity investment is obtained through the business merger under non-common control, the merger cost
shall be treated as the initial investment cost.
Where the business merger is finally realized by obtaining the equity of the invested unit under non-common control step by
step via several times of transactions, the handling method of long-term equity investment in the parent company‘s consolidated
financial statement shall be supplemented and disclosed during the reporting period when obtaining the control right. For instance:
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where the business merger is finally realized by obtaining the equity of the invested unit under non-common control step by step via
several times of transactions, which belongs to the package deal, the Group shall conduct accounting treatment by treating various
transactions as a transaction obtaining the control right. Where it doesn‘t belong to a package deal, the sum of the book value of
originally held equity investment and the newly-increased investment cost shall be treated as the initial investment cost accounted
based on cost method. Where the equity held before the acquisition date is accounted based on equity method, other relevant
comprehensive income accounted based on original equity method shall not be adjusted temporarily and during disposal of such
investment, accounting treatment shall be carried out based on the same basis on which the invested unit directly disposes relevant
assets or liabilities. Where the equity held before the acquisition date in the available-for-sale financial assets is accounted based on
fair value, the accumulated changes in fair value that shall be recorded in other comprehensive income originally shall be transferred
into the current profit and loss on investment on the merger date.
Except for the long-term equity investment obtained via the business merger, for the long-term equity investment obtained via
the cash payment, the purchase price actually paid shall be treated as the investment cost; while for the long-term equity investment
obtained via issuance of equity securities, the fair value of the issued equity securities shall be treated as the investment cost; for the
long-term equity investment invested by the investors, the value specified in the investment contract or the agreement shall be treated
as the investment cost; where the Company has any long-term equity investment obtained via debt restructuring and non-currency
asset exchange, the method to determine the investment cost shall be disclosed in accordance with relevant regulations of accounting
standards for business enterprises and the actual situation of the Company.
The Group adopts the cost method to account the investment on the subsidiaries and adopts the equity method to account the
investment on the joint venture and cooperative enterprises.
For the long-term equity investment measured and accounted subsequently based on the cost method, when increasing the
investment, the book value of the long-term equity investment cost shall be added based on the fair value of cost paid for additional
investment and relevant transaction cost occurred. Where the invested unit declares the distributed cash dividend or profit, the
amounts to be shared shall be recognized as the current investment income.
For the long-term equity investment measured and accounted subsequently based on the equity method, the book value of
long-term equity investment shall be added or reduced accordingly based on the change in the ownership interest of the invested unit.
When recognizing the shares of the net profit and loss of invested unit, the net profit of invested unit shall be adjusted before
recognition based on the fair value of the identifiable assets of the invested unit when obtaining the investment and based on the
accounting policies of the Group during accounting period and the internal transaction profit or loss between the joint venture and
cooperative enterprises shall be offset and the part that belongs to the investment enterprise shall be calculated based on the
shareholding ratio.
When disposing the long-term equity investment, the difference between the book value and the actually obtained price shall
be recorded in the current profit and loss on investment. When accounting the long-term equity investment based on equity method,
where the other changes in the ownership interest of the invested unit other than the net profit and loss are recorded in the ownership
interest, when disposing such investment, the part that shall be recorded in the ownership interest originally shall be transferred into
current profit and loss on investment according to corresponding ratio.
In case of loss of common control or significant influence on the invested unit due to reasons such as disposal of partial equity
investment, the remaining equity after disposal can be accounted based on the available-for-sale financial asset and difference
between the fair value and book value of the remaining equity on the date of loss of the common control or significant influence shall
be recorded in the current profit and loss. Accounting treatment shall be carried out on other comprehensive income of original
equity investment recognized due to the accounting based on equity method according to the same basis based on which the invested
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unit directly disposes relevant assets or liabilities when terminating adoption of equity method for accounting.
In case of loss of control on the invested unit due to disposal of partial long-term equity investment and where the remaining
equity after disposal can implements common control or exerts significant influence on the invested unit, the accounting based on
equity method shall be carried out and the difference between the book value of disposed equity and disposal consideration shall be
recorded in investment income and the remaining equity shall be deemed as being adjusted based on the equity-method accounting at
the time of acquisition; where the remaining equity after disposal cannot implement common control or exert significant influence on
the invested unit, accounting treatment can be carried out based on relevant regulations of available-for-sale financial assets; and the
difference between book value of disposed equity and disposal consideration shall be recorded in investment income. The difference
of the fair value and book value of remaining equity on the date of loss of control shall be recorded in the current profit and loss on
the investment.
Where various transactions conducted by the Group from step-by-step disposal of equity to loss of controlling interest don‘t
belong to a package deal, the accounting treatment on each transaction shall be carried out separately. Where they belong to a
package deal, various transactions shall be treated as a transaction disposing the subsidiary and losing the control right for accounting
treatment. However, before loss of control right, the difference between each transaction disposal price and the book value of
long-term equity investment to which the disposed equity corresponds shall be recognized as other comprehensive income and shall
be transferred into the current profit and loss without control right at the time of loss of control right.
14. Property of Investment
Measurement mode for investment real estate
Measurement based on cost method
Depreciation method or amortization method
The depreciation or amortization of the Group‘s investment real estate is withdrawn based on the composite life method.
The expected service life, net residual value rate and annual depreciation (amortization) rate of various investment real estates
are shown as follows:
Items Depreciation Term (Year) Expected Salvage Rate (%) Annual Depreciation Rate (%)
Land-use Right 50 10.00% 1.80%
Houses & Buildings 5—50 10.00% 1.80%—18.00%
15. Fixed Assets
(1) Recognition Condition
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.
The fixed assets shall be recognized when its relevant economic benefit may be flowed into the Group and its cost can be
reliably measured. The Group‘s fixed assets include Houses & buildings, Machinery equipment, Mould equipment, Transport
equipment, Apparatus equipment, Tooling equipment and Office equipment.
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(2) Depreciation method
Items Depreciation method Depreciation Term Rate of salvage value Annual Depreciation Rate
Houses & buildings Straight-line method 20—50 10.00% 1.80-4.50
Machinery equipment Straight-line method 10 10.00% 9.00
Mould equipment Straight-line method 3 10.00% 30.00
Transport equipment Straight-line method 5 10.00% 18.00
Apparatus equipment Straight-line method 5 10.00% 18.00
Tooling equipment Straight-line method 5 10.00% 18.00
Office equipment Straight-line method 5 10.00% 18.00
16. Project in Process
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.
17. Borrowing Costs
When occuring the borrowing costs that can be directly attributed to the fixed assets, investment real estate and inventories
which can reach the predetermined usable or marketable state through more than 1 year of construction or production activity, when
the asset expenditure has occurred, borrowing cost has occurred, the necessary construction or production activity that can make the
asset reach the predetermined usable or marketable status has occurred, the capitalization shall be conducted; when the constructed or
produced assets meeting the capitalization condition can reach the predetermined usable or marketable status, the capitalization shall
be suspended and the subsequent borrowing costs shall be recorded in current profit and loss. If the assets meeting capitalization
condition are abnormally suspended during construction or production and the suspension period lasts for more than three months,
the capitalization of borrowing costs shall be suspended until the asset construction or production activity is restarted.
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.
18. Intangible Assets
(1) Valuation Method, Service Life and Impairment Test
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. At the time of initial
recognition of the acquiree‘s assets, the intangible assets owned by the acquiree during merger under non-common control which are
not recognized in the financial statement shall be recognized as the intangible assets based on the fair value.。
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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. 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.
19. Long-term Asset Impairment
The Group carries out inspection on the long-term equity investment, investment real estate measured based on cost mode, fixed
asset, project under construction, production biological asset measured based on cost mode, oil and gas asset, intangible assets with
limited service life on each balance sheet date. Where there is any sign of impairment, the Group shall carry out the impairment test.
The impairment test shall be carried out on the intangible assets which goodwill and service life are uncertain at the end of each year
no matter whether there is any sign of impairment. 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.
20. Long-term Deferred Expenses
Long-term deferred expenses of the Group refer to various expenses that have been paid but shall be assumed on current period
or subsequent period with the amortization period of more than one year (exclusive). 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.
21．Employees’ Remuneration
(1) Accounting Treatment Method of Short-term Remuneration
Short-term remuneration mainly includes the wage, bonus, allowance, subsidy, employee‘s welfare expense, medical insurance
premium, birth insurance premium, industrial injury insurance premium, legal reserves of housing acquisition, labor union
expenditure, personnel education fund and non-currency welfare. During the accounting period when the employees provide the
service for the Company, the Company shall recognize the actual short-term employees‘ remuneration as the liability and shall record
it in current profit and loss or relevant asset cost. The non-currency welfare shall be measured based on the fair value.
(2) Accounting Treatment Method of Welfare after Departure
The welfare after departure mainly includes the defined contribution plan, which mainly includes basic endowment insurance,
unemployment insurance and annuity. Corresponding payable amount shall be recorded in relevant asset cost or current profit and
loss at the time of occurrence.
(3) Accounting Treatment Method of Dismissal Welfare
When terminating the labor relationship with employees before expiration of the employees‘ labor contract or proposing a
suggestion on provision of compensation for the purpose of encouraging employees to accept workforce reduction willingly, the
employees‘ remuneration related liabilities generated from dismissal welfare shall be recognized and recorded in current profit and
loss when the Company fails to unilaterally cancel the dismissal welfare offered for labor relationship termination plan or reduction
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suggestion and when the Company recognizes the cost related to payment of dismissal welfare restructuring (whichever is earlier).
However, if the dismissal welfare cannot be fully paid within 12 months after the end of the annual reporting period, it shall be
treated as the other long-term employee‘s remuneration.
The employees‘ internal retirement plan shall be treated based on the same principle of above dismissal welfare. The Company
shall record the internal retired employees‘ wages and paid social insurance premiums to be paid from the date when the employees
stop providing service to the normal retirement date in current profit and loss (dismissal welfare) when they meet the expected
liability recognition condition.
(4) Accounting Treatment Method of Other Long-term Employees’ Welfare
Where the other long-term employees‘ welfare provided by the Company to the employees can meet the defined contribution
plan, accounting treatment on such welfare shall be conducted based on the defined contribution plan; otherwise, it shall be
conducted based on the defined income plan.
22. Predictable 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.
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.
23. Stock Payment
The stock payment settled based on equity which is used to exchange the service provided by the employees shall be measured
based on the fair value on the date of grant of employees‘ equity instrument. The amount of fair value shall be recorded in relevant
costs or expenses based on straight-line method under the condition that the service within the waiting period is completed or the
specified performance condition is met before exercise of right by taking the best estimate of the quantity of exercisable equity
instruments within the waiting period as the basis, in order to increase the capital reserves accordingly.
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 the right can be exercised
immediately upon grant, the fair value of assumed liabilities shall be recorded in relevant costs or expenses on the date of grant to
increase the liabilities accordingly; where it needs to complete the service within waiting period or meet the specified performance
condition before exercise of right, the best estimate of exercisable right can be taken as the basis on each balance sheet date during
the waiting period to record the obtained service on current period in the cost or expense in accordance with the fair value amount of
liabilities assumed by the Group to adjust the liabilities accordingly.
The enterprise remeasures the fair value of liabilities and record its change in current profit and loss on every balance sheet date
before related liability settlement and the settlement date.
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Where the Group cancels the granted equity instruments within the waiting period (with an exception of cancellation due to
failure in meeting the exercisable condition), it shall be deemed as accelerated exercise of right, which means that the equity payment
plan within the remaining waiting period have fully met the exercisable condition and all expenses within the remaining waiting
period shall be recognized on the current period when cancelling the granted equity instrument.
24. Income
The operating income of the Group mainly includes the sales revenue of commodities, income from provision of labor service,
income from transfer of asset use right and income from construction contract. The income recognition policy is shown as follows:
(1) Sales revenue of commodities: 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) Income from provision of labor service: 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. 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.
(3) Income from transfer of assets: The revenue from abalienating of right to use assets may be recognized on the condition that
the relevant economic benefits are likely to flow into the Company and the amount of revenues can be measured in a reliable way.
25. Government Grants
(1) Judgment Basis and Accounting Treatment Method of Asset-related Governmental Subsidies
The governmental subsidies related to the assets refer to the governmental subsidies obtained by the enterprise, governmental
subsidies used for construction and procurement or the governmental subsidies forming long-term assets in other ways. 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.
(2) Judgment Basis and Accounting Treatment Method of Income-related Governmental Subsidies
The income related governmental subsidies refer to the governmental subsidies other than the asset-related governmental
subsidies. 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.
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26. Deferred Income Tax Assets/Deferred Income Tax Liabilities
The Group‘s deferred income tax assets and deferred income tax liabilities shall be recognized based on the difference between
the tax base and book value of the assets and liabilities (temporary difference). For the deductible loss that can be used to offset the
taxable income of following years according to the tax law regulations, corresponding deferred income tax assets shall be recognized.
For the temporary difference generated from initial recognition of the goodwill, the corresponding deferred income tax liabilities
shall not be recognized. For the temporary difference generated from initial recognition of the assets or liabilities generated during
the transaction of non-business merger which neither affects the accounting profit nor affects the taxable income tax (or deductible
loss), no corresponding deferred income tax asset and deferred income tax liability shall be recognized. On the balance sheet date, the
deferred income tax asset and deferred income tax liability shall be measured based on the applicable tax rate during the period when
it is expected to recover such assets or pay off such liabilities. The Group will recognize the deferred income tax assets based on the
future taxable income that may be used to deduct the deductible temporary difference, deductible loss and tax payment offsetting.
27. Lease
(1) Accounting treatment method 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 treatment method of finance 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.
28. Significant accounting policy and accounting estimate change
(1) Change in significant accounting policy
□Applicable √ Inapplicable
Contents and cause of change in
Approval procedure Remark
accounting policy
In 2014, the Ministry of Finance newly
issued or amended a series of statements
such as No. 2 Accounting Standards for The change in the accounting policy has no
Relevant accounting policy change has
Business Enterprises-Long-term Equity influence on the Group‘s financial
been approved by the sixth meeting of 8th
Investment, implemented relevant statements, so that there is no need to make
Board Meeting of the Company.
accounting rules and carried out any retroactive adjustment.
accounting treatment based on relevant
connection regulations.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(2) Change in significant accounting estimate
□Applicable √ Inapplicable
Ⅵ. Taxes
1．Main tax types and rates
Tax type Tax basis Tax rate
VAT Sales revenue of commodities 17%
Business Tax Taxable income 5%
Urban Maintenance & Construction Tax Circulating tax payable 7%
Enterprise Income Tax Taxable income amount 25%
Extra charges of education funds Circulating tax payable 3%
Real estate tax 70% of the original value of real estate 1.2%
Ⅶ. Notes to the Items of Consolidated Financial Statements
1. Monetary Fund
Unit: RMB
Items Ending balance Beginning balance
Ready money 516,454.17 492,314.95
Bank Deposit 21,875,692.95 50,212,004.91
Other Monetary Fund 6,427,210.56 3,547,136.34
Total 28,819,357.68 54,251,456.20
Other explanations
(1) Other monetary capitals of the Group at the end of the year refer to the cash deposit for bank acceptance.
(2) In the monetary capitals of the Group at the end of the year, the limited monetary capital is RMB 6,427,210.56. The monetary
capital limited at the beginning of the year is RMB 3,547,136.34.
2. Notes Receivable
(1) Classified Presentation of Notes Receivable
Unit: RMB
Items Ending balance Beginning balance
Bank acceptance bill 100,821,063.85 154,352,869.68
Commercial Acceptance Bill 23,066.81
Total 100,821,063.85 154,375,936.49
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(2) Notes Receivable of the Company that Have Been Pledged at the End of the Period
Unit: RMB
Items Pledged amount at the end of the period
Bank‘s acceptance bill 45,473,002.10
Total 45,473,002.10
(3) Notes Receivable of the Company that Have Been Endorsed or Discounted and that Are not Expired on
Balance Sheet Date at the End of the Period
Unit: RMB
Items Amount Ceased to Recognized at Year End Amount Ceased to Recognized at Year End
Bank’s acceptance bill 29,259,431.94
Total 29,259,431.94
3. Notes Receivable
(1) Classified Disclosure of Accounts Receivable
Unit: RMB
Amount at the end of period Beginning balance
Provision for Bad Provision for Bad
Book balance Book balance
Items Debts Debts
Book Value Book Value
Percent Percent
Amount Proportion Amount Amount Proportion Amount
Drawn Drawn
Accounts
receivable with
significant specific
amount that were 7,649,789.11 6.17% 6,227,694.47 81.41% 1,422,094.64 7,649,789.11 4.40% 6,227,694.47 81.41% 1,422,094.64
provisioned bad
debt preparation
separately
Accounts
receivable which
bad debt provision
111,125,574.26 89.67% 122,200.33 0.11% 111,003,373.93 160,967,562.02 92.60% 110,950.83 0.07% 160,856,611.19
shall be withdrawn
based on credit
risk characteristics
Accounts
receivable that 5,160,953.41 4.16% 5,160,953.41 100.00% 5,210,953.41 3.00% 5,210,953.41 100.00%
were not
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
significant but
have been
provisioned bad
debt preparation
separately
Total 123,936,316.78 11,510,848.21 112,425,468.57 173,828,304.54 11,549,598.71 162,278,705.83
Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end of period：
√ Applicable □ Inapplicable
Unit: RMB
Ending balance
Accounts receivable (based on unit)
Notes Receivable Provision for Bad Debts Percent Drawn Reason of provision
Shenzhen Boteman Bowling Club
Co., Ltd. (hereinafter referred to as 2,555,374.75 2,555,374.75 100.00% Can not be taken back
Boteman)
Failure to recover on time
H. K. Haowei Industry Co., Ltd. 1,870,887.18 448,792.54 23.99% because of customer‘s fund
shortage
TCL Wangpai Electric Appliance
1,325,431.75 1,325,431.75 100.00% Can not be taken back
(Huizhou) Co., Ltd.
Qingdao Hai‘er Spare Parts
1,225,326.15 1,225,326.15 100.00% Can not be taken back
Procurement Co., Ltd.
Skyworth Multimedia(Shenzhen)
672,769.28 672,769.28 100.00% Can not be taken back
Co.,Ltd.
Total 7,649,789.11 6,227,694.47 -- --
Accounts receivable with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable □ Inapplicable
Unit: RMB
Ending balance
Account ageing
Notes Receivable Provision for Bad Debts Percent Drawn
Subitem within one year
110,568,246.50
Subtotal within 1 year 110,568,246.50
2-3 year (s) 224,990.00 22,499.00 10.00%
Over 3years 332,337.76 99,701.33 30.00%
Total 111,125,574.26 122,200.33
Instructions for determining the combination basis:
Accounts receivable with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable √ Inapplicable
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Accounts receivable with accrual of bad debt reserve by other method in the combination
Accounts receivable without major individual amount but with separate accrual of bad debt reserve at the end of period
Balance at the end of the year
Unit name Notes Provision for Bad
Percent Drawn（%） Reason of provision
Receivable Debts
Shenzhen Huixin Video Science and
381,168.96 381,168.96 100.00 Can not be taken back
Technology Co.,Ltd.
Shenzhen Wandial Number Science and
351,813.70 351,813.70 100.00 Can not be taken back
Technology Co.,Ltd.
Shenzhen Dalong Electric Co.,Ltd. 344,700.00 344,700.00 100.00 Can not be taken back
Shenzhen Qunpin Electric Co.,Ltd. 304,542.95 304,542.95 100.00 Can not be taken back
China Galaxy Electric(Hong Kong) Co.,Ltd. 288,261.17 288,261.17 100.00 Can not be taken back
Dongguan Weite Electric Co.,Ltd. 274,399.80 274,399.80 100.00 Can not be taken back
Hong Kong New Century Electric Co.,Ltd. 207,409.40 207,409.40 100.00 Can not be taken back
Shenyang Beitai Electric Co.,Ltd. 203,304.02 203,304.02 100.00 Can not be taken back
Bejing Xinfanweiye Science and Technology
193,000.00 193,000.00 100.00 Can not be taken back
Co.,Ltd.
TCL Electric(Hong kong) Co.,Ltd. 145,087.14 145,087.14 100.00 Can not be taken back
Huizhou TCL New and Special Electronics
142,707.14 142,707.14 100.00 Can not be taken back
Co., Ltd.
Shenzhen Skyworth-RGB Electric Co.,Ltd. 133,485.83 133,485.83 100.00 Can not be taken back
Shenzhen Xinfa Electronics Co., Ltd. 119,094.78 119,094.78 100.00 Can not be taken back
Other 2,071,978.52 2,071,978.52 100.00 Can not be taken back
Total 5,160,953.41 5,160,953.41
(2) Bad Debt Provision Withdrawn, Recovered or Refunded at Current Period
The bad debt provision withdrawn at current period is RMB 11,249.50; the bad debt provision recovered or refunded at current
period is RMB 50,000.00.
Among which, the important bad debt provision recovered or refunded at current period:
Unit: RMB
Unit name Recovered or refunded amount Recovery method
Guangzhou Midea Refrigeration Plant Co.,
50,000.00 Bank acceptance bill
Ltd.
Total 50,000.00 --
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(3) Accounts Receivable with Top Five Ending Balances Collected Based on the Debtor
The total amount of accounts receivable with top five ending balances collected by the Debtor this year reaches RMB
106,260,853.21, which accounts for 85.74% of the total ending balance of the accounts receivable. The total amount of ending
balances of withdrawn bad debt provision is RMB 1,225,326.15.
4. Advance payment
(1) List of advance payments according to aging
Unit: RMB
Ending balance Beginning balance
Account ageing
Amount Proportion Amount Proportion
Within 1 year 4,042,321.66 71.30% 13,346,708.54 98.99%
1-2year (s) 1,496,115.65 26.39% 136,534.65 1.01%
2-3 year (s) 130,682.56 2.31%
Total 5,669,119.87 -- 13,483,243.19 --
Instruction for the cause of failure in completion of timely settlement of advance payment with aging larger than 1 year and
significant amount: none
(2) Advance Payment with Top Five Ending Balances Collected Based on the Prepayment Object
The total amount of advance payment with top five ending balances collected based on the prepayment object this year reaches
RMB 3,724,326.72, which accounts for 65.69% of the total ending balances of the advance payment.
5. Other Accounts Receivable
(1) Classified Disclosure of Other Accounts Receivable
Unit: RMB
Ending balance Beginning balance
Provision for Bad Provision for Bad
Book balance Book balance
Items Debts Book Debts
Book Value
Proporti Percent Value Propor Percent
Amount Amount Amount Amount
on Drawn tion Drawn
Accounts receivable
with significant
specific amount that
5,662,187.38 4.70% 5,662,187.38 100.00% 5,662,187.38 28.23% 5,662,187.38 100.00%
were provisioned
bad debt preparation
separately
Other accounts 109,162,244.07 90.60% 67,431.78 0.06% 109,094,812.2 10,081,917.80 50.27% 458,150.02 4.54% 9,623,767.78
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
receivable which 9
bad debt provision
shall be withdrawn
based on credit risk
characteristics
Accounts receivable
that were not
significant but have
5,668,513.51 4.70% 5,668,513.51 100.00% 4,313,278.80 21.50% 4,313,278.80 100.00%
been provisioned
bad debt preparation
separately
109,094,812.2
Total 120,492,944.96 11,398,132.67 20,057,383.98 10,433,616.20 9,623,767.78
9
Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
Ending balance
Other accounts receivable
Other Accounts
(based on unit) Provision for Bad Debts Percent Drawn Reason of provision
Receivable
Boteman 4,021,734.22 4,021,734.22 100.00% Can not be taken back
Zhao Baomin 564,646.35 564,646.35 100.00% Can not be taken back
Traffic incident indemnity 555,785.81 555,785.81 100.00% Can not be taken back
Hebei Botou Court 520,021.00 520,021.00 100.00% Can not be taken back
Total 5,662,187.38 5,662,187.38 -- --
Other Accounts Receivable with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable □ Inapplicable
Unit: RMB
Ending balance
Account ageing
Other Accounts Receivable Provision for Bad Debts Percent Drawn
Subitem within one year
108,354,131.23
Subtotal within 1 year 108,354,131.23
1-2 year (s) 328,685.91 16,434.30 5.00%
2-3 year (s) 464,152.99 46,415.30 10.00%
Over 3years 15,273.94 4,582.18 30.00%
Total 109,162,244.07 67,431.78
Instructions for determining the combination basis:
Other Accounts Receivable with accrual of bad debt reserve by balance percentage method in the combination
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□ Applicable √ Inapplicable
Other Accounts Receivable with accrual of bad debt reserve by other method in the combination
√ Applicable □ Inapplicable
Other Accounts Receivable without major individual amount but with separate accrual of bad debt reserve at the end of period:
Balance at the end of the year
Unit name Other Accounts Provision for Bad Percent Drawn（%） Reason of provision
Receivable Debts
Shenzhen Lotus Island Restaurant Co.,Ltd 236,293.80 236,293.80 100.00 Can not be taken back
Weili Electric Corporation Co.,Ltd, 112,335.62 112,335.62 100.00 Can not be taken back
Zhangzhou City, Fujian Province
Employee canteen ect. 1,036,916.46 1,036,916.46 100.00 Can not be taken back
Personal borrowings 987,090.51 987,090.51 100.00 Can not be taken back
Trade Union 297,402.55 297,402.55 100.00 Can not be taken back
Chuangjing workshop 192,794.00 192,794.00 100.00 Can not be taken back
Others 2,805,680.57 2,805,680.57 100.00 Can not be taken back
Total 5,668,513.51 5,668,513.51
(2) Bad Debt Provision Withdrawn, Recovered or Refunded at Current Period
The bad debt provision withdrawn at current period is RMB 964,516.47; the bad debt provision recovered or refunded at current
period is RMB 0.00.
Among which, the important bad debt provision recovered or refunded at current period: none
(3) Classification of Other Accounts Receivable Based on Nature of Money
Unit: RMB
Payment nature Book balance at the end of period Book balance at the beginning of period
Lease Deposit 330,400.00 330,400.00
Borrowing 2,472,108.12 3,106,310.17
Current accounts 107,947,763.80 8,614,008.37
Wage and utilities paid by agent 1,832,111.50 1,066,860.39
Rent receivable 7,181,456.09 5,207,178.01
Others 729,105.45 1,732,627.04
Total 120,492,944.96 20,057,383.98
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(4) Other Accounts Receivable with Top Five Ending Balances Collected Based on Debtor
Unit: RMB
Proportion in the
total ending balances Ending balance of
Unit name Payment nature Ending balance Account ageing
of other accounts bad debt provision
receivable
Huafa Trade
Current accounts 101,400,000.00 Within 1 year 84.15%
Company
Boteman Rent receivable 4,021,734.22 Over 3years 3.34% 4,021,734.22
Zhao Baomin Rent receivable 564,646.35 Over 3years 0.47% 564,646.35
Traffic incident
Current accounts 555,785.81 Over 3years 0.46% 555,785.81
indemnity
Hebei Botou Court Current accounts 520,021.00 Over 3years 0.43% 520,021.00
Total -- 107,062,187.38 -- 88.85% 5,662,187.38
6. Inventories
(1) Type of Inventories
Unit: RMB
Ending balance Beginning balance
Items Depreciation Depreciation
Book balance Book Value Book balance Book Value
Provisions Provisions
Raw Materials 16,000,026.71 1,260,134.51 14,739,892.20 29,655,107.32 4,893,231.35 24,761,875.97
Finishing Product 1,296,995.00 1,296,995.00 27,982.75 27,982.75
Stocked Goods 12,222,310.12 549,643.94 11,672,666.18 19,282,804.52 3,222,621.17 16,060,183.35
Turnover
440,625.54 51,587.59 389,037.95 914,440.54 363,236.79 551,203.75
materials
Self-made
semi-finished 2,740,898.61 33,070.70 2,707,827.91 2,287,490.60 250,244.88 2,037,245.72
product
Processed
Materials upon 73,631.31 73,631.31 3,680,812.31 3,680,812.31
entrustment
Total 32,774,487.29 1,894,436.74 30,880,050.55 55,848,638.04 8,729,334.19 47,119,303.85
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(2) Provision for Depreciation of Inventories
Unit: RMB
Beginning Current increment Current decrement
Items Ending balance
balance Withdrawing Others Carryover or resale Others
Raw Materials 4,893,231.35 3,633,096.84 1,260,134.51
Stocked Goods 3,222,621.17 2,672,977.23 549,643.94
Low-value
consuming 363,236.79 311,649.20 51,587.59
products
Self-made
semi-finished 250,244.88 217,174.18 33,070.70
product
Total 8,729,334.19 6,834,897.45 1,894,436.74
7. Other Current Assets
Unit: RMB
Items Ending balance Beginning balance
Trust and financing product 500,000,000.00
Total 500,000,000.00
Other instructions:
The trust and financing product is the ―Zhongxin Qianjing-Green Star City Investment Fund Collective Trust Plan‖ issued by
CITIC Trust, with the annual expected yield of 12% and term of 12 months, which interest shall be paid at the end of each quarter.
The product principal shall be paid when it becomes due.
8. Property of Investment
(1) Investment Real Estate Measured Based on Cost
√ Applicable □ Inapplicable
Unit: RMB
Items Houses & Buildings Land-use Right Project in Progress Total
I. Original value of book value
1.Beginning balance 107,661,686.94 107,661,686.94
2. Additional amount of current period
(1) Outsourcing
(2) Transferred from inventory/fixed
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
assets/construction in progress
(3) Increase in business merger
3.Decreased amount of current period
(1) Disposal
(2) Other transfer-out
4.Ending balance 107,661,686.94 107,661,686.94
II. Accumulated depreciation and
accumulated amortization
1.Beginning balance 75,132,266.12 75,132,266.12
2. Additional amount of current period 1,254,757.08 1,254,757.08
(1) Withdrawal or amortization 1,254,757.08 1,254,757.08
3.Decreased amount of current period
(1) Disposal
(2) Other transfer-out
4.Ending balance 76,387,023.20 76,387,023.20
III. Impairment Provision
1.Beginning balance
2. Additional amount of current period
(1) Withdrawing
3、Decreased amount of current period
(1) Disposal
(2) Other transfer-out
4.Ending balance
IV. Book Value
1.End-of-period book value 31,274,663.74 31,274,663.74
2.Opening book value 32,529,420.82 32,529,420.82
(2) Investment Real Estate Measured Based on Fair Value
□ Applicable √ Inapplicable
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
9．Fixed Assets
(1) Condition of Fixed Assets
Unit: RMB
Houses & Machinery Electronic Transport
Items Others Total
Buildings Equipment equipment equipment
I. Original value of book value：
1.Beginning balance 218,177,134.33 85,808,429.03 20,279,295.96 4,718,484.59 21,929,996.69 350,913,340.60
2. Additional amount of
216,000.00 4,373,897.50 41,062.36 562,051.28 1,133,131.34 6,326,142.48
current period
(1) Procurement 216,000.00 3,071,726.29 41,062.36 562,051.28 1,038,091.34 4,928,931.27
(2) Transferred from
0.00 1,302,171.21 0.00 0.00 95,040.00 1,397,211.21
construction in progress
(3) Increase in
0.00 0.00 0.00 0.00 0.00
business merger
3.Decreased amount of
0.00 11,025,745.64 11,472,716.18 1,139,113.00 1,336,996.45 24,974,571.27
current period
(1) Disposal or scrap 0.00 11,025,745.64 11,472,716.18 1,139,113.00 1,336,996.45 24,974,571.27
4.Ending balance 218,393,134.33 79,156,580.89 8,847,642.14 4,141,422.87 21,726,131.58 332,264,911.81
II. Accumulated depreciation
1.Beginning balance 61,872,274.85 53,695,012.53 17,630,534.85 3,400,834.30 15,887,082.82 152,485,739.35
2. Additional amount of
5,742,187.55 6,533,627.90 246,646.81 375,402.59 1,744,961.27 14,642,826.12
current period
(1) Withdrawing 5,742,187.55 6,533,627.90 246,646.81 375,402.59 1,744,961.27 14,642,826.12
3.Decreased amount of
0.00 9,667,859.53 10,097,288.54 1,017,193.84 1,111,735.49 21,894,077.40
current period
(1) Disposal or scrap 0.00 9,667,859.53 10,097,288.54 1,017,193.84 1,111,735.49 21,894,077.40
4.Ending balance 67,614,462.40 50,560,780.90 7,779,893.12 2,759,043.05 16,520,308.60 145,234,488.07
III. Impairment Provision
1.Beginning balance 0.00 1,499,613.30 1,160,684.99 104,388.91 120,847.02 2,885,534.22
2. Additional amount of
0.00 0.00 0.00 0.00 0.00
current period
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(1) Withdrawing 0.00 0.00 0.00 0.00 0.00
3.Decreased amount of
0.00 941,073.98 1,138,160.85 99,168.90 115,521.09 2,293,924.82
current period
(1) Disposal or scrap 0.00 941,073.98 1,138,160.85 99,168.90 115,521.09 2,293,924.82
4.Ending balance 0.00 558,539.32 22,524.14 5,220.01 5,325.93 591,609.40
IV. Book Value
1.End-of-period book value 150,778,671.93 28,037,260.67 1,045,224.88 1,377,159.81 5,200,497.05 186,438,814.34
2.Opening book value 156,304,859.48 30,613,803.20 1,488,076.12 1,213,261.38 5,922,066.85 195,542,067.03
(2) Condition of temporarily idle fixed asset
Unit: RMB
Original value of Accumulated Impairment
Items Net book value Remark
book value Depreciation Provision
Machinery Equipment 430,718.00 289,031.93 98,614.27 43,071.80
Mould Equipment 8,350,729.36 7,515,656.43 835,072.93
Transport equipment 207,000.00 186,300.00 20,700.00
Apparatus Equipment 5,800.00 5,220.00 580.00
Total 8,994,247.36 7,996,208.36 98,614.27 899,424.73
(3) Fixed assets leased by operating lease
Unit: RMB
Items End-of-period book value
Houses & buildings 95,862,690.65
Machinery Equipment 515,880.61
Total 96,378,571.26
(4) Condition of fixed assets without certificate of title
Unit: RMB
Items Book Value Cause of failure in handling the certificate of title
Warehouse 2,808,802.16 Handling relevant formalities
New dormitory building 4,151,261.36 Handling relevant formalities
Total 6,960,063.52
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
10. Project in Progress
(1) Condition of construction in process
Unit: RMB
Ending balance Beginning balance
Items Impairment Impairment
Book balance Book Value Book balance Book Value
Provision Provision
Huafa building renovation
654,356.00 654,356.00 654,356.00 654,356.00
project
Gongming Electronics
2,199,000.00 2,199,000.00 1,669,000.00 1,669,000.00
Town renovation project
Total 2,853,356.00 2,853,356.00 2,323,356.00 2,323,356.00
(2) Changes in Major Construction-in-Process
Unit: RMB
Other Accum Including:
Transfer-in Proportion Proportion of
Additional reduced ulated accumulated
fixed asset of project capitalization Source
Project Budget Beginning amount of amount Ending Job capitali capitalization
amount of investment of interest in of
name amounts balance current of balance schedule zation of interest in
current in the the current capital
period current of the current
period budget period
period interest period
Huafa building
654,356.00 654,356.00 Others
renovation project
Gongming
Electronics Town 1,669,000.00 530,000.00 2,199,000.00 Others
renovation project
10 tons of
1,302,171.21 1,302,171.21 Others
biomass boiler
Cable of power
distribution 95,040.00 95,040.00 Others
cabinet
Total 2,323,356.00 1,927,211.21 1,397,211.21 2,853,356.00 -- -- --
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
11. Intangible Assets
(1) Condition of intangible assets
Unit: RMB
Non-patented
Items Land-use Right Patent Others Total
technology
I. Original value of book value
1.Beginning balance 55,187,826.36 661,878.97 55,849,705.33
2. Additional amount of current period
(1) Procurement
(2) Internal research and
development
(3) Increase in business merger
3.Decreased amount of current period
(1) Disposal
4.Ending balance 55,187,826.36 661,878.97 55,849,705.33
II. Accumulated amortization
1.Beginning balance 6,236,209.05 252,516.35 6,488,725.40
2. Additional amount of current period 1,444,408.80 49,885.92 1,494,294.72
(1) Withdrawing 1,444,408.80 49,885.92 1,494,294.72
3.Decreased amount of current period
(1) Disposal
4.Ending balance 7,680,617.85 302,402.27 7,983,020.12
III. Impairment Provision
1.Beginning balance
2. Additional amount of current period
(1) Withdrawing
3.Decreased amount of current period
(1) Disposal
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
4.Ending balance
IV. Book Value
1.End-of-period book value 47,507,208.51 359,476.70 47,866,685.21
2.Opening book value 48,951,617.31 409,362.62 49,360,979.93
Proportion of the intangible assets produced from internal research and development of the Company at the end of the period in the
balance of the intangible assets: 0%.
12. Long-term deferred charges
Unit: RMB
The amortization
Other reduction
Items Beginning balance Current increment amount of the Ending balance
amounts
current period
Golf membership fee 511,133.25 60,333.39 159,133.19 291,666.67
Renovation
1,262,391.61 1,208,400.04 53,991.57
expenditures
Total 1,773,524.86 1,268,733.43 159,133.19 345,658.24
Other instructions:
The membership cost of Golf Club refers to the cost for obtaining the membership of the Golf Club and Mission Hills Golf Club.
The other reduction in the membership cost of Golf Club is caused by the Company‘s transfer of membership of Mission Hills Golf
Club.
13. Deferred Income Tax Assets & Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that are Not Offset
Unit: RMB
Ending balance Beginning balance
Items To deduct temporary Deferred Income Tax To deduct temporary Deferred Income Tax
difference Assets difference Assets
Provision drawn for
22,241,854.51 5,560,538.64 30,300,959.61 7,575,314.91
assets impairment
Deductible loss 1,841,280.09 460,320.02
Estimated liabilities 2,765,583.81 691,395.95 2,604,411.81 651,102.95
Total 25,007,438.32 6,251,934.59 34,746,651.51 8,686,737.88
99
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(2) Deferred Income Tax Assets or Liabilities Listed as the Net Amount after Offsetting
Unit: RMB
Deductible amount of
Deductible amount of Ending balance of Opening balance of
deferred income tax
deferred income tax deferred income tax deferred income tax
Items assets and liabilities at
assets and liabilities at assets or liabilities after assets or liabilities after
the beginning of the
the end of the period offsetting offsetting
period
Deferred Income Tax
6,251,934.59 8,686,737.88
Assets
(3) Deferred tax assets that have not been confirmed
Unit: RMB
Items Ending balance Beginning balance
Deductible loss 27,567,291.70 37,473,229.25
Provision drawn for assets impairment 3,153,172.51 3,297,123.71
Total 30,720,464.21 40,770,352.96
(4) The deductible loss of the unrecognized deferred income tax assets will become due in the following
years.
Unit: RMB
Year Ending amount Initial amount Remark
2014 210,527.72
2015 142,552.20 290,960.95
2016 253,206.10 556,637.59
2017 24,123,775.77 33,350,633.02
2018 3,047,757.63 3,064,469.97
Total 27,567,291.70 37,473,229.25 --
14. Short-term Borrowings
(1) Classification of Short-term Borrowings
Unit: RMB
Items Ending balance Beginning balance
Pledged loan 15,000,000.00 49,493,738.74
Mortgage Loan 103,114,376.32 67,348,857.39
100
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Credit loan 20,000,000.00 45,298,005.00
Total 138,114,376.32 162,140,601.13
15. Notes Payable
Unit: RMB
Type Ending balance Beginning balance
Bank acceptance bill 39,994,397.62 34,646,052.79
Total 39,994,397.62 34,646,052.79
Total amount of notes payable that is due but unpaid at the end of the period is RMB 0.00.
16. Accounts Payable
(1) Presentation of Accounts Payable
Unit: RMB
Items Ending balance Beginning balance
Material cost 65,547,836.32 52,206,342.81
Total 65,547,836.32 52,206,342.81
(2) Important Accounts Payables with Aging Larger than 1 Year
Unit: RMB
Items Ending balance Cause of failure in repayment or carry-over
Shenzhen YH Global Logistics Co., Ltd. 2,858,885.97 Unsettled
Taiwan LG Company 1,906,267.50 Unsettled
Total 4,765,153.47 --
17. Advance Collections
(1) Presentation of Advance Collections
Unit: RMB
Items Ending balance Beginning balance
Payment for goods 727,331.06 1,572,324.29
Total 727,331.06 1,572,324.29
101
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
18. Employees’ Remuneration Payable
(1) Presentation of Employees’ Remuneration Payable
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
I. Short-term remuneration 4,765,916.33 57,938,825.80 56,490,854.41 6,213,887.72
II. Welfare after departure-defined
-5,093.82 4,158,544.00 4,158,544.00 -5,093.82
contribution plan
III. Dismissal welfare 50,000.00 50,000.00
Total 4,760,822.51 62,147,369.80 60,699,398.41 6,208,793.90
(2) Presentation of Short-term Remuneration
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
1. Salary, bonus, allowance &
4,028,594.41 50,566,071.42 49,205,799.53 5,388,866.30
subsidies
2. Staff Welfare Treatment Fund 4,980,536.18 4,980,536.18
3. Social Insurance Premium 23,041.98 1,475,526.61 1,475,526.61 23,041.98
Among it: Medical insurance premium 23,041.98 1,277,973.44 1,277,973.44 23,041.98
Industrial Injury Insurance
89,505.47 89,505.47
Premium
Birth Insurance Premium 108,047.70 108,047.70
4. Public Housing Fund 24,310.00 794,130.24 794,130.24 24,310.00
5. Labor union expense and personnel
689,969.94 122,561.35 34,861.85 777,669.44
education fund
Total 4,765,916.33 57,938,825.80 56,490,854.41 6,213,887.72
(3) Presentation of Defined Contribution Plan
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
1. Basic retirement
-5,093.82 3,836,132.70 3,836,132.70 -5,093.82
insurance premium
2. Unemployment
322,411.30 322,411.30
Insurance Premium
Total -5,093.82 4,158,544.00 4,158,544.00 -5,093.82
102
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
19. Taxes Payable
Unit: RMB
Items Ending balance Beginning balance
VAT 7,294,271.06 4,546,472.19
Business Tax 1,405,738.37 1,185,572.87
Enterprise Income Tax 8,804,564.06 8,314,523.29
Personal Income Tax 35,016.79 43,155.25
Urban Maintenance & Construction Tax 124,888.48 23,767.75
Property Tax 452,346.57 610,591.84
Land use tax 330,904.20 195,937.53
Educational Surcharge 33,119.68 16,053.95
Others 71,197.64 7,006.39
Total 18,552,046.85 14,943,081.06
20. Other accounts Payables
(1) Other Accounts Payable Listed Based on Payment Nature
Unit: RMB
Items Ending balance Beginning balance
Cash deposit and cash pledge 11,080,224.58 5,846,332.45
Lease management fee 1,393,897.07 1,393,897.07
Equipment cost payable 246,722.49 332,322.49
Current accounts 9,851,796.05 12,057,421.18
After-sales and repai 333,642.00 108,012.00
Others 1,273,067.12 2,654,428.80
Total 24,179,349.31 22,392,413.99
(2) Important Other Accounts Payable with the Aging Larger Than 1 Year
Unit: RMB
Items Ending balance Cause of failure in repayment or carry-over
Shenzhen SED Property Development Co., Ltd. 1,393,897.07 Unsettled
Zhenxing Branch of CMBC 1,170,008.00 Unsettled
Shenzhen PNT Co., Ltd. 656,345.28 Unsettled
Shenzhen Tongxing Electronics Co., Ltd. 578,259.83 Unsettled
103
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Shenzhen Yongdasheng Investment Development
558,970.00 Unsettled
Co., Ltd.
Total 4,357,480.18 --
21. Long-term borrowings
(1) Classification of long-term borrowings
Unit: RMB
Items Ending balance Beginning balance
Mortgage Loan 585,300,000.00 162,418,800.00
Total 585,300,000.00 162,418,800.00
Description of classification of long-term borrowings: None
Other instructions: interest rate interval: the lending rate involves the upward fluctuation of benchmark interest rate of bank loan at
the same period and level, which is subject to 8.1875% this year.
22. Estimated liabilities
Unit: RMB
Items Ending balance Beginning balance Cause
Pending legal action 2,765,583.81 2,604,411.81 Commercial and labor dispute
Total 2,765,583.81 2,604,411.81 --
23. Capital Stock
Unit: RMB
Increase and decrease of change in the current period (+, -)
Beginning Sharetransferof
Ending balance
balance Issuingnew shares Donatehare publicaccumulation Others Subtotal
fund
Total shares 283,161,227.00 283,161,227.00
24. Capital Reserves
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
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
104
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
25. Surplus Reserves
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
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 Current period Previous period
Undistributed profits at the end of previous period
-196,386,008.11 -189,868,606.67
before adjustment
Beginning-of-year undistributed profits after
-196,386,008.11 -189,868,606.67
adjustment
Add: net profit belonging to the owner of the
7,687,620.27 -6,517,401.44
parent company of the current period
End-of-period undistributed profits -188,698,387.84 -196,386,008.11
Details of undistributed profits at the beginning of the adjustment period:
1). Retroactive adjustment is made according to the Accounting Standards for Business Enterprises and relevant new provisions;
affected undistributed profit at the beginning of the period is RMB 0.
2). Due to the change in accounting policy, the affected undistributed profit at the beginning of the period is RMB 0.
3). Due to correction of significant accounting mistakes, the affected undistributed profit at the beginning of the period is RMB 0.
4). Due to the change in the merger scope under common control, the affected undistributed profit at the beginning of the period is
RMB 0.
5). The undistributed profit at the beginning of the period affected by other adjustment: RMB 0.
27. Business Revenues & Business Cost
Unit: RMB
Accruals of the current period Accruals of the previous period
Items
Income Cost Income Cost
Main Businesses 614,968,207.08 564,457,891.72 585,086,234.27 545,670,732.98
Other Business 79,871,553.02 29,540,907.46 41,734,810.37 10,928,216.80
Total 694,839,760.10 593,998,799.18 626,821,044.64 556,598,949.78
105
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
28. Business Tax & Surcharges
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Business Tax 2,349,770.66 1,662,673.11
Urban Maintenance & Construction Tax 1,345,107.38 1,363,872.25
Educational Surcharge 576,474.58 584,516.67
Property Tax 442,258.65 442,258.56
Land use tax 239,994.10 239,994.10
Local education development fees 384,374.97 389,677.80
Others 317,229.50 364,379.76
Total 5,655,209.84 5,047,372.25
29. Sales costs
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Employees‘ Remuneration 4,916,515.15 4,019,077.85
Transportation expenses 3,135,971.86 2,775,973.32
Commodity inspection expenses 239,667.47 349,539.47
Customs affairs fee 109,718.52 222,239.21
Commodity wastage 321,271.86 390,776.18
Others 2,789,084.30 2,264,110.95
Total 11,512,229.16 10,021,716.98
30. Management costs
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Payroll 9,067,143.41 8,010,902.71
Depreciation costs 4,096,098.36 5,815,235.66
Social Insurance Premium 6,336,762.05 6,069,612.82
Social contact fees 1,562,052.88 1,892,026.53
Tax and surcharges 3,255,137.17 3,508,721.56
Staff Welfare Treatment Fund 1,878,679.25 1,762,758.92
Business trip costs 1,460,818.53 1,487,454.41
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Amortization of intangible assets 1,494,294.72 1,341,612.23
Transportation fees 1,491,600.64 1,279,878.43
Consulting fees 2,317,319.50 615,827.70
Safety protection fee 1,184,265.52 1,286,102.50
Repair costs 1,519,462.47 1,194,933.55
Auditing costs 773,171.95 849,241.21
Office costs 614,373.83 1,049,189.72
Communication fees 320,228.44 161,571.17
Amortization of low-value, perishable goods 353,442.02 361,177.31
Securities information disclosure fees 273,950.56 245,500.00
Legal action costs 6,520.89 122,098.60
Others 1,194,956.83 2,186,579.31
Total 39,200,279.02 39,240,424.34
31. Financial Expenses
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Interest Expenditures 40,887,323.57 19,690,543.20
Less: interest return 260,396.93 139,025.25
Add: exchange loss -1,946,419.38 1,754,493.26
Add: other expenditures 1,104,046.01 148,327.64
Total 39,784,553.27 21,454,338.85
32. Assets Impairment Loss
Unit: RMB
Items Accruals of the current period Accruals of the previous period
I. Provision for Bad Debts 925,765.97 1,082,308.51
II. Provision for Depreciation of
991,178.40
Inventories
Total 925,765.97 2,073,486.91
107
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
33. Investment income
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Investment income generated from disposal of
983,612.12
long-term equity investment
Total 983,612.12
34. Non-business Revenues
Unit: RMB
Accruals of the previous Amount recorded in current
Items Accruals of the current period
period nonrecurring profit and loss
Gains of Disposal of
1,752,028.49 267,153.14 1,752,028.49
non-current assets
Among it: income from fixed
1,752,028.49 267,153.14 1,752,028.49
assets disposition
Government Grants 4,159,795.00 1,652,600.00 4,159,795.00
Payment that can not be paid 341,320.10 467,913.11 341,320.10
Penalty fine income 155,570.00 58,256.00 155,570.00
Others 82,110.00 129,929.25 82,110.00
Total 6,490,823.59 2,575,851.50 6,490,823.59
Governmental subsidies recorded in current profit and loss:
Unit: RMB
Occurred amount of current Occurred amount of previous
Subsidies Assets related/income related
period period
Position subsidy 200,695.00 Income related
Export subsidy and bonus 3,393,000.00 Income related
Energy saving subsidy 76,800.00 Income related
L2278W machine type subsidy 80,000.00 Income related
Bonus for enterprises paying the
200,000.00 Income related
tax of more than RMB 1 million
Loan with discounted interest 409,300.00 169,600.00 Income related
Special support fund 200,000.00 Income related
Innovation and development
50,000.00 Income related
related special fund
Special energy saving fund 83,000.00 Income related
108
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Development fund for medium-
950,000.00 Income related
and small-sized enterprises
Total 4,159,795.00 1,652,600.00 --
35. Non-business Expenditures
Unit: RMB
Accruals of the previous Amount recorded in current
Items Accruals of the current period
period nonrecurring profit and loss
Loss of Disposal of Non-current
164,208.69 163,109.29 164,208.69
Assets
Among it: Loss from fixed-assets
164,208.69 163,109.29 164,208.69
disposition
Litigation indemnity 161,172.00 2,360,203.26 161,172.00
Others 268,327.41 32,465.04 268,327.41
Total 593,708.10 2,555,777.59 593,708.10
36. Expenses of Income Tax
(1) Expense Statement of Income Tax
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Income tax expenses of current period 521,227.71
Expense of deferred income tax 2,434,803.29 -1,077,769.12
Total 2,956,031.00 -1,077,769.12
(2) Accounting Profit and Income Tax Adjustment
Unit: RMB
Items Accruals of the current period
Total profit 10,643,651.27
Income tax calculated based on legal/applicable tax rate 2,660,912.82
Influence of non-deductible cost, expense and loss 53,136.31
Influence of deductible loss of deferred income tax assets unrecognized at the early stage of use -2,192,821.42
Influence of deductible temporary difference or deductible loss of deferred income tax assets that
2,434,803.29
are not recognized at current period
Income tax expense 2,956,031.00
109
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
37. Items in Cash Flow Statement
(1) Other Cash Received Related to Operation Activities
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Business Transaction Payment 10,157,369.88 11,089,580.53
Administration fee and water and electricity charges
9,827,961.00 7,310,433.74
collection
Employees' repayment for their borrowings 2,323,827.06 5,787,306.85
Lease Deposit 5,989,902.00 1,659,726.00
Interest income 260,396.93 139,025.25
Total 28,559,456.87 25,986,072.37
(2) Other Paid Related to Operation Activities
Unit: RMB
Items Accruals of the current period Accruals of the previous period
The unit's current money 6,213,713.40 9,170,778.56
Advances to employees 4,768,944.01 6,520,029.82
Legal action costs 6,520.89 122,098.60
Deposit, security 1,142,674.29 385,491.56
Social contact fees 1,562,052.88 2,060,175.83
water & electricity fees 18,771,965.55 15,940,284.79
Business trip costs 1,460,818.53 1,459,961.65
Transportation expenses 3,135,971.86 1,473,677.18
Transportation fees 1,491,600.64 1,457,535.10
Repair costs 1,519,462.47 1,012,148.48
Auditing and consulting fee 3,090,491.45 1,309,626.00
Security fee 309,351.00 202,553.25
Procedure fee of financial organization 1,104,046.01 148,327.64
Office costs 614,373.83 1,031,428.16
Communication fees 320,228.44 365,743.11
Others 992,749.19 660,030.48
Total 46,504,964.44 43,319,890.21
110
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(3) Other paid cashes related to investment activities
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Balance of the equity transfer amount received when disposing the
subsidiary that is lower than the monetary capital held on the disposal 44,452.72
date of subsidiary
Total 44,452.72
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 7,687,620.27 -6,517,401.44
Add: provision drawn for assets impairment 925,765.97 2,073,486.91
Depreciation of fixed assets, depletion of oil and gas, depreciation of
15,897,583.20 17,348,558.97
production materials or equipment
Amortization of Intangible Assets 1,494,294.72 1,486,557.95
Amortization of Long-term Expenses to be Apportioned 1,268,733.43 1,408,200.12
Loss from Disposal of Fixed Assets, Intangible Assets & Other
-1,587,819.80 -104,043.85
Long-term Assets (Proceeds indicated by ―-‖)
Financial Expenses (Proceeds indicated by ―-‖) 40,887,323.57 19,690,543.20
Investment loss(Proceeds indicated by ―-‖) -983,612.12
Decrement of Deferred Income Tax Assets (Addition indicated by ―-‖) 2,434,803.29 -1,077,769.12
Decrement of Inventories (Addition indicated by ―-‖) 23,074,150.75 -5,339,420.80
Decrement of Operative Receivables (Addition indicated by ―-‖) 5,491,533.44 -111,247,005.94
Increment of Operative Payables (Decrease indicated by ―-‖) 22,901,782.29 12,924,853.62
Net Cash Flow Provided by Operating Activities 119,492,159.01 -69,353,440.38
2. Important investment and fund raising activities involving no cash： -- --
3. Net Variation of Cash and Cash Equivalent： -- --
Year-end balance of cash 22,392,147.12 50,704,319.86
Less: year-beginning balance of cash 50,704,319.86 100,248,503.42
Net increase of cash and cash equivalent -28,312,172.74 -49,544,183.56
111
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(2) Net Cash for Disposal of Subsidiary Received at Current Period
Unit: RMB
Amount
Cash or cash equivalent received at the current period from disposal
100,000.00
of the subsidiary at current period
Wherein: --
Huafa Trade Company 100,000.00
Less: cash and cash equivalent held by subsidiary on the date of loss
144,452.72
of control right
Wherein: --
Huafa Trade Company 144,452.72
Wherein: --
Net cash received from disposal of subsidiary -44,452.72
(3) Composition of cash and cash equivalents
Unit: RMB
Items Ending balance Beginning balance
I. Cash 22,392,147.12 50,704,319.86
Among it: Ready money 516,454.17 492,314.95
Bank deposit available for payment anytime 21,875,692.95 50,212,004.91
III. Balance of Cash & Cash Equivalents at Term End 22,392,147.12 50,704,319.86
Other instructions: Monetary capital at the end of the year-other monetary capital doesn‘t belongs to cash and cash equivalent but
refers to cash deposit for bank‘s acceptance bill of RMB 6,427,210.56.
39. Assets whose ownership or right to use is restricted
Unit: RMB
Items End-of-period book value Cause of limitation
Monetary Fund 6,427,210.56 Used for issuing the bank’ acceptance bill
Notes Receivable 45,473,002.10 Used for pledge to obtain the bank loan
Investment property 31,274,663.74 Used to secure the bank loans
Fixed Assets 46,128,426.60 Used to secure the bank loans
Intangible Assets 47,344,188.72 Used to secure the bank loans
Total 176,647,491.72 --
112
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
40. Foreign Currency Monetary Item
(1) Foreign Currency Monetary Item
Unit: RMB
Ending balance of foreign
Items Exchange rate of conversion Converted ending RMB balance
currency
Wherein: USD 269,109.39 6.1190 1,647,548.30
HKD 166,488.16 0.7897 131,467.38
Wherein: USD 3,885,496.81 6.1190 23,844,905.37
Advance payment
Wherein: USD 97,630.95 6.1190 599,151.38
Accounts payable
Wherein: USD 1,188.60 6.1190 7,294.32
Short-term borrowing
Wherein: USD 8,680,238.00 6.1190 53,114,376.32
Ⅷ. Change of Merger Scope
1. Disposal of Subsidiary
Where there is any circumstance under which the control right over the subsidiary’s investment is lost at single disposal?
√ Yes □ No
Unit: RMB
Difference
Determin
of disposal
Profit or ation Amount of
price and
Ratio Book loss method other
the net asset Fair
of value of generate and main comprehensive
share of value of
remain remaini from assumpti income related
Time Determinati subsidiary remainin
ing ng re-measu on of fair to original
Equity Equity Equity point of on basis for to be shared g equity
Subsidiary equity equity rement value of subsidiary‘s
disposal disposal disposal loss of time point of at the on the
name on the on the of remainin equity
price ratio way control loss of consolidated date of
date of date of remainin g equity investment
right control right financial loss of
loss of loss of g equity on the transferred into
statement to control
control control based on date of the profit and
which the right
right right fair loss of loss on
disposed
value control investment
investment
right
corresponds
113
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Handover of
actual
control right
Huafa Trade Sep. 30,
100,000.00 100.00% Sales and 983,612.12
Company 2014
resolution of
shareholders
‘ meeting
Other instructions:
Where there is any circumstance under which the subsidiary‘s investment is disposed step by step through several times of
transactions and the control right is lost at current period?
□ Yes √ No
2. Change in Merger Scope Caused by Other Reasons
Please describe the change in merger scope caused by other reasons (such as establishment of new subsidiaries and liquidation of
subsidiaries) and relevant information:
In this year, the information of subsidiaries that are newly incorporated into the merger scope due to establishment of new
subsidiaries by the Group is shown as follows:
Name of Main business Registered Business nature Shareholding ratio Obtaining
subsidiary place address (%) method
Huafa Hengtai New
Shenzhen Shenzhen Property management 100.00%
Company establishment
Huafa Hengtai Company, founded on Mar. 5, 2014, is a limited liability company registered in Shenzhen Market Supervision
and Management Bureau, with the registration number being 440301108909539. The registered capital is RMB 1 million and the
paid-up capital is RMB 1 million. The Company holds 100.00% of the shares.
Ⅸ. Equity in Other Entities
1. Equity in subsidiaries
(1) Composition of Enterprise Group
Main business Registered Shareholding ratio
Name of subsidiary Business nature Obtaining method
place address Direct Indirect
Property Invested and
Huafa Lease Company Shenzhen Shenzhen 60.00%
management established
Property Invested and
Huafa Property Company Shenzhen Shenzhen 100.00%
management established
Invested and
Hengfa Technology Company Wuhan Wuhan Production and sale 100.00%
established
114
2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Property Invested and
Yutian Henghua Company Shenzhen Shenzhen 100.00%
management established
Property Invested and
Huafa Hengtian Company Shenzhen Shenzhen 100.00%
management established
Property Invested and
Huafa Hengtai Company Shenzhen Shenzhen 100.00%
management established
Instruction for shareholding ratio of subsidiary different from the proportion of voting right:
Basis for holding half or less than half of the voting rights but still controlling the invested unit and basis for holding more than half
of the voting rights but failing to control the invested unit:
Basis for control over the important structured entity incorporated in the merger scope:
Basis for determining whether the Company is an agent or a client: none.
Other instructions: none.
Ⅹ. Financial Instruments Related Risks
The main financial instruments of the Group include the borrowing, accounts receivable, accounts payable, trading financial
assets and trading financial liabilities. The detailed information of various financial instruments is shown in Note VI. The financial
instruments related risks and the risk management policy taken by the Group for reducing these risks are shown as follows. The
Group‘s management layer will manage and monitor these risk exposures in order to ensure controlling above risks within the limited
scope.
1. Various risk management objectives and policies
The Group‘s risk management aims to achieve proper balance between risk and benefit; minimize the negative influence of risk
on the Group‘s operation performance and maximize the benefits of shareholders and other equity investors. Based on this risk
management objective, the basic strategy of risk management of the Group is determining and analyzing the risks faced by the Group;
establishing proper risk tolerance and carrying out risk management and supervising various risks in a timely and reliable manner in
order to control the risks within a limited scope.
(1) Market risk
The market risk of financial instruments refers to the risk of fluctuation of fair value or future cash flow of financial
instruments caused by market price change, including foreign exchange risk, interest rate risk and other price risk.
1）Exchange rate risk
The exchange rate risk assumed by the Group is mainly related to the USD and HKD. Except for the daily operation activities
related to display carried out by the secondary subsidiary of the Group Hengfa Science and Technology Co., Ltd. in USD, the other
main business activities of the Group shall be settled in RMB. On Dec. 31, 2014, except for the USD balance of following assets and
liabilities and the petty UKD balance, the assets and liabilities of the Group are the RMB balances. The exchange rate risk generated
from the assets and liabilities of the USD and HKD balance may exert an influence on the operating performance of the Group.
Item Dec. 31, 2014 (converted into RMB) Dec. 31, 2013 (converted into RMB)
Monetary capital-USD 1,647,548.30 25,626,333.15
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Monetary capital-HKD 131,467.38 151,240.37
Accounts
23,844,905.37 59,104,721.62
receivable-USD
Advance payment-USD 599,151.38 9,057,267.97
Accounts
7,294.32 19,977.88
receivable-USD
Short-term
53,114,376.32 75,960,601.13
borrowing-USD
The Group attaches close attention to the influence of change in exchange rate on the Group.
2) Interest rate risk
The Group‘s interest rate risk is generated from the bank loan. The financial liabilities of floating interest rate cause the cash
flow interest rate risk faced by the Group and the financial liabilities of fixed interest rate cause the fair value interest rate risk faced
by the Group. The Group shall determine the relative ratio of fixed interest rate and floating interest rate contract according to the
market environment. On Dec. 31, 2014, the interest-bearing debts of the Group mainly include the floating interest rate loan contract
valued at RMB and USD, with the total amount being RMB 723,414,376.32 (on Dec. 31, 2013: RMB 324,559,401.13).
The Group‘s risk of financial instrument‘s cash flow change caused by change in interest rate is mainly related to the bank loan
of floating interest rate. The Group‘s policy aims to remain the floating interest rate of these borrowings to eliminate the fair value
risk caused by interest rate change.
3) Price risk
The Group sells the display at market price so that the performance is affected by such price fluctuation.
(2) Credit risk
The credit risk refers to the risk of property loss caused to the other party due to the failure of a party to the financial instrument
in performance its obligations. On Dec. 31, 2014, the maximum credit risk exposure that may cause the financial loss of the Group
mainly comes from the loss of the Group‘s financial assets caused by the failure of other party of the Contract in performance its
obligation and the financial guarantee assumed by the Group, which mainly includes:
In order to reduce the credit risk, the Group establishes a special department to determine the credit line and carry out credit
approval and implement other monitoring procedures to ensure that necessary measures are taken to recover the overdue creditor‘s
right. In addition, the Group reviews the recovery situation of each single account receivable on each balance sheet date to ensure full
withdrawal of bad debt provision for the accounts that cannot be recovered. Therefore, the Group‘s management layer believes that
the credit risk assumed by the Group has been reduced significantly.
The Group‘s working capital is stored in the bank with higher credit rating so that the credit risk of working capital is lower.
The Group implements necessary policies to ensure that all trade debtors have good credit record. Except for the top five
accounts receivable, the Group has no other significant credit concentration risk.
Total amount of top five accounts receivable: RMB 106,260,853.21.
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
(3) Liquidity risk
Liquidity risk is the risk that the Group fails to perform its financial obligation on the due date. The method for the Group to
manage the liquidity risk is to ensure sufficient fund liquidity for performance of due debts so as to avoid unacceptable loss or
damage to the enterprise‘s reputation. The Group regularly analyzes the liability structure and period in order to ensure sufficient
funds. The Group‘s management layer is responsible for monitoring the use of bank loan and ensuring its compliance with the loan
agreement. Meanwhile, the Group‘s management layer shall also have negotiation with the financial institution about the financing to
ensure a certain line of credit and reduce the liquidity risk.
The financial assets and financial liabilities held by the Group are analyzed based on the maturity of undiscounted remaining
contractual obligation:
Amount as of Dec. 31, 2014
Items Within 1 year 1-2 years 2-3 years More than 3 years Total
Financial assets
Monetary capital 28,819,357.68 28,819,357.68
Notes receivable 100,821,063.85 100,821,063.85
Notes Receivable 112,425,468.57 112,425,468.57
Other Accounts Receivable 109,094,812.29 109,094,812.29
Advance payment 5,669,119.87 5,669,119.87
Other current assets 500,000,000.00 500,000,000.00
Financial liabilities
Short-term borrowing 138,114,376.32 138,114,376.32
Notes payable 39,994,397.62 39,994,397.62
Accounts payable 65,547,836.32 65,547,836.32
Other payables 20,168,149.31 4,011,200.00 24,179,349.31
Deposit received 727,331.06 727,331.06
Employees‘ remuneration payable 6,208,793.90 6,208,793.90
Long-term borrowing 585,300,000.00 585,300,000.00
2. Sensitivity analysis
The Group adopts sensitivity analysis technology to analyze the influence of reasonable and potential change in the risk
variables on the current profit and loss or ownership interest. As few risk variables will change in isolation and the correlation of the
variables will have a large influence on the final affected amount of a certain risk variable change, the following analysis is carried
out based on the assumption that each variable changes in isolation.
(1) Sensitivity analysis of foreign exchange risk
Assumption of sensitivity analysis of foreign exchange risk: all foreign operation net investment hedging and cash flow
hedging are highly effective.
Based on the above assumptions and under the circumstance that other variables remain unchanged, the after-tax influence of
potential reasonable change in the exchange rate on the current profit and loss and equity is shown as follows:
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
2014 2013
Influence on net Influence on Influence on net Influence on
Item Exchange rate change
profit ownership profit ownership
interest interest
All foreign Appreciation of 5%
-1,011,402.55 -1,011,402.55 674,440.11 674,440.11
currencies against RMB
All foreign Depreciation of 5%
1,011,402.55 1,011,402.55 -674,440.11 -674,440.11
currencies against RMB
XI. Connected parties and connected transactions
1. Condition of parent company of the Enterprise
Shareholding Percentage of voting
proportion of the rights held by the
Name of parent company Registered place Business scope Registered capital
parent company over parent company over
the Enterprise the Enterprise
Wuhan Zhongheng Group Wuhan Production and sale 34,500,000 41.14% 41.14%
Description of condition of the other affiliates of the Enterprise
Registered capital and its change
Controlling shareholder Opening balance Increase of this Decrease of this Ending balance
year year
Wuhan Zhongheng Group 34,500,000 34,500,000
Held share or equity and its change
Controlling Shareholding amount Shareholding ratio (%)
shareholder Ending balance Opening balance Ending ratio Opening ratio
Wuhan Zhongheng Group 116,489,894.00 116,489,894.00 41.14 41.14
The final controlling party of the enterprise is Li Zhongqiu.
2. Condition of subsidiaries of the Enterprise
See Note ―Composition of Enterprise Group‖ for information of the enterprise‘s subsidiaries.
3. Information of Other Related Parties
Name of other affiliates Relationship between other related party and the enterprise
Shenzhen Zhongheng Huafa Science and Technology Co., Ltd. Under the control of the same parent company and the final controlling party
Wuhan Hengsheng Yutian Industry Co., Ltd. Under the control of the same parent company and the final controlling party
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Wuhan Hengsheng Opto-electric Industry Co., Ltd. Under the control of the same parent company and the final controlling party
Hongkong Yutian International Co., Ltd. Under the control of the same parent company and the final controlling party
Wuhan Xindongfang Real Estate Development Co., Ltd. Under the control of the same parent company and the final controlling party
Wuhan Zhongheng Property Management Co.,Ltd. Under the control of the same parent company and the final controlling party
Wuhan Guanggu Display System Co., Ltd. Under the control of the same parent company and the final controlling party
Wuhan Yutian Xingye Property Purchase Co., Ltd. Under the control of the same parent company and the final controlling party
Wuhan Yutian East Land Holding Co., Ltd. Under the control of the same parent company and the final controlling party
Wuhan Xiahua Zhongheng Electronic Co., Ltd. Under the control of the same parent company and the final controlling party
Wuhan ZHongheng Yutian Trade Co., Ltd. Under the control of the same parent company and the final controlling party
Wuhan Yutian Hongguang Real Estate Co., Ltd. Under the control of the same parent company and the final controlling party
Shenzhen Zhongheng Huayu Investment Holding Co., Ltd. Under the control of the same parent company and the final controlling party
Famous Sky Capital Limited Under the control of the same parent company and the final controlling party
Yutian International Co., Ltd. Under the control of the same parent company and the final controlling party
Hong Kong Zhongheng Yutian Co., Ltd. Under the control of the same parent company and the final controlling party
Other instructions:
Wuhan Hengshen Opto-Electronics Industry Co., Ltd. changed its name to Wuhan Hengsheng Opto-Electronics Industry Co.,
4. Connected Transaction
(1) Connection Transactions about Procurement and Sales of Commodities, Provision and Acceptance of
Labor Service
List of procured commodities/accepted labor
Unit: RMB
Content of connected
Related parties Accruals of the current period Accruals of the previous period
transaction
Hongkong Yutian International Co., Ltd. Commodities purchased 145,128,560.64 173,527,202.49
Wuhan Hengsheng Yutian Industry Co., Ltd. Commodities purchased 27,985,217.75 20,560,124.11
Total 173,113,778.39 194,087,326.60
Fact statement of sales of goods and provisions of labor
Unit: RMB
Affiliated party Affiliated transaction Accruals of the current period Accruals of the previous period
Hongkong Yutian International Co., Ltd. Sales of commodities 234,811,940.55 240,663,094.67
Wuhan Hengsheng Opto-electric Industry
Sales of commodities 185,805.98 499,451.70
Co., Ltd.
Shenzhen Zhongheng Huafa Science and Provision of labor
636,090.00
Technology Co., Ltd. service
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Wuhan Hengsheng Yutian Industry Co., Ltd. Sales of commodities 0 440,740.74
Wuhan Zhongheng New Tech Industry
Sales of commodities 60,056.30 111,612.97
Group Co., Ltd.
Total 235,693,892.83 241,714,900.08
(2) Associated lease situation
The Company is the Lessor:
Unit: RMB
Recognized lease income of Recognized lease income of
Name of Lessee Category of leased assets
current period previous period
Shenzhen Zhongheng Huafa
House building 2,309,448.00 1,598,622.00
Science and Technology Co., Ltd
(3) Associated guarantee situation
The Company is the Guarantor:
Unit: RMB
Whether guarantee has
Guaranteed person Amount of guarantee Starting date of guarantee Expiry date of guarantee been fully performed or
not
Hengfa Technology
75,000,000.00 Aug 28, 2014 Aug 28, 2015 None
Company
Hengfa Technology
48,000,000.00 Sep. 29, 2014 Sep. 29, 2015 None
Company
The Company acts as the secured party
Unit: RMB
Whether guarantee has
Guarantor Amount of guarantee Starting date of guarantee Expiry date of guarantee
been fully performed or not
Li Zhongqiu 20,000,000.00 Dec. 4, 2014 Dec. 4, 2015 None
(4) Remuneration of Key Management Personnel
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Total remuneration 1,743,400.00 1,655,800.00
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5、Receivables and payable of related party
(1) Receivables
Unit: RMB
Ending balance Beginning balance
Project name Associated party Provision for Bad Provision for Bad
Book balance Book balance
Debts Debts
Notes Hong Kong Tianyu International
23,844,905.37 58,271,302.17
Receivable Investment Co.,Ltd.
Advance Hong Kong Tianyu International
1,745,857.69 8,310,763.53
payment Investment Co.,Ltd.
Total 25,590,763.06 66,582,065.70
(2) Payables
Unit: RMB
Project name Associated party Ending book balance Opening book balance
Shenzhen Zhongheng New Science
Other payables and Technology Industry Group Co., 0 3,654.74
Ltd.
Advance collections Shenzhen Zhongheng Huafa Science 276,329.24 0
and Technology Co., Ltd.
Accounts payables Wuhan Hengsheng Opto-Electronics 1,231,780.60 0
Industry Co., Ltd.
Total 1,508,109.84 3,654.74
Ⅻ. Commitment and Contingent Matters
1. Contingent Affairs
(1) Important contingent matters on the balance sheet date
1. Contigent liabilities formed by pending litigation or arbitration
(1) Contract disputes between the Company and Shaanxi Linghua Electronic Co., Ltd.
The contract dispute case filed by Shaanxi Linghua Electronic Co., Ltd. (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,
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
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.
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.
On May 5, 2013, Futian District People‘s Court of Shenzhen City has made judgment regarding abovementioned case
(S.F.F.M.E.C.Z.No.9 in 2010): the company shall, within 10 days after the judgment becomes effective, pay RMB2,386,995.81 to
Shaanxi Linghua as damages and Shaanxi Linghua shall, within 10 days after the judgment becomes effective , pay RMB869,458.96
as the residual payment for the goods to the company and compensate the interest loss.
The Company shall lodge the suit on July 7, 2013 to Shenzhen Municipal Intermediate People‘s Court regarding the judgment.
According to the existing judgment, the company has withdrawn RMB2, 360,203.26 as the litigation cost of the case and determines
as expected liabilities.
As of the approval and submission date of this financial report, this case has not been completed legal proceedings. The
Company shall lodge the suit on July 7, 2013 to Shenzhen Municipal Intermediate People‘s Court regarding the judgment. According
to the existing judgment, the company has withdrawn RMB2, 360,203.26 as the litigation cost of the case and determines as expected
liabilities.
As of the approval and submission date of this financial report, this case has not been completed legal proceedings.
(2) 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.
Labor Dispute Case between Yang Guangze, former employee of the Company, and the Company claiming for wages, bonus,
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
overtime pay, housing provident fund, holiday pay, etc., According to the court judgment, the Company shall pay living expense of
off-post recuperation of RMB 23,851.00 from May 2007 to December 2008 to Yang Guangze.
2. Except for above contingent matters, as of Dec. 31, 2014, the Groups has no other significant contingent matters.
XIII. Events after Balance Sheet Date
1. Instruction of other events after balance sheet date
As of the approved release date of financial report, the Group has no significant events after balance sheet date to be disclosed.
XIV. Other Significant Events
1. Miscellaneous
As of Dec. 31, 2014, the Group has no other significant events to be disclosed.
XV. Notes of main items of parent company’s financial statements
1. Accounts Receivable
(1) Classified Disclosure of Accounts Receivable
Unit: RMB
Ending balance Beginning balance
Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Type
Proporti Percent Book Value Percent Book Value
Amount Amount Amount Proportion Amount
on Drawn Drawn
Accounts receivable with
significant specific amount
5,094,414.36 48.59% 3,672,319.72 72.09% 1,422,094.64 5,094,414.36 10.76% 3,672,319.72 72.09% 1,422,094.64
that were provisioned bad
debt preparation separately
Accounts receivable which
bad debt provision shall be
557,327.76 5.32% 122,200.33 21.93% 435,127.43 37,407,188.47 79.03% 110,950.83 0.30% 37,296,237.64
withdrawn based on credit
risk characteristics
Accounts receivable that
were not significant but have
4,832,157.56 46.09% 4,832,157.56 100.00% 4,832,157.56 10.21% 4,832,157.56 100.00%
been provisioned bad debt
preparation separately
Total 10,483,899.68 8,626,677.61 1,857,222.07 47,333,760.39 8,615,428.11 38,718,332.28
Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end of period：
√ Applicable □ Inapplicable
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Unit: RMB
Ending balance
Accounts Receivable (based on
Accounts Provision for Bad
unit) Percent Drawn Reason of provision
Receivable Debts
TCL Wangpai Electric Appliance
1,325,431.75 1,325,431.75 100.00% Can not be taken back
( Huizhou)Co., Ltd.
Skyworth Multimedia(Shenzhen)
672,769.28 672,769.28 100.00% Can not be taken back
Co.,Ltd.
Qingdao Hai‘er Spare Parts
1,225,326.15 1,225,326.15 100.00% Can not be taken back
Procurement Co., Ltd.
Failure to recover on time because
H. K. Haowei Industry Co., Ltd. 1,870,887.18 448,792.54 23.99%
of customer‘s fund shortage
Total 5,094,414.36 3,672,319.72 -- --
In the combination, aging analysis method is used to accrue the receivables of bad debt reserves:
√ Applicable □ Inapplicable
Unit: RMB
Ending balance
Account ageing
Accounts Receivable Provision for Bad Debts Percent Drawn
Subitem within one year
2-3 year (s) 224,990.00 22,499.00 10.00%
Over 3years 332,337.76 99,701.33 30.00%
Total 557,327.76 122,200.33
Instructions for determining the combination basis:
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:
Accounts receivable without major individual amount but with separate accrual of bad debt reserve at the end of period:
Balance at the end of the year
Unit name Accounts Provision for Bad Percent Drawn（%） Reason of provision
Receivable Debts
Shenzhen Huixin Video Science and 381,168.96 381,168.96 100.00 Can not be taken back
Technology Co.,Ltd.
Shenzhen Wandial Number Science and 351,813.70 351,813.70 100.00 Can not be taken back
Technology Co.,Ltd.
Shenzhen Dalong Electric Co.,Ltd. 344,700.00 344,700.00 100.00 Can not be taken back
Shenzhen Qunpin Electric Co.,Ltd. 304,542.95 304,542.95 100.00 Can not be taken back
China Galaxy Electric(Hong Kong) Co.,Ltd. 288,261.17 288,261.17 100.00 Can not be taken back
Dongguan Weite Electric Co.,Ltd. 274,399.80 274,399.80 100.00 Can not be taken back
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Hong Kong New Century Electric Co.,Ltd. 207,409.40 207,409.40 100.00 Can not be taken back
Shenyang Beitai Electric Co.,Ltd. 203,304.02 203,304.02 100.00 Can not be taken back
Bejing Xinfanweiye Science and Technology 193,000.00 193,000.00 100.00 Can not be taken back
Co.,Ltd.
TCL Electric(Hong kong) Co.,Ltd. 145,087.14 145,087.14 100.00 Can not be taken back
Huizhou TCL New and Special Electronics 142,707.14 142,707.14 100.00 Can not be taken back
Co., Ltd.
Shenzhen Skyworth-RGB Electric Co.,Ltd. 133,485.83 133,485.83 100.00 Can not be taken back
Shenzhen Xinfa Electronics Co., Ltd. 119,094.78 119,094.78 100.00 Can not be taken back
Others 1,743,182.67 1,743,182.67 100.00 Can not be taken back
Total 4,832,157.56 4,832,157.56
(2) Bad Debt Provision Withdrawn, Recovered or Refunded at Current Period
The bad debt provision withdrawn at current period is RMB 11,249.50; the bad debt provision recovered or refunded at current
period is RMB 0.00.
Among which, the important bad debt provision recovered or refunded at current period: none.
(3) Accounts Receivable with Top Five Ending Balances Collected Based the Debtor
The total amount of accounts receivable with top five ending balances collected by the Debtor this year reaches RMB
5,475,583.32, which accounts for 52.23% of the total ending balance of the accounts receivable. The total amount of ending balances
of withdrawn bad debt provision is RMB 4,053,488.68.
2. Other Accounts Receivable
(1) Classified Disclosure of Other Accounts Receivable
Unit: RMB
Ending balance Beginning balance
Book balance Provision for Bad Debts Book balance Provision for Bad Debts
Type
Proporti Percent Book Value Proporti Percent Book Value
Amount Amount Amount Amount
on Drawn on Drawn
Accounts receivable with
significant specific amount
10,221,046.53 8.39% 10,221,046.53 100.00% 0 10,221,046.53 8.88% 10,221,046.53 100.00% 0
that were provisioned bad
debt preparation separately
Other accounts
receivable which bad
debt provision shall be 106,277,411.47 87.21% 62,709.06 0.06% 106,214,702.41 100,848,359.10 87.64% 453,427.30 0.45% 100,394,931.80
withdrawn based on
credit risk
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
characteristics
Accounts receivable that
were not significant but
5,359,981.34 4.40% 5,359,981.34 100.00% 0 4,004,746.63 3.48% 4,004,746.63 100.00% 0
have been provisioned bad
debt preparation separately
Total 121,858,439.34 15,643,736.93 106,214,702.41 115,074,152.26 14,679,220.46 100,394,931.80
Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end of period:
√ Applicable □ Inapplicable
Unit: RMB
Ending balance
Other Accounts
Other Accounts
Receivable (based on unit) Provision for Bad Debts Percent Drawn Reason of provision
Receivable
Huafa Lease Company 4,558,859.15 4,558,859.15 100.00% Can not be taken back
Boteman 4,021,734.22 4,021,734.22 100.00% Can not be taken back
Zhao Baomin 564,646.35 564,646.35 100.00% Can not be taken back
Traffic incident indemnity 555,785.81 555,785.81 100.00% Can not be taken back
Hebei Botou Court 520,021.00 520,021.00 100.00% Can not be taken back
Total 10,221,046.53 10,221,046.53 -- --
Other Accounts Receivable with accrual of bad debt reserve by aging analysis method in the combination::
√ Applicable □ Inapplicable
Unit: RMB
Ending balance
Account ageing
Other Accounts Receivable Provision for Bad Debts Percent Drawn
Subitem within one year
105,563,753.03 0 0
Subtotal within 1 year 105,563,753.03 0 0
1-2 year (s) 234,231.51 11,711.58 5.00%
2-3 years 464,152.99 46,415.30 10.00%
Over 3years 15,273.94 4,582.18 30.00%
Total 106,277,411.47 62,709.06
Instructions for determining the combination basis:
Other Accounts Receivable with accrual of bad debt reserve by balance percentage method in the combination:
□ Applicable √ Inapplicable
Other Accounts Receivable with accrual of bad debt reserve by other method in the combination:
√ Applicable □ Inapplicable
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Other Accounts Receivable without major individual amount but with separate accrual of bad debt reserve at the end of period:
Balance at the end of the year
Unit name Other Accounts Provision for Bad Percent Drawn Reason of provision
Receivable Debts （%）
Shenzhen Lotus Island Restaurant Co.,Ltd 236,293.80 236,293.80 100.00 Can not be taken back
Weili Electric Corporation Co.,Ltd, 112,335.62 112,335.62 100.00 Can not be taken back
Zhangzhou City, Fujian Province
Employee canteen ect. 1,036,916.46 1,036,916.46 100.00 Can not be taken back
Personal borrowings 987,090.51 987,090.51 100.00 Can not be taken back
Trade Union 297,402.55 297,402.55 100.00 Can not be taken back
Chuangjing workshop 192,794.00 192,794.00 100.00 Can not be taken back
Others 2,497,148.40 2,497,148.40 100.00 Can not be taken back
Total 5,359,981.34 5,359,981.34
(2) Bad Debt Provision Withdrawn, Recovered or Refunded at Current Period
The bad debt provision withdrawn at current period is RMB 964,516.47; the bad debt provision recovered or refunded at current
period is RMB 0.00.
Among which, the important bad debt provision recovered or refunded at current period: none.
(3) Classification of Other Accounts Payable Based on Payment Nature
Unit: RMB
Payment nature Ending book balance Opening book balance
Borrowing 2,119,400.72 2,658,719.17
Current accounts 112,557,582.53 107,129,565.73
Rent income 7,181,456.09 5,207,178.01
Others 78,689.35
Total 121,858,439.34 115,074,152.26
(4) Other Accounts Receivable with Top Five Ending Balances Collected Based on Debtor
Unit: RMB
Proportion in the
total ending balances Ending balance of
Unit name Payment nature Ending balance Account ageing
of other accounts bad debt provision
receivable
Huafa Trade Company Current accounts 101,400,000.00 Within 1 year 83.21%
Huafa Lease Company Current accounts 4,558,859.15 Over 3years 3.74% 4,558,859.15
Boteman Rental expense 4,021,734.22 Over 3years 3.30% 4,021,734.22
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
receivable and other
expenses
Rental expense
Huafa Property
receivable under 882,564.39 Within 1 year 0.72%
Company
custody
Rental expense
Zhao Baomin receivable and other 564,646.35 Over 3years 0.46% 564,646.35
expenses
Total -- 111,427,804.11 -- 91.43% 9,145,239.72
3. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Items Impairment Impairment
Book balance Book Value Book balance Book Value
Provision Provision
Investment in
188,208,900.00 600,000.00 187,608,900.00 187,308,900.00 600,000.00 186,708,900.00
subsidiary
Total 188,208,900.00 600,000.00 187,608,900.00 187,308,900.00 600,000.00 186,708,900.00
(1) Investment in subsidiary
Unit: RMB
Withdrawal of
Additional Decreased Ending balance of
Beginning depreciation
Invested unit amount of amount of Ending balance depreciation
balance reserves of current
current period current period reserves
period
Huafa Lease
600,000.00 600,000.00 600,000.00
Company
Huafa Property
1,000,000.00 1,000,000.00
Company
Hengfa Technology
183,608,900.00 183,608,900.00
Company
Huafa Trade
100,000.00 100,000.00
Company
Yutian Henghua
1,000,000.00 1,000,000.00
Company
Huafa Hengtian
1,000,000.00 1,000,000.00
Company
Huafa Hengtai 1,000,000.00 1,000,000.00
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Company
Total 187,308,900.00 1,000,000.00 100,000.00 188,208,900.00 600,000.00
4. Business Revenues & Business Cost
Unit: RMB
Accruals of the current period Accruals of the previous period
Items
Income Cost Income Cost
Other Business 57,459,329.67 10,236,937.60 38,573,827.05 10,063,936.59
Total 57,459,329.67 10,236,937.60 38,573,827.05 10,063,936.59
Other explanations:
Other business-classified based on categories
Products Amount of current year Amount of last year
Business revenues Business cost Business revenues Business cost
Property lease 47,942,501.28 2,527,059.80 32,077,987.32 2,036,622.39
Utilities and other expenses 9,516,828.39 7,709,877.80 6,495,839.73 8,027,314.20
Total 57,459,329.67 10,236,937.60 38,573,827.05 10,063,936.59
XVI. Supplementary information
1. Detailed Statement of Non-recurring Profit and Loss of Current Period
√ Applicable □ Inapplicable
Unit: RMB
Items Amount Description
Profit and loss on non-current asset disposal 1,587,819.80
Governmental subsidies recorded in current profit and loss
(be closely related to the enterprise business, with an
4,159,795.00
exception of the governmental subsidies enjoyed based on
national unified standard quota or ration)
Other non-business income and expenditure other than
149,500.69
above items
Other profit and loss items meeting the definition of
983,612.12
non-recurring profit and loss
Less: amount affected by income tax 1,515,189.67
Total 5,365,537.94 --
Where the non-recurring profit and loss item identified by the Company according to No. 1 Company’s Information Disclosure
Explanatory Announcement for Public Issuance of Securities-Non-recurring Profit and Loss and the non-recurring profit and loss
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
items listed in No. 1 Company’s Information Disclosure Explanatory Announcement for Public Issuance of Securities-Non-recurring
Profit and Loss are defined as the recurring profit and loss items, proper explanation shall be given.
□ Applicable √ Inapplicable
2. Return on Net Assets and Earnings Per Share
Earning per Share
Profit during Reporting Period Averagely-weighted return on net asset Basic Earning per Share Diluted Earning per
(Yuan/Share) Share(Yuan/Share)
Net profit ascribed to shareholder
2.77% 0.0271 0.0271
of mother company
Net profit belonging to parent
company shareholders after 0.84% 0.0082 0.0082
excluding non-recurring items
3. Accounting Data Difference under Domestic and Foreign Accounting Standards
(1) Difference of Net Profit and Net Assets in Financial Report Disclosed Based on International
Accounting Standard and Chinese Accounting Standard
□ Applicable √ Inapplicable
(2) Difference of Net Profit and Net Assets in Financial Report Disclosed Based on Overseas Accounting
Standard and Chinese Accounting Standard
□ Applicable √ Inapplicable
4. Accounting Policy Change-related Supplementary Materials
□ Applicable √ Inapplicable
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2014 Annual Report of Shenzhen Zhongheng Huafa Co, Ltd.
Section XII. Documents available for Reference
I. Text of 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.
28 April 2015
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