2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Shenzhen Zhongheng Hwafa Co., Ltd.
Semi-annual Report in 2016
August 2016
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Section I Important Notice, Contents Interpretation
The board of directors, the board of supervisors, directors, supervisors, and
senior executives of the company shall guarantee the truthfulness, accuracy and
completeness of the content of the annual report, promise that the content is free
from any false records, misleading statements or material omissions, and will
assume several and joint legal liabilities.
All directors have attended the board meeting of considering this report.
The company plans not to distribute cash bonus, issue bonus shares, or
transfer reserve to common shares.
Li Zhongqiu (the company responsible person), Yang Bin (the responsible
person for accountants), and Wu Aijie (responsible person of accounting
mechanism, namely, the accountant responsible person) make the following
statement: This is to guarantee the semi-annual report in its authenticity and
integrity.
Considering that the future plan and other forward-looking statement
involved in the annual report are not considered as the substantial commitment
for investors, please pay attention to the investment risks.
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Contents
Semi-annual Report in 2016 .............................................................................................................. 2
Section I Important Notice, Contents Interpretation ..................................................................... 2
Section II Company Introduction ..................................................................................................... 5
Section III Summary of Accounting Data and Financial Indexes ................................................. 7
Section IV Report of Board of Directors.......................................................................................... 9
Section V Important Events ............................................................................................................ 15
Section VI Change of Share and Conditions of Shareholders ..................................................... 25
Section VII Related Conditions of Preferred Shares .................................................................... 29
Section VIII Conditions of Directors, Supervisors and Senior Manager ................................... 30
Section IX Financial Statements ..................................................................................................... 31
Section Ⅹ Directory of Document Available for Inspection .................................................... 114
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Definitions
Definition item Refers to Definition Content
Company and SHF Refers to Shenzhen Zhongheng Hwafa Co.,Ltd.
Hengfa Technology Refers to Wuhan Hengfa Technology Co., Ltd.
Hwafa Property Refers to Shenzhen Zhongheng Hwafa Property Co.,Ltd.
Hwafa Lease Refers to Shenzhen Hwafa Property Lease Management Co., Ltd.
Wuhan Zhongheng Group Refers to Wuhan Zhongheng New Technology Industry Group Co., Ltd.
Hongkong Yutian Refers to Hongkong Yutian International investment Co., Ltd.
Hengsheng Photoelectricity Refers to Wuhan Hengsheng Photoelectricity Co., Ltd.
Hengsheng Yutian Refers to Wuhan Hengsheng Yutian Industry Co., Ltd.
Yutian Henghua Refers to Shenzhen Yutian Henghua Co., Ltd.
Hwafa Hengtian Refers to Shenzhen Hwafa Hengtian Co., Ltd.
Hwafa Hengtai Refers to Shenzhen Hwafa Hengtian Co., Ltd.
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Section II Company Introduction
I. Company Profile
Stock abbreviation: SHF A SHF B Stock Code 000020 200020
Stock exchange for listing Shenzhen Stock Exchange
Chinese name of the company Shenzhen Zhongheng Hwafa Co.,Ltd
Chinese abbreviation of the company
SHF
name (if any)
Foreign abbreviation of the company
SHENZHEN ZHONGHENG HUAFA CO., LTD.
name (if any)
Legal Representative of the Company Li Zhongqiu
II. Contact and contact way
Secretary of the Board of Directors Securities affairs representative
Name Yang Bin Niu Yuxiang
Floor 33, No. 2 Building, Dachong Floor 33, No. 2 Building, Dachong
Adress Commercial Center, Nanshan District, Commercial Center, Nanshan District,
Shenzhen City Shenzhen City
Tel 0755-86360220 0755-86360201
Fax 0755-86360206 0755-86360206
Electronic mailbox hwafainvestor@126.com.cn hwafainvestor@126.com.cn
III. Other conditions
1. Way of Contact:
Whether the company registered address, office address, post code, company website and email address have been changed within
the report period.
√ Applicable □Inapplicable
The company registered address Room 411, North Hwafa Road, Futian District, Shenzhen City
Postal code of registered address 518031
Floor 33, No. 2 Building, Dachong Commercial Center, Nanshan District,
The company office address
Shenzhen City
Postal code of business address 518057
Website http://www.hwafa.com.cn
Company E-mail Address hwafainvestor@126.com.cn
Appointed website inquiry date disclosed in the
Jan. 4, 2016
temporary announcement (if any)
Appointed website inquiry index disclosed in the http://www.cninfo.com.cn/cninfo-new/disclosure/szse_main/bulletin_detail/tru
temporary announcement (if any) e/1201882551?announceTime=2016-01-04
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
2. Information disclosure and designated locations
Whether information disclosure and designated location have been changed within the report period.
□ Applicable √Inapplicable
The information disclosure newspaper name appointed by the company, website appointed by the Chinese Securities Regulatory
Commission to publish the half-year report, and the designated location as specified in the half-year report have not been changed
within the report period. Please refer to the 2015 Annual Report.
3. Change situation of registration
Whether registration conditions have been changed within the report period.
√ Applicable □Inapplicable
Registration No. of
Registration Place of business license Tax Registration
Organization code
date registration for business No.
corporation
Room 411, North
Initial registration within the Hwafa Road,
Jun. 9, 2013 440301501120670 440301618830372 61883037-2
report period Futian District,
Shenzhen City
Room 411, North
Final registration within the report Hwafa Road, 914403006188303 914403006188303 914403006188303
Jun. 7, 2016
period Futian District, 72G 72G 72G
Shenzhen City
Appointed website inquiry date
disclosed in the temporary Jun. 13, 2016
announcement (if any)
Appointed website inquiry index
http://www.cninfo.com.cn/cninfo-new/disclosure/szse_main/bulletin_detail/true/1202365307?an
disclosed in the temporary
nounceTime=2016-06-13
announcement (if any)
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Section III Summary of Accounting Data and Financial Indexes
I. Major accounting data and financial index
Whether the company shall trace, adjust or restate the previous annual accounting data because of accounting policy change and
accounting error correction.
□yes √no
Increase or decrease during
Same period of the previous
Current report period this report period over the
year
same period of last year
Operating income (RMB) 309,538,525.56 248,734,629.86 24.45%
Net profit attributed to the shareholders of
7,272,956.22 14,177,311.03 -48.70%
listed company (RMB)
Net profits attributed to shareholders of
listed company after deducting 6,182,473.52 -8,240,712.21 175.02%
non-recurring profits and losses (RMB)
Net amount of cash flow generated from
-25,424,349.57 17,028,593.73 -249.30%
operating activities (RMB)
Basic earnings per share (RMB/ share) 0.0257 0.0501 -48.70%
Diluted earnings per share (RMB/ share) 0.0257 0.0501 -48.70%
Weighted average net asset yield rate 2.31% 4.92% -2.61%
Increase or decrease at the end
End of current report period At the end of last year of this report period than that
at the end of the previous year
Total assets (RMB) 619,748,378.14 1,155,089,236.67 -46.35%
Net assets attributed to the shareholders of
318,679,518.42 311,406,562.20 2.34%
listed company (RMB)
II. Difference in accounting data under domestic and foreign accounting standards
1. Difference between net profits and net assets in the financial report disclosed in accordance with
international accounting standards and the Chinese accounting standards.
□ Applicable √Inapplicable
The difference between net profits and net assets in the financial report disclosed in accordance with international accounting
standards and the Chinese accounting standards is not existing during the reporting period.
2. Difference between net profits and net assets in the financial report disclosed in accordance with
international overseas accounting standards and the Chinese accounting standards.
□ Applicable √Inapplicable
The difference between net profits and net assets in the financial report disclosed in accordance with international accounting
standards and the Chinese accounting standards is not existing during the reporting period.
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
III. Items and Amount of Non-recurring Profits and Losses
√ Applicable □Inapplicable
Unit: RMB
Item Amount Statements
Profit and loss on non-current asset disposal (including the
write-off part of preparation for the impairment of the withdrawn 97,083.01
assets).
Governmental subsidies recorded in current profit and loss (be
closely related to the enterprise business, with an exception of the
1,163,469.00
governmental subsidies enjoyed based on national unified
standard quota or ration)
Other non-business income and expenditure other than above
194,858.82
items
Less: amount affected by income tax 364,928.13
Total 1,090,482.70 --
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
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
During the reporting period, the company involves no defining non-recurring profit and loss listed in Explanatory Announcement No.
1 on Information Disclosure for Companies Offering their Securities to the Public as recurring profit and loss.
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Section IV Report of Board of Directors
I. Overview
As the supporting product supply manufacturing enterprise in the household appliance industry, the company adheres to be
market-oriented, pays attention to management, increase incomes and reduce expenditures, as a result, keeping favorable
performance level regardless of the shocking and bottoming state of household appliance sales in the first half year of 2016.
Meanwhile, the self-owned properties which are located in the North Huaqiang and Guangming New Area of Shenzhen under the
company have entered renovation implementation phase, the commercial interests brought by renovation will significantly enhance
the company funds, in addition. The independent management of moving-back property will develop into the new continuous and
stable economic and benefit growth point, given this, the company will actively master the market tenancy, explore transformation
and upgrading means, develop and foster the new affiliated industries, and keep the continuous growth of performance in the future.
Within the report period, the company has obtained the operating incomes of RMB 309,538,500 with the year-on-year growth of
24.45%.; The operating profits are RMB 8,201,800 with the year-on-year decrement of 36.79%; The net profits are RMB 7,273,000
with the year-on-year decrement of 48.70%.
● As for the injection molding business, the operating incomes are RMB 91,025,800 in the first half year with the year-on-year
decrement of 18.50%. In the first half year of 2016, the household appliance industry has different performances, such as, the air
conditioner industry suffers from decreasing domestic sales due to destocking in the first half year, the ice washing industry keeps
stable growth state, and the kitchen household appliance industry is subject to optimistic growth under the driving of real estate
industry. In consideration of the continuously rising labor costs, the injection molding department has adjusted the product structure
and selects the product order which will bring relatively higher gross margin according to the household appliance market situation.
Meanwhile, the injection molding department will also strengthen the internal management, import competition mechanism, pay
attention to the employee training, provide favorable logistic service works to employees, completely mobilize employees'
enthusiasm, enhance employee quality and reinforce the belongingness sense of employees; Formulate the effective quality
correction and prevention measures, reinforce delicacy management, enhance product quality and overcome the overcritical quality
standard of customers. As a result, the produce has won the high praise from customers and made efforts to get more market shares
with the higher gross margin.
● As for the Polystyrene business, the operating incomes are RMB 30,816,400 in the first half year with the year-on-year
decrement of 11.09%. Faced with the more fierce market competition in the household appliance industry, increasingly rising
production costs and sharply compressing profit space, Polystyrene Department adheres to be market-oriented, actively cooperates
with customers to perfect product structure, continuously explores and innovates, ceaselessly renews equipment, pays attention to
product quality and forms its unique competition advantages. In the future, the company will make efforts to enhance product quality,
decrease raw materials' consumption, reduce production costs, and keep its unique advantages and market shares via innovative
design and product optimization.
● As for LCD complete machine business, the operating incomes are RMB 164,529,000 in the first half year with the
year-on-year growth of 120.85%. In the premise of keeping the basic production, the Video Information Department will pay more
attention to the design, research and development of new products, increase multiple dimensions and new cost-offsetting LCD
products, as well as realize mass production. As a result, the product will be changed from the traditional structure to the super-thin,
ultra-narrow and larger-dimension hook faces. Considering that our cost advantages are reflected from module factory to the overall
design of complete machine, we can get a head start and win more orders from customers. In addition, the single dimension of
product has developed into multi-series and multi-dimensional product lines, meanwhile, the Video Information Department pays
more attention to the product innovation, which has manufactured GIF, G, FIM, C350 hook face series and many kinds of products
which are independently designed and opened by the company. In the first half year of 2016, the company has successfully imported
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
new customers to change the single customer layout, therefore, the popularity and influence are further enhanced with continuously
increasing sales order and sharply growing operating incomes than the same period of last year.
● As for the property lease business, the operating incomes are RMB 20,777,000 in the first half year with the year-on-year
decrement of 15.23%. The lessees who are located in the Gongming Hwafa Electronic City, the self-owned property of the company,
are continuously removed from it in the reconstruction, reformation and relocation phase, the lease incomes are relatively decresed.
(II). Main business analysis
Year-on-year alternation conditions of main financial data
Unit: RMB
Same period of the Year-on-year increase
Current report period Cause of change
previous year or decrease
Operating income 309,538,525.56 248,734,629.86 24.45%
Operating costs 264,288,398.24 207,463,525.37 27.39%
Sales expenses 5,283,735.71 5,131,770.58 2.96%
The office lease costs and
consultation expenses in this
Management expense 27,295,883.47 18,594,919.77 46.79%
period are increased than the
same period of last year.
Most of the long-term loans
Financial expense 2,312,379.13 30,393,198.67 -92.39% have been repaid in this
period.
The income taxes in this
Income tax expenses 2,384,214.46 -708,871.91 436.34% period are increased than the
same period of last year.
Net amount of cash flow The received unit
generated from operating -25,424,349.57 17,028,593.73 -249.30% come-and-go funds have
activities been decreased.
Net amount of cash flows
Financial product incomes in
generated from -3,790,585.96 10,529,763.03 -136.00%
the last period
investment activities
Net amount of cash flows
Long-term loan repayments
generated from financial -544,260,367.28 -28,950,224.51 -1,779.99%
in this period
activities
Net increased amount of Long-term loan repayments
-573,490,540.29 -1,362,306.90 -41,997.02%
cash and cash equivalents in this period
The profit structure or profit source within the report period has been significantly changed.
□ Applicable √Inapplicable
The profit structure or profit source within the report period has no change.
Conditions about future development and planning extension which are disclosed in the share prospectus, collection prospectus,
capital reorganization report and other publicly disclosing documents within the report period
□ Applicable √Inapplicable
Conditions about future development and planning extension which are disclosed in the share prospectus, collection prospectus,
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
capital reorganization report and other publicly disclosing documents within the report period.
The operating plan progress conditions are disclosed in the preliminary period of the company within the report period
1. Continuously promote urban renewal project
The renew Unit Project in Hwafa Section, Gongming Street, Guangming New Area of Shenzhen will quicken the relocation and
reconstruction progress of the project in the first half year of 2016, strengthen the communication with the cooperation developers
(Shenzhen Vanke, Vanke Guangming and Wuhan Zhongheng Group) and quicken the formalitie transaction of the project; The renew
Project, Hwafa plaza, North Street, Futian District of Shenzhen will continue to coordinate the small local owners, accomplish
relocation compensation and settlement works and make no effort to accomplish the body declaration affairs.
2. Promote strategy cooperation and enhance the influence of private brand
In the first half year of 2016, the company will strengthen and promote the cooperation depth with the existing customers, take full
advantage of the internal coordination advantages and optimize the cooperation mode with dealers. Enhance the coordination degree
with dealers via the cooperation mechanism and mode optimization, as a result, realize the win-win sales result between company
and customers.
III. Main business constitution
Unit: RMB
Increase/decrease Increase/decrease Increase/decrease
of operation of operation cost of gross profit
Operating income Operating costs Gross profit rate revenue over the over the same rate over the
same period of period of the same period of
the previous year previous year the previous year
Industry-classified
Display 164,529,020.71 155,343,029.77 5.58% 120.85% 120.16% 0.29%
Injection molding
91,025,783.84 80,149,219.86 11.95% -18.50% -22.33% 4.34%
component
Foam component 30,816,378.24 25,722,816.97 16.53% -11.09% -13.97% 2.79%
Display 164,529,020.71 155,343,029.77 5.58% 120.85% 120.16% 0.29%
Injection molding
91,025,783.84 80,149,219.86 11.95% -18.50% -22.33% 4.34%
component
Foam component 30,816,378.24 25,722,816.97 16.53% -11.09% -13.97% 2.79%
Region -classified
Hong Kong 113,572,474.49 106,966,160.55 5.82% 73.00% 68.64% 2.44%
Central China 172,798,708.30 154,248,906.05 10.73% 11.34% 10.00% 1.08%
IV. Core competitiveness analysis
1. When all industrial lands of the company in Shenzhen are included in the first batch plan formulated in the 2010 Shenzhen
Urban Renewal Unit Plan, the state-owned resource development and operation in the future will develop into the incremental,
long-term and stable income sources and new profit growth point for the company.
2. Due to the three large-scale factories, nearly 90,000 square meters lands and the domestic and foreign well-famous large-scale
production enterprises which are concentrated in Wuhan Economic & Technological Development Zone, the customer resources are
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
high-quality and stable to form the favorable long-term cooperation relationship on the basis of radiation radius requirements of
supporting processing service industry, especially, after many years' operation, the injection molding business and Polystyrene
business have established stable management team and abundant production experience, as a result, the annual production capacity
and scale are among the best in the Central China, which is enjoying the high popularity in the industry.
V. Investment condition analysis
1. Conditions of foreign equity investment.
(1) Conditions of foreign investment
□ Applicable √Inapplicable
There is no foreign investment within the report period.
(2) Stock rights of financial enterprise
□ Applicable √Inapplicable
The company holds no stock rights of financial enterprise at the end of the period.
(3) Conditions of the securities investment
□ Applicable √Inapplicable
The company involves no security investment in the reporting period.
(4) Descriptions of the stock rights of other listing companies held by the company
□ Applicable √Inapplicable
The company holds no stock rights of other listing companies in the reporting period.
2. Entrusted financial management, derivative investment and entrusted loans
(1) Entrusted financial management conditions
□ Applicable √Inapplicable
The company involves no entrusted manage money matters in the reporting period.
(2) Derivative investment conditions
□ Applicable √Inapplicable
The company involves no derivative investment in the reporting period.
(3) Conditions of entrust loan conditions
□ Applicable √Inapplicable
The company involves no entrusted loans in the reporting period.
3. Conditions of the use of the raised funds
□ Applicable √Inapplicable
No situation of using raised capital of the company during the report period
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
4. Main subsidiary company and joint stock company analysis
√ Applicable □Inapplicable
Situations of main subsidiaries and joint stock companies
Unit: RMB
Main
Company Type of the Industry Registered Operating Operating
products or Total assets Net assets Net profit
name company belonged capital income profits
services
Research &
development
Hengfa , production,
Production 181,643,111. 458,612,404.3 213,436,001.9 287,355,034 10,957,263.
Technology Subsidiaries sales, import 9,291,819.13
sales 00 1 1 .26 57
Company and export
business of
the product.
Self-owned
Hwafa Property
property 1,000,000.0 1,133,177.6
Property Subsidiaries Management 811,809.20 41,183.05 126,072.32 125,722.32
lease and 0 5
Company Department
management
Self-owned
Property
Hwafa Lease property 1,000,000.0
Subsidiaries Management 1,900,692.20 -5,026,990.71
Company lease and 0
Department
management
Self-owned
Hwafa Property
property 1,000,000.0
Hengtian Subsidiaries Management 998,374.25 998,374.25 0.00 -729.55 -729.55
lease and 0
Company Department
management
Self-owned
Hwafa Property
property 1,000,000.0
Hengtai Subsidiaries Management 999,101.29 999,101.29 0.00 -728.26 -728.26
lease and 0
Company Department
management
5. Major projects with non-placement investment
□ Applicable √Inapplicable
The company involves no major projects with non-placement investment.
VI. Estimation of operational performance in Jan to Sep, 2016
The warning that the accumulated net profit from the beginning of the year to the end of the next period is negative or there is
material change compared with the same period of the previous year and the relevant reasons
□ Applicable √Inapplicable
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
VII. Explanation of the board of directors and the board of supervisors on the "Non-Standard
Audit Report" provided by the accountant firm for the current report period
□ Applicable √Inapplicable
VIII. "Non-standard Auditing Report" Instructions of Board of Directors in the First Half
Year
√ Applicable □Inapplicable
Board of Directors' Special Instructions about Affairs Involved in 2015 Non-standard Opinion Auditing Report:
1. The daily affiliated correlation between the company with Wuhan Hengsheng Photoelectricity Industry Co., Ltd. (hereinafter
referred to as "Hengsheng Photoelectricity") is the authorized business range of the annual shareholders' meeting. Due to the
extremely nervous supply of LCD from 2013 to 2015, it is acceptable habit to make payment in advance in the industry. However,
since the second half year of 2015, the company cancels the corresponding orders to avoid operation losses as a result of the sharp
declining price of LCD, such as, the company withdrawn all funds and interests in time according to the purchase contract with
Hengsheng Photoelectricity at the end of 2015.
2. On Jan. 18, 2016, the company received the Notice of Inquiry (SZDCTZi No. 16026) from China Securities Regulatory
Commission. Due to the suspected illegal information disclosure, the foregoing Commission decided to register and investigate the
company according to Securities Law of People's Republic of China. However, the foregoing investigation is under process until now
and the company has not received any conclusive opinion about the foregoing investigation.
IX. Profit Distribution Implementation Conditions of Company within the Report Period
A profit distribution scheme which is implemented within the report period, especially, cash bonus scheme, increasing capital reserve
by transferring equity scheme implementation or adjustment conditions
□ Applicable √Inapplicable
The profit distribution scheme in the first half year lies in not distributing cash bonus, bonus shares and increasing equity by
transferring accumulation funds.
X. Profit distribution or accumulation fund-to-capital stock plan during reporting period
□ Applicable √Inapplicable
The company plans the half a year not to distribute cash bonus, issue bonus shares, or transfer reserve to common shares.
XVI. Registration form for reception, research, communication and interview in reporting
period
√ Applicable □Inapplicable
Reception object Main content talked about
Reception time Reception place Reception mode Reception object
type and materials provided
Communicate the
Company Telephone
Jan. to june 2016 Personal Individual investor company's production
headquarters communication
operation conditions,
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
capital situation, urban
renews project progress
conditions, etc.
Section V Important Events
I. Corporate governance condition
There is no difference between the corporate governance and the requirements of Company Law and relevant provisions of CSRC
about the Management actual situation.
II. Lawsuit affairs
Major litigation and arbitration events
□ Applicable √Inapplicable
The company has no major lawsuit or arbitration matters during the reporting period.
Other lawsuit affairs
□ Applicable √Inapplicable
III. Media questioning conditions
□ Applicable √Inapplicable
The company involves no matters questioned by the media in the reporting period.
IV. Bankruptcy reorganization
□ Applicable √Inapplicable
The company involves no bankruptcy reorganization in the reporting period.
V. Transaction in assets
1. Conditions of acquisition of assets
□ Applicable √Inapplicable
The company involves no asset acquisition in the reporting period.
2. Assets held for sale
□ Applicable √Inapplicable
The company sells no asset acquisition in the reporting period.
3. Conditions of business combination
□ Applicable √Inapplicable
The company involves no business combination in the reporting period.
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
VI. Implementation and effect of equity incentive
□ Applicable √Inapplicable
The company involves no equity incentive plan and implementations in the reporting period.
VII. Significant related transactions
1. Related trade related to daily operation
√ Applicable □Inapplicable
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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Hongko the basis 10,818.2 10,818.2 Telegrap
holding complet Apr.30,
ng Sales of the 65.54% 48,702 No hic —— Ditto
shareholde e LCD 5 5 2016
Yutian sales transfer
r machine
order
price of
custome
rs.
22,122.4 98,053.3
Total -- -- -- -- -- -- --
3 6
The details of huge-amount sales
None.
return
Within the report period, Hengfa Technology has spent 13,168,700 dollars to purchase the
LCD from Hongkong Yutian, accounting for 26.34% of the annual amounts which are
estimated in the beginning of the year. In addition, Hengfa Technology spends 3,739,100
Anticipate the total amount of the
dollars to purchase LCD from Hengsheng Photoelectricity, accounting for 24.93% in the
daily related transactions to be made
annual amount which are estimated in the beginning of the year; In addition, Hengfa
in this period in categories, and the
Technology spends 382,500 dollars to purchase LCD from Hengsheng Photoelectricity,
actual performance within the
accounting for 3.48% in the annual amount which are estimated in the beginning of the year;
reporting period (if any)
Hengfa Technology obtains 16,623,800 dollars from sailing complete LCD machines to
Hongkong Yutian, accounting for 22.17% in the annual amount which are estimated in the
beginning of the year.
The reason for big difference
Inapplicable.
between the transaction price and
17
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
market reference price (if applicable)
2. Related trade occurred by asset acquisition and sale
□ Applicable √Inapplicable
The company involves no related transaction to asset acquisition and sale in the reporting period.
3. Related transaction to joint foreign investment
□ Applicable √Inapplicable
The company involves no related transaction to joint foreign investment in the reporting period.
4. Affiliated credit and debt transaction
√ Applicable □Inapplicable
Whether non-operating affiliated credit and debt transaction exists
□yes √no
The company involves no affiliated credit and debt transaction in the reporting period.
5. Other Related Party Transactions
□ Applicable √Inapplicable
The company involves no other related transactions in the reporting period.
VIII. Conditions of occupying non-operating capital of listed companies from controlling
shareholder and related parties
□ Applicable √Inapplicable
The controlling shareholder and related parties do not occupy the non-operating capital of listed company in the reporting period.
IX. Major contracts and their performance situation
1. Trusteeship, contracting and lease conditions
(1) Trusteeship conditions
□ Applicable √Inapplicable
The company involves no trusteeship in the reporting period.
(2) Contracting conditions
□ Applicable √Inapplicable
The company involves no contract in the reporting period.
(3) Lease condition
□ Applicable √Inapplicable
The company involves no lease in the reporting period.
2. Guarantee condition
√ Applicable □Inapplicable
18
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Unit: Ten thousand Yuan
Foreign Guaranty Condition of the Company (Excluding the Guaranty towards Subsidiaries)
Disclosure
Whether
date of
Actual occurring it is
announcem
Name of Guaranteed date (signing Actual amount Guaranty Guaranteed Fulfilled guarantee
ent related
guaranteed object amount date of the guaranteed type period or not d by
to the
agreement) related
guaranteed
parties
amount
Guarantee situation between the company and subsidiaries
Disclosure
Whether
date of
Actual occurring it is
announcem
Name of Guaranteed date (signing Actual amount Guaranty Guaranteed Fulfilled guarantee
ent related
guaranteed object amount date of the guaranteed type period or not d by
to the
agreement) related
guaranteed
parties
amount
Hengfa Apr.30, Joint liability
30,000 4,711.24 One year No No
Technology 2016 guarantee
Approved total guaranteed Total guaranteed actual accrual
amount towards the subsidiaries 30,000 towards subsidiaries during 2,261.24
in the reporting period (B1) the reporting period (B2)
Approved total guaranteed
Total balance of guarantee
amount towards the subsidiaries
30,000 towards subsidiaries at the end 4,711.24
at the end of the reporting
of the reporting period (B4)
period (B3)
The Company's Guaranty towards Subsidiaries
Disclosure
Whether
date of
Actual occurring it is
announcem
Name of Guaranteed date (signing Actual amount Guaranty Guaranteed Fulfilled guarantee
ent related
guaranteed object amount date of the guaranteed type period or not d by
to the
agreement) related
guaranteed
parties
amount
Total guarantee amount of company (namely, the sum of previous three items)
Approved total guaranteed Actual total guaranteed
amount in reporting period 30,000 amount occurred in reporting 2,261.24
(A1+B1) period ( A2+B2)
Approved total guaranteed Actual total guaranteed
amount at the end of reporting 30,000 balance at the end of reporting 4,711.24
period (A1+B1) period (A4+B4)
19
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Proportion (%) of the actual total guaranteed amount (that is
14.78%
A4+B4) in the company's net assets
Among them:
Total guaranteed amount towards shareholders, actual
0
controllers and related parties (C)
Guaranteed amount provided for guaranteed objects with a
0
liability rate of assets of over 70% directly or indirectly (D)
Excess of total guaranteed amount over 50% of net assets (E) 0
The aforementioned total guaranteed amount of three items (C
0
+ D + E)
Descriptions of joint and several liabilities for satisfaction of
None
pre-maturity guarantee (if any)
Descriptions for foreign guarantee provided against the
None
established procedures (if any)
Specific description for using the composite guarantee situation
(1) Conditions of foreign guarantee breaking the regulations
□ Applicable √Inapplicable
The company involves no foreign guarantee breaking the regulations during the reporting period.
3. Other important contacts
□ Applicable √Inapplicable
The company involves no other major contract in the reporting period.
4. Other major transactions
□ Applicable √Inapplicable
The company involves no other major transactions in the reporting period.
X. Commitment issues made by the company or the shareholders sharing 5% (or above) made
during the reporting period or before the report period while lasting for the report period
√ Applicable □Inapplicable
Performan
Commitment Commitment Commitmen
Commitment reason Commitment content ce
party time t term
conditions
Share changed commitments
The company and subsidiaries will not It will be
Commitments made in purchase Wuhan During the
directly or indirectly participate in any Mar. 29, fulfilled
report or rights and interests Zhongheng performan
business which competes with 2007 throughout
change report Group ce
Shenzhen Hwafa and its holding the year
20
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
subsidies, nor utilize the potential since Apr.
holding relations in Shenzhen Hwafa 12, 2007.
to conduct any behavior which is
likely to injure the interests of
Shenzhen Hwafa and its holding
subsidies.
The company and its subordinate
subsidies will avoid making affiliated
transaction with Shenzhen Hwafa and
its holding subsidies as far as possible.
Supposing that the affiliated
transaction fails to be avoided or
generates due to cogent reasons, the
company will sign agreement
It will be
according to laws, fulfill legitimate
fulfilled
Wuhan procedures according to the market During the
Mar. 29, throughout
Zhongheng equity, fairness and opening performan
2007 the year
Group principles, disclose information and ce
since Apr.
deal with the related approval
12, 2007.
submitting procedures in accordance
with related laws, regulations and
Listing Rules issued by Shenzhen
Stock Exchange, as a result, ensure
that the affiliated transaction will not
damage the legal rights and interests
of Shenzhen Hwafa and other
shareholders.
It will be
After purchasing and capital
fulfilled
Wuhan reorganization, it will ensure that it During the
Mar. 29, throughout
Zhongheng has independent personnel, capital, performan
2007 the year
Group business, finance and authority from ce
since Apr.
Shenzhen Hwafa.
12, 2007.
Commitments made when asset
reorganization
Commitments made at first
offering or refinancing
Other commitments made to
small and medium shareholders
of the company
Whether the commitments are
Yes
performed in time
21
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Specific reasons for not
completing performance and
None
plan for the next step (if
applicable)
XI. The condition of appointment and dismissal of the accounting firm
Whether the half-year financial report has been audited
□yes √no
The company's semi-annual report has not been audited.
XII. Punishment and rectification
□ Applicable √Inapplicable
The company involves no punishment and rectification in the reporting period.
XIII. Illegal Delisting Risk Disclosure
□ Applicable √Inapplicable
On Jan. 18, 2016, the company received the Notice of Inquiry (SZDCTZi No. 16026) from China Securities Regulatory
Commission. Due to the suspected illegal information disclosure, the foregoing Commission decided to register and investigate the
company according to Securities Law of People's Republic of China. However, the foregoing investigation is under process until the
date when the report is published, and the company has not received any conclusive opinion about the foregoing investigation.
Supposing that the company is finally recognized to have significant illegal information disclosure behaviors by China Securities
Regulatory Commission due to the investigation affairs, the company's stocks are likely to be given delisting risk warning and
suspended to be listed. Given this, the company will disclosure the related information in time, and reveals the risk warning
announcement every month at least according to Stock Listing Rules.
XIV. Description for Other Important Matters
√ Applicable □Inapplicable
(I) The company has signed Capital Replacement Contract (please refer to the company announcement on Apr. 30, 2009) with
Wuhan Zhongheng Group on Apr. 29, 2009, therein, partial setting-out property---which is located in the two industrial lands on
Hwafa Road, Gongming Town, Guangming New Area of Shenzhen City (real estate certificate number is "SFDZi No. 7226760" and
"SFDZi No. 7226763) with the land plot number of "A627-005" ands "A627-007", in total, the area can reach up to 48,200 square
meters) is the land which is reckoned in First Batch Plan of 2010 Shenzhen Urban Renew Unit Plan. In order to facilitate to promote,
combine and jointly develop the urban renew project, the foregoing setting-out land plot has not been transferred.
The company held the 2015 first temporary directors conference and 2015 first temporary shareholders conference on Feb. 16,
2015 and Mar. 4, 2015 respectively, on the conference, Urban Renew Project Promotion and Implementation Proposal about "Renew
Unit in Hwafa Section, Gongming Street, Guangming New Area of Shenzhen City" was approved, as a result, it was clearly indicated
that the company and Wuhan Zhongheng Group can obtain the corresponding relocation compensations for their project plots and
invested overground constructions. After estimation, it was estimated that the relocation compensations obtained by the company and
Wuhan Zhongheng Group will account for 50.5% and 49.5% in the total compensations respectively.
On the 2015 fifth temporary directors conference and 2015 second temporary shareholders conference which were held on Jun.
15, 2015 and Jul. 2, 2015 respectively, the following documents were audited and approved, namely, Urban Renew Project
22
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Promotion, Implementation and Affiliated Transaction Proposal about "Renew Unit in Hwafa Section, Gongming Street, Guangming
New Area of Shenzhen City", and Proposal about Submitting Board of Shareholders to Authorize Board of Directors to Deal with
Urban Renew Project Promotion and Implementation Affairs related to "Renew Unit in Hwafa Section, Gongming Street,
Guangming New Area of Shenzhen City". The company signed Urban Renewal Project Cooperation Framework Agreement about
"Renewal Unit in Hwafa Area, Gongming Street, Guangming New District, Shenzhen City", Gongming Hwafa Renovation
Cooperation Framework Agreement, House Purchase and Relocation Compensation and Settlement Agreement, and Removal
Compensation Agreement of Renovation Project for Hwafa Area, Gongming Street, Guangming New District, Cooperation
Agreement of Renovation Project for Goming Hwafa with Qianhai Zhongzheng Ubran Development Management Co., Ltd.
(hereinafter referred to as Qianhai Zhongheng), Shenzhen Zhongzheng Yutian Real Estate Co., Ltd. and Shenzhen Vanke
Guangming Real Estate Development Co., Ltd. (hereinafter referred to as "Zhongheng Yutian") and Wuhan Zhongheng Group. On
the Seventh Conference of the Eighth Session of Board of Directors, the following document was approved, namely, Urban Renew
Project Contract Termination Proposal about "Renew Unit in Hwafa Section, Gongming Street, Guangming New Area of Shenzhen
City" between the Company and Shenzhen Qianhai Zhongzheng Ubran Development Management Co., Ltd. On Aug. 25, 2015, the
company signed Cooperation Stoppage Agreement about Gongming Hawfa Ubran Renew Project with Qianhai Zhongzheng,
Zhongzheng Yutian and Wuhan Zhongheng Group, given this, the related agreement signed previously will not exert legal binding
force for any party.
On the 2015 Sixth Temporary Conference and 2015 Third Temporary General Meeting of Shareholders which was held on Sep.
11, 2015, the following document was signed, namely, Urban Renew Project Promotion, Implementation and Affiliated Transaction
Progress Proposal about "Renew Unit in Hwafa Section, Gongming Street, Guangming New Area of Shenzhen City". After that, the
company signed Urban Renew Project Cooperation Agreement about "Renew Unit in Hwafa Area, Gongming Street, Guangming
New Area of Shenzhen City", Renovation Project Cooperation and Business Contract about Hawfa Area, Gongming Street of
Guangming New Area, and House Purchase and Relocation Compensation Settlement Agreement with Wuhan Zhongheng New
Technology Industry Group Co., Ltd. (hereinafter referred to as "Wuhan Zhongheng Group"), Shenzhen Vanke Real Estate Co., Ltd.
(hereinafter referred to as "Shenzhen Vanke") and Shenzhen Vanke Guangming Real Estate Development Co., Ltd. (hereinafter
referred to as "Vanke Guangming") on Aug. 26, 2015.
After the foregoing agreements are effective and implemented, the company will obtain demolition compensations (RMB 0.5
billion) in cash and moving-back commercial property (not less than 100,000 square meters), given this, it is estimated that the
foregoing compensations are equivalent to the four-year incomes, as a result, the company incomes and capital scale will be
optimized to make for its long-term and stable development.
(II) In order to optimize the company capital structure, improve financial conditions as well as provide the necessary capital
supports and liquidity supports for the industrial business transformation & upgrading, the professionalization and large-scale
development of property operation business, the company is going to issue the non-public A shares, at this moment, the holding
shareholder (Wuhan Zhongheng New Technology Industry Group Co., Ltd.) shall make subscription for not more than 87,600,000
shares in cash, as a result, the total raising funds will not exceed RMB 599,184,000 (including issuing expenses), what's more, the
foregoing funds shall be used for repaying loans and supplementing liquidity funds and laying solid foundation for the sustainable
development of company. The related matters about non-public A share issuing have been approved on the 2015 Third Temporary
Directors Conference of the Company and 2014 Annual General Meeting of Stockholders. Please refer to the company
announcement published on the www.cninfo.com.cn on Mar. 20 and May 20, 2015. http://www.cninfo.com.cn/In order to guarantee
the continuous, effective and successful implementation of non-public A share issuing affairs, the resolution effectiveness period of
non-public share issuing shareholders conference is approved to be prolonged for 12 months on the 2016 first temporary shareholders
conference. Please refer to the announcement issued by the company on www.cninfo.com.cn on May 18, 2016.
http://www.cninfo.com.cn/
(III) On Dec. 29, 2015, Wuhan Zhongheng Group pledged the non-restricted circulation stocks (116,489,894) to Wuhan
Subsidiary of China CITTC Bank, accounting for 100% and 41.14% in the company shares and the total share capital of the
23
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
company respectively, then, which dealt with pledge cancellation registration formalities in Shenzhen Branch of China Securities
Registration Settlement Co., Ltd. and transacted pledge registration formalities in China Merchants Securities Capital Management
Co., Ltd. by right of 116,100,000 shares (accounting for 41% in the total share capital) on Dec. 31, 2015 and Feb. 1, 2016. As for
details, please refer to the company announcement issued on www.cninfo.com.cn on Jan. 13 and Feb. 19, 2016.
http://www.cninfo.com.cn/
(IV) The company received the accreditation investigation notice from China Securities Regulatory Commission on Jan. 18,
2016. According to it, the company was accredited and investigated due to the illegal information disclosure. As for details, please
refer to the Feb. 25, 2016, Mar. 26, 2016, Apr. 30, 2016, May 28, 2016, Jun. 25, 2016, Jul. 21, 2016 and Aug. 25, 2016 Accreditation
Investigation Progress and Risk Disclosure Announcement issued by the company on Jan. 19, 2016 on www.cninfo.com.cn.
http://www.cninfo.com.cn/
XV. Related conditions of company's liabilities
Whether the company has corporate bonds publicly issued and listed in share exchange and being immature or mature but failing to
be cashed in full on the report date approved by the annual report
No
24
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Section VI Change of Share and Conditions of Shareholders
I. Share changes
Unit: Share
Before this change Increase/decrease in this change (+, -) After this change
Shares
New issue Shares transfer from
Quantity Proportion Others Subtotal Quantity Proportion
of shares donation provident
fund
I. Shares with
restricted sales 0 0.00% 0 0.00%
conditions
II. Shares without
283,161,2
restricted sales 283,161,227 100.00% 100.00%
27
conditions
181,165,3
1. RMB common share 181,165,391 63.98% 63.98%
91
2. Foreign shares of 101,995,8
101,995,836 36.02% 36.02%
domestic listing 36
283,161,2
III. Total shares 283,161,227 100.00% 100.00%
27
Reasons for the change of shares
□ Applicable √Inapplicable
Approval situation of shares changes
□ Applicable √Inapplicable
Transfer situation of shares changes
□ Applicable √Inapplicable
Impact of the change of shares on such financial indexes as basic earnings per share and diluted earnings per share in the most recent
year and period, and net assets per share for shareholders of ordinary shares of the company
□ Applicable √Inapplicable
Other contents that the company deems necessary to disclose or required to be disclosed by the securities regulatory agency
□ Applicable √Inapplicable
Descriptions for changes in the total shares, shareholders structure, company assets and liabilities structure
□ Applicable √Inapplicable
II. Quantity of company shareholders and shareholding
Unit: Share
25
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Total preferred shareholders
The total number of common
recovering voting rights at the
share shareholders at the end 34,788 0
end of reporting period (if any)
of the report period
(see Note 8)
Shareholding of Shareholders Holding over 5% of Common Shares or the Top-10 Shareholders
Increase Quantity Infinite Pledge or frozen conditions
Common share and of holding quantity of
Shareholdin
quantity at the decrease common-s holding
Name of Nature of g proportion
end of situation hares with common-share
shareholders shareholders (%) Share Share status Quantity
reporting within restricted s with
holding
period reporting sales restricted sales
period conditions conditions
Wuhan Domestic Pledge 116,100,000
Zhongheng non-state 41.14% 116,489,894 0 0 116,489,894
Frozen 0
Group legal person
Seg Pledge 0
Foreign legal
(Hongkong) 5.85% 16,569,560 0 0 16,569,560
person Frozen 0
Co., Ltd.
GOOD HOPE Pledge 0
CORNER Foreign legal
4.91% 13,900,000 0 0 13,900,000
INVESTMENT person Frozen 0
S LTD
Changjiang Pledge 0
Securities
Foreign legal
Brokerage 1.89% 5,355,249 0 0 5,355,249
person Frozen 0
(Hongkong)
Co., Ltd.
Domestic Pledge 0
Xu Dongdong natural 0.60% 1,690,307 0 0 1,690,307
Frozen 0
person
Domestic Pledge 0
BINGHUA LIU natural 0.30% 839,013 0 0 839,013
Frozen 0
person
Domestic Pledge 0
Zhu Xionghui natural 0.22% 627,114 0 0 627,114
Frozen 0
person
Shenwan Pledge 0
Hongyuan
Foreign legal
Securities 0.22% 626,888 0 0 626,888
person Frozen 0
(Hongkong)
Co., Ltd.
26
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Domestic Pledge 0
Zhu Ming natural 0.22% 611,348 0 0 611,348
Frozen 0
person
Domestic Pledge 0
Tan Dongshan natural 0.20% 564,700 0 0 564,700
Frozen 0
person
Strategic investors or general
legal persons become top-10
None
shareholders due to rights
issue (if any) (see Note 3)
In the former ten shareholders, Wuhan Zhongheng Group has no affiliated relationship with other
Description for associated shareholders, nor serve as the person acting in concert as specified in Listed Company's
relationships or concerted Shareholders Holding Alternation Information Disclosure Management Method. The company
action of the above doesn't know whether other circulation share shareholders have established affiliated relationship,
shareholders nor whether they are the persons acting in concert as specified in Listed Company's Shareholders
Holding Alternation Information Disclosure Management Method.
Shareholding of Top-10 Common Share Shareholders without Restricted Sales Conditions
Quantity of held shares without restricted sales Classes of shares
Name of shareholders
conditions at the end of the reporting period Classes of shares Quantity
RMB common
Wuhan Zhongheng Group 116,489,894 116,489,894
share
Foreign shares of
Seg (Hongkong) Co., Ltd. 16,569,560 16,569,560
domestic listing
GOOD HOPE CORNER Foreign shares of
13,900,000 13,900,000
INVESTMENTS LTD domestic listing
Changjiang Securities Brokerage Foreign shares of
5,355,249 5,355,249
(Hongkong) Co., Ltd. domestic listing
RMB common
Xu Dongdong 1,690,307 1,690,307
share
Foreign shares of
BINGHUA LIU 839,013 839,013
domestic listing
Foreign shares of
Zhu Xionghui 627,114 627,114
domestic listing
Shenwan Hongyuan Securities Foreign shares of
626,888 626,888
(Hongkong) Co., Ltd. domestic listing
Foreign shares of
Zhu Ming 611,348 611,348
domestic listing
Foreign shares of
Tan Dongshan 564,700 564,700
domestic listing
27
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
The description of incidence
In the former ten shareholders, Wuhan Zhongheng New Science and Technology Industry
relation and concerted action among
Group has no affiliated relationship with other shareholders, nor serve as the person acting in
top-10 common share shareholders
concert as specified in Listed Company's Shareholders Holding Alternation Information
without restricted sales conditions,
Disclosure Management Method. The company doesn't know whether other circulation share
top-10 common share shareholders
shareholders have established affiliated relationship, nor whether they are the persons acting
without restricted sales conditions
in concert as specified in Listed Company's Shareholders Holding Alternation Information
and top-10 common share
Disclosure Management Method.
shareholders.
Situation description of
shareholders participating in
securities margin trading business None
among top-10 common share
shareholders (if have) (see Note 4)
Whether top-10 common share shareholders and top-10 common share shareholders without restricted sales conditions conduct
agreed reacquisition transaction in the reporting period
□yes √no
The top-10 common share shareholders and top-10 common share shareholders without restricted sales conditions fail to conduct
agreed reacquisition transaction in the reporting period.
III. Holding shareholders or actual controller alternation
Changes of controlling shareholders in reporting period
□ Applicable √Inapplicable
The company involves no changes in controlling shareholders in the reporting period.
Change of actual controller in reporting period
□ Applicable √Inapplicable
The company involves no changes in actual controllers in the reporting period.
IV. Conditions of company shareholder and person acting on concert presenting or
implementing overweight plan in the reporting period
□ Applicable √Inapplicable
As far as the company knows, no company shareholder and person acting on concert presents or implements overweight plan in the
reporting period.
28
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Section VII Related Conditions of Preferred Shares
□ Applicable √Inapplicable
The company involves no preferred shares in the reporting period.
29
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Section VIII Conditions of Directors, Supervisors and Senior Manager
I. Change of shares held by the directors, supervisors and senior manager
□ Applicable √Inapplicable
The company directors, supervisors and senior manager have not been changed with regard to shareholding within the report period.
As for details, please see 2015 Annual Report.
II. Change situation of company directors, supervisors and senior manager
√ Applicable □Inapplicable
Name: Position Type Date Cause
Wang Feng Director Dimission Feb. 15, 2016 Personal reasons
30
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Section IX Financial Statements
I. Audit Report
Whether the half-year report has been audited.
□yes √no
The company's semi-annual financial report has not been audited.
II. Financial Statement
The unit of the statement in the financial notes is: RMB (Yuan)
1. Consolidated Balance Sheet
Prepared by: Shenzhen Zhongheng Hwafa Co., Ltd
Jun. 30, 2016
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary capital 65,403,374.30 662,115,464.19
Deposit reservation for balance
Lending funds
Financial assets measured at fair value
and whose value variations are included
in current profits and losses
Derivative financial assets
Notes receivable 27,112,052.59 54,346,509.74
Accounts receivable 182,542,130.75 109,965,992.14
Advance payment 2,952,333.36 3,092,021.10
Premiums receivable
Reinsurance accounts receivable
Provision of cession receivable
Interest receivable 1,838,752.40
Dividends receivable
Other accounts receivable 20,273,143.19 9,411,791.40
Recoursable financial assets acquired
Inventory 37,519,314.34 27,132,125.91
Classified as assets held for sale 92,857,471.69 92,857,471.69
Non-current assets due in one year
31
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Other current assets 31,502.46
Total current assets 428,691,322.68 960,760,128.57
Non-current assets:
Issuing of loans and advances
Available-for-sale financial assets
Held-to-maturity investments
Long-term receivables
Long-term equity investments
Investment properties 29,404,574.44 30,019,906.66
Fixed assets 108,018,926.67 110,607,425.50
Construction in process 654,356.00 654,356.00
Engineering materials
Disposal of fixed assets
Productive biological asset
Oil and gas assets
Intangible assets 45,625,243.13 46,372,390.49
Development expenditure
Goodwill
Long-term unamortized expenses 239,308.12 274,758.16
Deferred income tax assets 7,114,647.10 6,400,271.29
Other non-current assets
Total non-current assets 191,057,055.46 194,329,108.10
Total assets 619,748,378.14 1,155,089,236.67
Current liabilities:
Short-term loans 85,012,392.00 119,479,107.41
Borrowing from Central Bank
Deposits from customers and interbank
Borrowing fund
Financial liabilities measured at fair
value and whose value variations are
included in current profits and losses
Derivative financial liabilities
Notes payable 16,352,307.37 53,614,420.20
Notes payable 101,410,511.69 54,241,655.86
Advance receipt 1,834,052.83 1,147,469.52
32
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Assets sold under agreements to
repurchase
Service charges and commissions
payable
Employee remuneration payable 3,459,053.06 4,731,615.47
Expenses of taxation payable 15,980,165.45 20,498,295.88
Interest payable
Dividends payable
Other accounts payable 23,565,965.51 32,665,698.32
Reinsurance accounts payable
Insurance contract reserves
Acting trading securities
Acting underwriting securities
Classified as liabilities held for sale
Non-current liabilities due in one year
Other current liabilities
Total current liabilities 247,614,447.91 286,378,262.66
Non-current liabilities:
Long-term loans 50,850,000.00 554,700,000.00
Bonds payable
Including: Preferred shares
Perpetual capital securities
Long-term receivables
Long-term employee remuneration
payable
Special payables
Estimated liabilities 2,604,411.81 2,604,411.81
Deferred incomes
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 53,454,411.81 557,304,411.81
Total liabilities 301,068,859.72 843,682,674.47
Owners' equities:
Share capital 283,161,227.00 283,161,227.00
Other equity instruments
33
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Including: Preferred shares
Perpetual capital securities
Capital reserve 146,283,642.90 146,283,642.90
Minus: Treasury share
Other comprehensive incomes
Appropriative reserve
Surplus reserves 77,391,593.25 77,391,593.25
General risk reserve
Undistributed profits -188,156,944.73 -195,429,900.95
Total owners' equity attributable to
318,679,518.42 311,406,562.20
parent company
Minority shareholder's equities
Total owners' equity 318,679,518.42 311,406,562.20
Total liabilities and owner's equities 619,748,378.14 1,155,089,236.67
Legal representative: Li Zhongqiu Leader in charge of accounting: Yang Bin Leader of accounting department: Wu Aijie
2. Balance Sheet of Parent Company
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary capital 5,287,205.88 524,937,734.32
Financial assets measured at fair value
and whose value variations are included
in current profits and losses
Derivative financial assets
Notes receivable
Accounts receivable 322,194.43 322,194.43
Advance payment 5,588.32 1,005,472.83
Interest receivable
Dividends receivable
Other accounts receivable 73,288,596.09 76,212,908.56
Inventory 14,806.50 14,806.50
Classified as assets held for sale 92,857,471.69 92,857,471.69
Non-current assets due in one year
Other current assets
34
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Total current assets 171,775,862.91 695,350,588.33
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments
Long-term receivables
Long-term equity investments 186,608,900.00 186,608,900.00
Investment properties 29,404,574.44 30,019,906.66
Fixed assets 5,273,431.99 4,726,034.98
Construction in process 654,356.00 654,356.00
Engineering materials
Disposal of fixed assets
Productive biological asset
Oil and gas assets
Intangible assets 5,061,019.26 5,133,492.12
Development expenditure
Goodwill
Long-term unamortized expenses 216,666.61 241,666.63
Deferred income tax assets 7,919,271.35 7,204,895.54
Other non-current assets
Total non-current assets 235,138,219.65 234,589,251.93
Total assets 406,914,082.56 929,939,840.26
Current liabilities:
Short-term loans 19,900,000.00 19,600,000.00
Financial liabilities measured at fair
value and whose value variations are
included in current profits and losses
Derivative financial liabilities
Notes payable
Notes payable 9,740,367.33 10,745,840.16
Advance receipt 1,578,237.80 735,382.00
Employee remuneration payable 823,155.24 788,575.28
Expenses of taxation payable 8,868,036.87 16,934,546.28
Interest payable
Dividends payable
Other accounts payable 17,277,270.06 26,415,353.86
35
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Classified as liabilities held for sale
Non-current liabilities due in one year
Other current liabilities
Total current liabilities 58,187,067.30 75,219,697.58
Non-current liabilities:
Long-term loans 50,850,000.00 554,700,000.00
Bonds payable
Including: Preferred shares
Perpetual capital securities
Long-term receivables
Long-term employee remuneration
payable
Special payables
Estimated liabilities 2,604,411.81 2,604,411.81
Deferred incomes
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 53,454,411.81 557,304,411.81
Total liabilities 111,641,479.11 632,524,109.39
Owners' equities:
Share capital 283,161,227.00 283,161,227.00
Other equity instruments
Including: Preferred shares
Perpetual capital securities
Capital reserve 146,283,642.90 146,283,642.90
Minus: Treasury share
Other comprehensive incomes
Appropriative reserve
Surplus reserves 77,391,593.25 77,391,593.25
Undistributed profits -211,563,859.70 -209,420,732.28
Total owners' equity 295,272,603.45 297,415,730.87
Total liabilities and owner's equities 406,914,082.56 929,939,840.26
3. Consolidated Income Statement
Unit: RMB
36
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Item Amount incurred of current period Amount incurred of prior period
I. Total operating incomes 309,538,525.56 248,734,629.86
Including: Operating income 309,538,525.56 248,734,629.86
Interest incomes
Earned premiums
Commission charges and commission
incomes
II. Total operating costs 301,336,765.71 265,260,708.90
Including: Operating cost 264,288,398.24 207,463,525.37
Interest expenditures
Commission charges and commission
expenditures
Surrender value
Net payment for insurance claims
Net allotted insurance contract reserves
Bond insurance expense
Reinsurance expenses
Business tax and surcharges 2,156,369.16 3,677,294.51
Sales expenses 5,283,735.71 5,131,770.58
Management expenses 27,295,883.47 18,594,919.77
Financial expenses 2,312,379.13 30,393,198.67
Assets impairment loss
Plus: Income from changes in fair value
(loss is expressed with"-" to fill in the
column)
Investment incomes (losses are expressed
29,500,643.47
with "-" to fill in the column)
Including: Income from investment in
joint-venture and partnership enterprises
Exchange gains (losses are expressed
with "-" to fill in the column)
III. Operating profits (losses are
8,201,759.85 12,974,564.43
expressed with "-" to fill in the column)
Plus: Non-operating income 1,518,636.51 807,053.65
Including: Gains from disposal of
116,007.01
non-current assets
Minus: Non-operating expenditure 63,225.68 313,178.96
Including: Losses from disposal of 18,924.00
37
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
non-current assets
IV. Total profits (total losses are
9,657,170.68 13,468,439.12
expressed with "-" to fill in the column)
Minus: Income tax expenses 2,384,214.46 -708,871.91
V. Net profits (net losses are expressed
7,272,956.22 14,177,311.03
with "-" to fill in the column)
Net profits attributable to owner of the
7,272,956.22 14,177,311.03
parent company
Minority shareholder's profit and loss
VI. After-tax net amount of other
comprehensive incomes
Net of tax from other comprehensive
income attributed to the parent company
owner
(I) Other comprehensive income that will
not be reclassified into profit and loss
afterwards
1. Recalculate the change of net liability
and net asset of defined benefit plan
2. Share from other comprehensive
incomes of invested units which will not
be reclassified in profit and loss under the
equity method
(II) Other comprehensive income that
will be reclassified into profit and loss
afterwards
1. Share from other comprehensive
incomes of invested units which will be
reclassified in profit and loss under the
equity method
2. Variable loss and profit of
available-for-sale financial asset fair
value
3. Held-to-maturity investment is
reclassified into the profit and loss of
available-for-sale financial assets
4. Effective part of profit and loss of
cash-flow hedging
5. Translation balance of foreign currency
financial statements
6. Others
Net of tax from other comprehensive
incomes attributable to minority
38
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
shareholders
VII. Total comprehensive incomes 7,272,956.22 14,177,311.03
Total comprehensive incomes attributable
7,272,956.22 14,177,311.03
to owners of parent company
Total comprehensive income attributable
to minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share 0.0257 0.0501
(II) Diluted earnings per share 0.0257 0.0501
If business merger under the same control occurs in the current period, the realized net profit of the combined party before the merger
is: RMB 0.00, the net profit achieved by the combined party for the prior period is: RMB 0.00.
Legal representative: Li Zhongqiu Leader in charge of accounting: Yang Bin Leader of accounting department: Wu Aijie
4. Profit Statement of the Parent Company
Unit: RMB
Item Amount incurred of current period Amount incurred of prior period
I. Operating incomes 21,050,313.65 26,161,173.96
Minus: Operating costs 2,177,884.29 3,256,287.14
Business tax and surcharges 1,097,952.84 1,655,383.66
Sales expenses
Management expenses 15,433,330.85 9,218,109.84
Financial expenses 5,221,263.90 25,557,934.72
Assets impairment losses
Plus: Income from changes in fair value
(loss is expressed with"-" to fill in the
column)
Investment income (losses are
29,499,999.98
expressed with "-" to fill in the column)
Including: Income from investment in
joint-venture and partnership
enterprises
II. Operating profits (losses are
-2,880,118.23 15,973,458.58
expressed with "-" to fill in the column)
Plus: Non-operating income 41,539.00 157,306.00
Including: Gains from disposal of
non-current assets
Minus: Non-operating expenditure 18,924.00 1,717.45
Including: Losses from disposal of
18,924.00
non-current assets
39
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
III. Total profits (total losses are
-2,857,503.23 16,129,047.13
expressed with "-" to fill in the column)
Minus: Income tax expenses -714,375.81
IV. Net profits (net losses are expressed
-2,143,127.42 16,129,047.13
with "-" to fill in the column)
V. After-tax net amount of other
comprehensive incomes
(I) Other comprehensive income that
will not be reclassified into profit and
loss afterwards
1. Recalculate the change of net liability
and net asset of defined benefit plan
2. Share from other comprehensive
incomes of invested units which will
not be reclassified in profit and loss
under the equity method Share from
other comprehensive incomes of
invested units which will be reclassified
in profit and loss under the equity
method
(II) Other comprehensive income that
will be reclassified into profit and loss
afterwards
1. Share from other comprehensive
incomes of invested units which will be
reclassified in profit and loss under the
equity method
2. Variable loss and profit of
available-for-sale financial asset fair
value
3. Held-to-maturity investment is
reclassified into the profit and loss of
available-for-sale financial assets
4. Effective part of profit and loss of
cash-flow hedging
5. Translation balance of foreign
currency financial statements
6. Others
VI. Total comprehensive incomes -2,143,127.42 16,129,047.13
VII. Earnings per share:
(I) Basic earnings per share
(II) Diluted earnings per share
40
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
5. Statement of Consolidated Cash Flow Statement
Unit: RMB
Item Amount incurred of current period Amount incurred of prior period
I. Cash flows generated from operating
activities:
Cash received from selling goods and
178,719,535.63 183,618,610.88
providing labor services
Net increased amount of deposits from
customers and interbank
Net increased amount of borrowings
from Central Bank
Net increased amount of borrowing
funds from other financial institutions
Cashes obtained from receiving
premiums of the original insurance
contract
Net cash received from reinsurance
business
Net increased amount of policy holder
deposits and investments
Net increased amount of disposing
financial assets measured at fair value
and whose value variations are included
in current profits and losses
Cash received from interests,
commission charges and commissions
Net increased amount of borrowing
funds
Net increased amount of repurchasing
business funds
Return of received expenses of taxation
Other cash received related to operating
6,735,237.88 109,260,397.00
activities
Subtotal of cash inflow of operating
185,454,773.51 292,879,007.88
activities
Cash paid from purchasing goods and
130,584,597.67 221,324,808.05
accepting labor services
Net increased amount of customer loans
and advances
Net increased amount of deposits in
Central Bank and interbank deposits
Cashes paid for compensation payments
under the original insurance contract
41
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Cash paid for interests, commission
charges and commissions
Cashes paid for policy dividends
Cashes paid to employees and for
30,682,437.45 31,468,469.13
employees
Various expenses of taxation paid 14,888,534.34 11,053,191.84
Other cash paid related to operating
34,723,553.62 12,003,945.13
activities
Subtotal of cash outflow of operating
210,879,123.08 275,850,414.15
activities
Net amount of cash flow generated
-25,424,349.57 17,028,593.73
from operating activities
II. Cash flows generated from
investment activities:
Cash received from returning the
investment
Cash received from obtaining
14,166,666.65
investment income
Net cashes returned from disposal of
fixed assets, intangible assets and other 158,656.34
long-term assets
Net cashes received from disposal of
subsidiaries and other business units
Other cash received related to
investment activities
Subtotal of cash inflow from investment
158,656.34 14,166,666.65
activities
Net cashes returned from acquisition or
construction of fixed assets, intangible 3,949,242.30 3,537,547.11
assets and other long-term assets
Cashes paid for investments
Net increased amount of pledge loans
Net cashes paid for obtaining
subsidiaries and other business units
Other cash paid related to investment
99,356.51
activities
Subtotal of cash outflow of investment
3,949,242.30 3,636,903.62
activities
Net amount of cash flows generated
-3,790,585.96 10,529,763.03
from investment activities
III. Cash flows generated from financial
activities:
42
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Cash received from absorbing the
investment
Including: Cash received from a
subsidiary's absorbing investment of
minority shareholders
Cashes received from obtaining loan 57,020,825.00 172,101,597.40
Cashes received from bond issuing
Other cash received related to financial
activities
Subtotal of cash inflow from financial
57,020,825.00 172,101,597.40
activities
Cash paid for repaying debts 595,950,388.73 174,100,580.11
Cashes paid for dividend distribution,
5,330,803.55 26,951,241.80
profits and interest payments
Including: Dividends and profits paid to
minority shareholders by the
subsidiaries
Other cash paid related to financial
activities
Subtotal of cash outflow of financial
601,281,192.28 201,051,821.91
activities
Net amount of cash flows generated
-544,260,367.28 -28,950,224.51
from financial activities
IV. Impacts of exchange rate variations
-15,237.48 29,560.85
on cashes and cash equivalents
V. Net increase amount of cash and cash
-573,490,540.29 -1,362,306.90
equivalents
Plus: Balance of cash and cash
632,846,956.16 22,392,147.12
equivalents at beginning of period
VI. Balance of cash and cash
59,356,415.87 21,029,840.22
equivalents at end of period
6. Cash Flow Statement of Parent Company
Unit: RMB
Item Amount incurred of current period Amount incurred of prior period
I. Cash flows generated from operating
activities:
Cash received from selling goods and
11,823,161.27 28,713,390.03
providing labor services
Return of received expenses of taxation
Other cash received related to operating 31,580,866.37 22,742,334.43
43
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
activities
Subtotal of cash inflow of operating
43,404,027.64 51,455,724.46
activities
Cash paid from purchasing goods and
accepting labor services
Cashes paid to employees and for
2,433,244.76 2,961,727.35
employees
Various expenses of taxation paid 10,242,618.35 2,995,386.87
Other cash paid related to operating
39,784,929.43 25,812,424.01
activities
Subtotal of cash outflow of operating
52,460,792.54 31,769,538.23
activities
Net amount of cash flow generated
-9,056,764.90 19,686,186.23
from operating activities
II. Cash flows generated from
investment activities:
Cash received from returning the
investment
Cash received from obtaining
14,166,666.65
investment income
Net cashes returned from disposal of
fixed assets, intangible assets and other 576.00
long-term assets
Net cashes received from disposal of
subsidiaries and other business units
Other cash received related to
investment activities
Subtotal of cash inflow from investment
576.00 14,166,666.65
activities
Net cashes returned from acquisition or
construction of fixed assets, intangible 2,765,792.00 21,011.00
assets and other long-term assets
Cashes paid for investments
Net cashes paid for obtaining
subsidiaries and other business units
Other cash paid related to investment
activities
Subtotal of cash outflow of investment
2,765,792.00 21,011.00
activities
44
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Net amount of cash flows generated
-2,765,216.00 14,145,655.65
from investment activities
III. Cash flows generated from financial
activities:
Cash received from absorbing the
investment
Cashes received from obtaining loan 15,000,000.00 14,700,000.00
Cashes received from debenture issues
Other cash received related to financial
activities
Subtotal of cash inflow from financial
15,000,000.00 14,700,000.00
activities
Cash paid for repaying debts 518,550,000.00 29,999,965.00
Cashes paid for dividend distribution,
4,278,638.49 24,604,032.66
profits and interest payments
Other cash paid related to financial
activities
Subtotal of cash outflow of financial
522,828,638.49 54,603,997.66
activities
Net amount of cash flows generated
-507,828,638.49 -39,903,997.66
from financial activities
IV. Impacts of exchange rate variations
90.95 9,682.19
on cashes and cash equivalents
V. Net increase amount of cash and cash
-519,650,528.44 -6,062,473.59
equivalents
Plus: Balance of cash and cash
524,937,734.32 14,802,258.59
equivalents at beginning of period
VI. Balance of cash and cash
5,287,205.88 8,739,785.00
equivalents at end of period
7. Consolidated Statement of Changes in Owner's Equity
Amount of current period
Unit: RMB
Current period
Owners' equity attributable to parent company
Minority
Other equity Minus Total
Item
Other Appropri General Undistrib sharehold owners'
Share instruments Capital : Surplus
compreh ative risk uted er's
capital reserve Treasu reserves equity
ensive reserves reserve profits equities
Prefer Perpe Others
ry
45
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
red tual share incomes s
shares capit
al
secur
ities
I. Closing
283,161, 146,283,6 77,391,5 -195,429, 311,406,
balance of last
227.00 42.90 93.25 900.95 562.20
year
Plus: Changes in
accounting
policies
Preliminary
error correction
Enterprise
combination
under the
common control
Others
II. Opening
283,161, 146,283,6 77,391,5 -195,429, 311,406,
balance of
227.00 42.90 93.25 900.95 562.20
current year
III.
Increase/decreas
e amount in
current period 7,272,956 7,272,95
(decrease is .22 6.22
expressed with
"-" to fill in the
column)
(I) Total
7,272,956 7,272,95
comprehensive
.22 6.22
income amount
(II) Capital
invested and
reduced OF
owners
1. Common
shares invested
by shareholders
2. Capital
invested by
46
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
holders of other
equity
instruments
3. Share-based
payment amount
included in
owner's equity
4. Others
(III) Profit
distribution
1. Withdraw
surplus reserves
2. Withdraw
general risk
reserves
3. Distribution
to owners (or
shareholders)
4. Others
(IV) Inner
carry-over of
ownership
equity
1. Transferred
and increased
capital of capital
reserves (or
share capital)
2. Transferred
and increased
capital of
surplus reserves
(or share capital)
3. Surplus
reserves
offsetting loss
4. Others
(V)
Appropriative
reserve
47
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
1. Withdrawal in
current period
2. Use in current
period
(VI) Others
IV. Balance at
283,161, 146,283,6 77,391,5 -188,156, 318,679,
the end of
227.00 42.90 93.25 944.73 518.42
current period
Amount of last year
Unit: RMB
Prior period
Owners' equity attributable to parent company
Other equity
instruments Minorit
Minus: Other y Total
Item Perp
Appropri General Undistrib
Share Capital Treasu compreh Surplus shareho owners'
Prefe etual
ative risk uted
capital rred reserve ry ensive reserves lder's equity
capit
Others reserves reserves profits
share al share incomes equities
s secur
ities
I. Closing
283,161, 109,496, 77,391,5 -188,698, 281,351,
balance of last
227.00 837.33 93.25 387.84 269.74
year
Plus: Changes in
accounting
policies
Preliminary error
correction
Enterprise
combination
under the
common control
Others
II. Opening
283,161, 109,496, 77,391,5 -188,698, 281,351,
balance of
227.00 837.33 93.25 387.84 269.74
current year
Ⅲ .
Increase/decreas 36,786,8 -6,731,51 30,055,2
e amount in 05.57 3.11 92.46
current period
48
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
(decrease is
expressed with
"-" to fill in the
column)
(I) Total
-6,731,51 -6,731,5
comprehensive
3.11 13.11
income amount
(II) Capital
invested and 36,786,8 36,786,8
reduced OF 05.57 05.57
owners
1. Common
shares invested
by shareholders
2. Capital
invested by
holders of other
equity
instruments
3. Share-based
payment amount
included in
owner's equity
36,786,8 36,786,8
4. Others
05.57 05.57
(III) Profit
distribution
1. Withdraw
surplus reserves
2. Withdraw
general risk
reserves
3. Distribution to
owners (or
shareholders)
4. Others
(IV) Inner
carry-over of
ownership equity
1. Transferred
49
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
and increased
capital of capital
reserves (or
share capital)
2. Transferred
and increased
capital of surplus
reserves (or
share capital)
3. Surplus
reserves
offsetting loss
4. Others
(V)
Appropriative
reserve
1. Withdrawal in
current period
2. Use in current
period
(VI) Others
IV. Balance at
283,161, 146,283, 77,391,5 -195,429, 311,406,
the end of
227.00 642.90 93.25 900.95 562.20
current period
8. Statement of Changes in Owner's Equity of Parent Company
Amount of current period
Unit: RMB
Current period
Other equity instruments
Perpetu Other
Minus: Appropr Total
Item Share al Capital compreh Surplus Undistribu
Preferre Treasur iative owners'
capital capital Others reserve ensive reserves ted profits
d shares y share reserves equity
securiti incomes
es
I. Closing balance of last 283,161,22 146,283,64 77,391,59 -209,420,7 297,415,7
year 7.00 2.90 3.25 32.28 30.87
Plus: Changes in
accounting policies
Preliminary error
50
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
correction
Others
II. Opening balance of 283,161,22 146,283,64 77,391,59 -209,420,7 297,415,7
current year 7.00 2.90 3.25 32.28 30.87
Ⅲ . Increase/decrease
amount in current period
-2,143,127 -2,143,12
(decrease is expressed
.42 7.42
with "-" to fill in the
column)
(I) Total comprehensive -2,143,127 -2,143,12
income amount .42 7.42
(II) Capital invested and
reduced OF owners
1. Common shares
invested by shareholders
2. Capital invested by
holders of other equity
instruments
3. Share-based payment
amount included in
owner's equity
4. Others
(III) Profit distribution
1. Withdraw surplus
reserves
2. Distribution to owners
(or shareholders)
3. Others
(IV) Inner carry-over of
ownership equity
1. Transferred and
increased capital of
capital reserves (or share
capital)
2. Transferred and
increased capital of
surplus reserves (or share
capital)
3. Surplus reserves
51
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
offsetting loss
4. Others
(V) Appropriative reserve
1. Withdrawal in current
period
2. Use in current period
(VI) Others
IV. Balance at the end of 283,161,22 146,283,64 77,391,59 -211,563,8 295,272,
current period 7.00 2.90 3.25 59.70 603.45
Amount of last year
Unit: RMB
Prior period
Other equity instruments
Perpetu Other
Minus: Appropri Total
Item Capital compreh Surplus Undistributed
al
Share capital Preferre Treasur ative owners'
capital Others reserve ensive reserves profits
d shares y share reserve equity
securitie incomes
s
I. Closing balance 283,161,227. 109,496,837 77,391,593. -199,878,673. 270,170,9
of last year 00 .33 25 79 83.79
Plus: Changes in
accounting policies
Preliminary error
correction
Others
II. Opening balance 283,161,227. 109,496,837 77,391,593. -199,878,673. 270,170,9
of current year 00 .33 25 79 83.79
Ⅲ .
Increase/decrease
amount in current
36,786,805. 27,244,74
period (decrease is -9,542,058.49
57 7.08
expressed with "-"
to fill in the
column)
(I) Total
-9,542,058
comprehensive -9,542,058.49
.49
income amount
(II) Capital 36,786,805. 36,786,80
invested and 57 5.57
52
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
reduced OF owners
1. Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Share-based
payment amount
included in owner's
equity
36,786,805. 36,786,80
4. Others
57 5.57
(III) Profit
distribution
1. Withdraw
surplus reserves
2. Distribution to
owners (or
shareholders)
3. Others
(IV) Inner
carry-over of
ownership equity
1. Transferred and
increased capital of
capital reserves (or
share capital)
2. Transferred and
increased capital of
surplus reserves (or
share capital)
3. Surplus reserves
offsetting loss
4. Others
(V) Appropriative
reserve
1. Withdrawal in
current period
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
2. Use in current
period
(VI) Others
IV. Balance at the
283,161,227. 146,283,642 77,391,593. -209,420,732. 297,415,7
end of current
00 .90 25 28 30.87
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 Uniform Social Credit Code of the company is 91440300618830372G. 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
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: August 29, 2016.
Comparing with the beginning of the period, the consolidated range of this period remains unchanged. Please refer to the
Annotation "VIII. Equity in Other Entities ".
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
In consideration of the earnings' management history and financial resource support recently, the group thinks that it is rational
to compile the financial statement on the basis of continuous operation. .
Ⅴ. Significant Accounting Policy and Accounting Estimate
Specific accounting policy and accounting estimate tips:
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
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,
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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.
(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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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.
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.
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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.
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. Assets classified as held for sale
The held assets on sales which are divided by the group include fixed assets and construction in progress. Therein, the division
is conducted on the basis of: Considering that the fixed assets and engineering in progress can be sold immediately only according to
the common and general asset articles under the current state, the group's Board of Shareholders has made a decision about the asset
disposal and signed the irrevocable transferring agreement to transferee, therefore, the transferring will be finished within one year.
14. 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
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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:
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
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.
15. 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 (%)
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Land-use Right 50 10.00% 1.80%
Houses & Buildings 5—50 10.00% 1.80%—18.00%
16. 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.
(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%
17. 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.
18. 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.
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19. 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.。
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.
20. 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.
21. 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.
22．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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
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.
23. 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.
24. 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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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.
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.
25. 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.
26. 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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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.
27. 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.
28. 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.
29. Significant accounting policy and accounting estimate change
(1) Change in significant accounting policy
□Applicable √ Inapplicable
(2) Change in significant accounting estimate
□Applicable √ Inapplicable
Ⅵ. Taxes
1．Main tax types and rates
Tax type Tax basis Tax rate
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
VAT Taxable income 17%、6%、3%
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 254,667.37 382,669.21
Bank Deposit 59,101,748.50 632,464,286.95
Other Monetary Fund 6,046,958.43 29,268,508.03
Total 65,403,374.30 662,115,464.19
Other explanations
(1) Other monetary capitals of the Group at the end of the period refer to the cash deposit for bank acceptance.
(2) In the monetary capitals of the Group at the end of the period, the limited monetary capital is RMB 6,046,958.43. The monetary
capital limited at the beginning of the period is RMB 29,268,508.03.
2. Notes Receivable
(1) Classified Presentation of Notes Receivable
Unit: RMB
Items Ending balance Beginning balance
Bank acceptance bill 26,392,052.59 54,346,509.74
Trade acceptance bill 720,000.00
Total 27,112,052.59 54,346,509.74
(2) 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 acceptance bill 10,308,326.47
Total 10,308,326.47
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
7,649,789.1 7,649,789. 7,649,789.1 7,649,789.
amount that were 3.91% 100.00% 6.22% 100.00%
1 11 1 11
provisioned bad
debt preparation
separately
Accounts
receivable which
bad debt provision 182,681,586 139,455.7 182,542,130 110,105,447 139,455.7 109,965,992
93.45% 0.08% 89.58% 0.13%
shall be withdrawn .49 4 .75 .88 4 .14
based on credit
risk characteristics
Accounts
receivable that
were not
significant but 5,160,953.4 5,160,953. 5,160,953.4 5,160,953.
2.64% 100.00% 4.20% 100.00%
have been 1 41 1 41
provisioned bad
debt preparation
separately
195,492,329 12,950,19 182,542,130 122,916,190 12,950,19 109,965,992
Total 100.00% 100.00%
.01 8.26 .75 .40 8.26 .14
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) Provision for Bad
Notes Receivable Percent Drawn Reason of provision
Debts
Shenzhen Boteman Bowling Club
2,555,374.75 2,555,374.75 100.00% Can not be taken back
Co., Ltd.
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
H. K. Haowei Industry Co., Ltd. 1,870,887.18 1,870,887.18 100.00% Can not be taken back
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 7,649,789.11 -- --
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
Subtotal within 1 year 182,193,860.53
1-2year (s) 27,448.20 1,372.41 5.00%
Over 3years 460,277.76 138,083.33 30.00%
Total 182,681,586.49 139,455.74
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
Unit: RMB
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa 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
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) 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 period reaches RMB
163,559,131.62, which accounts for 83.67% of the total ending balance of the accounts receivable. The total amount of ending
balances of withdrawn bad debt provision is RMB1,225,326.15.
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 2,726,963.39 92.37% 1,201,255.38 38.85%
1-2year (s) 6,000.00 0.20% 515,157.07 16.66%
2-3 year (s) 219,369.97 7.43% 1,252,009.66 40.49%
Over 3 years 123,598.99 4.00%
Total 2,952,333.36 -- 3,092,021.10 --
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 period
reaches RMB 2,541,518.80, which accounts for 86.09% of the total ending balances of the advance payment.
Other explanations:
None
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
5. Interests receivable
(1) Classification of interests receivable
Unit: RMB
Items Ending balance Beginning balance
Wuhan Hengsheng Opto-electric Industry Co., Ltd. 0.00 1,838,752.40
Total 1,838,752.40
6. 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 21,835,107. 5,662,187. 16,172,92 6,403,097. 30.91 5,662,187.
69.15% 25.93% 88.43% 740,909.97
were provisioned 43 38 0.05 35 % 38
bad debt preparation
separately
Other accounts
receivable which
bad debt provision 4,273,561.1 173,338.0 4,100,223. 8,844,219. 42.69 173,338.0 8,670,881.4
13.53% 4.06% 1.96%
shall be withdrawn 8 4 14 47 % 4 3
based on credit risk
characteristics
Accounts receivable
that were not
significant but have 5,469,385.4 5,469,385. 5,469,385. 26.40 5,469,385. 100.00
17.32% 100.00% 0.00
been provisioned 4 44 44 % 44 %
bad debt preparation
separately
31,578,054. 11,304,91 20,273,14 20,716,70 100.00 11,304,91 9,411,791.4
Total 100.00%
05 0.86 3.19 2.26 % 0.86 0
Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable □ Inapplicable
Unit: RMB
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Ending balance
Other accounts receivable
Other Accounts
(based on unit) Provision for Bad Debts Percent Drawn Reason of provision
Receivable
Shenzhen Jifang Investment
15,432,010.08 No risk of bad debts
Co., Ltd.
Boteman 4,021,734.22 4,021,734.22 100.00% Can not be taken back
Wuwu Branch of Shenzhen
740,909.97 No risk of bad debts
Dachong Industrial Co., Ltd.
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 21,835,107.43 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
Subtotal within 1 year 3,202,575.45
1-2 year (s) 572,918.40 28,645.92 5.00%
2-3 year (s) 23,640.40 2,364.04 10.00%
Over 3years 474,426.93 142,328.08 30.00%
Total 4,273,561.18 173,338.04
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
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
Personal borrowings 991,841.17 991,841.17 100.00 Can not be taken back
Employee canteen ect. 796,041.46 796,041.46 100.00 Can not be taken back
Trade Union 297,402.55 297,402.55 100.00 Can not be taken back
Shenzhen Lotus Island Restaurant Co.,Ltd 236,293.80 236,293.80 100.00 Can not be taken back
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Chuangjing workshop 192,794.00 192,794.00 100.00 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
Others 2,842,676.84 2,842,676.84 100.00 Can not be taken back
Total 5,469,385.44 5,469,385.44
(2) 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
Security deposit 499,620.00 1,071,309.97
Borrowing 2,182,945.73 2,230,773.98
Current accounts 7,179,633.99 7,427,894.35
Rent receivable 21,684,964.35 8,780,596.09
Others 30,889.98 1,206,127.87
Total 31,578,054.05 20,716,702.26
(3) 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
Shenzhen Jifang
Rent income 15,432,010.08 Within 1 year 48.87%
Investment Co., Ltd.
Boteman Rent income 4,021,734.22 Over 3years 12.74% 4,021,734.22
Wuwu Branch of
Shenzhen Dachong Security deposit 740,909.97 Within 1 year 2.35%
Industrial Co., Ltd.
Zhao Baomin Rent income 564,646.35 Over 3years 1.79% 564,646.35
Traffic incident Lease fees
555,785.81 Over 3years 1.76% 555,785.81
indemnity receivable
Total -- 21,315,086.43 -- 67.51% 5,142,166.38
7. Inventories
(1) Type of Inventories
Unit: RMB
Ending balance Beginning balance
Items
Book balance Depreciation Book Value Book balance Depreciation Book Value
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Provisions Provisions
Raw Materials 22,805,063.20 1,260,134.51 21,544,928.69 17,440,555.09 1,260,134.51 16,180,420.58
Finishing Product 186,209.80 186,209.80 307,753.41 307,753.41
Stocked Goods 13,412,782.27 549,643.94 12,863,138.33 9,231,179.62 549,643.94 8,681,535.68
Turnover
707,674.15 51,587.59 656,086.56 297,390.39 51,587.59 245,802.80
materials
Self-made
semi-finished 2,302,021.66 33,070.70 2,268,950.96 1,749,684.14 33,070.70 1,716,613.44
product
Total 39,413,751.08 1,894,436.74 37,519,314.34 29,026,562.65 1,894,436.74 27,132,125.91
(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 1,260,134.51 1,260,134.51
Stocked Goods 549,643.94 549,643.94
Low-value
consuming 51,587.59 51,587.59
products
Self-made
semi-finished 33,070.70 33,070.70
product
Total 1,894,436.74 1,894,436.74
8. Assets classified as held for sale
Unit: RMB
Estimated disposal
Items Ending book value Fair value Estimated disposal time
expense
Gongming Huafa
92,857,471.69 December 31, 2016
Electric Shopping Mall
Total 92,857,471.69 --
Other explanations:
The company signed Urban Renewal Project Cooperation Agreement about "Renewal Unit in Huafa Area, Gongming Street,
Guangming New District, Shenzhen City", House Purchase and Relocation Compensation and Settlement Agreement, and House
Renovation Project Cooperation and Operation Contract in Huafa Industrial Zone, Gongming Street, Guan Hwafa Industrial
Zonegming New Area with Wuhan Zhongheng New Technology Industry Group Co., Ltd. (hereinafter referred to as Wuhan
Zhongheng New Technology Industry Group), Shenzhen Vanke Real Estate Co., Ltd. and Shenzhen Vanke Guangming Real Estate
Development Co., Ltd. on Aug. 26, 2015. According to the agreement between our company and Wuhan Zhongheng New
Technology Industry Group, the company authorizes Wuhan Zhongheng New Technology Industry Group Co., Ltd. to make the
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
project cooperation on behalf of our company, as a result, our company can obtain the relocation compensations of RMB 0.5 billion
and supplementary commercial area of 100,000 square meters; After the target project is liquidated and settled, the third intermediary
agent appointed by Wuhan Zhongheng Huafa Industry Group will distribute the surplus benefits. If the mutual benefits have a surplus,
the company will make sharing, according to the 50.50% of the occupied land rights and interests. In case of deficits, the company
will not take responsibility.
9. Other Current Assets
Unit: RMB
Items Ending balance Beginning balance
Wait deal intangible assets loss or income 31,502.46
Total 31,502.46
Other instructions:
10. 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
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 77,641,780.28 77,641,780.28
2. Additional amount of current period 615,332.22 615,332.22
(1) Withdrawal or amortization 615,332.22 615,332.22
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
3.Decreased amount of current period
(1) Disposal
(2) Other transfer-out
4.Ending balance 78,257,112.50 78,257,112.50
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 29,404,574.44 29,404,574.44
2.Opening book value 30,019,906.66 30,019,906.66
(2) Investment Real Estate Measured Based on Fair Value
□ Applicable √ Inapplicable
11．Fixed Assets
(1) Condition of Fixed Assets
Unit: RMB
Houses & Machinery Transport Tool Office Molding Instrument
Items Total
Buildings Equipment Equipment Equipment Equipment Equipment Equipment
I. Original value of book
value：
1.Beginning 9,577,989. 5,594,918.6 6,100,169.0 2,754,225.5 195,307,276
91,554,098.85 75,669,452.20 4,056,422.87
balance 70 2 7 8 .89
2. Additional
395,156.0 1,249,792.0 4,367,489.5
amount of current 32,200.00 536,126.90 1,323,760.68 830,453.91
1 0 0
period
395,156.0 1,249,792.0 4,335,289.5
(1) Procurement 536,126.90 1,323,760.68 830,453.91
1 0 0
(2) Transferred 32,200.00 32,200.00
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
from construction in
progress
(3) Increase in
business merger
3.Decreased
amount of current 195,000.00 669,603.44 864,603.44
period
(1) Disposal or
195,000.00 669,603.44 864,603.44
scrap
9,973,145. 6,844,710.6 6,261,019.5 2,754,225.5 198,810,162
4.Ending balance 91,586,298.85 76,205,579.10 5,185,183.55
71 2 4 8 .95
II. Accumulated
depreciation
1.Beginning 6,827,648. 5,007,167.4 3,906,423.9 2,364,563.7 84,699,851.
10,974,795.70 52,671,164.37 2,948,087.90
balance 38 0 3 1 39
2. Additional
181,348.4 6,656,244.6
amount of current 2,964,437.38 2,597,077.61 194,227.14 61,246.83 596,359.12 61,548.12
6 6
period
181,348.4 6,656,244.6
(1) Withdrawing 2,964,437.38 2,597,077.61 194,227.14 61,246.83 596,359.12 61,548.12
6 6
3.Decreased
amount of current 175,500.00 389,359.77 564,859.77
period
(1) Disposal or
175,500.00 389,359.77 564,859.77
scrap
7,008,996. 5,068,414.2 4,113,423.2 90,791,236.
4.Ending balance 13,939,233.08 55,268,241.98 2,966,815.04 2,426,111.83
84 3 8 28
III. Impairment
Provision
1.Beginning
balance
2. Additional
amount of current
period
(1) Withdrawing
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
3.Decreased
amount of current
period
(1) Disposal or
scrap
4.Ending balance
IV. Book Value
1.End-of-period 2,964,148. 1,776,296.3 2,147,596.2 108,018,926
77,647,065.77 20,937,337.12 2,218,368.51 328,113.75
book value 87 9 6 .67
2.Opening book 2,750,341. 2,193,745.1 110,607,425
80,579,303.15 22,998,287.83 1,108,334.97 587,751.22 389,661.87
value 32 4 .50
(2) Condition of temporarily idle fixed asset
Unit: RMB
Original value Accumulated Impairment
Items Net book value Remark
of book value Depreciation Provision
Hengfa Technology Co., Ltd. purchased Room
1-11, Floor 1, Building 1, and Room 1-4, Floor 1,
Building 2, Zhongheng ﹒Huju Tianxia, Taershan
Village, Daji Street, Caidian District of Wuhan
City in Jun. 2015, in addition, which also
purchased Room 1-11, Floor 1, Building 6, and
Room 1-4, Floor 1, Building 7 of Zhongheng ﹒
Houses & Huju Tianxia, Taershan Village, Daji Street,
26,000,000.00 390,780.24 25,609,219.76
Buildings Caidian District of Wuhan City in Dec. 2015 with
the construction areas of 1,971.22 square meters.
According to the plan, the foregoing real estates
will be used for commercial service. Wuhan
Hengfa Technology will pay the house purchasing
funds of RMB 25 million and deed taxes of RMB
1 million, according to the appraisal price and
contract requirements.
(3) Fixed assets leased by operating lease
Unit: RMB
Items End-of-period book value
Houses & buildings 984,121.55
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
12. 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
Total 654,356.00 654,356.00 2,853,356.00 2,853,356.00
(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 654,356.0 654,356.0
Others
renovation project 0 0
654,356.0 654,356.0
Total -- -- --
0 0
13. Intangible Assets
(1) Condition of intangible assets
Unit: RMB
Non-patented
Items Land-use Right Patent Software cost 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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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 9,125,026.65 352,288.19 9,477,314.84
2. Additional amount of
722,204.40 24,942.96 747,147.36
current period
(1) Withdrawing 722,204.40 24,942.96 747,147.36
3.Decreased amount of
current period
(1) Disposal
4.Ending balance 9,847,231.05 377,231.15 10,224,462.20
III. Impairment Provision
1.Beginning balance
2. Additional amount of
current period
(1) Withdrawing
3.Decreased amount of
current period
(1) Disposal
4.Ending balance
IV. Book Value
1.End-of-period book value 45,340,595.31 284,647.82 45,625,243.13
2.Opening book value 46,062,799.71 309,590.78 46,372,390.49
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%.
14. Long-term deferred charges
Unit: RMB
The amortization
Items Beginning balance Current increment Other reduction Ending balance
amount of the
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
current period amounts
Golf membership fee 241,666.63 25,000.02 216,666.61
Renovation
33,091.53 10,450.02 22,641.51
expenditures
Total 274,758.16 35,450.04 239,308.12
Other instructions:
15. 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
22,996,373.35 5,749,168.34 22,996,373.35 5,749,168.34
assets impairment
Deductible loss 2,857,503.23 714,375.81
Estimated liabilities 2,604,411.81 651,102.95 2,604,411.81 651,102.95
Total 28,458,288.39 7,114,647.10 25,600,785.16 6,400,271.29
(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
7,114,647.10 6,400,271.29
Assets
(3) Deferred tax assets that have not been confirmed
Unit: RMB
Items Ending balance Beginning balance
Deductible loss 880,511.90 1,006,234.22
Provision drawn for assets impairment 3,153,172.51 3,153,172.51
Total 4,033,684.41 4,159,406.73
(4) The deductible loss of the unrecognized deferred income tax assets will become due in the following
years.
Unit: RMB
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Year Ending amount Initial amount Remark
2017 355,163.57 480,885.89
2018 525,348.33 525,348.33
Total 880,511.90 1,006,234.22 --
Other instructions:
16. Short-term Borrowings
(1) Classification of Short-term Borrowings
Unit: RMB
Items Ending balance Beginning balance
Pledged loan 3,000,000.00 21,000,000.00
Mortgage Loan 62,112,392.00 78,879,107.41
Guaranteed loan 19,900,000.00 19,600,000.00
Total 85,012,392.00 119,479,107.41
Description of short-term loans classification
17. Notes Payable
Unit: RMB
Type Ending balance Beginning balance
Bank acceptance bill 16,352,307.37 53,614,420.20
Total 16,352,307.37 53,614,420.20
Total amount of notes payable that is due but unpaid at the end of the period is RMB 0.00.
18. Accounts Payable
(1) Presentation of Accounts Payable
Unit: RMB
Items Ending balance Beginning balance
Material cost 101,410,511.69 54,241,655.86
Total 101,410,511.69 54,241,655.86
(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 --
Other instructions:
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
None
19. Advance Collections
(1) Presentation of Advance Collections
Unit: RMB
Items Ending balance Beginning balance
Payment for goods 1,834,052.83 1,147,469.52
Total 1,834,052.83 1,147,469.52
20. Employees’ Remuneration Payable
(1) Presentation of Employees’ Remuneration Payable
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
I. Short-term remuneration 4,736,709.29 27,604,229.21 28,872,824.48 3,468,114.02
II. Welfare after departure-defined
-5,093.82 2,390,217.66 2,394,184.80 -9,060.96
contribution plan
Total 4,731,615.47 29,994,446.87 31,267,009.28 3,459,053.06
(2) Presentation of Short-term Remuneration
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
1. Salary, bonus, allowance &
3,822,231.19 23,781,242.81 25,093,845.71 2,509,628.29
subsidies
2. Staff Welfare Treatment Fund 2,571,917.82 2,571,917.82
3. Social Insurance Premium 23,041.98 805,323.28 807,013.09 21,352.17
Among it: Medical insurance
23,041.98 696,836.93 698,526.74 21,352.17
premium
Industrial Injury Insurance
47,048.59 47,048.59
Premium
Birth Insurance Premium 61,437.76 61,437.76
4. Public Housing Fund 24,310.00 400,047.86 400,047.86 24,310.00
5. Labor union expense and
867,126.12 45,697.44 0.00 912,823.56
personnel education fund
Total 4,736,709.29 27,604,229.21 28,872,824.48 3,468,114.02
(3) Presentation of Defined Contribution Plan
Unit: RMB
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Items Beginning balance Current increment Current decrement Ending balance
1. Basic retirement
-5,093.82 2,260,737.32 2,264,704.46 -9,060.96
insurance premium
2. Unemployment
0.00 129,480.34 129,480.34
Insurance Premium
3. Payment of enterprise
0.00
annuity
Total -5,093.82 2,390,217.66 2,394,184.80 -9,060.96
Other instructions:
21. Taxes Payable
Unit: RMB
Items Ending balance Beginning balance
VAT 3,857,391.56 3,113,697.74
Business Tax 4,233,742.33 4,353,926.65
Enterprise Income Tax 5,750,491.38 11,702,968.21
Personal Income Tax 72,902.37 35,377.25
Urban Maintenance & Construction Tax 241,000.45 256,676.38
Property Tax 727,079.72 526,275.00
Land use tax 323,945.13 323,677.55
Educational Surcharge 104,054.11 178,390.78
Others 669,558.40 7,306.32
Total 15,980,165.45 20,498,295.88
Other instructions:
None
22. Other accounts Payables
(1) Other Accounts Payable Listed Based on Payment Nature
Unit: RMB
Items Ending balance Beginning balance
Security deposit and cash pledge 11,939,502.02 10,061,229.53
Lease management fee 612,359.41 1,698,564.47
Equipment cost payable 251,672.49 332,322.49
Current accounts 8,860,234.60 18,190,118.93
After-sales and repai 1,285,474.20 837,903.65
Others 616,722.79 1,545,559.25
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Total 23,565,965.51 32,665,698.32
(2) Ather significant payables aging more than one year
Unit: RMB
Items Ending balance Reasons for failure to pay or carry down
Shenzhen Jifang Investment Co., Ltd. 4,208,840.00 Unsettled
Shenzhen Huayongxing Environmental Unsettled
1,000,000.00
Protection Technology Co., Ltd.
Shenzhen Sed Property Development Co.
634,723.75 Unsettled
Ltd.
Linghang Technology (Shenzhen) Co., Ltd. 656,345.28 Unsettled
Shenzhen Tongxing Electronics Co., Ltd. 578,259.83 Unsettled
Shenzhen Yongdasheng Investment
558,970.00 Unsettled
Development Co., Ltd.
Total 7,637,138.86 --
Other instructions:
23. Long-term borrowings
(1) Classification of long-term borrowings
Unit: RMB
Items Ending balance Beginning balance
Mortgage Loan 50,850,000.00 554,700,000.00
Total 50,850,000.00 554,700,000.00
Description of classification of long-term borrowings:
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 6.125% this year.
24. Estimated liabilities
Unit: RMB
Items Ending balance Beginning balance Cause
Pending legal action 2,604,411.81 2,604,411.81 Commercial and labor dispute
Total 2,604,411.81 2,604,411.81 --
Other descriptions, including important assumptions, estimations and explanations related to significant contingent liabilities:
None
25. Capital Stock
Unit: RMB
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Increase and decrease of change in the current period (+, -)
Share transfer
Beginning
Issuing new of public Ending balance
balance Donate hare Others Subtotal
shares accumulation
fund
Total shares 283,161,227.00 283,161,227.00
Other instructions:
Equity pledge conditions of holding shareholders: Until Jun. 30, 2016, the holding shareholders have held 116,100,000.00 shares
which are under the pledge state of the company, therein, the pledge period of 88,750,047.00 shares and 27,349,953.00 shares will
last from Dec. 31, 2015 until Dec. 31, 2016, and from Feb. 1, 2016 until Dec. 31, 2016 respectively, and China Merchants Securities
Capital Management Co., Ltd. served as the pledgee.
26. Capital Reserves
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
Capital premium (Shares
96,501,903.02 96,501,903.02
Premium)
Other Capital Reserves 49,781,739.88 49,781,739.88
Total 146,283,642.90 146,283,642.90
Other descriptions, including the descriptions of current increase and decrease changes as well as the reasons for changes
None
27. Surplus Reserves
Unit: RMB
Items Beginning balance Current increment Current decrement Ending balance
Statutory Surplus
21,322,617.25 21,322,617.25
Reserves
Any Surplus Reserves 56,068,976.00 56,068,976.00
Total 77,391,593.25 77,391,593.25
Descriptions of the surplus reserves, including the descriptions of current increase and decrease changes as well as the
reasons for changes
None.
28. Undistributed profits
Unit: RMB
Items Current period Previous period
Undistributed profits at the end of previous period
-195,429,900.95 -188,698,387.84
before adjustment
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Beginning-of-year undistributed profits after
-195,429,900.95 -188,698,387.84
adjustment
Add: net profit belonging to the owner of the
7,272,956.22 -6,731,513.11
parent company of the current period
End-of-period undistributed profits -188,156,944.73 -195,429,900.95
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.
29. Business Revenues & Business Cost
Unit: RMB
Accruals of the current period Accruals of the previous period
Items
Income Cost Income Cost
Main Businesses 286,371,182.79 261,215,066.60 220,850,548.84 203,649,886.02
Other Business 23,167,342.77 3,073,331.64 27,884,081.02 3,813,639.35
Total 309,538,525.56 264,288,398.24 248,734,629.86 207,463,525.37
30. Business Tax & Surcharges
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Business Tax 741,511.13 1,229,313.48
Urban Maintenance & Construction Tax 648,491.13 1,174,351.04
Educational Surcharge 279,899.79 503,299.14
Property Tax 184,274.40 221,129.34
Land use tax 119,997.05 119,997.06
Local education development fees 181,617.29 334,429.41
Others 578.37 94,775.04
Total 2,156,369.16 3,677,294.51
Other instructions:
None.
31. Sales costs
Unit: RMB
90
2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Items Accruals of the current period Accruals of the previous period
Employees’ Remuneration 1,895,241.77 2,561,706.55
Transportation expenses 1,626,969.69 1,360,594.47
Commodity inspection expenses 417,538.75 198,425.89
Customs affairs fee 50,422.80 82,077.60
Commodity wastage 184,429.08 135,667.65
Others 1,109,133.62 793,298.42
Total 5,283,735.71 5,131,770.58
Other instructions:
Others are reflected in the after-sales service expenses, low-value and easily-consuming amortization, office costs, etc.
32. Management costs
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Payroll 4,515,773.03 2,529,243.66
Depreciation costs 2,634,069.61 2,565,709.55
Social Insurance Premium 3,582,840.30 3,374,203.85
Social contact fees 1,402,388.24 858,681.46
Tax and surcharges 1,587,116.48 2,272,979.33
Staff Welfare Treatment Fund 1,178,133.14 855,496.44
Business trip costs 2,012,899.56 902,790.08
Amortization of intangible assets 747,147.36 747,147.36
Transportation fees 836,651.41 597,837.91
Consulting fees 1,507,497.56 403,726.00
Safety protection fee 545,366.05 455,580.56
Repair costs 571,994.61 543,829.14
Auditing costs 734,235.85 797,169.81
Office costs 1,550,706.35 435,606.13
Communication fees 189,732.98 195,132.09
Amortization of low-value, perishable
210,497.70 95,480.48
goods
Securities information disclosure fees 36,071.80 277,639.60
Legal action costs 264,923.00 15,849.00
Others 3,187,838.44 670,817.32
Total 27,295,883.47 18,594,919.77
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Other instructions:
Other expenses are mainly leasing expenses (RMB 2,245,877.49), commercial insurance costs, and water and electricity fees.
33. Financial Expenses
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Interest Expenditures 5,330,803.55 28,796,081.34
Less: interest return 613,209.75 66,409.22
Add: exchange loss -3,716,468.30 427,093.90
Add: other expenditures 1,311,253.63 1,236,432.65
Total 2,312,379.13 30,393,198.67
Other instructions:
None.
34. Investment income
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Investment income generated from disposal of
643.49
long-term equity investment
Investment income of financial products 29,499,999.98
Total 29,500,643.47
Other instructions:
None.
35. 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
116,007.01 116,007.01
non-current assets
Among it: income from fixed
116,007.01 116,007.01
assets disposition
Donation accepted 3,500.00
Government Grants 1,163,469.00 1,163,469.00
Payment that can not be paid 175,522.50 623,987.65 175,522.50
Penalty fine income 41,539.00 156,906.00 41,539.00
Penalty Incomes 22,099.00 22,240.00 22,099.00
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Others 420.00
Total 1,518,636.51 807,053.65 1,518,636.51
Governmental subsidies recorded in current profit and loss:
Unit: RMB
Whether the
subsidy Whether a Amount Amount
Asset
Subsidizing Subject to be Granting affects the special incurred in incurred in
Type related/incom
program granted reason profit and subsidy or the current the prior
e related
loss of the not period period
current year
Subsidy
obtained due to
Bureau of E
meeting the
conomy and
requirement of
Enterprise Informatizat
investment Income
development ion, Caidian Subsidy No Yes 100,000.00 0.00
promotion and related
subsidies District,Wu
other local
han City
supportive
policies of local
government
Subsidy
obtained due to
Bureau of E
meeting the
conomy and
requirement of
Enterprise Informatizat
investment Income
development ion, Caidian Reward No Yes 200,000.00 0.00
promotion and related
subsidies District,Wu
other local
han City
supportive
policies of local
government
Subsidy
obtained due to
meeting the
requirement of
Export
investment Income
subsidy and Reward No Yes 863,469.00 0.00
promotion and related
bonus
other local
supportive
policies of local
government
Total -- -- -- -- -- 1,163,469.00 --
Other instructions:
None.
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
36. 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
18,924.00 18,924.00
Assets
Among it: Loss from
18,924.00 18,924.00
fixed-assets disposition
Foreign donations 50,000.00
Others 44,301.68 263,178.96 44,301.68
Total 63,225.68 313,178.96 63,225.68
Other instructions:
None.
37. 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 3,098,590.27 50.00
Expense of deferred income tax -714,375.81 -708,921.91
Total 2,384,214.46 -708,871.91
(2) Accounting Profit and Income Tax Adjustment
Unit: RMB
Items Accruals of the current period
Total profit 9,657,170.68
Income tax calculated based on legal/applicable tax rate 2,414,292.67
Influence of non-deductible cost, expense and loss 987.92
Influence of deductible loss of deferred income tax assets unrecognized at
-31,430.58
the early stage of use
Influence of deductible temporary difference or deductible loss of deferred
364.45
income tax assets that are not recognized at current period
Income tax expense 2,384,214.46
Other instructions:
None.
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
38. 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 2,902,221.40 100,949,004.51
Administration fee and water and
2,932,023.33 5,401,204.38
electricity charges collection
Employees' repayment for their
23,221.40 791,229.19
borrowings
Security deposit 264,562.00 2,052,549.70
Interest income 613,209.75 66,409.22
Total 6,735,237.88 109,260,397.00
Description of other received cash related to the business activity
The received cashes which are related to the operation activities mainly include Administration fee and water and
electricity charges collection, management expenses, personal contacts, security deposit and other intercourse funds.
(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 8,763,196.37 2,097,872.27
Advances to employees 1,390,022.62 943,718.19
Legal action costs 264,923.00 15,849.00
Deposit, Security deposit 6,601,906.95 424,257.00
Social contact fees 1,477,186.54 858,681.46
water & electricity fees 2,001,355.59 1,944,134.86
Business trip costs 2,034,807.36 902,790.08
Transportation expenses 1,896,893.96 1,860,594.47
Transportation fees 967,138.76 597,837.91
Repair costs 571,994.61 543,829.14
Auditing and consulting fee 1,507,497.56 403,726.00
Security fee 545,366.05 135,580.56
Procedure fee of financial organization 1,311,253.63 124,046.01
Office costs 1,553,388.35 435,606.13
Communication fees 200,451.18 195,132.09
Rental fee 2,245,877.49
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Others 1,390,293.60 520,289.96
Total 34,723,553.62 12,003,945.13
Description of other paid cash related to the business activity
The paid cashes which are related to the operation activities mainly include management expenses, sales costs, personal
contacts, Security deposit, water and electricity expense which are collected by another agency, as well as management costs
which are paid in cash.
(3) Other paid cash related to the investment activity
Unit: RMB
Items Accruals of the current period Accruals of the previous period
The condition that the share transfer amount received by the
handling branch company is less than the balance amount of 0.00 99,356.51
holding currency funds per day handled by the branch company
Total 99,356.51
Description of other paid cash related to the investment activity
39. 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 7,272,956.22 14,177,311.03
Depreciation of fixed assets, depletion of oil and gas,
7,271,576.88 6,979,667.72
depreciation of production materials or equipment
Amortization of Intangible Assets 747,147.36 747,147.36
Amortization of Long-term Expenses to be Apportioned 35,450.04 35,450.04
Loss from Disposal of Fixed Assets, Intangible Assets
-97,083.01
& Other Long-term Assets (Proceeds indicated by “-”)
Financial Expenses (Proceeds indicated by “-”) 5,330,803.55 28,796,081.34
Investment loss(Proceeds indicated by “-”) -29,500,643.47
Decrement of Deferred Income Tax Assets (Addition
-714,375.81 -708,921.91
indicated by “-”)
Decrement of Inventories (Addition indicated by “-”) -10,387,188.43 -3,009,147.99
Decrement of Operative Receivables (Addition
-78,574,397.07 10,817,171.40
indicated by “-”)
Increment of Operative Payables (Decrease indicated
43,690,760.70 -11,305,521.79
by “-”)
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Net Cash Flow Provided by Operating Activities -25,424,349.57 17,028,593.73
2. Important investment and fund raising activities
-- --
involving no cash：
3. Net Variation of Cash and Cash Equivalent： -- --
Year-end balance of cash 59,356,415.87 21,029,840.22
Less: year-beginning balance of cash 632,846,956.16 22,392,147.12
Net increase of cash and cash equivalent -573,490,540.29 -1,362,306.90
(2) Composition of cash and cash equivalents
Unit: RMB
Items Ending balance Beginning balance
I. Cash 59,356,415.87 632,846,956.16
Among it: Ready money 254,667.37 382,669.21
Bank deposit available for payment
59,101,748.50 632,464,286.95
anytime
III. Balance of Cash & Cash Equivalents at
59,356,415.87 632,846,956.16
Term End
Other instructions:
The balance amount after subtracting other currency funds from currency funds at the end of period is not considered as the cash and
cash equivalent, instead the security deposit for bank acceptance bill (RMB 6,046,958.43).
40. Assets whose ownership or right to use is restricted
Unit: RMB
Items End-of-period book value Cause of limitation
Monetary Fund 6,046,958.43 Used for issuing the bank’s acceptance bill
Fixed Assets 43,928,278.14 Used to secure the bank loans
Intangible Assets 45,340,595.31 Used to secure the bank loans
Investment property 29,404,574.44 Used to secure the bank loans
Used for pledge to obtain loans from Haier
Accounts receivable 3,225,816.76
Finance Co., Ltd.
Total 127,946,223.08 --
Other instructions:
None.
41. Foreign Currency Monetary Item
(1) Foreign Currency Monetary Item
Unit: RMB
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Ending balance of foreign
Items Exchange rate of conversion Converted ending RMB balance
currency
Money funds -- -- 323,975.47
Wherein: USD 48,852.07 6.6312 323,947.85
Euro
HKD 32.32 0.85467 27.62
Accounts receivable -- -- 76,289,308.56
Wherein: USD 11,504,600.76 6.6312 76,289,308.56
Euro
HKD
Long-term borrowing -- --
Wherein: USD
Euro
HKD
Short-term borrowing 22,612,392.00
Wherein: USD 3,410,000.00 6.6312 22,612,392.00
Accounts payable 19,365,746.40
Wherein: USD 2,920,398.48 6.6312 19,365,746.40
Other instructions:
Ⅷ. Equity in Other Entities
1. Equity in subsidiaries
(1) Composition of Enterprise Group
Name of Main business Registered Shareholding ratio
Business nature Obtaining method
subsidiary place address Direct Indirect
Income obtained
Huafa Lease Property from investment
Shenzhen Shenzhen 60.00%
Company management and newly establi
shment
Income obtained
Huafa Property Property from investment
Shenzhen Shenzhen 100.00%
Company management and newly establi
shment
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Income obtained
Hengfa
Production and from investment
Technology Wuhan Wuhan 100.00%
sale and newly establi
Company
shment
Income obtained
Huafa Hengtian Property from investment
Shenzhen Shenzhen 100.00%
Company management and newly establi
shment
Income obtained
Huafa Hengtai Property from investment
Shenzhen Shenzhen 100.00%
Company management and newly establi
shment
Instruction for shareholding ratio of subsidiary different from the proportion of voting right:
None.
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:
None.
Basis for control over the important structured entity incorporated in the merger scope:
None.
Basis for determining whether the Company is an agent or a client:
None.
Other instructions:
None.
Ⅸ. 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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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, 2015, 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, 2015 (converted into Dec. 31, 2014 (converted into RMB)
RMB)
Monetary capital-USD 323,947.85 78,163.93
Monetary capital-HKD 27.62 858.74
Accounts receivable-USD 76,289,308.56 49,546,374.57
Advance payment-USD - 464,330.52
Accounts receivable-USD 19,365,746.40
Short-term borrowing-USD 22,612,392.00 28,879,107.41
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 June 30, 2016, 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 RMB135,862,392.00 (on Dec. 31, 2015: RMB674,179,107.41).
The Group's risk from changes in cash flow of financial instruments due to variation of interest rate is mainly related to the bank
loans with floating rate of interest. The Group's policy is to maintain a floating interest rate on these loans in order to eliminate the
fair value risk from variation of interest rate.
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, 2015, 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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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: RMB163, 559,131.62.
(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 June 30, 2016
Items Within 1 year 1-2 years 2-3 years More than 3 years Total
Financial assets
Monetary capital 65,403,374.30 65,403,374.30
Notes receivable 27,112,052.59 27,112,052.59
Notes Receivable 182,542,130.75 182,542,130.75
Other Accounts 20,273,143.19 20,273,143.19
Receivable
Advance payment 2,952,333.36 2,952,333.36
Financial liabilities
Short-term borrowing 85,012,392.00 85,012,392.00
Notes payable 16,352,307.37 16,352,307.37
Accounts payable 101,410,511.69 101,410,511.69
Other payables 19,357,125.51 4,208,840.00 23,565,965.51
Deposit received 1,834,052.83 1,834,052.83
Employees’ 3,459,053.06 3,459,053.06
remuneration payable
Long-term borrowing 50,850,000.00 50,850,000.00
2. Sensitivity analysis
The Group adopts sensitivity analysis technology to analyze the influence of reasonable and potential change in the risk
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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:
January-June 2016 January-June 2015
Exchange rate
Item Influence on net Influence on Influence on net Influence on
change
profit ownership interest profit ownership interest
All foreign Appreciation of 5% 1,298,817.96 1,298,817.96 1,058,696.79 1,058,696.79
currencies against RMB
All foreign Depreciation of 5% -1,298,817.96 -1,298,817.96 -1,058,696.79 -1,058,696.79
currencies against RMB
X. Connected parties and connected transactions
1. Condition of parent company of the Enterprise
Shareholding Percentage of voting
Name of parent proportion of the rights held by the
Registered place Business scope Registered capital
company parent company over parent company over
the Enterprise the Enterprise
Wuhan Zhongheng
Wuhan Production and sale 34,500,000.00 41.14% 41.14%
Group
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
The final controlling party of the enterprise is Li Zhongqiu.
Other instructions:
None.
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
Under the control of the same parent company and the final controlling party
Co., Ltd.
Wuhan Hengsheng Yutian Industry Co., Ltd. Under the control of the same parent company and the final controlling party
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.,
Under the control of the same parent company and the final controlling party
Ltd.
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
Under the control of the same parent company and the final controlling party
Co., Ltd.
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
Shengzhen Yutian Henghua Co., Ltd. Under the control of the same parent company and the final controlling party
Shenzhen Zhongheng Yongye Co., Ltd. Under the control of the same parent company and the final controlling party
Other instructions:
None.
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Whether it
Approved exceeds the
Content of connected Accruals of the Accruals of the previous
Related parties transaction approved
transaction current period period
amount transaction
amount
Hongkong Yutian Commodities
85,710,600.86 324,680,000.00 No 51,872,144.42
International Co., Ltd. purchased
Wuhan Hengsheng
Commodities
Yutian Industry Co., 27,331,191.04 168,833,600.00 No 2,991,900.00
purchased
Ltd.
Fact statement of sales of goods or 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 108,182,506.77 60,145,369.93
Wuhan Hengsheng Opto-electric
Sales of commodities 1,325,408.25
Industry Co., Ltd.
Description for related transactions of goods purchase or sales, and labor services rendering or receiving
(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 0.00 1,472,769.00
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
65,000,000.00 Sep. 10, 2015 Jun.17, 2016 Yes
Company
Hengfa Technology
48,000,000.00 Sep. 29, 2014 Sep.29, 2016 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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
not
Li Zhongqiu 600,000,000.00 May 28, 2014 May 28, 2026 None
Li Zhongqiu 20,000,000.00 May 19, 2016 May 19, 2017 None
Description of related-party guarantee
(4) Remuneration of Key Management Personnel
单位： 元
Items Accruals of the current period Accruals of the previous period
Total remuneration 640,060.60 733,423.26
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
74,330,908.97 47,219,865.22
Receivable Investment Co.,Ltd.
Advance Hong Kong Tianyu International
520,885.50
payment Investment Co.,Ltd.
Interests Wuhan Hengsheng Opto-electric
1,838,752.40
receivable Industry Co., Ltd.
(2) Payables
Unit: RMB
Project name Associated party Ending book balance Opening book balance
Shenzhen Zhongheng Huafa Science
Other payables 8,663,196.37
and Technology Co., Ltd.
Wuhan Hengsheng Opto-electric
Accounts payables 5,230,391.30 924,354.64
Industry Co., Ltd.
Hong Kong Tianyu International
Accounts payables 19,214,270.84
Investment Co.,Ltd.
Ⅺ. Commitment and Contingent Matters
1. Contingent Affairs
(1) Important contingent matters on the balance sheet date
Except for the guarantee affairs as specified in the Annotation "Affiliated Guarantee Conditions", other significant affairs or
contingencies which need to be disclosed are shown as follows:
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
1. Contingent liability caused by pending action or pending 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,
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.
On Nov. 24, 2015, Shenzhen Intermediate People's Court judged the foregoing case ((2013) SZFSZ Zi No. 1491): The company
shall pay default compensations of RMB 1,778,081.05 to Shaanxi Linghua and Shaanxi Linghua shall pay the remaining goods
payments of RMB 869,458.96 and interest losses to the company within 10 days after the judgment takes effect.
Until Jun. 30, 2016, the company had calculated and withdrawn RMB 2,360,203.26 to the case to serve as the lawsuit expenses
and accrued liabilities.
Until the date when the financial report is approved and issued, the company had made preparation to lodge the repeat complaint
aiming at the judgment.
(2) The labor dispute which has not been implemented until now in the confirmed anticipated liabilities in the previous year.
According to the Execution Notice issued by Guangzhou Province Shenzhen People's Court ((2008) SFFZ Zi No. 522-529), the
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SLZC [2007] No. 1069-1077, 1079, 1081 and 1085-1087 Arbitration Judgment related to the labor dispute case about Cai Yaoqiang
and the other fifteen persons have been legally effective. As shown in the Enterprise Basic Information Credit Report, the total labor
dispute object which has not been implemented is RMB 38,386.00, which is confirmed as anticipated liabilities.
2. Except for the foregoing affairs or contingencies, the group has no other significant affair or contingency until Jun. 30, 2016.
Ⅻ. 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.
XIII. Other Significant Events
1. Others
As of June 30, 2016, the Group has no other significant events to be disclosed.
XIV. 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 5,094,414.3 49.05 5,094,414. 5,094,414.3 5,094,414.
100.00% 49.05% 100.00%
that were provisioned bad 6 % 36 6 36
debt preparation separately
Accounts receivable which
bad debt provision shall be 138,083.3 138,083.3
460,277.76 4.43% 30.00% 322,194.43 460,277.76 4.43% 30.00% 322,194.43
withdrawn based on credit 3 3
risk characteristics
Accounts receivable that
were not significant but have 4,832,157.5 46.52 4,832,157. 4,832,157.5 4,832,157.
100.00% 46.52% 100.00%
been provisioned bad debt 6 % 56 6 56
preparation separately
10,386,849. 100.00 10,064,65 10,386,849. 10,064,65
Total 322,194.43 100.00% 322,194.43
68 % 5.25 68 5.25
Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end of period：
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√ Applicable □ Inapplicable
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.
H. K. Haowei Industry Co., Ltd. 1,870,887.18 1,870,887.18 100.00% Can not be taken back
Qingdao Hai’er Spare Parts
1,225,326.15 1,225,326.15 100.00% Can not be taken back
Procurement Co., Ltd.
Total 5,094,414.36 5,094,414.36 -- --
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
Over 3years 460,277.76 138,083.33 30.00%
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
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
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
Others 1,862,277.45 1,862,277.45 100.00 Can not be taken back
Total 4,832,157.56 4,832,157.56
(2) 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 52.72% of the total ending balance of the accounts receivable. The total amount of ending balances
of withdrawn bad debt provision is RMB 5,475,583.32.
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 80,847,621. 91.00 10,221,046. 70,626,574.8 79,933,722.2 87.11 10,221,046. 69,712,675.7
12.64% 12.79%
that were provisioned bad 36 % 53 3 8 % 53 5
debt preparation separately
Other accounts
receivable which bad
debt provision shall be 2,830,636.5
3.19% 168,615.32 5.96% 2,662,021.26 6,668,848.13 7.27% 168,615.32 2.53% 6,500,232.81
withdrawn based on 8
credit risk
characteristics
Accounts receivable that
were not significant but 5,160,853.2 5,160,853.2 100.00 5,160,853.2 100.00
5.81% 0.00 5,160,853.27 5.62%
have been provisioned bad 7 7 % 7 %
debt preparation separately
88,839,111.2 100.00 15,550,515. 73,288,596.0 91,763,423.6 100.00 15,550,515. 76,212,908.5
Total
1 % 12 9 8 % 12 6
Other accounts receivable of which individual amount at the end of period are significant, but subject to individual withdrawing
bad-debt provision:
√ Applicable □ Inapplicable
Unit: RMB
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Ending balance
Other Accounts Receivable
Other Accounts
(based on unit) Provision for Bad Debts Percent Drawn Reason of provision
Receivable
Hengfa Technology Company 54,453,654.78 No risk of bad debts
Shenzhen Jifang Investment No risk of bad debts
15,432,010.08
Co., Ltd.
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
Wuwu Branch of Shenzhen No risk of bad debts
740,909.97
Dachong Industrial Co., Ltd.
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 80,847,621.36 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
Subtotal within 1 year 1,854,105.25
1-2 year (s) 478,464.00 23,923.20 5.00%
2-3 years 23,640.40 2,364.04 10.00%
Over 3years 474,426.93 142,328.08 30.00%
Total 2,830,636.58 168,615.32
Instructions for determining the combination basis:
None.
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
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
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Zhangzhou City, Fujian Province
Employee canteen ect. 796,041.46 796,041.46 100.00 Can not be taken back
Personal borrowings 991,841.17 991,841.17 100.00 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 2,534,144.67 2,534,144.67 100.00 Can not be taken back
Total 5,160,853.27 5,160,853.27
(2) Classification of Other Accounts Payable Based on Payment Nature
Unit: RMB
Payment nature Ending book balance Opening book balance
Borrowing 2,024,786.49 2,041,924.43
Current accounts 65,098,470.39 80,199,993.19
Rent income 21,684,964.35 8,780,596.09
Other 30,889.98 740,909.97
Total 88,839,111.21 91,763,423.68
(3) 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
Hengfa Technology
Current accounts 54,453,654.78 Within 1 year 61.29%
Co., Ltd.
Shenzhen Jifang Lease fees
15,432,010.08 Within 1 year 17.37%
Investment Co., Ltd. receivable
Huafa Lease
Current accounts 4,558,859.15 Over 3years 5.13% 4,558,859.15
Company
Lease fees
Boteman 4,021,734.22 Over 3years 4.53% 4,021,734.22
receivable
Wuwu Branch of Security deposit for
Shenzhen Dachong lease 740,909.97 Within 1 year 0.83%
Industrial Co., Ltd.
Total -- 79,207,168.20 -- 89.15% 8,580,593.37
3. Long-term Equity Investment
Unit: RMB
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Ending balance Beginning balance
Items Impairment Impairment
Book balance Book Value Book balance Book Value
Provision Provision
Investment in
187,208,900.00 600,000.00 186,608,900.00 187,208,900.00 600,000.00 186,608,900.00
subsidiary
Total 187,208,900.00 600,000.00 186,608,900.00 187,208,900.00 600,000.00 186,608,900.00
(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 Hengtian
1,000,000.00 1,000,000.00
Company
Huafa Hengtai
1,000,000.00 1,000,000.00
Company
Total 187,208,900.00 187,208,900.00 600,000.00
4. Business Revenues & Business Cost
Unit: RMB
Accruals of the current period Accruals of the previous period
Items
Income Cost Income Cost
Other Business 21,050,313.65 2,177,884.29 26,161,173.96 3,256,287.14
Total 21,050,313.65 2,177,884.29 26,161,173.96 3,256,287.14
Other explanations:
None.
5. Investment income
Unit: RMB
Items Accruals of the current period Accruals of the previous period
Investment income of financial products 0.00 29,499,999.98
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2016 Semi-Annual Report Context of Shenzhen Zhongheng Hwafa Co., Ltd
Total 0.00 29,499,999.98
XV. 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 97,083.01
Governmental subsidies recorded in current profit and loss
(be closely related to the enterprise business, with an
1,163,469.00
exception of the governmental subsidies enjoyed based on
national unified standard quota or ration)
Other non-business income and expenditure other than
194,858.82
above items
Less: amount affected by income tax 364,928.13
Total 1,090,482.70 --
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
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
2.31% 0.0257 0.0257
of mother company
Net profit belonging to parent
company shareholders after 1.96% 0.0218 0.0218
excluding non-recurring items
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Section Ⅹ Directory of Document Available for Inspection
I. Annual report text bearing the signature of President;
II. Financial report text bearing the signature and seal of head of unit, people in charge of accountancy and leading member of
accounting body;
III. Text of all the documents revealed publicly in the China Securities Journal, Securities Times and Hongkong Commercial
Daily specified by China Securities Regulatory Commission within the reporting period;
IV. Other relevant materials.
[Note] This report is prepared in Chinese and English. In case of understanding ambiguity between the two versions, the
Chinese version shall prevail.
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