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深华发B:2021年半年度报告全文--英文版2022-04-26  

                                                      SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                        SEMI-ANNUAL REPORT 2021




         深圳中恒华发股份有限公司

    SHENZHEN ZHONGHEN HUAFA CO., LTD.

         SEMI-ANNUAL REPORT 2021




                August 2021




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                                                     SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                               SEMI-ANNUAL REPORT 2021




        Section I. Important Notice, Contents and Interpretation

Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of Shenzhen Zhongheng HUAFA Co., Ltd. (hereinafter referred to as
the Company) hereby confirm that there are no any fictitious statements,
misleading statements, or important omissions carried in this report, and shall
take all responsibilities, individual and/or joint, for the reality, accuracy and
completion of the whole contents.
Li Zhongqiu, Principal of the Company, Yang Bin, person in charger of
accounting works and Chuai Guoxu, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of 2021
Semi-Annual Report is authentic, accurate and complete.
All directors are attended the Board Meeting for report deliberation.
Concerning the forward-looking statements with future planning involved in the
Report, they do not constitute a substantial commitment for investors. Majority
investors are advised to exercise caution of investment risks.

Risks factors are being well-described in the Report, found more in risks factors

and countermeasures disclosed in Prospects for Future Development of the

Board of Directors’ Report.

The Company has no plan of cash dividends carried out, bonus issued and
capitalizing of common reserves either.




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                                                                                           SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                     SEMI-ANNUAL REPORT 2021




                                                            Contents




Section I Important Notice, Contents and Interpretation ........................................................... 2

Section II Company Profile and Main Financial Indexes ............................................................ 6

Section III Management Discussion and Analysis ........................................................................................... 9


Section IV Corporate Governance ........................................................................................................... 17


Section V Enviornmental and Social Responsibility ....................................................................................... 18


Section VI Important Matters .................................................................................................... 19

Section VII Changes in shares and particular about shareholders ........................................... 33

Section VIII Preferred Stock ...................................................................................................... 38

Section IX Corporate Bonds ....................................................................................................... 39

Section X Financial Report ......................................................................................................... 40




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                                                                         SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                   SEMI-ANNUAL REPORT 2021




                             Documents Available for Reference


I. Text of the Annual Report caring signature of the Chairman;
II. Financial statement carrying the signatures and seals of the person in charge of the Company, principal of the
accounting works and person in charge of accounting organ;
III. All documents of the Company and manuscripts of public notices that disclosed in the China Securities journal,
Securities Times and Hong Kong Commercial Daily designated by CSRC in the report period;
IV. Article of Association
V. Other relevant files.




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                                                                           SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                     SEMI-ANNUAL REPORT 2021




                                             Interpretation


                     Items            Refers to                                  Contents

    Company, Shen HUAFA               Refers to   SHENZHEN ZHONGHENG HUAFA CO., LTD.

    Hengfa Technology                 Refers to   Wuhan Hengfa Technology Co., Ltd.

    HUAFA Property                    Refers to   Shenzhen Zhongheng HUAFA Property Co., Ltd

    HUAFA Lease                       Refers to   Shenzhen HUAFA Property Lease Management Co., Ltd

                                                  Wuhan Zhongheng New Science & Technology Industrial Group Co.,
    Wuhan Zhongheng Group             Refers to
                                                  Ltd

    HK Yutian                         Refers to   Hong Kong Yutian International Investment Co., Ltd.

    Hengsheng Photo-electricity       Refers to   Wuhan Hengsheng Photo-electricity Industry Co., Ltd.

    Hengsheng Yutian                  Refers to   Wuhan Hengsheng Yutian Industrial Co., Ltd.

    Yutian Henghua                    Refers to   Shenzhen Yutian Henghua Co., Ltd.

    HUAFA Hengtian                    Refers to   Shenzhen HUAFA Hengtian Co., Ltd.

    HUAFA Hengtai                     Refers to   Shenzhen HUAFA Hengtai Co., Ltd.

                                                  Shenzhen Vanke Real Estate Co., Ltd, now renamed as Shenzhen Vanke
    Shenzhen Vanke                    Refers to
                                                  Development Co., Ltd.

    Vanke Guangming                   Refers to   Shenzhen Vanke Guangming Real Estate Development Co., Ltd

    V& T Law Firm                     Refers to   Shenzhen V& T Law Firm

    Zhongheng Semiconductor (former               Shenzhen Zhongheng Semiconductor Co., Ltd. (former “Zhongheng
                                      Refers to
    “Huafa Technology ”)                        Huafa Technology Co., Ltd”)




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                                                                                          SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                    SEMI-ANNUAL REPORT 2021




                Section II. Company Profile and Main Financial Indexes

I. Company profile

    Short form of the stock        Shen HUAFA A, Shen HUAFA B                Stock code                 000020, 200020

    Stock exchange for listing     Shenzhen Stock Exchange

    Name of the Company (in
                                   深圳中恒华发股份有限公司
    Chinese)

    Short form of the Company
                                   深华发
    (in Chinese) (if applicable)

    Foreign name of the
                                   SHENZHEN ZHONGHENG HUAFA CO., LTD.
    Company (if applicable)

    Legal representative           Li Zhongqiu


II. Person/Way to contact

                                                          Secretary of the Board                   Rep. of security affairs

    Name                                         Niu Zhuo

                                                 618, 6/F, East Tower, Huafa Building,
    Contact add.                                 No.411 Building, Huafa (N) Road,
                                                 Futian District, Shenzhen

    Tel.                                         0755-86360201

    Fax.                                         0755-86360201

    E-mail                                       huafainvestor@126.com.cn


III. Others

1. Way of contact

Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or
not
□ Applicable      √ Not applicable

Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period,
found more details in Annual Report 2020.


2. Information disclosure and preparation place

Whether information disclosure and preparation place changed in reporting period or not
□ Applicable      √ Not applicable

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                                                                                     SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                               SEMI-ANNUAL REPORT 2021

The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation
place for semi-annual report have no change in reporting period, found more details in Annual Report 2020.


VI. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data
 □ Yes √ No

                                                   Current period           Same period of last year      Changes over last year

    Operating income(RMB)                               391,633,808.55               300,703,421.38                        30.24%

    Net profit attributable to shareholders of
                                                           6,989,362.48                 3,165,597.55                      120.79%
    the listed company(RMB)

    Net profit attributable to shareholders of
    the listed company after deducting                     7,034,198.78                 3,167,896.46                      122.05%
    non-recurring gains and losses(RMB)

    Net cash flow arising from operating
                                                        -21,818,369.59                 21,200,212.24                     -202.92%
    activities(RMB)

    Basic earnings per share(RMB/Share)                          0.0248                       0.0112                      121.43%

    Diluted earnings per share(RMB/Share)                        0.0248                       0.0112                      121.43%

    Weighted average ROE                                         2.07%                        0.96%                            1.11%
                                                                                                         Changes over period-end
                                                 Current period-end         period-end of last year
                                                                                                                of last year

    Total assets(RMB)                                   673,347,527.18               627,779,621.06                            7.26%

    Net assets attributable to shareholder of
                                                        343,238,099.77               336,248,737.29                            2.08%
    listed company(RMB)


V. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International
Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.


2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or
Chinese GAAP (Generally Accepted Accounting Principles) in the period.



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                                                                                       SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                 SEMI-ANNUAL REPORT 2021

VI. Items and amounts of extraordinary profit (gains)/loss

√Applicable □ Not applicable
                                                                                                                                In RMB

                                Item                                            Amount                             Note

    Gain/loss of entrusted investment or assets management                             149,767.58

    Other non-operating income and expenditure except for the
                                                                                      -194,603.88
    aforementioned items

    Total                                                                              -44,836.30                    --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable     √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss




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                                                                                   SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                             SEMI-ANNUAL REPORT 2021




                       Section III Management Discussion and Analysis

I. Main businesses of the company in the reporting period

     After years of development, the company has gradually formed two main businesses in industry and property
management. Among them, the industrial business mainly includes injection molding, polylon (light-weight
packaging materials), and complete machine production and sales of liquid crystal display, property management
business is mainly the lease of its own property.
     In the first half of 2021, the company achieved operating income of 391,633,800 yuan, up 30.24% year on
year; Operating profit was 8,552,400 yuan, up 115.69% year on year; Net profit was 7.023,100 yuan, up 121.86%
year on year. In the first half of the year, the operating income of industrial production was 366,572,800 yuan, up
30.37% year on year; the operating profit was 887,700 yuan, up 189.91% year on year; and the net profit was
814,400 yuan, up 198.77% year on year. Property leasing business in the first half of the year achieved operating
income of 250.61 million yuan, 34.01% more than the same period last year, operating profit of 756.35 million
yuan, 52.7% more than the same period last year, net profit of 6.1079 million yuan, 53.06% more than the same
period last year.

II. Core competitiveness analysis

    All industrial lands of the Company located in Shenzhen were taken into the first batch of plan under 2010
Shenzhen urban upgrade planning. In the future, development and operation of self-owned land resources would
become the income source of the Company on a long-term and stable basis.

III. Main business analysis

See the “I. Main businesses of the company in the reporting period”


Change of main financial data on a y-o-y basis
                                                                                                                         In RMB

                                                         Same period of last
                                 Current period                                  y-o-y changes (+,-)           Reasons
                                                                 year

                                                                                                       Video         incomes
    Operation income                391,633,808.55             300,703,421.38                 30.24%
                                                                                                       increased

    Operation cost                  334,523,805.25             263,959,652.63                 26.73%

                                                                                                       After-sales service fee
    Sales expenses                   14,094,617.96                9,100,079.39                54.88%
                                                                                                       increased

    Administrative
                                     22,680,307.24              17,082,362.66                 32.77%   Repair fee increased
    expenses

    Financial cost                     5,241,702.86               3,484,228.81                50.44%   Exchange increased



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                                                                                           SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                     SEMI-ANNUAL REPORT 2021

 Income tax expense                      1,584,720.39                    837,369.58                   89.25%    Profit growth

                                                                                                                Increase new products
 R&D investment                          3,955,647.50                   2,423,425.26                  63.23%
                                                                                                                in the Period

                                                                                                                The              inventory
 Net cash flow arising                                                                                          increased in the Period
 from operation                        -21,818,369.59               21,200,212.24                  -202.92%     due to the epidemic in
 activities                                                                                                     the first half year of
                                                                                                                last year

 Net cash flow arising
                                                                                                                Investment for fixed
 from investment                        -2,316,374.60               -1,338,379.56                    -73.07%
                                                                                                                assets increased
 activities

 Net cash flow arising
                                                                                                                Bank loans increased
 from financing                         23,182,219.89              -34,838,186.71                   166.54%
                                                                                                                in the period
 activities

                                                                                                                The    inventory         and
 Net increase of cash
                                        -1,355,867.36              -14,832,093.81                    -90.86%    account         receivable
 and cash equivalent
                                                                                                                increased

Major changes on profit composition or profit resources in reporting period
□ Applicable      √ Not applicable
No major changes on profit composition or profit resources occurred in reporting period
Constitution of operation income
                                                                                                                                    In RMB

                                       Current period                             Same period of lat year
                                                                                                                      Increase/decrease
                                                Ratio in operation                             Ratio in operation
                               Amount                                          Amount                                       y-o-y(+,-)
                                                        income                                      income

 Total operation
                             391,633,808.55                      100%        300,703,421.38                  100%                 30.24%
 income

 According to industries

 Display                     198,422,034.91                 50.67%           163,278,927.45                 48.63%                  4.21%

 Plastic injection
                             106,953,726.74                 27.31%            85,278,752.42                 28.36%                 -3.22%
 hardware

 Foam parts                   22,259,297.79                  5.68%            19,908,274.02                 6.62%                  -0.94%

 Property leasing             25,060,998.64                  6.40%            18,701,335.82                 6.22%                   0.18%

 Scrap income                 38,492,780.64                  9.83%            12,121,666.69                 4.03%                   5.80%

 Utilities and others             444,969.83                 0.11%              1,414,464.98                0.47%                  -0.36%

 According to products

 Display                     198,422,034.91                 50.67%           163,278,927.45                 48.63%                  4.21%

 Plastic injection           106,953,726.74                 27.31%            85,278,752.42                 28.36%                 -3.22%


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                                                                                       SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                 SEMI-ANNUAL REPORT 2021

 hardware

 Foam parts                   22,259,297.79               5.68%            19,908,274.02              6.62%                  -0.94%

 Property leasing             25,060,998.64               6.40%            18,701,335.82              6.22%                   0.18%

 Scrap income                 38,492,780.64               9.83%            12,121,666.69              4.03%                   5.80%

 Utilities and others            444,969.83                0.11%            1,414,464.98              0.47%                  -0.36%

 According to region

 Hong Kong and
                              95,569,502.38               22.37%        105,186,479.34               34.98%                 -12.61%
 Taiwan

 Central China               203,317,499.60               51.92%        136,683,631.65               45.45%                   6.67%

 East China                   87,594,449.15               22.37%           39,318,383.66             13.08%                   9.29%

 South China                   5,152,357.42               1.32%            19,514,926.73              6.49%                  -5.17%


The industries, products, or regions accounting for over 10% of the company’s operating revenue or operating profit


√Applicable □ Not applicable
                                                                                                                               In RMB

                                                                                                                   Increase/decrea
                                                                               Increase/decrea   Increase/decrea
                          Operation        Operation        Gross profit                                               se of gross
                                                                               se of operation   se of operation
                           income             cost              ratio                                                  profit ratio
                                                                                income y-o-y       cost y-o-y
                                                                                                                          y-o-y

 According to industries

 Display                198,422,034.91   181,998,855.63             8.28%             22.00%            19.00%                1.69%

 Plastic
 injection              106,953,726.74    96,354,708.77             9.91%             25.00%            22.00%                2.25%
 hardware

 According to products

 Display                198,422,034.91   181,998,855.63             8.28%             22.00%            19.00%                1.69%

 Plastic
 injection              106,953,726.74    96,354,708.77             9.91%             25.00%            19.00%                2.25%
 hardware

 According to region

 Hong Kong and
                         95,569,502.38    79,562,859.88            16.75%              -8.97%           -19.29%              10.62%
 Taiwan

 Central China          203,317,499.60   190,785,789.29             6.16%             67.15%            70.48%               -1.84%

 East China              87,594,449.15    80,998,643.40             7.53%            122.78%           120.08%                1.14%

 South China              5,152,357.42     6,030,530.61            -17.04%            -72.26%          195.58%             -106.06%

Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on
latest one year’s scope of period-end

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                                                                                   SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                             SEMI-ANNUAL REPORT 2021

□ Applicable √ Not applicable


Reasons for y-o-y relevant data with over 30% changes
√Applicable    □Not applicable

                                                                                              Y-o-y
                     Item                         2021-6-30                2021-1-1          changes             Causes
                                                                                              (+,-)
                                                                                                        Discounting of note
Note receivable                                           491,683.78        20,240,464.79        -98% receivable increased in
                                                                                                        the period
                                                                                                        Discounting of note
Receivable financing                                    5,774,948.69        10,057,385.11        -43% receivable increased in
                                                                                                        the period
                                                                                                        Current accounts
Other account receivable                            22,540,779.20            4,466,949.96       405%
                                                                                                        increased
                                                                                                        Inventory has
Inventory                                               129,877,952.00      70,166,013.49         85% significantly increased
                                                                                                        from Hengfa
                                                                                                        The input tax to be
Other current assets                                      741,380.21         4,255,643.19        -83%
                                                                                                        deducted declined
Long-term deferred expenses                               623,601.59            77,445.31       705% Contract renewal of SAP
                                                                                                        Loans of Hengfa
Short-term loans                                    51,089,579.00           12,527,808.00       308%
                                                                                                        increased
                                                                                                        Account received in
Contractual liabilities                                   765,555.97           287,140.66       167%
                                                                                                        advance increased
                                                                                                        Last year’s year-end
Wages payable                                           3,886,717.29         5,737,366.59        -32%
                                                                                                        bonus distributed
Interest payable                                          179,523.72            26,335.66       582% Loans increased
                                                                                                        Notes already endorsed
Other current liability                                   211,799.13        18,322,972.81        -99%
                                                                                                        and outstanding declined
                                                                                              Y-o-y
                     Item                       Jan.- Jun. 2021          Jan.- Jun. 2020     changes             Causes
                                                                                              (+,-)
Operation tax and surcharge                             1,428,361.92         1,004,056.05     42%       Additional tax increased
Interest income                                           189,945.55            11,856.69    1502%      Loan subsidies
Other income                                                 3,553.35          348,540.00     -99%      Government subsidy
                                                                                                        Wealth management
Investment income                                         149,767.58            66,780.40    124%
                                                                                                        income
Non-operation revenue                                     276,599.04            45,200.06    512%       Government subsidy
Non-operation expense                                     215,202.92              7,302.38   2847%      Penalty expenses




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                                                                                          SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                    SEMI-ANNUAL REPORT 2021

IV. Analysis of the non-main business

√Applicable □Not applicable
                                                                                                                               In RMB

                                                                                                            Whether be sustainable
                                Amount              Ratio in total profit    Description of formation
                                                                                                                    (Y/N)

 Investment
                                   149,767.58                     1.74%     Interest settlement         Y
 income
 Asset                                                                      Inventory reduction
                                  1,350,000.00                  15.67%                                  N
 impairment                                                                 provision

 Non-operation
                                   276,599.04                     3.21%     Government subsidy          N
 revenue

 Non-operation
                                   215,202.92                     2.50%     Penalty                     N
 expense


V. Assets and liability analysis

1. Major changes of assets composition

                                                                                                                               In RMB

                      End of the current period               End of last year

                                         Ratio in                            Ratio in     Ratio
                                                                                                        Notes of major changes
                        Amount            total             Amount             total     changes
                                          assets                              assets

 Monetary fund        59,612,186.22        8.85%          60,968,053.58          9.71%    -0.86%

 Account
                     135,750,939.59       20.16%        128,063,911.79        20.40%      -0.24%
 receivable

 Inventory           129,877,952.00       19.29%          70,166,013.49       11.18%       8.11%   Inventory from Hengfa increased

 Investment real
                      46,360,497.13        6.88%          47,224,662.27          7.52%    -0.64%
 estate

 Fixed assets        191,477,026.08       28.43%        193,605,444.53        30.84%      -2.41%

 Construction in
                         740,000.00        0.11%             740,000.00          0.12%    -0.01%
 process

 Short-term
                      51,089,579.00        7.59%          12,527,808.00          2.00%     5.59%   Loans increased in the period
 loans

 Contractual
                         765,555.97        0.11%             287,140.66          0.05%     0.06%
 liabilities

 Long-term
                      61,000,000.00        9.06%          61,000,000.00          9.72%    -0.66%
 loans



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                                                                   SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                             SEMI-ANNUAL REPORT 2021

2. Major foreign assets

□ Applicable   √ Not applicable


3. Assets and liability measured by fair value

□ Applicable   √ Not applicable


4. Assets right restriction till end of reporting period

Monetary fund                                                        42,990,989.02 Security deposit
Fixed assets                                                         12,375,571.51 Collateral for borrowing
Intangible assets                                                     6,752,967.68 Collateral for borrowing
Disposal of fixed assets                                             92,857,471.69 Court seizure
Investment real estate                                               11,503,400.02 Collateral for borrowing
Total                                                               166,480,399.92




VI. Investment analysis

1. Overall situation

□ Applicable √ Not applicable


2. The major equity investment obtained in the reporting period

□ Applicable √ Not applicable


3. The major non-equity investment doing in the reporting period

□ Applicable √ Not applicable


4. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable
The Company has no securities investment in the Period.


(2) Derivative investment

□ Applicable √ Not applicable
The Company has no derivatives investment in the Period.




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                                                                                       SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                 SEMI-ANNUAL REPORT 2021

VII. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicable
The Company had no sales of major assets in the reporting period.


2. Sales of major equity

□ Applicable √ Not applicable


VIII. Analysis of main holding company and stock-jointly companies

√Applicable □ Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over 10%
                                                                                                                           In RMB

  Company                            Main        Register         Total                     Operating    Operatin
                     Type                                                      Net assets                            Net profit
      name                          business      capital        assets                      revenue     g profit

                                  R&D,
                                  production
                                  and sales
 Hengfa
                                  of the        181,643,11     517,551,00      227,012,99   366,572,80   887,707.
 Technolog      Subsidiary                                                                                           813,963.14
                                  products as   1.00                  0.92           6.37         9.91         92
 y Company
                                  well as
                                  export
                                  business

                                  Leasing
 HUAFA                            and
                                                1,000,000.     6,324,584.                   2,914,794.   1,253,72
 Property       Subsidiary        manageme                                     421,786.50                           1,043,626.48
                                                00                        38                       33        7.86
 Company                          nt of own
                                  property

Particular about subsidiaries obtained or disposed in report period
□Applicable    √ Not applicable
Explanation of main holding company and stock-jointly companies
Nil


IX. Structured vehicle controlled by the Company

□ Applicable √Not applicable


X. Risks and countermeasures

(1) Business analysis

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                                                                          SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                    SEMI-ANNUAL REPORT 2021

Wuhan Hengfa Technology, as an important subsidiary of the company, is faced with increasing pressure under the
influence of intensifying market competition and tight supply of raw and auxiliary materials and other factors, the
key to solve the dilemma is to upgrade technology, enhance the added value of technology, and improve
profitability; In the context of downstream consumer demand upgrading, it improves production efficiency by
increasing the research and development of new products, adjusting and improving the product structure, and
improving the production process; At the same time, it expands upstream supply channels of raw and auxiliary
materials to avoid material shortage affecting production.


For a certain period of time, property leasing is still another important business for the development of the
company. Making full use of the self-owned property to provide operation, leasing and service businesses will
bring a certain contribution to the company's cash flow. After the gradual implementation of the urban renewal
project, it will bring long-term and stable sources of income for the company.


(2) Business plan
◆Industrial Business Upgrade

The epidemic of COVID-19 is not over yet, and all colleagues in the company continued to work hard to serve
existing customers, vigorously expanded the market, and gained more market share; Meanwhile, the Company
will intensify the development of raw & auxiliary materials suppliers in shortage within the market, try to avoid
the negative impact of upstream material shortage on the Company’s production. On the basis of maintaining
customers, actively looked for high-quality technology projects in consumer electronics, and gradually realized
industrial upgrading through technology optimization and management optimization; at the same time, it
strengthened management, improved production efficiency, improved product quality, and made full use of the
geographical advantages of the company to make the business bigger and stronger.


◆Promote the urban renewal project

Speed up the promotion of renewal unit project of Huafa District, Gongming Street, Guangming New District,
Shenzhen and the renewal project renovation progress of Huafa Building, Huaqiang North Street, Futian District,
Shenzhen, accelerate the settlement of project procedures, and strive to make stage progress as early as possible.

◆Continue to focus on strengthening the company’s internal control

In 2021, the company will further optimize the corporate governance structure and improve the internal control
system and process and strictly implement and improve the executive ability of relevant system in accordance
with the governance requirements of listed companies, the company’s management and relevant departments will
execute the administrative provisions for approval procedures of fund utilizing, management system of related
transactions, working system of internal audit, internal reporting system of major information in strict accordance
with the requirements of internal control documents.




16
                                                                                       SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                 SEMI-ANNUAL REPORT 2021




                                  Section IV Corporate Governance

I. In the report period, the Company held annual general meeting and extraordinary
shareholders’ general meeting

1. Shareholders’ General Meeting in the report period


                                   Ratio of investor                       Date of
 Session of meeting       Type                              Date                                         Resolutions
                                     participation                        disclosure

                                                                                          Juchao
                                                                                          Website(http://www.cninfo.com.cn/new/
                                                                                                   disclosure/detail?plate=szse&org
 Annual General
                        AGM                  48.98%    20 May 2021      21 May 2021                Id=gssz0000020&stockCode=00
 Meeting of 2020
                                                                                                   0020&announcementId=120784
                                                                                                   5176&announcementTime=2020
                                                                                                   -05-22)


2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□ Applicable √ Not applicable


II. Changes of directors, supervisors and senior executives

□ Applicable √ Not applicable
Directors, supervisors and senior executives of the Company has no changes during the reporting period, found more in the Annual
Report of 2020.


III. Profit distribution plan and capitalizing of common reserves plan for the Period

□ Applicable √ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the midterm.


IV. Implementation of the company’s stock incentive plan, employee stock ownership plan or
other employee incentives

□ Applicable √ Not applicable
The Company had no stock incentive plan, employee stock ownership plan or other employee incentive in the reporting period.




17
                                                                                       SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                 SEMI-ANNUAL REPORT 2021




                    Section V. Environmental and Social Responsibility

I. Important environmental issues

The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department

□ Yes √No


Administrative penalties imposed for environmental issues during the reporting period

                                                                                            Impact on the
     The company or       Reasons for                                                       production &          Corrective
                                                   Violations        Penalty results
       subsidiary            penalty                                                      operation of listed         measures
                                                                                               company

 N/A                   N/A                   N/A                  N/A                    N/A                    N/A

Other environmental information disclosed with reference to the key emission units
N/A
Reasons for not disclosed other environmental information
N/A


II. Social responsibility

Not applicable




18
                                                                                     SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                               SEMI-ANNUAL REPORT 2021




                                      Section VI. Important Matters

I. Commitments that the actual controller, shareholders, related party, offeror and committed party as the
Company etc. have fulfilled during the reporting period and have not yet fulfilled by the end of reporting
period

□Applicable    √Not applicable
During the reporting period of the company, there are no commitments made by the actual controller, shareholders, related parties,
purchasers and the company that have been completed in the reporting period or have not been completed by the end of the reporting
period.


II. Non-operational fund occupation from controlling shareholders and its related party

□ Applicable √ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.


III. Guarantee outside against the regulation


□Applicable √Not applicable
No guarantee outside against the regulation in Period.


IV. Appointment and non-reappointment (dismissal) of CPA


Whether the financial report has been audited or not
□Yes √no
The company's semi-annual report has not been audited.


V. Explanation from Board of Directors and Supervisory Committee for “Qualified Opinion”
that issued by CPA

□ Applicable √Not applicable


VI. Explanation from the Board for “Qualified Opinion” of last year’s

□ Applicable √Not applicable


VII. Bankruptcy reorganization

□ Applicable    √Not applicable
No bankruptcy reorganization for the Company in reporting period



19
                                                                                              SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                        SEMI-ANNUAL REPORT 2021

VIII. Lawsuits

Significant lawsuits and arbitration
√Applicable        □Not applicable
                    Amoun
                      t of     Predicte                    The results
     The basic
                    money           d      Advances in     and effects      Execution of the
     situation of                                                                                    Disclosure
                    involve    liabiliti     litigation    of litigation         litigation                          Disclosure index
      litigation                                                                                         date
                    d (in 10      es       (Arbitration)   (Arbitration         (Arbitration)
 (Arbitration)
                    thousan     (Y/N)                            )
                    d Yuan)
                                                                           In         September
 In September                                                              2018,       Shenzhen
 2016, Wuhan                                                               Vanke applied for
 Zhongheng
                                                                           compulsory
 Group Co.,                                                                execution.           In
 Ltd. and the                                                              October 2019, due
 Company                                                                   to the outsider's
                                           Ruling on 16
 and                                                                       application          of
                                           August
 Shenzhen                                                                  "objection           to                http://www.cninfo.com
                                           2017; put
 Vanke were                                                                execution"         and                 .cn/cninfo-new/disclos
                                           forward the
 applied for                                                               "non-enforcement                       ure/szse_main/bulletin
                                           application
 arbitration                                                               ", the execution                       _detail/true/12044066
                                           for
 due to the                                                Found more      procedure          was                 06?announceTime=20
                                           dismantling
 dispute case                                              in              terminated. If the                     18-02-09 ;
                                           by the                                                    2018-02-0
 of “Contract      46,460     No                          announcem       outsider's                             http://www.cninfo.com
                                           Company                                                   9
 for the                                                   ent of the      application        was                 .cn/new/disclosure/det
                                           and
 Cooperative                                               Company         rejected     by     the                ail?plate=szse&stockC
                                           controlling
 Operation of                                                              Shenzhen                               ode=000020&announc
                                           shareholder,
 the Old                                                                   Intermediate                           ementId=1205326846
                                           the
 Projects at                                                               People’s     Court,                   &announcementTime=
                                           application
 Huafa                                                                     Shenzhen       Vanke                   2018-08-25
                                           was rejected
 Industrial                                                                would have the
                                           by the court
 Park,                                                                     right to continue
 Gongming                                                                  to apply for the
 Street,                                                                   resumption           of
 Guangming                                                                 compulsory
 New                                                                       execution.
 District”.


 In March                                  The second                                                             http://www.cninfo.com
 2016, the                                 trial decides                   Execution                              .cn/cninfo-new/disclos
                                                           Execution                                 2016-09-1
 Company            947.26     No          the                             completed in                           ure/szse_main/bulletin
                                                           completed                                 4
 and HUAFA                                 Company                         March 2021                             _detail/true/12027024
 Property suit                             wins the                                                               23?announceTime=20

20
                                                                                   SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                             SEMI-ANNUAL REPORT 2021

 against                           lawsuit on                                                        16-09-14 07:41
 Shenzhen                          15 March
 Huayongxing                       2018, and
 Environment                       has applied
 al                                for
 Technology                        enforcement
 Co., Ltd.,
 and
 Shenzhen
 Yidaxin
 Technology
 Co., Ltd. for
 contract
 violation and
 refuse to
 move the site

 Application
 for
 arbitration in
 case of
 contract
 dispute
                                                      A decision                                     http://www.cninfo.com
 between the
                                                      was issued                                     .cn/new/disclosure/det
 V&T                               Arbitration
                                                      and the                                        ail?plate=szse&stockC
 (Shenzhen)                        has been                          Under               2018-11-1
                    1,940.2   No                      Company’s                                     ode=000020&announc
 Law Firm                          heard for                         implementation      4
                                                      motion to                                      ementId=1205602053
 and                               adjudication
                                                      dismiss was                                    &announcementTime=
 Shenzhen
                                                      denied.                                        2018-11-14
 Zhongheng
 Huafa Co.,
 Ltd. and
 Wuhan
 Zhongheng
 Group

 Shenzhen                          The
 Zhongheng                         judgment
                                                                                                     http://www.cninfo.com
 Huafa                             (2020)      Yue
                                                      Semiconduc                                     .cn/new/disclosure/det
 Semiconduct                       03 Min Chu
                                                      tor                                            ail?stockCode=000020
 or Co., Ltd                       No.17       was                                       2021-06-0
                     5,200    No                      Company        Trial in progress               &announcementId=12
 bring a suit                      issued        in                                      3
                                                      has filed an                                   10151395&orgId=gssz
 against                           May      2021,
                                                      appeal                                         0000020&announcem
 Shenzhen                          all claims of
                                                                                                     entTime=2021-06-03
 Zhongheng                         Semiconduct
 Huafa       Co.,                  or Company

21
                                                                                            SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                      SEMI-ANNUAL REPORT 2021

      Ltd for the                              were
      ownership                                rejected
      transfer,
      performance
      of          asset
      replacement
      contract and
      compensatio
      n



     Other lawsuits
     □Applicable √ Not applicable


     IX. Penalty and rectification

     □Applicable √ Not applicable
     The Company has no penalty and rectification in the period


     X. Integrity of the company and its controlling shareholders and actual controllers

     □ Applicable √Not applicable


     XI. Major related transaction

     1. Related transaction with routine operation concerned

     √Applicable □ Not applicable
                                                                                            Wh
                                                                                            eth
                                                                                            er
                                                                                   Tradi    ove
                                                                  Relat             ng       r
                                                                                                   Clea
                                                                     ed    Prop
                                                                                   limit    the     ring
                                                          Relat   transa   ortio                                                Date    Index
                                  Conte                                                            form
                      Type of                               ed     ction    n in   appro    app
Relat      Relat                   nt of                                                             for    Available similar    of      of
                       related               Pricing      trans   amou     simil
 ed        ionsh                 related                                            ved     rov    relat
                      transact              principle     actio   nt (in     ar                               market price      discl   disclo
party        ip                  transac                                                             ed
                         ion                                n       10     trans   (in 10   ed
                                   tion                                                            trans                        osure   sure
                                                          price   thous    actio
                                                                                   thousa   lim    actio
                                                                    and      ns
                                                                                                      n
                                                                  Yuan)             nd      ited
                                                                                   Yuan)    or
                                                                                            not
                                                                                            (Y/
                                                                                            N)

HK         Unde      Purchas     Purcha    Synchroniz     3,77    3,775            15,69    N      Tele    The average



     22
                                                                              SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                        SEMI-ANNUAL REPORT 2021

Yutia         r     e of raw   sing     ed with the    5.18     .18    7.92       grap    market price refers
n             the   material   LCD      market                                    hic     to the price of
              sa    s from     monito                                             trans   same
              me    related    rs                                                 fer     specifications
              co    parties                                                               which is searched
              ntr                                                                         from through the
              ol                                                                          world famous
                                                                                          professional
                                                                                          market survey
                                                                                          company website
                                                                                          http://www.witsvie
                                                                                          w.com recognized
                                                                                          authority in the
                                                                                          industry and LCD
                                                                                          professional
                                                                                          market survey
                                                                                          company website
                                                                                          http://www.witsvie
                                                                                          w.com

                                        In
                                        principle,
                                        the
                                        transaction
                                        price of
                                        purchased
                                        raw
                                        materials is
                                        determined
                                        at
                    Purchas
Heng     Unde                  Purcha   approximat                                Tele
                    e of raw
sheng    r the                 sing     ely 1%                                    grap
                    material                           5,06   5,066   13,08
Photo    same                  LCD      lower than                            N   hic     Ditto
                    s from                             6.05     .05     1.6
-elect   contr                 monito   the                                       trans
                    related
ricity   ol                    rs       prevailing                                fer
                    parties
                                        average
                                        market
                                        price, with
                                        reference
                                        to the
                                        respective
                                        bargaining
                                        power of
                                        both
                                        parties.

    23
                                                                                       SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                 SEMI-ANNUAL REPORT 2021

                                       Base        on
                                       the
                  Purchas              customer
Heng      Unde    e of       Purcha    purchase                                             Tele
sheng     r the   finished   se of     order price                                          grap
                                                        984.     984.8        6,540.
Photo     same    goods      LCD       and reduce                                      N    hic     Ditto
                                                        89          9             8
-elect    contr   from       displa    1 yuan per                                           trans
ricity    ol      related    y         unit        as                                       fer
                  parties              operation
                                       fee



                                       Determine
          Unde    Sales of   Sales                                                          Tele
                                       d on the
HK        r the   product    of                                                             grap
                                       basis of the     6,21     6,210        19,62
Yutia     same    s to       LCD                                                       N    hic     Ditto
                                       customer’s      0.03       .03          2.4
n         contr   related    displa                                                         trans
                                       sales order
          ol      parties    y                                                              fer
                                       price

                                       Determine
Heng      Unde    Sales of   Sales                                                          Tele
                                       d on the
sheng     r the   product    of                                                             grap
                                       basis of the     1,56     1,561        6,540.
Photo     same    s to       LCD                                                       N    hic     Ditto
                                       customer’s      1.22       .22            8
-elect    contr   related    displa                                                         trans
                                       sales order
ricity    ol      parties    y                                                              fer
                                       price

                             Releva
                             nt
                             produc
                             ts of     Determine
Heng      Unde    Sales of                                                                  Tele
                             LCD       d on the
sheng     r the   product                                                                   grap
                             display   basis of the     126.     126.0        654.0
Photo     same    s to                                                                 N    hic     Ditto
                             ,         customer’s      07          7             8
-elect    contr   related                                                                   trans
                             plastic   sales order
ricity    ol      parties                                                                   fer
                             injecti   price
                             on
                             hardw
                             are

                                       Determine
Heng      Unde    Sales of                                                                  Tele
                                       d on the
sheng     r the   product                                                                   grap
                             LCD       basis of the     44.6                  457.8
Photo     same    s to                                           44.69                 N    hic     Ditto
                             glass     customer’s      9                         6
-elect    contr   related                                                                   trans
                                       sales order
ricity    ol      parties                                                                   fer
                                       price

Total                                         --            --   17,76   --   62,59    --    --             --   --        --



     24
                                                                                            SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                      SEMI-ANNUAL REPORT 2021

                                                                  8.13               5.46
Detail of sales return with major
                                          N/A
amount involved

                                          In the reporting, Hengfa Technology purchased LCD monitors from HK Yutian with US $ 5.6445
                                          million approximately, 23.52% of the annual amount predicted at the beginning of the year; purchased
                                          LCD monitor from Hengsheng Photo-electricity with US $ 6.9138 million approximately, 34.57% of
Report the actual implementation of
                                          the annual amount predicted at the beginning of the year; purchasing LCD Display from Hengsheng
the daily related transactions which
                                          Photo-electricity with about US$ 1.339 million, 13.39% of the annual amount predicted at the
were projected about their total
                                          beginning of the year; sold LCD Display whole machine to HK Yutian with US$ 9.5462 million
amount    by      types    during   the
                                          approximately, 31.82% of the annual amount predicted at the beginning of the year; sold LCD display
reporting period(if applicable)
                                          to Hengsheng Photo-electricity with about US$ 1.4541 million, 14.54% of the annual amount
                                          predicted at the beginning of the year; and sold LCD glass to Hengsheng Photo-electricity   with
                                          about US$ 68100, 9.73% of the annual amount predicted at the beginning of the year
Reasons    for     major    differences
between trading price and market          N/A
reference price


    2. Related transactions by assets acquisition and sold

    □Applicable      √Not applicable
    No above mentioned transactions occurred


    3. Main related transactions of mutual investment outside

    □ Applicable     √ Not applicable
    No main related transactions of mutual investment outside for the Company in reporting period.


    4. Contact of related credit and debt

    □ Applicable     √ Not applicable
    No contact of related credit and debt during the reporting period.

    5. Contact with the related finance companies and finance companies that controlled by the Company

    □ Applicable    √ Not applicable
    There are no deposits, loans, credits or other financial business between the Company and the finance companies with related
    relationships or between the finance companies controlled by the Company and related parties


    6. Other significant related transactions

    □ Applicable     √ Not applicable
    The company had no other significant related transactions in reporting period.




    25
                                                                                        SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                  SEMI-ANNUAL REPORT 2021

XII. Significant contract and implementations

1. Trusteeship, contract and leasing

(1) Trusteeship

□ Applicable    √ Not applicable
No trusteeship for the Company in reporting period.


(2) Contract

□ Applicable    √ Not applicable
No contract for the Company in reporting period.


(3) Leasing

□ Applicable    √ Not applicable
No leasing for the Company in reporting period.


2. Major guarantees

√Applicable □ Not applicable
                                                                                                                   In 10 thousand Yuan

                     Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)
  Name of       Related                                                                       Count                         Guaran
                                            Actual
     the        Announc                                  Actual                                 er                Implem     tee for
                              Guarante      date of                  Guarante    Collateral            Guarant
 Company         ement                                 guarantee                              guara                 ented    related
                               e limit     happenin                   e type      (if any)              ee term
 guarantee      disclosur                                 limit                               ntee(i               (Y/N)     party
                                               g
        d        e date                                                                       f any)                         (Y/N)

                                             Guarantee of the Company and the subsidiaries
  Name of       Related                                                                       Count                         Guaran
                                            Actual
     the        Announc                                  Actual                                 er                Implem     tee for
                              Guarante      date of                  Guarante    Collateral            Guarant
 Company         ement                                 guarantee                              guara                 ented    related
                               e limit     happenin                   e type      (if any)              ee term
 guarantee      disclosur                                 limit                               ntee(i               (Y/N)     party
                                               g
        d        e date                                                                       f any)                         (Y/N)

 Wuhan
                                                                    Joint and
 Hengfa
                2021-04-                                            several
 Technolo                        30,000                                                                1 year     N         Y
                27                                                  liability
 gy Co.,
                                                                    guarantee
 Ltd.
 Total      amount      of                             Total amount of actual
 approving      guarantee                    30,000    occurred guarantee for                                               3,480.09



26
                                                                                               SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                         SEMI-ANNUAL REPORT 2021

 for       subsidiaries      in                           subsidiaries in report
 report period (B1)                                       period (B2)
 Total        amount      of                              Total balance of actual
 approved         guarantee                               guarantee               for
 for subsidiaries at the                        30,000    subsidiaries at the end                                                  2,788.96
 end         of   reporting                               of     reporting    period
 period (B3)                                              (B4)

                                               Guarantee of the subsidiaries for the subsidiaries
  Name of          Related                                                                           Count              Comple
                                              Actual                                                                               Guaran
       the        Announc                                   Actual                                    er                   te
                                  Guarante    date of                    Guarante       Collateral            Guarant               tee for
 Company           ement                                  guarantee                                  guara              implem
                                   e limit   happenin                        e type      (if any)             ee term               related
 guarantee        disclosur                                    limit                                 ntee(i             entation
                                                 g                                                                                  party
       d            e date                                                                           f any)              or not

                             Total amount of guarantee of the Company (total of three above mentioned guarantee)
                                                          Total amount of actual
 Total amount of approving
                                                          occurred guarantee in
 guarantee in report period                     30,000                                                                             3,480.09
                                                          report              period
 (A1+B1+C1)
                                                          (A2+B2+C3)
                                                          Total balance of actual
 Total amount of approved
                                                          guarantee at the end of
 guarantee at the end of report                 30,000                                                                             2,788.96
                                                          report              period
 period (A3+B3+C2)
                                                          (A4+B4+C4)

 The proportion of the total amount of actually
 guarantee in the net assets of the Company (that                                                                                    8.12%
 is A4+ B4+C4)

 Including:

Explanation on compound guarantee


3.Trust financing


□Applicable √Not applicable
No trust financing occurred in the reporting period


4.Material contracts for daily operations

□ Applicable       √ Not applicable


5. Other material contracts

□ Applicable       √ Not applicable
No other material contracts for the Company in reporting period.




27
                                                                         SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                   SEMI-ANNUAL REPORT 2021

XIII. Explanation on other significant events

√ Applicable □ Not applicable
(i) The Company signed Asset Exchange Contract with Wuhan Zhongheng New Science & Technology Industrial
Group Co., Ltd (hereinafter referred to as Wuhan Zhongheng Group) on 29 April 2009 (details were referred to in
the announcement dated 30 April 2009), and pursuant to the contract, since part of the assets of the Company
(namely two parcel of industrial lands located at Huafa road, Gongming town, Guangming new district, Shenzhen
(the property certificate No. were SFDZ No.7226760 and SFDZ No.7226763, No. of parcels were A627-005
andA627-007, and the aggregate area was 48,200 sq.m) were the lands listed in the first batch of plan for 2010
Shenzhen urbanization unit planning preparation plan. For promotion of such urbanization project and joint
cooperation, the Company has not completed the transfer procedures in respect of the aforesaid land.


The Company convoked the first extraordinary meeting of the Board in 2015 on February 16, 2015 and the first
extraordinary general meeting of the Board in 2015 on March 4, 2015, which considered and approved the
“Motion on promoting and implementing the urban renewal project for the renewal units of Huafa area at
Gongming street, Guangming new district, Shenzhen”, specified that the Company and Wuhan Zhongheng Group
shall obtain the corresponding compensatory consideration for removal from the respectively owned project plots
and the respectively contributed and constructed above-ground buildings before the land development, it is
estimated that the compensatory consideration obtained by the Company accounts for 50.5% of the total
consideration and Wuhan Zhongheng Group accounts for 49.5% by calculation.


The sixth extraordinary meeting of the board of directors in 2015 and the third extraordinary general meeting of
2015 have considered and adopted the “Proposal on the project promotion and implementation of urban renewal
and the progress of related transactions of ‘the updated units at Huafa Area, Gong Ming Street, Guangming New
District, Shenzhen’”, the company has signed the “Agreement on the cooperation of urban renewal project of the
updated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”, “Contract for the
cooperative venture of reconstruction project for Huafa Industrial Park, Gong Ming Street, Guangming New
District” on 26 August 2015, and “Agreement on housing acquisition and removal compensation and resettlement”
with Wuhan 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 12 September 2016, Shenzhen Vanke applied for arbitration in respect of “Agreement on the cooperation of
urban renewal project of the updated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”
against the Company and Wuhan Zhongheng Group. Shenzhen Court of International Arbitration (SCIA) has
given a ruling in August 2017. On August 29, 2018, the court accepted the compulsory execution application of
Shenzhen Vanke. In October 2019, as a number of outsiders filed an “execution objection” and applied for “no
execution” to Shenzhen Intermediate People’s Court, the Shenzhen Intermediate People’s Court ruled to terminate
the enforcement procedure on March 20, 2020. If the “execution objection” and “no execution” proposed by

28
                                                                           SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                     SEMI-ANNUAL REPORT 2021

outsiders are rejected according to law, Shenzhen Vanke may continue to apply to the Shenzhen Intermediate
People’s Court to resume execution. In April 2020, Zhongheng Semiconductor sued the company to Shenzhen
Intermediate People’s Court, and requested the company to transfer the above mentioned two pieces of lands and
compensate the economic loss of 52 million yuan, the company received the first trial verdict in the case in May
2021. and the company appealed to the supreme people’s court against the judgment, which has not yet entered
into force. Progress of the case found more in the Notices released on Juchao website dated 14 Sept. 2016, 1 Nov.
2016, 16 Nov. 2016, on 18 Feb. 2017, 24 March 2017, 25 April 2017, 1 July 2017, 18 August 2017, 9 Feb. 2018,
25 Aug. 2018, 7 Sept. 2018, 21 Apr. 2020, 3 Jun, 2021 and 22 Jul. 2021 respectively.


(ii) On 31 December 2015, the 88,750,047 shares held by Wuhan Zhongheng Group, are pledge to China
Merchants Securities Assets Co., Ltd. with due date of 31 December 2016. On 1 Feb. 2016, Wuhan Zhongheng
Group pledge the 27,349,953 shares held to China Merchants Securities Assets Co., Ltd. with due date of 31
December 2016. The above-mentioned pledged shares are deferred by Wuhan Zhongheng Group; pledge expired
on 31 December 2017. The trading day for repurchase put off to the date when pledge actually removed. Till end
of this period released, controlling shareholder still not removed the pledge and the Company has apply by letter,
relevant Notice of Presentment on Stock Pledge from Controlling Shareholder was released. Found more in notice
released on Juchao website date 2 Feb. 2018.


(iii) The controlling shareholder Wuhan Zhongheng Group holds 119,289,894 shares of the Company’ stock,
accounting for 42.13% of the total share capital of the Company, of which 116,489,894 shares were judicially frozen
by Shenzhen Intermediate People's Court (hereinafter referred to as "Shenzhen Intermediate Court") on September
27, 2016, which were frozen again by the Shenzhen Intermediate People's Court on December 14, 2018, with a
frozen period of 36 months; the remaining 2,800,000 shares were frozen by the Shenzhen Intermediate People's
Court on May 29, 2019, and were frozen again by the Higher People’s Court of Guangdong Province on July 5,
2019. For details, please refer to the company’s announcements published on Juchao Website dated October 27,
2016, January 11, 2019, May 31, 2019 and August 7, 2019.


(iv)Wuhan Zhongheng Group received the first-instance judgment of Guangdong Higher People’s Court to the
“pledged securities repurchase dispute” case sued by China Merchants Securities Asset Management Co., Ltd. in
March 2021. Wuhan Zhongheng Group refused to accept the judgment and has appealed to the Supreme People's
Court, the judgment of first instance has not yet taken effect. For details, please refer to the company
announcement (“progress of the major litigation and arbitration cases of the controlling shareholder”)issued by the
company on www.cninfo.com.cn on March 19, 2021.


(v) On September 29, 2016, the company and its controlling shareholder, Wuhan Zhongheng Group, signed the
“Agency Contract” with V&T Law Firm. On October 8, 2016, the three parties also signed the “Supplemental
Agreement for Agency Contract”, it was agreed that V&T acted as an agent for the company and Wuhan
Zhongheng Group to deal with the arbitration case with Shenzhen Vanke. After losing the lawsuit, due to


29
                                                                         SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                   SEMI-ANNUAL REPORT 2021

differences in the payment of attorney fees, V&T sued our company and Wuhan Zhongheng Group to the
Shenzhen Court of International Arbitration, and applied to the court to seize a bank account under our company’s
name and part of our company dormitories, please refer to “Other Announcements on the Progress Involving
Litigation and Arbitration” (Announcement Numbers: 2018-43, 2019-02) released on Juchao Website dated
November 14, 2018 and March 6, 2019. The Shenzhen Court of International Arbitration ruled that the company
and Wuhan Zhongheng Group paid the corresponding fees. The loss of the arbitrament in this case was borne by
Wuhan Zhongheng Group in whole, and found more on “Other Announcements on the Progress Involving
Litigation and Arbitration” (Announcement No.: 2019-34) released on Juchao Website dated November 25, 2019.




XIV. Significant event of subsidiary of the Company

□ Applicable √Not applicable




30
                                                                                                SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                          SEMI-ANNUAL REPORT 2021




   Section VII. Changes in Shares and Particulars about Shareholders

I. Changes in Share Capital

1. Changes in Share Capital

                                                                                                                                     In Share

                                   Before the Change             Increase/Decrease in the Change (+, -)               After the Change

                                                                                    Public
                                                            New                     reserve
                                                 Proporti             Bonus                                                        Proportio
                                    Amount                  shares                  transfer       Others Subtotal   Amount
                                                   on                 shares                                                          n
                                                            issued                 into share
                                                                                    capital

I. Restricted shares                         0     0.00%          0            0               0        0        0            0       0.00%

 1. State-owned shares

 2. State-owned legal
person’s shares

 3. Other domestic shares

  Including: Domestic
legal person’s shares

     Domestic natural
person’s shares

 4. Foreign shares

  Including: Foreign legal
person’s shares

     Foreign natural
person’s shares

II. Unrestricted shares             283,161,227 100.00%           0            0               0        0        0   283,161,227 100.00%

 1. RMB ordinary shares             181,165,391 63.98%            0            0               0        0        0   181,165,391    63.98%

 2. Domestically listed
                                    101,995,836 36.02%            0            0               0        0        0   101,995,836    36.02%
foreign shares

 3. Overseas listed foreign
shares

 4. Others

III. Total shares                   283,161,227 100.00%           0            0               0        0        0   283,161,227 100.00%

Reasons for share changed
□ Applicable       √ Not applicable

                                                                                                                                           31
                                                                                         SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                   SEMI-ANNUAL REPORT 2021

Approval of share changed
□ Applicable    √ Not applicable
Ownership transfer of share changed
□ Applicable    √ Not applicable
Progress of shares buy-back
□ Applicable    √ Not applicable
Implementation progress of reducing holdings of shares buy-back by centralized bidding
□ Applicable    √ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□ Applicable    √ Not applicable
Other information necessary to disclose or need to disclosed under requirement from security regulators
□ Applicable    √ Not applicable


2. Changes of lock-up stocks

□ Applicable    √ Not applicable


II. Securities issuance and listing

□ Applicable    √ Not applicable


III. Amount of shareholders of the Company and particulars about shares holding

                                                                                                                                    In Share

                                                                Total preference shareholders with
Total common stock
                                                                voting rights recovered at end of
shareholders in reporting                             20,986                                                                            0
                                                                reporting period (if applicable) (see
period-end
                                                                note 8)

                 Particulars about common shares held above 5% by shareholders or top ten common shareholders

                                                                            Amount                      Information of shares pledged,
                                                Amount of
                                                                               of        Amount of               tagged or frozen
                                     Proporti    common         Chang
                                                                            restricte     common
 Full name of        Nature of        on of     shares held         es in
                                                                               d         shares held
 Shareholders      shareholder       shares     at the end of   report                                    State of
                                                                            common        without                           Amount
                                      held       reporting      period                                     share
                                                                            shares       restriction
                                                   period
                                                                              held

                   Domestic                                                                             Pledged            116,100,000
Wuhan
                   non-state-o
Zhongheng                            42.13%     119,289,894     0                    0   119,289,894
                   wned legal                                                                           Frozen             119,289,894
Group
                   person




                                                                                                                                            32
                                                                                        SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                  SEMI-ANNUAL REPORT 2021

SEG (HONG             Overseas                                                                        Pledged                     0
KONG) CO.,            legal             5.85%      16,569,560    0                0     16,569,560
                                                                                                      Frozen                      0
LTD.                  person

GOOD HOPE                                                                                             Pledged                     0
                      Overseas
CORNER
                      legal             2.50%       7,072,000    0                0       7,072,000
INVESTMENT                                                                                            Frozen                      0
                      person
S LTD.

Changjiang                                                                                            Pledged                     0
Securities            Overseas
Brokerage             legal             1.89%       5,355,249    0                0       5,355,249
                                                                                                      Frozen                      0
(Hong Kong)           person
Co., Ltd.

Guoyuan                                                                                               Pledged                     0
Securities            Overseas
Brokerage             legal             1.37%       3,870,117    0                0       3,870,117
                                                                                                      Frozen                      0
(Hong Kong)           person
Limited

                      Overseas                                                                        Pledged                     0
Li Zhongqiu           nature            1.00%       2,830,000    0                0       2,830,000
                                                                                                      Frozen                      0
                      person

China                                                                                                 Pledged                     0
                      State-owne
Merchants
                      d legal           0.85%       2,394,018    0                0       2,394,018
Securities Hong                                                                                       Frozen                      0
                      person
Kong Co., Ltd.

                      Domestic                                                                        Pledged                     0
Li Wei                nature            0.58%       1,638,100    0                0       1,638,100
                                                                                                      Frozen                      0
                      person

                      Domestic                                                                        Pledged                     0
Xu Xinfen             nature            0.56%       1,585,300    0                0       1,585,300
                                                                                                      Frozen                      0
                      person

                      Domestic                                                                        Pledged                     0
LI SHERYN
                      nature            0.51%       1,446,100    0                0       1,446,100
ZHAN MING                                                                                             Frozen                      0
                      person

Strategy investor or general
legal person becoming the top
10 common shareholders by             N/A
placing new shares (if
applicable) (see note 3)

Explanation      on    associated     Among the top ten shareholders, Li Zhongqiu is the actual controller of Wuhan Zhongheng New
relationship      among         the   Technology Industry Group Co., LTD., and belongs to a man of concerted action. It is not known
aforesaid shareholders                whether other shareholders of the company are related to each other, or whether they belong to


                                                                                                                                       33
                                                                                      SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                SEMI-ANNUAL REPORT 2021

                                    the concerted action stipulated in the "Management Measures for Disclosure of Information
                                    about Changes in Shareholders' Shareholding of Listed Companies".

Description of the above
shareholders in relation to
delegate/entrusted voting           N/A
rights and abstention from
voting rights.

Special note on the repurchase
account among the top 10
                                    N/A
shareholders (if applicable)
(see note 11)

                               Particular about top ten shareholders with un-lock up common stocks held

                                     Amount of common shares held without restriction at                  Type of shares
       Shareholders’ name
                                                          Period-end                                   Type            Amount

                                                                                              RMB common
Wuhan Zhongheng Group                                                          119,289,894                             119,289,894
                                                                                              share

                                                                                              Domestically
SEG (HONG KONG) CO.,
                                                                                16,569,560    listed foreign               16,569,560
LTD.
                                                                                              shares

                                                                                              Domestically
GOOD HOPE CORNER
                                                                                 7,072,000    listed foreign                7,072,000
INVESTMENTS LTD.
                                                                                              shares

Changjiang Securities                                                                         Domestically
Brokerage (Hong Kong) Co.,                                                       5,355,249    listed foreign                5,355,249
Ltd.                                                                                          shares

                                                                                              Domestically
Guoyuan Securities Brokerage
                                                                                 3,870,117    listed foreign                3,870,117
(Hong Kong) Limited
                                                                                              shares

                                                                                              Domestically
Li Zhongqiu                                                                      2,830,000    listed foreign                2,830,000
                                                                                              shares

                                                                                              Domestically
China Merchants Securities
                                                                                 2,394,018    listed foreign                2,394,018
Hong Kong Co., Ltd.
                                                                                              shares

                                                                                              Domestically
Li Wei                                                                           1,638,100    listed foreign                1,638,100
                                                                                              shares

                                                                                              RMB common
Xu Xinfen                                                                        1,585,300                                  1,585,300
                                                                                              share

LI SHERYN ZHAN MING                                                              1,446,100    Domestically                  1,446,100


                                                                                                                                    34
                                                                                          SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                    SEMI-ANNUAL REPORT 2021

                                                                                                 listed foreign
                                                                                                 shares

Expiation on associated
relationship or consistent
                                     Among the top ten shareholders, Li Zhongqiu is the actual controller of Wuhan Zhongheng New
actors within the top 10
                                     Technology Industry Group Co., LTD., and belongs to a man of concerted action. It is not known
un-lock up common
                                     whether other shareholders of the company are related to each other, or whether they belong to
shareholders and between top
                                     the concerted action stipulated in the "Management Measures for Disclosure of Information
10 un-lock up common
                                     about Changes in Shareholders' Shareholding of Listed Companies".
shareholders and top 10
common shareholders

Explanation on top 10
common shareholders                  Among the top ten shareholders, Xu Xin Fen holds 400,400 shares through the general account
involving margin business (if        and 1184,900 shares through the credit securities account, for a total of 1585,300 shares.
applicable) (see note 4)

Whether top ten common stock shareholders or top ten common stock shareholders with un-lock up shares held have a buy-back
agreement dealing in reporting period
□ Yes √ No
The top ten common stock shareholders or top ten common stock shareholders with un-lock up shares held of the Company have no
buy-back agreement dealing in reporting period.


IV. Changes of shares held by directors, supervisors and senior executives

□ Applicable    √ Not applicable
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report
2020.


V. Changes in controlling shareholders or actual controllers

Change of controlling shareholder during the reporting period
□ Applicable      √ Not applicable
The Company had no change of controlling shareholder during the reporting period
Change of actual controller during the reporting period
□ Applicable      √ Not applicable
The Company had no change of actual controller during the reporting period




                                                                                                                                      35
                                                             SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                       SEMI-ANNUAL REPORT 2021




                                     Section VIII. Preferred Stock

□ Applicable   √ Not applicable
The Company had no preferred stock in the Period.




                                                                                            36
                                                          SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                    SEMI-ANNUAL REPORT 2021




                                    Section IX. Corporate Bonds

□ Applicable   √ Not applicable




                                                                                         37
                                                                         SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                   SEMI-ANNUAL REPORT 2021




                                          Section X. Financial Report

I. Audit report

Whether the semi annual report is audited
□ Yes √ No
The company's semi annual financial report has not been audited


II. Financial Statement

Statement in Financial Notes are carried in RMB/CNY


1. Consolidated Balance Sheet

Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD.
                                                                                                         In RMB

                                   Item                           June 30, 2021          December 31, 2020

Current assets:

     Monetary funds                                                      59,612,186.22            60,968,053.58

     Settlement provisions

     Capital lent

     Trading financial assets

     Derivative financial assets

     Note receivable                                                        491,683.78            20,240,464.79

     Account receivable                                                 135,750,939.59           128,063,911.79

     Receivable financing                                                 5,774,948.69            10,057,385.11

     Accounts paid in advance                                            31,961,398.64            39,643,255.11

     Insurance receivable

     Reinsurance receivables

     Contract reserve of reinsurance receivable

     Other account receivable                                            22,540,779.20             4,466,949.96

        Including: Interest receivable

                    Dividend receivable

     Buying back the sale of financial assets

     Inventories                                                        129,877,952.00            70,166,013.49

     Contractual assets


                                                                                                             38
                                              SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                        SEMI-ANNUAL REPORT 2021

     Assets held for sale

     Non-current asset due within one year

     Other current assets                       741,380.21           4,255,643.19

Total current assets                         386,751,268.33        337,861,677.02

Non-current assets:

     Loans and payments on behalf

     Debt investment

     Other debt investment

     Long-term account receivable

     Long-term equity investment

     Investment in other equity instrument

     Other non-current financial assets

     Investment real estate                   46,360,497.13         47,224,662.27

     Fixed assets                            191,477,026.08        193,605,444.53

     Construction in progress                   740,000.00            740,000.00

     Productive biological asset

     Oil and gas asset

     Right-of-use assets

     Intangible assets                        39,945,399.92         40,820,657.80

     Expense on Research and Development

     Goodwill

     Long-term expenses to be apportioned       623,601.59              77,445.31

     Deferred income tax asset                 7,383,734.13          7,383,734.13

     Other non-current asset                      66,000.00             66,000.00

Total non-current asset                      286,596,258.85        289,917,944.04

Total assets                                 673,347,527.18        627,779,621.06

Current liabilities:

     Short-term loans                         51,089,579.00         12,527,808.00

     Loan from central bank

     Capital borrowed

     Trading financial liability

     Derivative financial liability

     Note payable                             42,983,519.37         37,416,381.20

     Account payable                         116,056,638.57         98,318,239.88



                                                                               39
                                                     SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                               SEMI-ANNUAL REPORT 2021

     Accounts received in advance

     Contractual liability                             765,555.97            287,140.66

     Selling financial asset of repurchase

     Absorbing deposit and interbank deposit

     Security trading of agency

     Security sales of agency

     Wage payable                                     3,886,717.29          5,737,366.59

     Taxes payable                                   12,933,110.63         14,204,642.62

     Other account payable                           37,074,456.45         27,608,281.01

        Including: Interest payable                    179,523.72              26,335.66

                     Dividend payable

     Commission charge and commission payable

     Reinsurance payable

     Liability held for sale

     Non-current liabilities due within one year                           12,000,000.00

     Other current liabilities                         211,799.13          18,322,972.81

Total current liabilities                           265,001,376.41        226,422,832.77

Non-current liabilities:

     Insurance contract reserve

     Long-term loans                                 61,000,000.00         61,000,000.00

     Bonds payable

        Including: Preferred stock

                     Perpetual capital securities

     Lease liability

     Long-term account payable

     Long-term wages payable

     Accrual liability                                   64,411.00             64,411.00

     Deferred income                                  4,043,640.00          4,043,640.00

     Deferred income tax liabilities

     Other non-current liabilities

Total non-current liabilities                        65,108,051.00         65,108,051.00

Total liabilities                                   330,109,427.41        291,530,883.77

Owner’s equity:

     Share capital                                  283,161,227.00        283,161,227.00



                                                                                      40
                                                               SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                         SEMI-ANNUAL REPORT 2021

     Other equity instrument

        Including: Preferred stock

                    Perpetual capital securities

     Capital public reserve                                   146,577,771.50           146,577,771.50

     Less: Inventory shares

     Other comprehensive income

     Reasonable reserve

     Surplus public reserve                                    77,391,593.25            77,391,593.25

     Provision of general risk

     Retained profit                                         -163,892,491.98          -170,881,854.46

Total owner’ s equity attributable to parent company         343,238,099.77           336,248,737.29

     Minority interests

Total owner’ s equity                                        343,238,099.77           336,248,737.29

Total liabilities and owner’ s equity                        673,347,527.18           627,779,621.06


Legal Representative: Li Zhongqiu


Person in charge of accounting works: Yang Bin


Person in charge of accounting institute: Chuai Guoxu


2. Balance Sheet of Parent Company

                                                                                               In RMB

                                   Item                 June 30, 2021          December 31, 2020

Current assets:

     Monetary funds                                             1,331,648.92               966,379.17

     Trading financial assets

     Derivative financial assets

     Note receivable

     Account receivable

     Receivable financing

     Accounts paid in advance                                   2,199,741.25                73,685.03

     Other account receivable                                  87,948,585.04            93,922,057.92

        Including: Interest receivable

                    Dividend receivable




                                                                                                    41
                                                    SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                              SEMI-ANNUAL REPORT 2021

     Inventories                                        14,806.50             14,806.50

     Contractual assets

     Assets held for sale

     Non-current assets maturing within one year

     Other current assets

Total current assets                                91,494,781.71         94,976,928.62

Non-current assets:

     Debt investment

     Other debt investment

     Long-term receivables

     Long-term equity investments                  186,618,400.00        186,618,400.00

     Investment in other equity instrument

     Other non-current financial assets

     Investment real estate                         23,353,697.10         23,957,898.42

     Fixed assets                                   96,806,187.37         96,674,476.52

     Construction in progress                         740,000.00            740,000.00

     Productive biological assets

     Oil and natural gas assets

     Right-of-use assets

     Intangible assets                               4,336,290.66          4,408,763.52

     Research and development costs

     Goodwill

     Long-term deferred expenses

     Deferred income tax assets                      7,443,826.11          7,443,826.11

     Other non-current assets

Total non-current assets                           319,298,401.24        319,843,364.57

Total assets                                       410,793,182.95        414,820,293.19

Current liabilities:

     Short-term borrowings                           6,000,000.00

     Trading financial liability

     Derivative financial liability

     Notes payable

     Account payable                                 9,740,367.33         10,745,840.16

     Accounts received in advance                       46,958.09             83,155.09



                                                                                     42
                                                     SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                               SEMI-ANNUAL REPORT 2021

     Contractual liability

     Wage payable                                      819,533.72           1,476,601.12

     Taxes payable                                    7,316,798.88          7,892,878.33

     Other accounts payable                          20,487,078.43         21,304,919.43

        Including: Interest payable

                     Dividend payable

     Liability held for sale

     Non-current liabilities due within one year                           12,000,000.00

     Other current liabilities

Total current liabilities                            44,410,736.45         53,503,394.13

Non-current liabilities:

     Long-term loans                                 61,000,000.00         61,000,000.00

     Bonds payable

        Including: Preferred stock

                     Perpetual capital securities

     Lease liability

     Long-term account payable

     Long term employee compensation payable

     Accrued liabilities                                 64,411.00             64,411.00

     Deferred income

     Deferred income tax liabilities

     Other non-current liabilities

Total non-current liabilities                        61,064,411.00         61,064,411.00

Total liabilities                                   105,475,147.45        114,567,805.13

Owners’ equity:

     Share capital                                  283,161,227.00        283,161,227.00

     Other equity instrument

        Including: Preferred stock

                    Perpetual capital securities

     Capital public reserve                         146,587,271.50        146,587,271.50

     Less: Inventory shares

     Other comprehensive income

     Special reserve

     Surplus reserve                                 77,391,593.25         77,391,593.25



                                                                                      43
                                                                               SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                         SEMI-ANNUAL REPORT 2021

     Retained profit                                                         -201,822,056.25          -206,887,603.69

Total owner’s equity                                                        305,318,035.50            300,252,488.06

Total liabilities and owner’s equity                                        410,793,182.95            414,820,293.19


3. Consolidated Profit Statement

                                                                                                                  In RMB

                                 Item                                 2021 semi-annual         2020 semi-annual

I. Total operating income                                                    391,633,808.55            300,703,421.38

     Including: Operating income                                             391,633,808.55            300,703,421.38

             Interest income

             Insurance gained

             Commission charge and commission income

II. Total operating cost                                                     381,924,442.73            297,053,804.80

     Including: Operating cost                                               334,523,805.25            263,959,652.63

             Interest expense

             Commission charge and commission expense

             Cash surrender value

             Net amount of expense of compensation

             Net amount of withdrawal of insurance contract
reserve

             Bonus expense of guarantee slip

             Reinsurance expense

             Tax and extras                                                     1,428,361.92             1,004,056.05

             Sales expense                                                    14,094,617.96              9,100,079.39

             Administrative expense                                           22,680,307.24             17,082,362.66

             R&D expense                                                        3,955,647.50             2,423,425.26

             Financial expense                                                  5,241,702.86             3,484,228.81

                Including: Interest expenses                                    3,774,381.48             4,018,202.27

                            Interest income                                      189,945.55                 11,856.69

     Add: Other income                                                              3,553.35               348,540.00

          Investment income (Loss is listed with “-”)                          149,767.58                 66,780.40

          Including: Investment income on affiliated company and
joint venture

                The termination of income recognition for financial
assets measured by amortized cost


                                                                                                                      44
                                                                          SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                    SEMI-ANNUAL REPORT 2021

           Exchange income (Loss is listed with “-”)

           Net exposure hedging income (Loss is listed with “-”)

           Income from change of fair value (Loss is listed with “-”)

           Loss of credit impairment (Loss is listed with “-”)

           Losses of devaluation of asset (Loss is listed with “-”)     -1,350,000.00

           Income from assets disposal (Loss is listed with “-”)                                -99,867.53

III. Operating profit (Loss is listed with “-”)                         8,512,686.75          3,965,069.45

     Add: Non-operating income                                              276,599.04             45,200.06

     Less: Non-operating expense                                            215,202.92              7,302.38

IV. Total profit (Loss is listed with “-”)                              8,574,082.87          4,002,967.13

     Less: Income tax expense                                             1,584,720.39            837,369.58

V. Net profit (Net loss is listed with “-”)                             6,989,362.48          3,165,597.55

  (i) Classify by business continuity

     1.continuous operating net profit (net loss listed with ‘-”)       6,989,362.48          3,165,597.55

     2.termination of net profit (net loss listed with ‘-”)

  (ii) Classify by ownership

     1.Net profit attributable to owner’s of parent company              6,989,362.48          3,165,597.55

     2.Minority shareholders’ gains and losses

VI. Net after-tax of other comprehensive income

  Net after-tax of other comprehensive income attributable to
owners of parent company

     (I) Other comprehensive income items which will not be
reclassified subsequently to profit of loss

              1.Changes of the defined benefit plans that
re-measured

              2.Other comprehensive income under equity method
that cannot be transfer to gain/loss

              3.Change of fair value of investment in other equity
instrument

              4.Fair value change of enterprise's credit risk

              5. Other

       (ii) Other comprehensive income items which will be
reclassified subsequently to profit or loss

              1.Other comprehensive income under equity method
that can transfer to gain/loss

              2.Change of fair value of other debt investment


                                                                                                           45
                                                                                    SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                              SEMI-ANNUAL REPORT 2021

             3.Amount of financial assets re-classify to other
comprehensive income

             4.Credit impairment provision for other debt
investment

             5.Cash flow hedging reserve

             6.Translation differences arising on translation of
foreign currency financial statements

             7.Other

  Net after-tax of other comprehensive income attributable to
minority shareholders

VII. Total comprehensive income                                                      6,989,362.48                   3,165,597.55

     Total comprehensive income attributable to owners of parent
                                                                                     6,989,362.48                   3,165,597.55
Company

     Total comprehensive income attributable to minority
shareholders

VIII. Earnings per share:

     (i) Basic earnings per share                                                          0.0248                         0.0112

     (ii) Diluted earnings per share                                                       0.0248                         0.0112

As for the enterprise combined under the same control, net profit of 780,210.91Yuan achieved by the merged party before
combination while -824,054.38 Yuan achieved last period.


Legal Representative: Li Zhongqiu


Person in charge of accounting works: Yang Bin


Person in charge of accounting institute: Chuai Guoxu


4. Profit Statement of Parent Company

                                                                                                                          In RMB

                                Item                                    Semi-annual of 2021            Semi-annual of 2020

I. Operating income                                                                22,146,204.31                   16,720,522.47

     Less: Operating cost                                                            4,439,887.16                   2,040,226.11

          Taxes and surcharge                                                         572,280.19                      542,709.33

          Sales expenses

          Administration expenses                                                    7,444,373.84                   6,208,200.98

          R&D expenses

          Financial expenses                                                         3,381,988.26                   4,015,977.09



                                                                                                                               46
                                                                        SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                  SEMI-ANNUAL REPORT 2021

                 Including: Interest expenses                           3,385,557.02          4,018,202.27

                            Interest income                                                       6,881.46

     Add: Other income                                                      3,306.96

           Investment income (Loss is listed with “-”)

           Including: Investment income on affiliated Company and
joint venture

                 The termination of income recognition for financial
assets measured by amortized cost (Loss is listed with “-”)

           Net exposure hedging income (Loss is listed with “-”)

           Changing income of fair value (Loss is listed with “-”)

           Loss of credit impairment (Loss is listed with “-”)

           Losses of devaluation of asset (Loss is listed with “-”)

           Income on disposal of assets (Loss is listed with “-”)

II. Operating profit (Loss is listed with “-”)                        6,310,981.82          3,913,408.96

     Add: Non-operating income                                                 0.35              17,754.80

     Less: Non-operating expense                                            8,500.00

III. Total Profit (Loss is listed with “-”)                           6,302,482.17          3,931,163.76

     Less: Income tax                                                   1,236,934.73            982,790.94

IV. Net profit (Net loss is listed with “-”)                          5,065,547.44          2,948,372.82

     (i) continuous operating net profit (net loss listed with ‘-”)

     (ii) termination of net profit (net loss listed with ‘-”)

V. Net after-tax of other comprehensive income

     (i) Other comprehensive income items which will not be
reclassified subsequently to profit of loss

              1.Changes of the defined benefit plans that
re-measured

              2.Other comprehensive income under equity method
that cannot be transfer to gain/loss

              3.Change of fair value of investment in other equity
instrument

              4.Fair value change of enterprise's credit risk

              5. Other

     (ii) Other comprehensive income items which will be
reclassified subsequently to profit or loss

              1.Other comprehensive income under equity method
that can transfer to gain/loss



                                                                                                         47
                                                                                SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                          SEMI-ANNUAL REPORT 2021

              2.Change of fair value of other debt investment

              3.Amount of financial assets re-classify to other
comprehensive income

              4.Credit impairment provision for other debt
investment

              5.Cash flow hedging reserve

              6.Translation differences arising on translation of
foreign currency financial statements

              7.Other

VI. Total comprehensive income                                                   5,065,547.44              2,948,372.82

VII. Earnings per share:

     (i) Basic earnings per share

     (ii) Diluted earnings per share


5. Consolidated Cash Flow Statement

                                                                                                                 In RMB

                                  Item                                Semi-annual of 2021       Semi-annual of 2020

I. Cash flows arising from operating activities:

     Cash received from selling commodities and providing labor
                                                                               244,756,106.28            251,602,049.92
services

     Net increase of customer deposit and interbank deposit

     Net increase of loan from central bank

     Net increase of capital borrowed from other financial
institution

     Cash received from original insurance contract fee

     Net cash received from reinsurance business

     Net increase of insured savings and investment

     Cash received from interest, commission charge and
commission

     Net increase of capital borrowed

     Net increase of returned business capital

     Net cash received by agents in sale and purchase of securities

     Write-back of tax received                                                  2,152,394.35

     Other cash received concerning operating activities                        16,266,093.74              3,743,255.21

Subtotal of cash inflow arising from operating activities                      263,174,594.37            255,345,305.13



                                                                                                                      48
                                                                        SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                  SEMI-ANNUAL REPORT 2021

     Cash paid for purchasing commodities and receiving labor
                                                                       180,586,052.16        179,132,887.12
service

     Net increase of customer loans and advances

     Net increase of deposits in central bank and interbank

     Cash paid for original insurance contract compensation

     Net increase of capital lent

     Cash paid for interest, commission charge and commission

     Cash paid for bonus of guarantee slip

     Cash paid to/for staff and workers                                 38,342,263.84         24,991,943.90

     Taxes paid                                                         13,863,743.82          3,743,185.15

     Other cash paid concerning operating activities                    52,200,904.14         26,277,076.72

Subtotal of cash outflow arising from operating activities             284,992,963.96        234,145,092.89

Net cash flows arising from operating activities                       -21,818,369.59         21,200,212.24

II. Cash flows arising from investing activities:

     Cash received from recovering investment

     Cash received from investment income                                 186,685.90              66,780.40

     Net cash received from disposal of fixed, intangible and other
                                                                            21,750.00           411,000.00
long-term assets

     Net cash received from disposal of subsidiaries and other units

     Other cash received concerning investing activities                                      35,000,000.00

Subtotal of cash inflow from investing activities                         208,435.90          35,477,780.40

     Cash paid for purchasing fixed, intangible and other long-term
                                                                         2,524,810.50          1,816,159.96
assets

     Cash paid for investment

     Net increase of mortgaged loans

     Net cash received from subsidiaries and other units obtained

     Other cash paid concerning investing activities                                          35,000,000.00

Subtotal of cash outflow from investing activities                       2,524,810.50         36,816,159.96

Net cash flows arising from investing activities                        -2,316,374.60         -1,338,379.56

III. Cash flows arising from financing activities:

     Cash received from absorbing investment

     Including: Cash received from absorbing minority
shareholders’ investment by subsidiaries

     Cash received from loans                                           57,190,879.00          6,725,056.80

     Other cash received concerning financing activities



                                                                                                         49
                                                                              SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                        SEMI-ANNUAL REPORT 2021

Subtotal of cash inflow from financing activities                             57,190,879.00               6,725,056.80

     Cash paid for settling debts                                             30,430,404.00              37,370,812.20

     Cash paid for dividend and profit distributing or interest
                                                                               3,578,255.11               4,192,431.31
paying

     Including: Dividend and profit of minority shareholder paid by
subsidiaries

     Other cash paid concerning financing activities

Subtotal of cash outflow from financing activities                            34,008,659.11              41,563,243.51

Net cash flows arising from financing activities                              23,182,219.89              -34,838,186.71

IV. Influence on cash and cash equivalents due to fluctuation in
                                                                                -403,343.06                 144,260.22
exchange rate

V. Net increase of cash and cash equivalents                                   -1,355,867.36             -14,832,093.81

     Add: Balance of cash and cash equivalents at the period -begin           60,968,053.58              36,645,061.61

VI. Balance of cash and cash equivalents at the period -end                   59,612,186.22              21,812,967.80


6. Cash Flow Statement of Parent Company

                                                                                                                In RMB

                                    Item                              Semi-annual of 2021       Semi-annual of 2020

I. Cash flows arising from operating activities:

     Cash received from selling commodities and providing labor
                                                                                 2,336,572.26            17,825,898.30
services

     Write-back of tax received

     Other cash received concerning operating activities                        12,794,492.62              7,210,631.17

Subtotal of cash inflow arising from operating activities                       15,131,064.88            25,036,529.47

     Cash paid for purchasing commodities and receiving labor
service

     Cash paid to/for staff and workers                                            548,093.93              2,100,854.64

     Taxes paid                                                                  3,454,113.92              1,790,646.36

     Other cash paid concerning operating activities                             1,380,064.32             11,480,046.39

Subtotal of cash outflow arising from operating activities                       5,382,272.17            15,371,547.39

Net cash flows arising from operating activities                                 9,748,792.71              9,664,982.08

II. Cash flows arising from investing activities:

     Cash received from recovering investment

     Cash received from investment income

     Net cash received from disposal of fixed, intangible and other



                                                                                                                      50
                                                                                          SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                    SEMI-ANNUAL REPORT 2021

long-term assets

     Net cash received from disposal of subsidiaries and other units

     Other cash received concerning investing activities

Subtotal of cash inflow from investing activities

     Cash paid for purchasing fixed, intangible and other long-term
assets

     Cash paid for investment

     Net cash received from subsidiaries and other units obtained

     Other cash paid concerning investing activities

Subtotal of cash outflow from investing activities

Net cash flows arising from investing activities

III. Cash flows arising from financing activities:

     Cash received from absorbing investment

     Cash received from loans

     Other cash received concerning financing activities

Subtotal of cash inflow from financing activities

     Cash paid for settling debts                                                            6,000,000.00                     6,000,000.00

     Cash paid for dividend and profit distributing or interest paying                       3,383,290.96                     3,366,124.47

     Other cash paid concerning financing activities

Subtotal of cash outflow from financing activities                                           9,383,290.96                     9,366,124.47

Net cash flows arising from financing activities                                            -9,383,290.96                    -9,366,124.47

IV. Influence on cash and cash equivalents due to fluctuation in
                                                                                                                                     2,210.11
exchange rate

V. Net increase of cash and cash equivalents                                                      365,501.75                    301,067.72

     Add: Balance of cash and cash equivalents at the period -begin                               966,379.17                  2,046,143.44

VI. Balance of cash and cash equivalents at the period -end                                  1,331,880.92                     2,347,211.16


7. Statement of Changes in Owners’ Equity (Consolidated)

Current Amount
                                                                                                                                      In RMB

                                                                    Semi-annual of 2021

                                          Owners’ equity attributable to the parent Company                                 Min       Tota
         Item                   Other                                                                                        ority       l
                   Sha                         Capi    Less   Othe       Reas   Surp      Prov       Reta      Othe   Subt
                                equity                                                                                       inter     own
                    re                         tal      :       r        onab   lus       ision      ined       r     otal
                             instrument                                                                                      ests      ers’



                                                                                                                                               51
                                                                                    SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                              SEMI-ANNUAL REPORT 2021

                  cap          Per          reser   Inve   com     le     reser      of    profi               equit
                  ital         pet           ve     ntor   preh   reser    ve       gene     t                   y
                         Pre
                               ual                   y     ensi    ve               ral
                         fer
                               cap    Ot            shar   ve                       risk
                         red
                               ital   her            es    inco
                         sto
                               sec                         me
                         ck
                               urit
                               ies

                  283
                                            146,                          77,3             -170      336,       336,
I. The ending     ,16
                                            577,                          91,5             ,881,     248,       248,
balance of the    1,2
                                            771.                          93.2             854.      737.       737.
previous year     27.
                                              50                                5            46       29         29
                   00

Add: Changes
of accounting
policy

Error
correction of
the last period

Enterprise
combine
under the
same control

Other

                  283
II. The                                     146,                          77,3             -170      336,       336,
                  ,16
beginning                                   577,                          91,5             ,881,     248,       248,
                  1,2
balance of the                              771.                          93.2             854.      737.       737.
                  27.
current year                                  50                                5            46       29         29
                   00

III. Increase/
Decrease in
                                                                                           6,98      6,98       6,98
the period
                                                                                           9,36      9,36       9,36
(Decrease is
                                                                                           2.48      2.48       2.48
listed with
“-”)

(i) Total                                                                                  6,98      6,98       6,98
comprehensiv                                                                               9,36      9,36       9,36
e income                                                                                   2.48      2.48       2.48

(ii) Owners’
devoted and
decreased



                                                                                                                       52
                 SHENZHEN ZHONGHEN HUAFA CO., LTD.
                           SEMI-ANNUAL REPORT 2021

capital

1.Common
shares
invested by
shareholders

2. Capital
invested by
holders of
other equity
instruments

3. Amount
reckoned into
owners equity
with
share-based
payment

4. Other

(iii) Profit
distribution

1. Withdrawal
of surplus
reserves

2. Withdrawal
of general
risk
provisions

3.
Distribution
for owners (or
shareholders)

4. Other

(iv) Carrying
forward
internal
owners’
equity

1. Capital
reserves
conversed to
capital (share
capital)


                                                53
                                                                             SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                       SEMI-ANNUAL REPORT 2021

 2. Surplus
 reserves
 conversed to
 capital (share
 capital)

 3. Remedying
 loss with
 surplus
 reserve

 4. Carry-over
 retained
 earnings from
 the defined
 benefit plans

 5. Carry-over
 retained
 earnings from
 other
 comprehensiv
 e income

 6. Other

 (v)
 Reasonable
 reserve

 1. Withdrawal
 in the report
 period

 2. Usage in
 the report
 period

 (vi) Others

                  283
                                     146,                            77,3            -163     343,           343,
 IV. Balance at   ,16
                                     577,                            91,5            ,892,    238,           238,
 the end of the   1,2
                                     771.                            93.2            491.     099.           099.
 period           27.
                                       50                               5              98      77              77
                   00

Amount of the previous period
                                                                                                            In RMB

                                                       Semi-annual of 2020
       Item
                                Owners’ equity attributable to the parent Company                   Mino   Total



                                                                                                                    54
                                                                                       SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                 SEMI-ANNUAL REPORT 2021

                               Other                                                                                 rity    owne
                               equity                                                                               intere    rs’
                             instrument                                                                              sts     equit

                                Pe                           Othe                                                             y
                                                      Less
                                rpe                           r                       Prov
                                                       :            Reas
                 Sha            tua           Capi           com            Surp      ision   Reta
                        Pr                            Inve          onab
                 re              l             tal           preh           lus        of     ined    Othe   Subt
                        efe                           ntor           le
                 cap            ca            reser          ensi           reser     gene    profi    r     otal
                        rre             Oth            y            reser
                 ital           pit            ve             ve             ve        ral      t
                        d               er            shar           ve
                                al                           inco                     risk
                        sto                            es
                                sec                          me
                        ck
                                uri
                                tie
                                 s

                 283
I. The ending                                 146,                          77,3              -177           329,
                 ,16                                                                                                         329,4
balance of                                    587,                          91,5              ,712,          428,
                 1,2                                                                                                         28,04
the previous                                  271.                          93.2              041.           049.
                 27.                                                                                                          9.89
year                                            50                                5             86            89
                  00

Add:
Changes of
accounting
policy

Error
correction of
the last
period

Enterprise
combine
under the
same control

Other

II. The          283
                                              146,                          77,3              -177           329,
beginning        ,16                                                                                                         329,4
                                              587,                          91,5              ,712,          428,
balance of       1,2                                                                                                         28,04
                                              271.                          93.2              041.           049.
the current      27.                                                                                                          9.89
                                                50                                5             86            89
year              00

III. Increase/
Decrease in                                                                                   3,16           3,16            3,165
the period                                                                                    5,59           5,59            ,597.
(Decrease is                                                                                  7.55           7.55               55
listed with


                                                                                                                                     55
                SHENZHEN ZHONGHEN HUAFA CO., LTD.
                          SEMI-ANNUAL REPORT 2021

“-”)

(i) Total            3,16      3,16        3,165
comprehensi          5,59      5,59        ,597.
ve income            7.55      7.55          55

(ii) Owners’
devoted and
decreased
capital

1.Common
shares
invested by
shareholders

2. Capital
invested by
holders of
other equity
instruments

3. Amount
reckoned into
owners
equity with
share-based
payment

4. Other

(iii) Profit
distribution

1.
Withdrawal
of surplus
reserves

2.
Withdrawal
of general
risk
provisions

3.
Distribution
for owners
(or
shareholders)

4. Other


                                               56
                 SHENZHEN ZHONGHEN HUAFA CO., LTD.
                           SEMI-ANNUAL REPORT 2021

(iv) Carrying
forward
internal
owners’
equity

1. Capital
reserves
conversed to
capital (share
capital)

2. Surplus
reserves
conversed to
capital (share
capital)

3.
Remedying
loss with
surplus
reserve

4. Carry-over
retained
earnings
from the
defined
benefit plans

5. Carry-over
retained
earnings
from other
comprehensi
ve income

6. Other

(v)
Reasonable
reserve

1.
Withdrawal
in the report
period

2. Usage in



                                                57
                                                                                 SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                           SEMI-ANNUAL REPORT 2021

 the report
 period

 (vi) Others

                   283
                                            146,                         77,3            -174            332,
 IV. Balance       ,16                                                                                                  332,5
                                            587,                         91,5            ,546,           593,
 at the end of     1,2                                                                                                  93,64
                                            271.                         93.2            444.            647.
 the period        27.                                                                                                    7.44
                                             50                             5              31                44
                    00


8. Statement of Changes in Owners’ Equity (Parent Company)

Current Amount
                                                                                                                        In RMB

                                                               Semi-annual of 2021
                                    Other
                              equity instrument
                                                                       Other
                                    Perp           Capita     Less:
                    Share                                              compr    Reaso     Surplu     Retai
      Item                                           l        Invent                                                    Total
                                    etual                              ehensi   nable        s       ned
                    capit   Prefe                                                                             Other   owners’
                                    capit   Othe   reserv      ory       ve     reserv    reserv     profi
                     al     rred                                                                                       equity
                                     al       r      e        shares   incom       e         e         t
                            stock                                         e
                                    secur
                                    ities

                                                                                                     -206,
 I. The ending      283,1                          146,58                                 77,391
                                                                                                     887,             300,252,
 balance of the     61,22                          7,271.                                 ,593.2
                                                                                                     603.              488.06
 previous year       7.00                                50                                      5
                                                                                                       69

   Add:
 Changes of
 accounting
 policy

      Error
 correction of
 the last period

      Other

 II. The                                                                                             -206,
                    283,1                          146,58                                 77,391
 beginning                                                                                           887,             300,252,
                    61,22                          7,271.                                 ,593.2
 balance of the                                                                                      603.              488.06
                     7.00                                50                                      5
 current year                                                                                          69

 III. Increase/                                                                                      5,06
                                                                                                                      5,065,54
 Decrease in                                                                                         5,54
                                                                                                                          7.44
 the period                                                                                          7.44


                                                                                                                                 58
                     SHENZHEN ZHONGHEN HUAFA CO., LTD.
                               SEMI-ANNUAL REPORT 2021

(Decrease is
listed with “-”)

(i) Total                         5,06
                                              5,065,54
comprehensive                     5,54
                                                 7.44
income                            7.44

(ii) Owners’
devoted and
decreased
capital

1.Common
shares
invested by
shareholders

2. Capital
invested by
holders of
other equity
instruments

3. Amount
reckoned into
owners equity
with
share-based
payment

4. Other

(iii) Profit
distribution

1. Withdrawal
of surplus
reserves

2. Distribution
for owners (or
shareholders)

3. Other

(iv) Carrying
forward
internal
owners’ equity

1. Capital
reserves
conversed to


                                                     59
                                                                                         SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                   SEMI-ANNUAL REPORT 2021

 capital (share
 capital)

 2. Surplus
 reserves
 conversed to
 capital (share
 capital)

 3. Remedying
 loss with
 surplus reserve

 4. Carry-over
 retained
 earnings from
 the defined
 benefit plans

 5. Carry-over
 retained
 earnings from
 other
 comprehensive
 income

 6. Other

 (v) Reasonable
 reserve

 1. Withdrawal
 in the report
 period

 2. Usage in the
 report period

 (vi) Others

                                                                                                        -201,
 IV. Balance at     283,1                           146,58                                    77,391
                                                                                                         822,           305,318,
 the end of the     61,22                            7,271.                                    ,593.2
                                                                                                         056.             035.50
 period              7.00                                  50                                       5
                                                                                                           25

Amount of the previous period
                                                                                                                           In RMB

                                                                   Semi-annual of 2020
                                   Other                                Other              Surpl
                   Shar                           Capit         Less:            Reason                                   Total
      Item                   equity instrument                          compr                us     Retaine
                    e                               al      Invent                 able                         Other   owners’
                            Pref   Perp    Othe                         ehensi             reserv   d profit
                   capit                          reserv        ory              reserve                                 equity
                            erre   etual    r                             ve                  e


                                                                                                                                   60
                                                                SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                          SEMI-ANNUAL REPORT 2021

                 al      d     capit    e      shares   incom
                        stoc    al                         e
                         k     secu
                               ritie
                                 s
                 283,
I. The ending                          146,5                       77,39   -208,86
                 161,                                                                    298,276,
balance of the                         87,27                       1,593   3,486.5
                 227.                                                                     605.21
previous year                           1.50                         .25        4
                  00

   Add:
Changes of
accounting
policy

         Error
correction of
the last
period

         Other

II. The          283,
                                       146,5                       77,39   -208,86
beginning        161,                                                                    298,276,
                                       87,27                       1,593   3,486.5
balance of the   227.                                                                     605.21
                                        1.50                         .25        4
current year      00

III. Increase/
Decrease in
the period                                                                 2,948,3       2,948,37
(Decrease is                                                                72.82           2.82
listed with
“-”)

(i) Total
                                                                           2,948,3       2,948,37
comprehensiv
                                                                            72.82           2.82
e income

(ii) Owners’
devoted and
decreased
capital

1.Common
shares
invested by
shareholders

2. Capital
invested by
holders of



                                                                                                61
                 SHENZHEN ZHONGHEN HUAFA CO., LTD.
                           SEMI-ANNUAL REPORT 2021

other equity
instruments

3. Amount
reckoned into
owners equity
with
share-based
payment

4. Other

(iii) Profit
distribution

1.
Withdrawal
of surplus
reserves

2.
Distribution
for owners
(or
shareholders)

3. Other

(iv) Carrying
forward
internal
owners’
equity

1. Capital
reserves
conversed to
capital (share
capital)

2. Surplus
reserves
conversed to
capital (share
capital)

3. Remedying
loss with
surplus
reserve

4. Carry-over


                                                62
                                                                           SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                     SEMI-ANNUAL REPORT 2021

 retained
 earnings from
 the defined
 benefit plans

 5. Carry-over
 retained
 earnings from
 other
 comprehensiv
 e income

 6. Other

 (v)
 Reasonable
 reserve

 1.
 Withdrawal
 in the report
 period

 2. Usage in
 the report
 period

 (vi) Others

                  283,
 IV. Balance at                              146,5                             77,39   -205,91
                  161,                                                                                  301,224,
 the end of the                              87,27                             1,593   5,113.7
                  227.                                                                                   978.03
 period                                       1.50                               .25        2
                   00


III. Company profile

1. The registration place of the enterprise, the form of organization and the headquarters address
Shenzhen Zhongheng HUAFA Company Limited (hereinafter referred to as Company or the Company),
established on 8 December 1981. Uniform social credit code 91440300618830372G.
Registered place and head office of the Company: 411 Bldg., Huafa (N) Road, Futian District, Shenzhen
Legal representative: Li Zhongqiu
Registered capital: RMB 283,161,227.00


2. The nature of the business and the main business activities
The Company belongs to the computer, telecommunication and manufacturing of other electronic equipment.
Business scope: producing and sales of vary color TV set, liquid crystal display, LCD (operates in branch),
radio-recorder, sound equipment, electronic watch, electronic game and computers, the printed wiring board,
precision injection parts, light packaging material (operates in Wuhan) and hardware (including tool and mould)

                                                                                                               63
                                                                            SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                      SEMI-ANNUAL REPORT 2021

for various electronic products and supporting parts, plating and surface treatment and tin wire, development and
operation of real estate (Shen Fang Di Zi No.: 7226760) and property management. Funded affiliated companies
in Wuhan and Jilin. Setting up branches in capital of the province (Lhasa City excluded) in China and
municipality directly under the central government.



3. Relevant party offering approval reporting of financial statements and date thereof
The financial statement has been deliberated and approved by BOD on 20 August 2021. According to Article of
Association, the statement shall be submitted for deliberation in shareholders general meeting.


Consolidate scope in the Period including: subsidiaries including Shenzhen HUAFA Property Lease Management
Co., Ltd (no annual inspection in 2011, and business license revoke on 1 April 2014), Shenzhen Zhongheng
HUAFA Property Co., Ltd, Wuhan Hengfa Technology Co., Ltd., Shenzhen HUAFA Hengtian Co., Ltd. and
Shenzhen HUAFA Hengtai Co., Ltd. More of subsidiaries found in “Note VIII. Equity in other subjects”.



IV. Preparation basis of Financial Statements

1. Preparation basis

Base on the running continuously and actual transactions and events, in line with the Accounting Standards for
Business Enterprise – Basic Standards and specific principle of accounting standards issued by the Ministry of
Finance (hereinafter collectively referred to as Accounting Standards for Business Enterprise), the Company
prepared and formulate the financial statement lies on the followed important accounting policy and estimation.

2. Going concern

The Company expects that the production and sales will be in a virtuous cycle within 12 months from the end of
he reporting period, and there is no risk that affects the continued operations.



V. Important accounting policy and estimation

Notes on specific accounting policies and accounting estimation:
The following disclosure has covered the specific accounting policies and accounting estimates formulated by the
Company according to the actual production and operation characteristics.

1. Declaration of obedience to Accounting Standards for Business Enterprise

The Financial Statements of the Company are up to requirements of Accounting Standards for Business Enterprise
and also a true and thorough reflection to the relevant information as the Company’s financial position dated 30th
June 2021 and the operation results as well as cash flow for the first half year of 2021.


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2. Accounting period

The Company’s accounting year is Gregorian calendar year, namely from 1 st January to 31st December of every
year.


3. Business cycle

The Company’s business cycle is one year (12 months) as a normal cycle, and the business cycle is the
determining criterion for the liquidity of assets and liabilities of the Company.

4. Bookkeeping standard currency

The Renminbi (RMB) is taken as the book-keeping standard currency.


5. Accounting methods for consolidation of enterprises under the same control or otherwise

5.1 Consolidation of enterprises under the same control
Where the Company for long term equity investment arising from business combination under common control
satisfies the combination consideration by payment of cash, transfer of non-cash assets or assumption of debt, the
carrying value of the net assets of the acquire in combined financial statement of the ultimate controller shared by
the Company as at the combination date shall be deemed as the initial investment cost of such long term equity
investment. If the equity instrument issued by combining party are consider as the combination consideration,
than the total value of the issuing shares are consider as the share capital. The difference between the initial cost of
long-term equity investment and book value of consideration (or total face value of the shares issued) paid, capital
surplus adjusted; if the capital surplus not enough to written down, than retained earning adjusted.


5.2 Business combination not under common control
As for business combination not under common control, combination costs refer to the sum of the fair value of the
assets paid, liabilities occurred or assumed as well as equity securities issued by the acquirer to obtain control over
the acquire as at the acquisition date. As for acquiree that obtained by consolidation not under the same control,
the qualified confirmation of identified assets, liability and contingency liabilities should calculated by fair value
on day of purchased. If the consolidation cost larger than the fair value amount of identified net assets from
acquiree’s, the differences should be recognized as goodwill. If the consolidation cost less than the fair value
amount of identified net assets from acquiree’s, the differences should reckoned into current non-operating
income.



6. Preparation methods for consolidated financial statements


6.1 Consolidation financial statement range
The Company includes all the subsidiaries (including the separate entities controlled by the Company) into

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consolidated financial statement, including companies controlled by the Company, non-integral part of the
investees and structural main body.


6.2 Centralize accounting policies, balance sheet dates and accounting periods of parent and subsidiaries.
As for the inconsistency between the subsidiaries and the Company in the accounting policies and periods, the
necessary adjustment is made on the subsidiaries’ financial statements in the preparation of the consolidated
financial statements according to the Company’s accounting policies and periods.


6.3 Offset of consolidated financial statement
The consolidated financial statements shall be prepared on the basis of the balance sheet of the parent company
and subsidiaries, which offset the internal transactions incurred between the parent company and subsidiaries and
within subsidiaries. The owner’s equity of the subsidiaries not attributable to the parent company shall be
presented as minority equity under the owner’s equity item in the consolidated balance sheet. The long term equity
investment of the parent company held by the subsidiaries, deemed as treasury stock of the corporate group as
well as the reduction of owners’ equity, shall be presented as “Less: treasury stock” under the owners’ equity item
in the consolidated balance sheet.


6.4Accounting for acquisition of subsidiary through combination
For subsidiaries    acquired    under     enterprise   merger      involving     enterprises   under      common   control,
the assets, liabilities, operating results and cash flows of the subsidiaries are included in the consolidated financial
statements from the      beginning      of the financial    year      in which the     combination took       place. When
preparing    the    consolidated      financial statements,     for      the subsidiaries      acquired    from    business
combination not involving entities under common control, the identifiable net assets of the subsidiaries are
adjusted on the basis of their fair values on the date of acquisition.


6.5 Accounting treatment of disposal subsidiaries
In the case of partial disposal of long-term equity investments in subsidiaries without loss of control, in the
consolidated financial statements, the difference between the disposal price and the net asset share corresponding
to the disposal of long-term equity investments and enjoying the subsidiaries’ continued calculation from the
purchase date or the merger date is used to adjust the capital reserve (capital premium or equity premium). If the
capital reserve is insufficient to offset, the retained earnings are adjusted.



7. Classification of joint venture arrangement and accounting treatment of joint operation

8. Determination criteria of cash and cash equivalent


The cash recognized in the preparation of the cash flow statements, is the Company’s storage cash and deposits
available for payment anytime. The cash equivalents recognized in the preparation of the cash flow statements


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refers to the investment held by the Company with characteristic of short-term, strong mobility, easy transfer to
known sum cash and has slim risk from value changes.


9. Foreign currency exchange and the conversion of foreign currency statements


9.1 Foreign currency exchange
The approximate exchange rate of the spot exchange rate on transaction occurred should be used for standard
money conversion while foreign currency exchange occurred On the balance sheet day, the monetary items are
converted on the current rate on the balance sheet day, concerning the exchange differences between the spot
exchange rate on that date and initial confirmation or the sport exchange rate on previously balance sheet date,
should reckoned in to current gains/losses except the capitalizing on exchange differences for foreign specific
loans, which was reckoned into cost for capitalizing. The non-monetary items measured on the historic cost are
still measured by the original bookkeeping rate with the sum of the bookkeeping standard currency unchanged.
Items of non-monetary foreign currency which was calculated by fair value, should converted by spot exchange
rate on the confirmation day of fair value, difference between the converted amount of bookkeeping currency and
original amount of bookkeeping currency, was treated as changes of fair value (including exchange rate changed)
reckoned into current gains/losses or recognized as other consolidated income.


9.2 Conversion of foreign currency financial statements
Upon the conversion of the foreign currency financial statements of the controlling subsidiaries, joint enterprises,
and the affiliated enterprises on the bookkeeping standard currency different from the Company’s, the accounting
check and preparation of the consolidated financial statements are made. Assets and liabilities items in the balance
sheet are converted on the current rate on the balance sheet day; owners’ equity items besides the “retained profit”
item, the other items are converted on the actual rate. Items of revenue and expenses in profit statement, should
converted by the approximate exchange rate of spot exchange rate on occurring date. The conversion difference of
the foreign currency financial statements is listed specifically in the owners’ equity in the balance sheet. If the
foreign cash flow determined by rational system method, the approximate exchange rate of spot exchange rate on
occurring date should prevail. The cash influenced by the rate fluctuation is listed specifically in the cash flow
statement. As for the foreign operation, the conversion difference of the foreign currency statement related to the
foreign operation is transferred in proportion into the disposal of the current loss/gain.



10. Financial instrument


10.1 Category and recognition of financial instrument
Financial instrument is the contract that taken shape of the financial asses for an enterprise and of the financial
liability or equity instrument for other units.

(1) Financial assets

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The Company classifies financial assets that meet the following conditions as financial assets measured at
amortized cost: ① The Company’s business model for managing financial assets is to collect contractual cash
flows as its goal; ② The contractual terms of the financial assets stipulate that the cash flow generated on a
specific date is only the payment of principal and interest based on the outstanding principal amount.


For investment in non-trading equity instruments, the Company may irrevocably designate it as a financial asset
measured at fair value and its changes included in other comprehensive income at initial recognition. The
designation is made on the basis of a single investment, and the relevant investment meets the definition of equity
instruments from the perspective of the issuer.


Except for financial assets classified as financial assets measured at amortized cost and financial assets measured
at fair value and whose changes are included in other comprehensive income, the Company classifies the financial
assets as financial assets measured at fair value and whose changes are included in current profit or loss. At the
initial recognition, if the accounting mismatch can be eliminated or reduced, the Company can irrevocably
designate the financial asset as a financial asset measured at fair value and its changes are included in the current
profit and loss.


(2) Financial liabilities
Financial liabilities are classified as financial liabilities measured at fair value and whose changes are included in
the current profit or loss, financial liabilities formed by the transfer of financial assets that does not meet the
conditions for derecognition or continues to be involved in the transferred financial assets, and financial liabilities
measured at amortized cost at initial recognition. All financial liabilities are not reclassified.


10.2 Measurement of financial instruments
The initial recognition of the Company’s financial instruments is measured at fair value. For financial assets and
financial liabilities measured at fair value and whose changes are included in the current profit and loss, the
related transaction costs are directly included in the current profit and loss; for other types of financial assets or
financial liabilities, the related transaction costs are included in the initial recognition amount. For the accounts
receivable or bills receivable arising from the sale of products or the provision of labor services, not containing or
not considering significant financing components, the Company shall use the amount of consideration expected to
be received as the initial recognition amount. The subsequent measurement of financial instruments depends on
their classification.


(1) Financial assets
① Financial assets measured at amortized cost. After initial recognition, such financial assets are measured at
amortized cost by using the effective interest method. Gains or losses arising from financial assets that are
measured at amortized cost and do not belong to any hedging relationship are included in the current profit or loss
when they are derecognized, reclassified, amortized in accordance with the effective interest rate method, or


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recognized for impairment.


② Financial assets measured at fair value and whose changes are included in the current profit and loss. After
initial recognition, for such financial assets (except for a part of financial assets that belong to the hedging
relationship), the fair value is used for subsequent measurement, and the resulting gains or losses (including
interest and dividend income) are included in the current profit and loss.


③ Investment in debt instruments measured at fair value and whose changes are included in other comprehensive
income. After initial recognition, the subsequent measurement of such financial assets is conducted at fair value.
Interest, impairment losses or gains calculated by using the effective interest rate method and the exchange gains
and losses are included in the current profit and loss, and other gains or losses are included in other
comprehensive income. In derecognition, the accumulated gains or losses previously included in other
comprehensive income are transferred out of other comprehensive income and included in the current profit and
loss.


(2) Financial liabilities
① Financial liabilities measured at fair value and whose changes are included in the current profit and loss. Such
financial liabilities include trading financial liabilities (including derivatives that belong to financial liabilities)
and financial liabilities designated to be measured at fair value and whose changes are included in the current
profit and loss. After initial recognition, the subsequent measurement of such financial liabilities is at fair value,
except for those related to hedge accounting, gains or losses (including interest expenses) resulting from changes
in the fair value of trading financial liabilities are included in the current profit and loss. If a financial liability
designated to be measured at fair value and whose changes are included in the current profit or loss, the amount of
change in the fair value of the financial liability caused by changes in the enterprise’s own credit risk is included
in other comprehensive income, other changes in fair value are included in the current profit and loss. If the
impact of changes in the financial liability’s own credit risk included in other comprehensive income causes or
expands the accounting mismatch in profit or loss, the Company will include all gains or losses on the financial
liability in the current profit and loss.
② Financial liabilities measured at amortized cost. After initial recognition, such financial liabilities are
measured at amortized cost by using the effective interest method.


10.3 The Company’s methods for confirming the fair value of financial instruments
If the financial instrument has an active market, the fair value is determined by the quoted price in the active
market; if the financial instrument doesn’t have an active market, the fair value is determined by adopting the
valuation technique. Valuation techniques mainly include market approach, income approach and cost approach.
In limited circumstances, if the recent information used to determine fair value is insufficient, or the range of
possible estimated amounts of fair value is widely distributed, and the cost represents the best estimate of fair
value within this range, the cost may represent the appropriate estimates of fair value within this distribution range.

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The Company uses all information on the performance and operation of the investee gettable after the initial
recognition date to determine whether the cost represents the fair value or not.


10.4 Confirmation basis and measurement method for the transfer of liabilities of financial assets

(1)Financial assets
If the Company’s financial asset meets one of the following conditions, it shall be terminated for confirmation: ①
The contract right to receive the cash flow of the financial asset is terminated; ② The financial asset has been
transferred, and the Company has transferred almost all risks and rewards of ownership of the financial asset; ③
The financial asset has been transferred, although the Company has neither transferred nor retained almost all the
remuneration in the ownership of the financial asset, it has not retained control of the financial asset.


If the transfer of financial assets meets the conditions for derecognition, the difference between the following two
amounts shall be included in the current profit and loss: ① The book value of the transferred financial assets on
the date of derecognition; ② The sum of the consideration received for the transfer of financial assets and the
amount corresponding to the derecognized part of the cumulative amount of changes in fair value that was directly
included in other comprehensive income (the financial assets involved in the transfer are classified as financial
assets measured at fair value and their changes are included in other comprehensive income).


(2) Financial liability
If the current obligation of the financial liability (or part of it) has been discharged, the Company derecognizes the
financial liability (or part of the financial liability).


If the financial liability (or part of it) is derecognized, the Company shall include the difference between its book
value and the consideration paid (including non-cash assets transferred out or liabilities assumed) into the current
profit and loss.




11.Note receivable

11.1 How to determine expected credit losses
Based on expected credit losses, the Company makes impairment accounting treatment and confirm loss
provisions for financial assets (including receivables) measured at amortized cost and financial assets (including
receivables financing) that are measured at fair value and whose changes are included in other comprehensive
income, and lease receivables.


The Company assesses on each balance sheet date whether the credit risk of relevant financial instruments has
increased significantly since initial recognition, and divides the process of credit impairment of financial
instruments into three stages, and adopts different accounting treatment methods for financial instruments


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impairment at different stages: (1) In the first stage, if the credit risk of a financial instrument has not increased
significantly since its initial recognition, the Company shall measure the loss provisions according to the expected
credit losses of the financial instrument in the next 12 months, and calculate the interest income according to its
book balance (i.e. without deducting impairment) and actual interest rate; (2) In the second stage, if the credit risk
of a financial instrument has increased significantly since the initial recognition but no credit impairment has
occurred, the Company shall measure the loss provisions according to the expected credit losses of the financial
instrument during the entire duration, and calculate the interest income according to its book balance and actual
interest rate; (3) In the third stage, if the credit impairment occurs after initial recognition, the Company shall
measure loss provisions based on the expected credit losses of the financial instrument for the entire duration, and
calculate the interest income according to its book balance and actual interest rate.


(1) Methods of measuring loss provisions for financial instruments with lower credit risk
For financial instruments with lower credit risk on the balance sheet date, the Company can directly make the
assumption that the credit risk of the instrument has not increased significantly since the initial recognition
without comparing with the credit risk at the initial recognition.


If the default risk of financial instruments is low, the debtor’s ability to fulfill its contractual cash flow obligations
is strong in the short term, and even if there are adverse changes in the economic situation and operating
environment over a long period of time, it may not necessarily reduce the borrower’s ability to fulfill the
contractual cash flow obligations, the financial instrument shall be considered to have lower credit risk.


(2) Methods of measuring loss provisions for accounts receivable and lease receivables
①Receivables that do not contain significant financing components. For the receivables formed by transactions
regulated by “Accounting Standards for Business Enterprises No.14-Revenue” and without containing significant
financing components, the Company adopts a simplified method, that is, it always calculates the loss provisions
based on the expected credit losses for    the entire duration.


Based on the nature of financial instruments, the Company assesses whether credit risk has increased significantly
on the basis of individual financial assets or financial assets portfolios. The Company divides the notes receivable
and accounts receivable into several portfolios based on the characteristics of credit risk, and calculates the
expected credit losses on the basis of the portfolios, the basis for determining the portfolios is as follows:


Accounts receivable portfolio 1: A portfolio that uses the aging of accounts receivables as credit risk
characteristics,
Accounts receivable portfolio 2: Combination of related parties included in the scope of consolidated statements
Notes receivable portfolio 1: Same as the division of accounts receivable portfolio
Notes receivable portfolio 2: Management evaluates that this type of fund is bank acceptance portfolio with lower
credit risk


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For the accounts receivable and notes receivable being divided into portfolio 1, the Company refers to the
historical credit loss experience, combines with the current conditions and the prediction of future economic
situation, and prepares a comparison table of the aging of accounts receivable and the expected credit loss rate of
the entire duration, and calculates the expected credit losses.


For accounts receivable and notes receivable being divided into portfolio 2, the Company refers to historical credit
loss experience, combines with the current conditions and the predictions of future economic conditions, and
calculates the expected credit losses of 0% through default risk exposure and expected credit loss rate for the
entire duration.


②Accounts receivables and leases receivables that contain significant financing components. For accounts
receivables that contain significant financing components and leases receivables regulated by “Accounting
Standards for Business Enterprises No. 21-Leases”, the Company measures loss provisions in accordance with the
general method, that is, the “third stage” model.


(3) Methods of measuring loss reserves for other financial assets
For financial assets other than the above, such as debt investment, other debt investment, other receivables,
long-term receivables other than lease receivables, etc., the Company uses the general method, that is, the
three-stage model to measure loss reserves.
When measuring the credit impairment of financial instruments, the Company considers the following factors in
assessing whether the credit risk has increased significantly:


The Company divides other receivables into a number of portfolios based on the nature of the money, and
calculates the expected credit loss on the basis of the portfolio. The basis for determining the portfolio is as
follows:
Other receivables portfolio 1: A portfolio of unrelated parties with provision for impairment in accordance with
the expected loss rate


Other receivables portfolio 2: A portfolio of related parties included in the scope of the consolidated statement


For other receivables classified into portfolio 1, the Company refers to historical credit loss experience, combines
with current conditions and forecasts of future economic conditions, compiles a comparison table of accounts
receivable aging and expected credit loss rate of the entire duration, and calculates the expected credit loss.


For other receivables classified into portfolio 2, the Company refers to historical credit loss experience, combines
with current conditions and forecasts of future economic conditions, and calculates an expected credit loss of 0%
through the default risk exposure and the expected credit loss rate of the entire duration .


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(4)Accrual method of bad debt provision for those accrual by account age as the portfolio

               Account age                   Expected credit loss rate of receivable (%) Expected credit loss rate of other receivable
                                                                                                             (%)
Within one year (one year included)                              0                                             0

1-2 years                                                        5                                             5
2-3 years                                                        10                                           10
Over 3 years                                                     30                                           30
11.2 Accounting treatment methods of expected credit losses
In order to reflect the changes in the credit risk of financial instruments since initial recognition, the Company
remeasures the expected credit losses on each balance sheet date, and the resulting increase or reversal of the loss
provisions should be counted as an impairment loss or gain and included in the current profit and loss, and based
on the type of financial instrument, offsets the book value of the financial asset listed in the balance sheet or
includes in the estimated liability (loan commitment or financial guarantee contract) or includes in other
comprehensive income (debt investments measured at fair value and whose changes are included in other
comprehensive income).



12. Account receivable


Same as 10. Note receivable


13.Receivable financing


Same as 10. Note receivable


14. Other account receivable


Determination and accounting treatment on the expected credit losses of other account receivable

Same as 10. Note receivable


15. Inventory


15.1 Categories of inventory
The inventory is goods or manufactured products held for sale, products in process, and materials and matters
utilized in the production or supply of labor. Mainly including raw material, revolving materials (wrappage and
low-value consumption goods etc.), outside processing materials, goods in process, semi-finished goods, stocks
and so on.


15.2 Accounting method for inventory delivery

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When inventories are issued, the actual cost is determined by monthly weighted average method.


15.3 Accrual method inventory falling price reserves
On the balance sheet day, the inventory is measured on the lower one between the cost and the net realizable value,
and the provision for the falling price reserves is accrued on each inventory item; however, as for the inventory of
large quantity and low price, the provision is accrued on the inventory category.


15.4 Inventory system
Inventory system of the Company is perpetual inventory system


15.5 Amortization method for the low-value consumables and wrap page
Low-value consumables and packages are amortized by one-point method



16. Contractual assets

17. Contractual costs

18. Assets held for sale

19. Debt investment

20. Other debt investment

21. Long-term account receivable

22. Long-term equity investment

22.1 Recognition of initial investment cost
For a long-term equity investment obtained by a business combination, if it is a business combination under the
same control, take the share of the combine party obtained in the book value of the net assets in the consolidated
financial statements of the ultimate controlling party on the combination date as the initial investment cost; in the
case of the consolidation of enterprises not under the same control, recognized as the initial cost is the recognized
consolidation cost on the purchase day. As for the long term equity investment obtained by cash payment, the
initial investment cost is the actual purchase payment. As for the long term equity investment obtained by the
equity securities offering, the initial investment cost is the fair value of the equity securities. As for the long-term
equity investment obtained by debt reorganization, initial investment cost of such investment should determine by
relevant regulation of the “Accounting Standards for Business Enterprise No.12- Debt Reorganization”; as for the
long term equity investment obtained by the exchange of the non-monetary assets, the initial investment cost is
recognized on the relevant rules in the “Accounting Standards for Business Enterprise No. 7- Exchange of
Non-Monetary Assets”

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22.2 Subsequent measurement and profit or loss recognition
Where the company has a control over the investee, long-term equity investments are measured using cost method.
Long-term equity investments in associates and joint ventures are measured using equity method. Where part of
the equity investments of an investor in its associates are held indirectly through venture investment institutions,
common fund, trust companies or other similar entities including investment linked insurance funds, such part of
equity investments indirectly held by the investor shall be measured at fair value through profit or loss according
to according to relevant requirements of Accounting Standards for Business Enterprises No.22—Recognition
and measurement of Financial Instruments regardless whether the above entities have significant influence on
such part of equity investments, while the remaining part shall be measured using equity method.


22.3 Basis of conclusion for common control and significant influence over the investee
Joint control over an investee refers to where the activities which have a significant influence on return on certain
arrangement could be decided only by mutual consent of the investing parties sharing the control, which includes
the sales and purchase of goods or services, management of financial assets, acquisition and disposal of assets,
research and development activities and financing activities, etc.; Significant influence on the investee refers to
that: significant influence over the investee exists when holding more than 20% but less than 50% of the shares
with voting rights or even if the holding is below 20%, there is still significant influence if any of the following
conditions is met: there is representative in the board of directors or similar governing body of the investee;
participation in the investee’s policy setting process; assign key management to the investee; the investee relies on
the technology or technical information of the investing company; or major transactions with the investee.



23. Investment real estate

Measurement for investment real estate
Cost method
Depreciation or amortization method

The types of investment real estate of the Company include the leased land use rights, leased buildings, and land
use rights held and prepared for transfer after appreciation. Investment real estate is initially measured at cost and
subsequently measured by using the cost model.


The leased buildings in the Company’s investment property adopts straight-line depreciation to calculate and
distill depreciation, specific accounting policy are same as part of the fixed assets. The leased land use rights in
the investment property and the land use rights to be transferred after appreciation adopt straight-line amortization,
specific accounting policy are same as part of the intangible assets.




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24. Fixed assets


(1) Recognition


Fixed assets refers to the tangible assets holding for purpose of producing goods, providing labor services, leasing
or operation management, which has one accounting fiscal year of using life. Meanwhile as up to the following
conditions, they are recognized: the economic interest related to the fixed assets probably flow into the Company;
the cost of the fixed assets can be measured reliably.


(2) Depreciation method


                                                                                                   Annual depreciation
       Category          Depreciation method    Depreciation life (year)        Salvage rate
                                                                                                          rate

                        Straight-line
 House building                                 20-50                      10                  1.8-4.5
                        depreciation

                        Straight-line
 Machinery equipment                            10                         10                  9
                        depreciation

                        Straight-line
 Mold equipment                                 3                          10                  30
                        depreciation

 Transportation         Straight-line
                                                5                          10                  18
 equipment              depreciation

                        Straight-line
 Instrument equipment                           5                          10                  18
                        depreciation

                        Straight-line
 Tool equipment                                 5                          10                  18
                        depreciation

                        Straight-line
 Office equipment                               5                          10                  18
                        depreciation
N/A



(3) Recognition basis, valuation and depreciation method for fixed assets under financing lease


The fixed assets under financing lease are the lease that has substantially transferred all the risks and rewards
associated with asset ownership. The initial valuation of the fixed assets under financing lease is to take the lower
one between the fair value of the leased assets and the present value of the minimum lease payments on the start
date of the lease period as the entry value; the subsequent valuation of the fixed assets under financing lease
adopts the depreciation policy consistent with the own fixed assets to make depreciation and impairment
provision.




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25. Construction in process


Construction in process of the Company divided as self-run construction and out-bag construction. The
Construction in process of the Company carried forward as fixed assets while the construction is ready for the
intended use. Criteria of the expected condition for use should apply one of the follow conditions: The substance
construction (installation included) of the fixed assets has completed all or basically; As the projects have been in
test production or operation, and the results show that the assets can operate properly and produce the qualified
products stably, or the test operation result shows the assets can operate or open properly. The expenditure of the
fixed assets on the construction is a little or little. The fixed assets of the project constructed have been up to the
requirements of the design or contract, or basically up to.




26. Borrowing expenses

26.1 Recognition principle on capitalization of borrowing expenses
As for the Company’s actual borrowing expenses directly attributable to the assets construction or production, it is
capitalized and reckoned into the relevant assets cost; as for other borrowing expenses, it is recognized on the
actual sum and reckoned into the current loss/gain. The assets up to the capitalization are assets as the capital
assets, investment real estate, and inventory reaching the expectant availability or sale ability.


26.2 Calculation of the capitalization
Capitalization term: the period from the time starts to capitalization to the time the capitalization ends. The period
of capitalization suspended is not included. The capitalization of borrowing expenses should be suspended while
the abnormal interrupt, which surpass three months continuously, in the middle of acquisition or construction or
production.


As for the borrowing of the specific borrowing,          the capitalization sum is recognized on the current actual
interest expenses less the interest income of the borrowing capital not utilized but deposited in the bank or the
return of the temporary investment; As for the appropriation of the general borrowing, the capitalization sum is
recognized on the weighted average of, the accumulative assets expenditure above the specific borrowing, and
times the capitalization rate of the appropriation; As for the discount or premium of the borrowing, the discount or
premium to be diluted in every accounting period is recognized in the actual rate method.


The effective interest method is the method for the measurement of the diluted discount or premium or interest
expenses on the actual interest rate; and the actual interest rate is the interest rate used in the discount of the future
cash flow in the expectant duration period as the current book value of the borrowing.




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27. Biological assets

28. Oil and natural gas assets

29.Right-of-use assets

30. Intangible assets

(1) Accounting method, service life and impairment test


1. Recognition principle on capitalization of borrowing expenses
As for the Company’s actual borrowing expenses directly attributable to the assets construction or production, it is
capitalized and reckoned into the relevant assets cost; as for other borrowing expenses, it is recognized on the
actual sum and reckoned into the current loss/gain. The assets up to the capitalization are assets as the capital
assets, investment real estate, and inventory reaching the expectant availability or sale ability.


2. Calculation of the capitalization
Capitalization term: the period from the time starts to capitalization to the time the capitalization ends. The period
of capitalization suspended is not included. The capitalization of borrowing expenses should be suspended while
the abnormal interrupt, which surpass three months continuously, in the middle of acquisition or construction or
production.


As for the borrowing of the specific borrowing,          the capitalization sum is recognized on the current actual
interest expenses less the interest income of the borrowing capital not utilized but deposited in the bank or the
return of the temporary investment; As for the appropriation of the general borrowing, the capitalization sum is
recognized on the weighted average of, the accumulative assets expenditure above the specific borrowing, and
times the capitalization rate of the appropriation; As for the discount or premium of the borrowing, the discount or
premium to be diluted in every accounting period is recognized in the actual rate method.


The effective interest method is the method for the measurement of the diluted discount or premium or interest
expenses on the actual interest rate; and the actual interest rate is the interest rate used in the discount of the future
cash flow in the expectant duration period as the current book value of the borrowing.



(2) Accounting policies for internal research and development expenditure


Specific criteria for the research phase and development phase of internal R&D projects, and specific criteria for
development phase expenditures to qualify for capitalization


Expenditures for internal research and development projects at the research phase shall be included in the current


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profit or loss when incurred; expenditures incurred at the development phase and recognized as intangible assets
shall be transferred to intangible assets accounting.



31. Long-term assets impairment


Long-term equity investments, investment properties measured at cost and long-term assets such as fixed assets,
construction in progress, productive biological assets at cost method, oil and gas assets, intangible assets and
goodwill are tested for impairment if there is any indication that an asset may be impaired at the balance date. If
the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount,
a provision for impairment and an impairment loss are recognized for the amount by which the asset’s carrying
amount exceeds its recoverable amount.


The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future
cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on
the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the
recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest
group of assets that is able to generate independent cash inflows.


Goodwill arising from a business combination is tested for impairment at least at each year end, irrespective of
whether there is any indication that the asset may be impaired. For the purpose of impairment testing, the carrying
amount of goodwill acquired in a business combination is allocated from the acquisition date on a reasonable
basis to each of the related asset groups; if it is impossible to allocate to the related asset groups, it is allocated to
each of the related set of asset groups. If the carrying amount of the asset group or set of asset groups is higher
than its recoverable amount, the amount of the impairment loss first reduced by the carrying amount of the
goodwill allocated to the asset group or set of asset groups, and then the carrying amount of other assets (other
than the goodwill) within the asset group or set of asset groups, pro rata based on the carrying amount of each
asset.


Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent period.



32. Long-term deferred expenses

The Company’s long-term deferred expenditure are expenses paid out and with one year above (one-year
excluded) benefit period. The long-term deferred expenses are diluted by periods according to the benefit period.
As the long-term deferred expenses cannot enable the accounting period’s beneficiary, all dilution values of the
project undiluted yet, are transferred into the current loss/gain.




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33. Contractual liabilities

The company presents the obligation to transfer goods or provide services to customers for consideration received
or receivable as a contract liability.


34. Employees remuneration


(1) Accounting for short-term benefits


In the period of employee services, short-term benefits are actually recognized as liabilities and charged to profit
or loss, or if otherwise required or allowed by other accounting standards, to the related costs of assets for the
current period. At the time of actual occurrence, The Company’s employee benefits are recorded into the profits
and losses of the current year or assets associated costs according to the actual amount. The non-monetary
employee benefits are measured at fair value. Regarding to the medical and health insurance, industrial injury
insurance, maternity insurance and other social insurances, housing fund and labor union expenditure and
personnel education that the Company paid for employees, the Company should recognize corresponding
employees benefits payable according to the appropriation basis and proportion as stipulated by relevant
requirements and recognize the corresponding liabilities and include these expenses in the profits or losses of the
current period or recognized as respective assets costs.


(2) Accounting for post-employment benefits


During the accounting period in which an employee provides service, the amount payable calculated under
defined contribution scheme shall be recognized as a liability and recorded in profit and loss of the current period
or in assets. In respect of the defined benefit scheme, the Company shall use the projected unit credit method and
attribute the welfare obligations calculated using the formula stipulated by the defined benefit scheme to the
service period of the employee, and record the obligation in the current profit and loss or related assets cost.


(3) Accounting for termination benefits


The Company recognizes a liability and expenses in the current profit or loss for termination benefits at the earlier
of the following dates: when the Company can no longer withdraw the offer of those benefits; and when the
Company recognizes costs for restructuring involving the payment of termination costs.


(4) Accounting for other long-term employee benefits


The Company provides other long-term employee benefits to its employees. For those falling within the scope of
defined contribution scheme, the Company shall account for them according to relevant requirements of the
defined contribution scheme. In addition, the Company recognizes and measures the net liabilities or net assets of
the other long-term employee benefits according to relevant requirements of the defined contribution scheme.


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35. Lease liability

36. Accrual liability

The obligation related to contingencies is the current obligation assumed by the company, and performing this
obligation may result in an outflow of economic benefits, and this obligation can be determined as the estimated
liabilities when the amount can be reliably measured. The Company makes initial measurement in accordance
with the best estimate for performing the related current obligation, if the expenditure as needed has a continuous
range, and the likelihood of occurrence of various results in this range is the same, the best estimate is determined
by the median value within the range; if a number of items are involved, the best estimate is determined by the
calculation of various possible outcomes and related probabilities.


At the balance sheet date, the book value of estimated liabilities should be rechecked, if there is conclusive
evidence indicates that this book value cannot truly reflect the current best estimate, and then the book value
should be adjusted in accordance with the current best estimate.



37.Share-based payment

38. Other financial instrument as preferred shares and perpetual bonds

39. Revenue (income)

Accounting policy for recognition and measurement of revenue(income)
The Company recognizes revenue based on the transaction price allocated to the performance obligations at the
time when it has fulfilled the performance obligations in the contract, that is, when the customer obtains control
rights of the relevant goods or services. Obtaining control rights of related goods means being able to lead the use
of the goods and obtain almost all economic benefits from them. Performance obligations refer to the Company's
commitment to transfer clearly distinguishable goods to customers in the contract. The transaction price refers to
the amount of consideration that the Company expects to be entitled to receive due to the transfer of goods to the
customer, not including the amount collected on behalf of a third party and the amount that the Company expects
to return to the customer.
Whether the performance obligation is to be performed within a certain period of time or at a certain point of time
depends on the terms of the contract and relevant legal provisions. If the performance obligation is performed
within a certain period of time, the Company recognizes revenue in accordance with the progress of the
performance. Otherwise, the Company recognizes revenue at a certain point when the customer obtains control
rights of the relevant assets.
The Company's specific revenue recognition methods:


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The sales contract between the Company and the customer usually only contains the performance obligation for
the transferred goods. The Company’s performance obligation for the transfer of goods does not meet the three
conditions for performance within a certain period of time, therefore, the Company usually recognizes revenue at
the time-point of completion of the inspection of incoming on the basis of comprehensive consideration of the
following factors, i.e. for domestic sales, the revenue is recognized when the product has been sent out and the
other party has signed for confirmation. For export sales, the revenue is recognized by the relevant customs
declaration documents when the product has been shipped and customs declaration procedures have been
completed.
The house lease contract signed by the Company and the customer usually only contains the performance
obligation for the provision of lease and property services, the Company recognizes revenue according to the
progress of performance when a performance obligation is performed within a certain period of time, i.e. as
agreed in the lease contract, revenue is recognized when related payments are received or evidence of collections
is obtained.

Different business models of similar business resulted in different accounting policies for revenue recognition
N/A




40. Government subsidy

40.1Category of government subsidy and accounting treatment
Governments subsidy of the Company refer to the monetary and non-monetary assets obtained from government
for free (excluding the capital invested by government as an owner). If the government grants are monetary assets,
it shall be measured according to the amount received or receivable. If the government grants are non-monetary
assets, it shall be measured at fair value; if the fair value cannot be obtained reliably, it shall be measured at the
nominal amount.


Government grants related to daily activities are included in other income in accordance with the economic
business. Government grants not related to daily activities are included in the non-operating income and
expenditure.


Government grants that the government documents clearly stipulate to be used for the purchase and establishment
or forming long-term assets in other way are recognized as government grants related to assets. For the
government grants that the government documents do not clearly specify the subsidy target and can form
long-term assets, the part corresponding to the asset value is recognized as the government grants related to the
assets, and the rest is recognized as the government grants related to the income. For the government grants which
are difficult to be distinguished, recognize the whole as the government grants related to the income. Government
grants related to assets are recognized as deferred income. The amount recognized as deferred income is included
in the current profit and loss in a reasonable and systematic manner within the useful life of the relevant asset.


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Government grants other than government grants related to assets are recognized as government grants related to
income. If the government grants related to the income are used to compensate the related expenses or losses of
the enterprise in the future period, recognize them as deferred income and include them in the current profit and
loss during the period of recognizing the related expenses. The government grants used to compensate the relevant
expenses or losses incurred by the enterprise are directly included in the current profit and loss.


The Company obtained the policy preferential loan interest subsidy, and the finance allocated the interest subsidy
funds to the loan bank, and the loan bank provides loans to the Company at a preferential interest rate, take the
actual amount of the loan received as the entry value of the loan, and calculate the relevant borrowing costs
according to the loan principal the policy preferential interest rate. If the finance directly appropriates the interest
subsidy funds to the Company, the Company will offset the relevant borrowing costs with the corresponding
interest subsidy.


40.2 Time points to recognize the government grants
Government grants are recognized when they meet the conditions attached to government grants and can be
received. Government grants measured in accordance with the amount receivable are recognized when there is
conclusive evidence at the end of the period that it meets the relevant conditions stipulated in the financial support
policy and is expected to receive financial support funds. Other government grants other than government grants
measured in accordance with the receivable amount are recognized when the grant is actually received.




41. Deferred income tax asset / deferred income tax liability

41.1 Where there is difference between the carrying amount of the assets or liabilities and its tax base, (as for an
item that has not been recognized as an asset or liability, if its tax base can be determined in light of the tax law,
the tax base shall recognized as the difference) the deferred income tax and deferred income tax liabilities shall be
determined according to the applicable tax rate in period of assets expected to recover or liability expected to pay
off.


41.2 The deferred income tax assets shall be recognized to the extent of the amount of the taxable income which it
is most likely to obtain and which can be deducted from the deductible temporary difference. On balance sheet
date, if there have concrete evidence of obtaining, in future period, enough taxable amounts to deduct the
deductible temporary difference, the un-confirmed deferred income tax assets in previous accounting period shall
be recognized. If there has no enough taxable amounts, obtained in future period, to deducted the deferred income
tax assets, book value of the deferred income tax assets shall be kept in decreased.


41.3The taxable temporary differences related to the investments of subsidiary companies and associated


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enterprises shall recognized as deferred income tax liability, unless the Company can control the time of the
reverse of temporary differences and the temporary differences are unlikely to be reversed in the expected future.
As for the deductible temporary difference related to the investment of the subsidiary companies and associated
enterprises, deferred income tax assets shall be recognized while the temporary differences are likely to be
reversed in the expected future and it is likely to acquire any amount of taxable income tax that may be used for
making up the deductible temporary differences.



42. Leasing


(1) Accounting treatment for operating lease


Operating lease payments are recognized on a straight-line basis over the term of the relevant lease, and are either
included in the cost of related asset or charged to profit or loss for the period.



(2) Accounting treatment for finance lease


Accounting treatment for finance lease: At the commencement of the lease term, the Group records the leased
asset at an amount equal to the lower of the fair value of the leased asset and the present value of the minimum
lease payments. The difference between the recorded amounts is accounted for as unrecognized finance charge,
using the effective interest method amortization during the lease term. Minimum lease payments deducting
unrecognized financing charges are listed as long-term payable.




43. Other important accounting policy and estimates

N/A


44. Changes in important accounting policies and estimates

(1) Changes in important accounting policies

√ Applicable □ Not applicable

      Content and reason of changes in
                                                  Approval    procedure                       Note
            accounting policies
44.1 Change in accounting policies and basis
The revised Accounting Standards for Business Enterprise No. 14- Revenue (hereinafter referred to as New
Revenue Standard) was released by the Ministry of Finance in 2017. the Company implemented the New Revenue
Standards and Notice since 1 Jan. 2020. and relevant content of the accounting polices are adjusted.


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The new revenue standards replaced the "Accounting Standards for Business Enterprises No. 14-Revenue" and
"Accounting Standards for Business Enterprises No. 15-Construction Contracts" (collectively referred to as the
"original revenue standards") promulgated by the Ministry of Finance in 2006. Under the original revenue
standards, the Company used the transfer of risk rewards as the judgment standard for the timing of revenue
recognition. The new revenue standards introduce the “five-step method” of revenue recognition and
measurement, and provide more guidance for specific transactions or events. Under the new revenue standards,
the Company uses the transfer of control as the judgment standard for revenue recognition. For the specific
accounting policies of revenue recognition and measurement, please refer to "Note III. (22) Revenue".


The Company has adjusted relevant accounting policies in accordance with the specific provisions of the new
revenue standards on specific matters or transactions. According to the provisions of the new revenue standards,
the contract assets or contract liabilities are listed in the balance sheet based on the relationship between
performance obligations and customer payments. At the same time, the Company provides more disclosures on
income-related information disclosure requirements in accordance with the new revenue standards, such as
information related to important contracts or business and performance obligations and information related to
transaction prices allocated to the remaining performance obligations, including the usual performance time of
performance obligations, the important payment terms, the nature of the goods the company promises to transfer
(including the explanation of whether the company is an agent), the company’s expected return to customers and
other similar obligations, the expected refund to the customer assumed by the company and other similar
obligations, the type of quality assurance and related obligations.


The Company reviews revenue sources and customer contract procedures to assess the impact of the new revenue
standards on financial statements. The Company’s revenue is mainly derived from the sale of goods, and revenue
is recognized when the goods are delivered or the service acceptance is completed. The adoption of the new
revenue standards has no significant impact on the Company except for the presentation of financial statements.




(2)Changes in important accounting estimates

□ Applicable √Not applicable




(3) Adjustment the financial statements at the beginning of the first year of implementation of new leasing
standards since 2021


Applicable
Whether needs to adjust the balance sheet at the beginning of the year
□Yes √No


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Explanation of reasons for not requiring the adjustment of beginning balance sheet account
No impact items


(4) Retrospective adjustment of early comparison data description when initially implemented the new
leasing standards since 2021


□ Applicable   √ Not applicable


45. Other

VI. Taxes

1. Major tax and tax rate

                   Taxes                                     Taxation basis                                Tax rate

 VAT                                           Sales revenue                             13%, 9%, 6%, 5%, 3%

 Consumption tax                               Turnover tax payable                      7%

 Corporate income tax                          Taxable income                            25%, 15%

 Educational surtax                            Turnover tax payable                      3%

 Local educational surtax                      Turnover tax payable                      2%, 1.5%

 Property tax                                  70% of original value of the property     1.2%

Explain the different taxation entity of the enterprise income tax

                           Taxation entity                                                   Income tax rate


2. Tax preferences

According to the “Measures for the Determination of High-tech Enterprises”, and through the enterprise
application, expert review, and public announcement and other procedures, the Company’s wholly-owned
subsidiary, Wuhan Hengfa Technology Co., Ltd., has been identified as a high-tech enterprise, and obtained the
“High-tech Enterprise Certificate” jointly issued by the Science and Technology Department of Hubei Province,
Hubei Provincial Finance Department, Hubei Provincial Office, SAT, and Local Taxation Bureau of Hubei
Province on December 1, 2020, the certificate number is GR202042003237, which is valid for 3 years. The
applicable corporate income tax rate of the subsidiary Wuhan Hengfa Technology Co., Ltd. for 2021was 15%.


3. Other

Nil




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VII. Notes to main items in consolidated financial statement

1. Monetary fund

                                                                                                                          In RMB

                    Item                                   Ending balance                          Opening balance

 Cash on hand                                                                  903.40                                 138,673.02

 Bank deposit                                                          16,620,293.80                            30,141,013.39

 Other monetary fund                                                   42,990,989.02                            30,688,367.17

 Total                                                                 59,612,186.22                            60,968,053.58

Other explanation
Other currency funds are bank acceptance bill margin


2. Trading financial assets

                                                                                                                          In RMB

                    Item                                   Ending balance                          Opening balance

   Including:

   Including:

Other note:


3. Derivative financial assets

                                                                                                                          In RMB

                    Item                                   Ending balance                          Opening balance
Other note:


4. Note receivable

(1) Category

                                                                                                                          In RMB

                    Item                                   Ending balance                          Opening balance

 Commercial acceptance bill                                                 491,683.78                          20,240,464.79

 Total                                                                      491,683.78                          20,240,464.79

                                                                                                                          In RMB

                                          Ending balance                                      Opening balance
         Category                                Bad debt          Book                                                  Book
                           Book balance                                        Book balance      Bad debt provision
                                                 provision         value                                                 value



                                                                                                                                 87
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                        Amoun         Proport     Amoun    Accrua                    Amoun       Proport                 Accrual
                                                                                                              Amount
                             t           ion         t         l ratio                   t        ion                      ratio

    Including:

    Including:

Accrual of bad debt provision on single basis:
                                                                                                                                       In RMB

                                                                                Ending balance
          Name
                                     Book balance              Bad debt provision             Accrual ratio              Accrual causes

Accrual of bad debt provision on portfolio:
                                                                                                                                       In RMB

                                                                                   Ending balance
             Name
                                                Book balance                      Bad debt provision                   Accrual ratio

Explanation on portfolio basis:
If the provision for bad debts of note receivable is made in accordance with the general model of expected credit losses, please refer to
the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √Not applicable


(2) Bad debt provision accrual, collected or reversal in the period

Bad debt provision accrual in the period:
                                                                                                                                       In RMB

                                                                   Amount changed in the period
                        Opening
     Category                                                      Collected or                                             Ending balance
                           balance              Accrual                                Written-off            Other
                                                                     reversal

Including major amount bad debt provision that collected or reversal in the period:
□ Applicable √Not applicable


(3) Notes receivable that the company has pledged at the end of the period

                                                                                                                                       In RMB

                                  Item                                                       Amount pledge at period-end


(4) Notes endorsement or discount and undue on balance sheet date

                                                                                                                                       In RMB

                    Item                            Amount derecognition at period-end            Amount not derecognition at period-end

 Commercial acceptance bill                                                                                                        211,799.13

 Total                                                                                                                             211,799.13



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(5) Notes transfer to account receivable due for failure implementation by drawer at period-end

                                                                                                                                         In RMB

                                Item                                             Amount transfer to account receivable at period-end

Other note


(6) Note receivable actually written-off in the period


                                                                                                                                         In RMB

                                Item                                                              Written-off amount

Written-off situation of important notes receivable:
                                                                                                                                         In RMB

                                                                                                                               Whether the
                                                                                                         Written-off            payment is
                         Nature of notes               Written-off
        Name                                                              Written-off reason             procedure             generated by
                            receivable                  amount
                                                                                                         performed             related party
                                                                                                                                transactions

Notes receivable written-off description:


5. Account receivable

(1) Category

                                                                                                                                         In RMB

                                             Ending balance                                               Opening balance

                                                       Bad debt
                          Book balance                                                 Book balance           Bad debt provision
      Category                                         provision         Book                                                          Book
                        Amoun       Proport     Amoun        Accrua      value       Amoun       Proport      Amoun        Accrual     value
                            t          ion         t         l ratio                    t          ion           t          ratio

 Account receivable
 with bad debt          13,146,                 13,156,      100.00                  13,146,                  13,146,       100.00
                                                                           0.00                   9.31%                                    0.00
 provision accrual       290.18                  183.96              %               290.18                    290.18           %
 on a single basis

 Including:

 Account receivable
                         135,77                                          135,75      128,07
 with bad debt                                  9,893.7                                                       9,893.7                 128,063,
                        0,727.1                               0.01%      0,939.5     3,805.5     90.69%                     0.01%
 provision accrual                                      8                                                              8                911.79
                                5                                             9             7
 by combination

 Including:

 Combination 1:          135,77                 9,893.7       0.01%      135,75      128,07      90.69%       9,893.7       0.01%     128,063,


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 Take account ages       0,727.1                    8              0,939.5   3,805.5                        8                    911.79
 of receivables as a          5                                          9          7
 combination of
 credit risk
 characteristics

                         148,91                                     135,75      141,22
                                            13,166,                                        100.00    13,156,                    128,063,
 Total                   7,017.3                                   0,939.5   0,095.7                               8.66%
                                             077.74                                            %     183.96                      911.79
                              3                                          9          5

Accrual of bad debt provision on single basis: 13,146,290.18
                                                                                                                                  In RMB

                                                                        Ending balance
 Name
                            Book balance                Bad debt provision        Accrual ratio                 Accrual causes

 Shenzhen Portman
 Bowling Club Co.,                   2,555,374.75                2,555,374.75                     100.00%       Uncollectible
 Ltd.

 Hong Kong Haowei
                                     1,870,887.18                1,870,887.18                     100.00%       Uncollectible
 Industrial Co., Ltd.

 TCL ACE ELECTRIC
 APPLIANCE
                                     1,325,431.75                1,325,431.75                     100.00%       Uncollectible
 (HUIZHOU) CO.,
 LTD.

 Qingdao Haier Parts
                                     1,225,326.15                1,225,326.15                     100.00%       Uncollectible
 Procurement Co., Ltd.

 SKYWORTH
 Multimedia                            579,343.89                  579,343.89                     100.00%       Uncollectible
 (Shenzhen) Co., Ltd.

 Shenzhen Huixin
 Video Technology Co.,                 381,168.96                  381,168.96                     100.00%       Uncollectible
 Ltd.

 Shenzhen Wandelai
 Digital Technology                    351,813.70                  351,813.70                     100.00%       Uncollectible
 Co., Ltd.

 Shenzhen Dalong
                                       344,700.00                  344,700.00                     100.00%       Uncollectible
 Electronic Co., Ltd.

 Shenzhen Keya
                                       332,337.76                  332,337.76                     100.00%       Uncollectible
 Electronic Co., Ltd.

 Shenzhen Qunping
                                       304,542.95                  304,542.95                     100.00%       Uncollectible
 Electronic Co., Ltd.

 China Galaxy
                                       288,261.17                  288,261.17                     100.00%       Uncollectible
 Electronics (Hong


                                                                                                                                       90
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 Kong) Co., Ltd.

 Dongguan Weite
                                         274,399.80                  274,399.80                    100.00%     Uncollectible
 Electronic Co., Ltd.

 Chuangjing                              247,811.87                  247,811.87                    100.00%     Uncollectible

 Hong Kong New
 Century Electronics                     207,409.40                  207,409.40                    100.00%     Uncollectible
 Co., Ltd.

 Shenyang Beitai
                                         203,304.02                  203,304.02                    100.00%     Uncollectible
 Electronic Co., Ltd.

 Beijing Xinfang Weiye
                                         193,000.00                  193,000.00                    100.00%     Uncollectible
 Technology Co., Ltd.

 TCL Electronics (Hong
                                         145,087.14                  145,087.14                    100.00%     Uncollectible
 Kong) Co., Ltd.

 Huizhou TCL Xinte
                                         142,707.14                  142,707.14                    100.00%     Uncollectible
 Electronics Co., Ltd.

 Sky Worth – RGB
                                         133,485.83                  133,485.83                    100.00%     Uncollectible
 Electronic Co., Ltd.

 Other                                 2,039,896.72                 2,039,896.72                   100.00%     Uncollectible

 Total                                13,146,290.18              13,146,290.18     --

Accrual of bad debt provision on single basis:
                                                                                                                                 In RMB

                                                                          Ending balance
 Name
                            Book balance                Bad debt provision         Accrual ratio               Accrual causes

Accrual of bad debt provision on portfolio: 9893.78
                                                                                                                                 In RMB

                                                                             Ending balance
              Name
                                            Book balance                   Bad debt provision                   Accrual ratio

 Within one year

 1-2 years                                              50,840.84                          2,542.04                             5.00%

 2-3 years                                              65,934.11                          6,593.41                             10.00%

 Over 3 years                                            2,527.77                             758.33                            30.00%

 Total                                                 119,302.72                          9,893.78       --

Explanation on portfolio basis:
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, please
refer to the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √Not applicable
By account age


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                                                                                                                                   In RMB

                          Account ages                                                             Book balance

 Within one year (one year included)                                                                                    135,313,612.32

 1-2 years                                                                                                                     316,209.95

 2-3 years                                                                                                                      65,934.11

 Over 3 years                                                                                                            13,221,260.95

    3-4 years                                                                                                                   74,970.77

    Over 5 years                                                                                                         13,146,290.18

 Total                                                                                                                  148,917,017.33


(2) Bad debt provision accrual, collected or reversal in the period

Bad debt provision accrual in the period:
                                                                                                                                   In RMB

                                                                Amount changed in the period
                        Opening
     Category                                                   Collected or                                            Ending balance
                        balance              Accrual                               Written-off             Other
                                                                  reversal

Including major amount bad debt provision that collected or reversal in the period:
                                                                                                                                   In RMB

                   Company                             Amount collected or reversal                        Way of collection


(3) Actual written-off accounts receivable in the current period

                                                                                                                                   In RMB

                               Item                                                          Written-off amount

Including the important accounts receivable written-off situation:
                                                                                                                                   In RMB

                                                                                                                        Whether the
                                                                                                    Written-off          payment is
                        Nature of accounts         Written-off
         Name                                                          Written-off reason           procedure           generated by
                             receivable                amount
                                                                                                    performed           related party
                                                                                                                        transactions

Written-off description of accounts receivable:


(4) Top 5 account receivables collected by arrears party at ending balance

                                                                                                                                   In RMB

                                Ending balance of account             Proportion in total account          Ending balance of bad debt
         Company
                                          receivable                   receivables at period-end                   provision


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 Qingdao Haidayuan
 Purchasing Service Co.,                       55,398,955.61                              41.00%
 Ltd.

  Hong Kong Yutian
 International Investment                      29,037,251.56                              21.00%
 Co., Ltd.

 Hefei Hangjia Display
                                               20,818,896.99                              15.00%
 Technology Co., Ltd.

 TCL Air Conditioner
                                               17,304,577.43                              13.00%
 (Wuhan) Co., Ltd.

  Viewsonic
                                                 9,050,774.07                               7.00%
 International Copera

 Total                                        131,610,455.66                              97.00%


(5) Account receivable derecognition due to financial assets transfer

Nil


(6) Assets and liabilities resulted by account receivable transfer and continues involvement

Nil
Other note:
Nil


6. Receivable financing

                                                                                                                              In RMB

                     Item                                   Ending balance                                Opening balance

 Haier Electronic Acceptance                                               5,774,948.69                                10,057,385.11

                     Total                                                 5,774,948.69                                10,057,385.11

Receivable financing Changes in the period and changes in fair value
□ Applicable √Not applicable
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, please
refer to the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √Not applicable
Other explanation:




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7. Accounts paid in advance

(1) By account age

                                                                                                                               In RMB

                                             Ending balance                                         Opening balance
       Account ages
                                   Amount                     Proportion                   Amount                 Proportion

 Within one year                     31,776,308.14                     99.42%               39,458,164.61                  99.52%

 1-2 years                              102,781.00                         0.32%              102,781.00                       0.27%

 2-3 years                               82,309.50                         0.26%               82,309.50                       0.21%

 Over 3 years                                  0.00

 Total                               31,961,398.64                --                        39,643,255.11             --

Explanation on reasons of failure to settle on important account paid in advance with age over one year:
Nil


(2) Top 5 account paid in advance at ending balance by prepayment object

                     Company                                    Ending balance                      Proportion in accounts paid in
                                                                                                               advance
Hefei Hangjia Display Technology Co., Ltd.                                         10,981,759.00                                 34%
AU Optronics Co., Ltd.                                                              8,231,592.52                                 26%
Nanjing CEC Panda LCD Technology Co.,                                               3,243,380.00                                 10%
Ltd.
Guangzhou Houxiang Electronic                                                        820,800.00                                   3%
Technology Co., Ltd.
Gree Precision Mold (Wuhan) Co., Ltd.                                                745,620.00                                   2%
Other explanation:
Nil


8. Other account receivable

                                                                                                                               In RMB

                     Item                                 Ending balance                                Opening balance

 Other account receivable                                                  22,540,779.20                              4,466,949.96

 Total                                                                     22,540,779.20                              4,466,949.96


1) Category of interest receivable

                                                                                                                               In RMB

                     Item                                 Ending balance                                Opening balance


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2) Significant overdue interest

                                                                                                                    In RMB

                                                                                                       Whether there is
        Borrower                 Ending balance      Overdue time           Reason for overdue        impairment and its
                                                                                                        judgment basis

Other note:
Nil


3) Accrual of bad debt provision

□ Applicable √Not applicable


(2) Dividend receivable

1) Category of dividend receivable

                                                                                                                    In RMB

           Item (or invested unit)                  Ending balance                             Opening balance


2) Important dividend receivable with account age over one year

                                                                                                                    In RMB

                                                                                                       Whether there is
                                                                               Reasons for
  Item (or invested unit)        Ending balance      Account age                                      impairment and its
                                                                               non-recovery
                                                                                                        judgment basis


3) Accrual of bad debt provision

□ Applicable √Not applicable
Other note:


(3) Other account receivable

1) Other account receivable by nature

                                                                                                                    In RMB

                   Nature                         Ending book balance                        Opening book balance

 Margin & deposit                                                   1,381,560.00                             1,681,688.00

 Borrow money                                                       2,889,381.44                             2,124,073.12

 Intercourse funds                                               23,785,393.79                               8,924,093.42



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 Rental receivable                                                          8,311,911.11                          6,224,167.48

 Other                                                                      1,024,034.71                            364,429.79

 Less: Bad debt provision                                                 -14,851,501.85                        -14,851,501.85

 Total                                                                    22,540,779.20                           4,466,949.96


2) Accrual of bad debt provision

                                                                                                                          In RMB

                                     Phase I               Phase II                        Phase III

                                                   Expected credit losses for    Expected credit losses for
                                 Expected credit
   Bad debt provision                                 the entire duration         the entire duration (with       Total
                             losses over next 12
                                                        (without credit              credit impairment
                                    months
                                                     impairment occurred)                  occurred)

 Balance on1 Jan. 2021                                                117.75                  14,812,059.79      14,851,501.85

 Balance of 1 Jan. 2021
                                      ——                   ——                            ——                 ——
 in the period

 Balance on Dec. 31,
                                                                      117.75                  14,812,059.79      14,851,501.85
 2021

Change of book balance of loss provision with amount has major changes in the period
□ Applicable √Not applicable
By account age
                                                                                                                          In RMB

                            Account ages                                                       Book balance

 Within one year (one year included)                                                                             21,174,519.27

 1-2 years                                                                                                          297,671.40

 2-3 years                                                                                                          312,212.44

 Over 3 years                                                                                                    15,607,877.94

    3-4 years                                                                                                     1,446,706.00

    4-5 years                                                                                                       943,020.00

    Over 5 years                                                                                                 13,218,151.94

 Total                                                                                                           37,392,281.05


3) Bad debt provision accrual, collected or reversal in the period

Bad debt provision accrual in the period:
                                                                                                                          In RMB

     Category           Opening                         Amount changed in the period                          Ending balance




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                        balance                           Collected or
                                          Accrual                           Written-off          Other
                                                            reversal

Including the important amount collected or switches back in the period:
                                                                                                                                 In RMB

                  Company                            Amount collected or switches back                   Way of collection


4) The actual written-off other receivables in the current period

                                                                                                                                 In RMB

                               Item                                                           Written-off amount

Including the important written-off situation of other receivables:
                                                                                                                                 In RMB

                                                                                                                       Whether the
                                                                                                 Written-off           payment is
                          Nature of other            Written-off
         Name                                                            Written-off reason       procedure           generated by
                            receivables                amount
                                                                                                  performed           related party
                                                                                                                       transactions

Description of other receivables written-off:


5) Top 5 other receivables collected by arrears party at ending balance

                                                                                                                                 In RMB

                                                                                              Proportion in total
                                                                                                                    Ending balance of
        Company               Nature                Ending balance         Account ages        other receivables
                                                                                                                    bad debt provision
                                                                                                at period-end

 Portman                Rental receivable              4,021,734.22      Over 3 years                    18.00%          4,021,734.22

 Shenzhen Jifang
 Investment Co.,        Rental receivable              1,380,608.00      Over 3 years                     6.00%          1,380,608.00
 Ltd

 Fujian Jielian
 Electronics Co.,       Margin & deposit                 800,000.00      Over 3 years                     4.00%              240,000.00
 Ltd.

 Compensation for
                        Intercourse funds                555,785.81      Over 3 years                     2.00%              555,785.81
 traffic accidents

 Hebei Botou Court      Intercourse funds                520,021.00      Over 3 years                     2.00%              520,021.00

 Total                            --                   7,278,149.03              --                                      6,718,149.03


6) Receivables involving government subsidies

                                                                                                                                 In RMB


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                                                                                                                 Estimated time,
                            Government subsidy
            Name                                           Ending balance        Ending account age            amount and basis of
                                     item
                                                                                                                     receipt


7) Other receivable for termination of confirmation due to the transfer of financial assets

8) The amount of assets and liabilities that are transferred other receivable and continued to be involved

Other note:


9. Inventories

Whether companies need to comply with the disclosure requirements of the real estate industry
No


(1) Category

                                                                                                                               In RMB

                                      Ending balance                                            Opening balance

                                       Inventories fall                                         Inventories fall
                                        provision or                                              provision or
                                            contract                                                contract
         Item
                     Book balance       performance          Book value      Book balance        performance          Book value
                                              costs                                                  costs
                                        impairment                                                impairment
                                            provision                                              provision

 Raw materials       67,070,060.38          2,191,320.92    64,878,739.46    39,735,101.27         1,691,320.92       38,043,780.35

 Inventory
                     55,755,568.27          2,523,369.82    53,232,198.45    27,562,913.38         1,673,369.82       25,889,543.56
 goods

 Homemade
 semi-finished       11,750,725.54            29,363.73     11,721,361.81     6,213,029.56            29,363.73        6,183,665.83
 products

 Low priced and
 easily worn            156,274.66           110,622.38         45,652.28       159,646.13          110,622.38            49,023.75
 articles

 Total              134,772,337.36          4,854,676.85   129,877,952.00    73,670,690.34         3,504,676.85       70,166,013.49


(2) Inventories fall provision or contract performance costs impairment provision

                                                                                                                               In RMB

         Item          Opening                   Current increased                  Current decreased               Ending balance



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                         balance                                                    Reversal or
                                              Accrual               Other                                Other
                                                                                     write-off

 Raw materials         1,691,320.92           500,000.00                                                                  2,191,320.92

 Inventory
                       1,673,369.82           850,000.00                                                                  2,523,369.82
 goods

 Homemade
 semi-finished             29,363.73                                                                                         29,363.73
 products

 Low priced and
 easily worn              110,622.38                                                                                        110,622.38
 articles

 Total                 3,504,676.85          1,350,000.00                                                                 4,854,676.85
Nil


(3) Explanation on capitalization of borrowing costs at ending balance of inventory

Nil


(4) Assets completed without settlement from construction contract at period-end

Nil


10. Contract assets

                                                                                                                                  In RMB

                                                   Ending balance                                      Opening balance
              Item                  Book            Provision for                         Book         Provision for
                                                                       Book value                                         Book value
                                   balance          impairment                           balance        impairment

The amount and reasons for major changes in the book value of contract assets during the current period:
                                                                                                                                  In RMB

              Item                      Change amount                                        Reason for change

If the provision for bad debts of contract assets is made in accordance with the general model of expected credit losses, please refer to
the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √Not applicable
Accrual provision for impairment of contract assets in the current period
                                                                                                                                  In RMB

                                                                                             Current
            Item                 Current accrual             Current reversal                                            Reason
                                                                                        resell/Written-off

Other note:




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11. Assets held for sale

                                                                                                                                       In RMB

                      Ending book         Provision for       Ending book                                Estimated              Estimated
         Item                                                                            Fair value
                            balance       impairment                 value                             disposal cost           disposal time

Other note:


12. Non-current assets due within one year

                                                                                                                                       In RMB

                     Item                                   Ending balance                                    Opening balance

Important debt investment/other debt investment
                                                                                                                                       In RMB

                                              Ending balance                                           Opening balance

                                                           Real                                                      Real
  Creditor’s Rights Item        Face      Coupon                            Expiry         Face      Coupon                        Expiry
                                                          interest                                                  interest
                                 value       rate                             date          value      rate                           date
                                                            rate                                                       rate
Other note:


13. Other current assets

                                                                                                                                       In RMB

                     Item                                   Ending balance                                    Opening balance

 Reclassification of input tax to be
                                                                                     741,380.21                                 4,255,643.19
 deducted

 Total                                                                               741,380.21                                 4,255,643.19

Other explanation:


14. Debt investment

                                                                                                                                       In RMB

                                         Ending balance                                               Opening balance
         Item                             Provision for                                                Provision for
                      Book balance                             Book value              Book balance                            Book value
                                          impairment                                                    impairment

Important debt investment
                                                                                                                                       In RMB

                                              Ending balance                                           Opening balance

                                                           Real                                                      Real
  Creditor’s Rights Item        Face      Coupon                            Expiry         Face      Coupon                        Expiry
                                                          interest                                                  interest
                                 value       rate                             date          value      rate                           date
                                                            rate                                                       rate


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Provision for impairment accrual
                                                                                                                                                In RMB

                                     Phase I                            Phase II                      Phase III

                                                            Expected credit losses for      Expected credit losses for
                                 Expected credit
   Bad debt provision                                           the entire duration         the entire duration (with                  Total
                             losses over next 12
                                                                  (without credit               credit impairment
                                    months
                                                              impairment occurred)                  occurred)

 Balance of 1 Jan. 2021
                                        ——                             ——                          ——                            ——
 in the period

Change of book balance of loss provision with amount has major changes in the period
□ Applicable √Not applicable
Other note:


15. Other debt investment

                                                                                                                                                In RMB

                                                                                                                         Accumulat
                                                                                                                          ed loss
                                                                                                                          reserves
                                                          Fair value                                    Cumulativ
                       Opening       Accrued                                Ending                                       recognized
      Item                                                changes in                        Cost        e fair value                           Note
                       balance          interest                            balance                                       in other
                                                          this period                                     changes
                                                                                                                         comprehen
                                                                                                                            sive
                                                                                                                          income

Important other debt investment
                                                                                                                                                In RMB

                                                   Ending balance                                                 Opening balance
    Other     Creditor’s                                          Real                                                      Real
                                 Face          Coupon                              Expiry      Face           Coupon                       Expiry
       Rights Item                                               interest                                                   interest
                                 value             rate                             date       value              rate                         date
                                                                   rate                                                       rate

Provision for impairment accrual
                                                                                                                                                In RMB

                                     Phase I                            Phase II                      Phase III

                                                            Expected credit losses for      Expected credit losses for
                                 Expected credit
   Bad debt provision                                           the entire duration         the entire duration (with                  Total
                             losses over next 12
                                                                  (without credit               credit impairment
                                    months
                                                              impairment occurred)                  occurred)

 Balance of 1 Jan. 2021
                                        ——                             ——                          ——                            ——
 in the period

Change of book balance of loss provision with amount has major changes in the period


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□ Applicable √Not applicable
Other note:


16. Long-term receivables

(1) Long-term receivables

                                                                                                                                           In RMB

                                        Ending balance                                          Opening balance
                                                                                                                                       Discount
          Item             Book            Bad debt                                  Book              Bad debt
                                                               Book value                                            Book value       rate range
                           balance         provision                               balance             provision

Bad debt provision impairment
                                                                                                                                           In RMB

                                       Phase I                      Phase II                            Phase III

                                                            Expected credit losses for       Expected credit losses for
                                   Expected credit
   Bad debt provision                                          the entire duration            the entire duration (with           Total
                               losses over next 12
                                                                 (without credit                 credit impairment
                                      months
                                                              impairment occurred)                     occurred)

 Balance of 1 Jan. 2021
                                        ——                          ——                               ——                     ——
 in the period

Change of book balance of loss provision with amount has major changes in the period
□ Applicable √Not applicable


(2) Long-term receivables derecognized due to the transfer of financial assets

(3) The amount of assets and liabilities formed by the transfer of long-term receivables and continued
involvement

Other note


17. Long-term equity investment

                                                                                                                                           In RMB

                                                                Current changes (+, -)
                                                                                                                                          Ending
                                                 Investm                                     Cash
                 Openin                                           Other                                                                   balance
                                                       ent                                  dividen                          Ending
                   g       Additio                               compre                                                                     of
                                       Capital   gain/los                      Other         d or         Impair             balance
 Enterpr         balance     nal                                 hensive                                                                  depreci
                                       reducti          s                      equity        profit       ment       Other    (book
    ise          (book     investm                                income                                                                   ation
                                         on          recogni                   change       announ       accrual             value)
                 value)      ent                                 adjustm                                                                  reserve
                                                      zed                                    ced to
                                                                    ent                                                                      s
                                                     under                                  issued



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                                              equity

 I. Joint venture

 II. Associated enterprise

Other note


18. Other equity instrument investment

                                                                                                                                 In RMB

                    Item                                  Ending balance                                 Opening balance

Itemized disclosure of investment in non-trading equity instruments for the current period
                                                                                                                                 In RMB

                                                                                                       Reasons
                                                                                                     designated as
                                                                              The amount of                           Reason for
                                                                                                       fair value
                                                                              comprehensive                           transferring
                        Recognized                                                                   measurement
                                          Cumulative        Accumulated           income                             comprehensive
       Item               dividend                                                               and its changes
                                             gain               loss           transferred to                          income to
                           income                                                                     included in
                                                                                 retained                                  retained
                                                                                                         other
                                                                                 earnings                                  income
                                                                                                     comprehensive
                                                                                                        income

Other note:


19. Other non-current financial assets

                                                                                                                                 In RMB

                    Item                                  Ending balance                                 Opening balance
Other note:


20. Investment real estate

(1) Investment real estate measured at cost

√ Applicable □ Not applicable
                                                                                                                                 In RMB

                                                                                     Construction in
             Item              House and building          Land use right                                             Total
                                                                                           process

 I. Original book value

 1. Opening balance                  133,661,686.94                                                                  133,661,686.94

 2. Current increased

 (1) Outsourcing



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(2) Inventory\fixed
assets\construction in
process transfer-in

(3) Increased by
combination



3. Current decreased

(1) Disposal

(2) Other transfer-out



4. Ending balance        133,661,686.94                       133,661,686.94

II. Accumulated
depreciation and
accumulated
amortization

1. Opening balance        86,437,024.67                        86,437,024.67

2. Current increased        864,165.14                           864,165.14

(1) Accrual or
                            864,165.14                           864,165.14
amortization



3. Current decreased

(1) Disposal

(2) Other transfer-out



4. Ending balance         87,301,189.81                        87,301,189.81

III. Impairment
provision

1. Opening balance

2. Current increased

(1) Accrual



3. Current decreased

(1) Disposal

(2) Other transfer-out



4. Ending balance



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 IV. Book value

 1. Ending book value                 46,360,497.13                                                                            46,360,497.13

 2. Opening book value                47,224,662.27                                                                            47,224,662.27


(2) Investment real estate measured by fair value

□ Applicable √Not applicable


(3) Investment real estate without property certification held

                                                                                                                                      In RMB

                                                                                                Reason without property certification
                    Item                                      Book value
                                                                                                                  held

Other note
Nil


21. Fixed assets

                                                                                                                                      In RMB

                    Item                                     Ending balance                                  Opening balance

 Fixed assets                                                                  98,619,554.39                               100,747,972.84

 Disposal of fixed assets                                                      92,857,471.69                                   92,857,471.69

 Total                                                                     191,477,026.08                                  193,605,444.53


(1) Fixed asset

                                                                                                                                      In RMB

                                               Means of
                   House         Machinery                       Office          Instrument      Tool             Mold
       Item                                   transportati                                                                          Total
                   building      equipment                     equipment         equipment     equipment       equipment
                                                  on

 I. Original
 book value

 1. Opening       73,200,617     95,162,467    3,589,808.      7,286,291.         3,231,378.   9,160,548.      24,950,960        216,582,07
 balance                   .41          .54            82                 60             03             05               .45           1.90

 2. Current                      11,482,624                                                    1,310,026.       1,896,734.       15,115,702
                                              132,653.66       144,179.07        149,485.44
 increased                              .28                                                             38               15                 .98

 (1)                             11,482,624                                                    1,310,026.       1,896,734.       15,115,702
                                              132,653.66       144,179.07        149,485.44
 Purchasing                             .28                                                             38               15                 .98

 (2)
 Constructio


                                                                                                                                             105
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n in
process
transfer-in

(3)
Increased
by
combinatio
n



3. Current                 10,836,574                                                                    11,868,963
                                        122,034.19   53,535.27    37,852.46    818,967.34
decreased                         .68                                                                           .94

(1)
Disposal or
scrapping

Transfer to
                           10,836,574                                                                    11,868,963
Zhengzhou                               122,034.19   53,535.27    37,852.46    818,967.34
                                  .68                                                                           .94
branch

4. Ending     73,200,617   94,906,526   3,600,428.   7,376,935.   3,343,011.   9,651,607.   26,847,694   218,926,82
balance              .41          .35          29           40           01           09           .60         0.15

II.
Accumulati
ve
depreciatio
n

1. Opening    20,835,498   62,315,100   2,530,234.   6,270,774.   2,684,698.   4,790,714.   16,407,078   115,834,09
balance              .92          .16          21           21           25           70           .61         9.06

2. Current                 3,955,263.                                                       1,894,766.   7,824,460.
              952,782.69                 96,067.63   78,981.69    78,665.44    767,933.59
increased                         27                                                               49           80

                           3,955,263.                                                       1,894,766.   7,824,460.
(1) Accrual   952,782.69                 96,067.63   78,981.69    78,665.44    767,933.59
                                  27                                                               49           80



3. Current                 2,194,672.                                                                    2,449,303.
                                         44,847.64   29,287.01     9,781.57    170,714.49
decreased                         60                                                                            31

(1)
Disposal or
scrapping

Transfer to
                           2,194,672.                                                                    2,449,303.
Zhengzhou                                44,847.64   29,287.01     9,781.57    170,714.49
                                  60                                                                            31
branch

4. Ending     21,788,281   64,075,690   2,581,454.   6,320,468.   2,753,582.   5,387,933.   18,301,845   121,209,25


                                                                                                                 106
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 balance               .61           .83          20               89               12           80             .10          6.55

 III.
 Depreciatio
 n reserves

 1. Opening
 balance

 2. Current
 increased

 (1) Accrual



 3. Current
 decreased

 (1)
 Disposal or
 scrapping



 4. Ending
 balance

 IV. Book
 value

 1. Ending      51,412,335   31,732,826    1,018,974.       1,056,466.                   4,263,673.      8,545,849.   98,619,554
                                                                         589,428.89
 book value            .80           .31          09               51                            29             50            .39

 2. Opening     52,365,118   32,847,367    1,059,574.       1,015,517.                   4,369,833.      8,543,881.   100,747,97
                                                                         546,679.78
 book value            .49           .38          61               39                            35             84           2.84


(2) Temporarily idle fixed assets

                                                                                                                             In RMB

                        Original book       Accumulated             Provision for
         Item                                                                               Book value                Note
                             value           depreciation            impairment

 House building


(3) Fixed assets leasing-out by operational lease

                                                                                                                             In RMB

                             Item                                                        Ending book value

 House building




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(4) Fixed assets without property certification held

                                                                                                                        In RMB

                                                                                       Reason without property certification
                    Item                                  Book value
                                                                                                       held

Other note


(5) Disposal of fixed assets

                                                                                                                        In RMB

                    Item                                 Ending balance                          Opening balance

 Renovation of Gongming Huafa Electric
                                                                       92,857,471.69                           92,857,471.69
 Town

 Total                                                                 92,857,471.69                           92,857,471.69

Other explanation


22. Construction in process

                                                                                                                        In RMB

                    Item                                 Ending balance                          Opening balance

 Construction in process                                                  740,000.00                               740,000.00

 Total                                                                    740,000.00                               740,000.00


(1) Construction in process

                                                                                                                        In RMB

                                        Ending balance                                      Opening balance
         Item                            Impairment                                           Impairment
                     Book balance                         Book value        Book balance                        Book value
                                          provision                                            provision

 Huafa Building
 Reconstruction            240,000.00                        240,000.00        240,000.00                          240,000.00
 Project

 Gongming
 Electronic City
                           500,000.00                        500,000.00        500,000.00                          500,000.00
 Reconstruction
 Project

 Total                     740,000.00                        740,000.00        740,000.00                          740,000.00




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(2) Changes of major projects under construction

                                                                                                                                       In RMB

                                                                                                               includi
                                                                                                 Accum
                                                                             Propor                              ng:       Interes
                                            Fixed                                                ulated
                                                        Other                tion of                           interes        t
                         Openi    Curren    assets                                               amoun
                                                        decrea   Ending      project                              t        capital
                          ng         t      transfe                                    Progre        t of                             Sourceof
  Item        Budget                                    sed in     balanc    invest                            capital     ization
                         balanc   increas   r-in in                                      ss      interes                               funds
                                                         the          e       ment                              ized       rate of
                              e     ed       the                                                      t
                                                        Period                 in                              amoun         the
                                            Period                                               capital
                                                                             budget                            t of the      year
                                                                                                 ization
                                                                                                                year


(3) The provision for impairment of construction projects

                                                                                                                                       In RMB

                       Item                              Current accrual amount                                Accrual reason

Other note


(4) Engineering materials

                                                                                                                                       In RMB

                                                   Ending balance                                           Opening balance
              Item                                    Provision for                           Book           Provision for
                                  Book balance                            Book value                                              Book value
                                                      impairment                          balance             impairment

Other note:


23. Productive biological assets

(1) Productive biological assets measured by cost

□ Applicable √Not applicable


(2) Productive biological assets measured by fair value

□ Applicable √Not applicable


24. Oil and gas assets

□ Applicable √Not applicable




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25. Right to use assets

                                                                                                                In RMB

                     Item                                                                     Total

Other note:


26. Intangible assets

(1) Intangible assets

                                                                                                                In RMB

                                                             Non-patented        Computer
         Item               Land use right    Patent right                                              Total
                                                              technology          software

 I. Original book
 value

 1. Opening
                              55,415,814.36                                        3,113,396.41       58,529,210.77
 balance

 2. Current
 increased

 (1) Purchasing

 (2) Internal R&D

 (3) Increased by
 combination



 3. Current
 decreased

 (1) Disposal



 4. Ending balance

 II. Accumulated
 amortization

 1. Opening
                              16,651,035.42                                         948,089.65        17,599,125.07
 balance

 2. Current
 increased

 (1) Accrual                     662,350.40                                         150,518.73



 3. Current



                                                                                                                   110
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 decreased

 (1) Disposal



 4. Ending balance             17,313,385.82                                                   1,098,608.38         18,413,988.90

 III. Depreciation
 reserves

 1. Opening
                                                                                                 109,427.90             109,427.90
 balance

 2. Current
 increased

 (1) Accrual                                                                                      62,388.75              62,388.75



 3. Current
 decreased

 (1) Disposal



 4. Ending balance                                                                               171,816.65             171,816.65

 IV. Book value

 1. Ending book
                               38,102,428.54                                                   1,842,971.38         39,945,399.92
 value

 2. Opening book
                               38,764,778.94                                                   2,055,878.86         40,820,657.80
 value

The proportion of intangible assets form by internal R&D in total book value of intangible assets at period-end 0.00%


(2) The situation of land use rights that have not completed the ownership certificate

                                                                                                                            In RMB

                                                                                           Reason without property certification
                      Item                                     Book value
                                                                                                           held

Other note:


27. Development expenditure

                                                                                                                            In RMB

                                       Increase in the current period           Decrease in the current period

                                   Internal
                  Opening                                                   Recognize    Transferred                     Ending
     Item                        developme
                     balance                       Other                      d as       into current                    balance
                                     nt
                                                                            intangible    profit and
                                 expenditur

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                                       e                                          assets           loss



     Total

Other note


28. Goodwill

(1) Goodwill original book value

                                                                                                                                    In RMB

  Invested name                             Increase in the current period          Decrease in the current period
    or matters           Opening            Formed by
                                                                                                                          Ending balance
     forming              balance               business                               Dispose
     goodwill                              combination



       Total


(2) Goodwill provision for impairment

                                                                                                                                    In RMB

  Invested name                             Increase in the current period          Decrease in the current period
    or matters           Opening
                                                                                                                          Ending balance
     forming              balance               Accrual                                Dispose
     goodwill



       Total

Information about the asset group or combination of asset groups where the goodwill is located
Explain the process of goodwill impairment testing, key parameters (such as the growth rate of the forecast period when the present
value of future cash flows are expected, the growth rate of the stable period, the profit rate, the discount rate, the forecast period, etc.)
and the confirmation method of the impairment loss of goodwill:
The impact of goodwill impairment testing
Other note


29. Long-term deferred expenses

                                                                                                                                    In RMB

                                                                          Amortized in
         Item             Opening balance          Current increased                             Other decreased        Ending balance
                                                                              Period

 Amortization of
                                    77,445.31              660,284.00           114,127.72                                    623,601.59
 cloud service fees


                                                                                                                                         112
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 Total                           77,445.31             660,284.00                 114,127.72                                     623,601.59

Other explanation
New contract renewal this year


30. Deferred income tax assets/Deferred income tax liabilities

(1) Deferred income tax assets without offset

                                                                                                                                         In RMB

                                                Ending balance                                           Opening balance
          Item              Deductible temporary         Deferred income tax           Deductible temporary        Deferred income tax
                                  differences                      assets                      differences                   assets

 Provision for assets
                                    28,458,252.74                   6,761,085.38                 28,458,252.74                6,761,085.38
 impairment

 Accrual liability                       64,411.00                      16,102.75                     64,411.00                   16,102.75

 Deferred income                      4,043,640.00                     606,546.00                  4,043,640.00                  606,546.00

 Total                              32,566,303.74                   7,383,734.13                 32,566,303.74                7,383,734.13


(2) Deferred income tax liabilities that are not offset

                                                                                                                                         In RMB

                                                Ending balance                                           Opening balance
          Item               Taxable temporary           Deferred income tax             Taxable temporary         Deferred income tax
                                  differences                    liabilities                   differences                 liabilities


(3) Amount of deferred income tax asset and deferred income tax liability after trade-off

                                                                                                                                         In RMB

                                                          Ending balance of            Trade-off between the       Opening balance of
                            Trade-off between the
                                                         deferred income tax            deferred income tax        deferred income tax
          Item               deferred income tax
                                                          assets or liabilities        assets and liabilities at    assets or liabilities
                            assets and liabilities
                                                             after off-set                  period-begin               after off-set

 Deferred income tax
                                                                    7,383,734.13                                              7,383,734.13
 assets


(4) Deferred income tax asset without recognized

                                                                                                                                         In RMB

                     Item                                  Ending balance                                    Opening balance

 Deductible temporary differences                                              3,163,837.81                                   3,163,837.81


                                                                                                                                            113
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 Deductible loss                                                          4,098,904.69                                       4,098,904.69

 Total                                                                    7,262,742.50                                       7,262,742.50


(5) Deductible losses of un-recognized deferred income tax assets expired on the followed year

                                                                                                                                   In RMB

              Year                        Ending amount                     Opening amount                         Note

 2021

 2022                                                742,401.79                       742,401.79

 2023                                                404,207.57                       404,207.57

 2024                                              1,318,067.59                      1,318,067.59

 2025                                              1,634,227.74                      1,634,227.74

 Total                                             4,098,904.69                      4,098,904.69                       --

Other explanation:


31. Other non-current assets

                                                                                                                                   In RMB

                                                           Ending balance                                Opening balance
                     Item                        Book       Impairment                        Book         Impairment
                                                                            Book value                                        Book value
                                               balance       provision                       balance        provision

 Advance payment for equipment                 66,000.00                      66,000.00      66,000.00                         66,000.00

 Total                                         66,000.00                      66,000.00      66,000.00                         66,000.00

Other explanation:


32. Short-term borrowings

(1) Category

                                                                                                                                   In RMB

                     Item                                  Ending balance                                Opening balance

 Loan in pledge                                                          51,089,579.00                                   12,527,808.00

 Total                                                                   51,089,579.00                                   12,527,808.00

Explanation on category of short-term loans:


(2) Short-term loans that have been overdue and have not been repaid

The total amount of short-term loans that were overdue and not repaid at the end of the period was RMB 0.00, and the important
short-term loans that were overdue and not repaid are as follows:


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                                                                                                                      In RMB

         Borrower              Ending balance            Borrowing rate          Overdue time         Overdue interest rate

Other note:


33. Trading financial liabilities

                                                                                                                      In RMB

                    Item                                 Ending balance                         Opening balance

    Including:

    Including:

Other note:


34. Derivative financial liabilities

                                                                                                                      In RMB

                    Item                                 Ending balance                         Opening balance
Other note:


35. Notes payable

                                                                                                                      In RMB

                   Category                              Ending balance                         Opening balance

 Bank acceptance draft                                               42,983,519.37                           37,416,381.20

 Total                                                               42,983,519.37                           37,416,381.20

Totally 0 Yuan due note payable are paid at period-end


36. Account payable

(1) Account payable

                                                                                                                      In RMB

                    Item                                 Ending balance                         Opening balance

 Within one year                                                    112,291,685.77                           85,862,573.31

 Over one year                                                        3,764,952.80                           12,455,666.57

 Total                                                              116,056,638.57                           98,318,239.88


(2) Major account payable over one year

                                                                                                                      In RMB

                    Item                                 Ending balance              Reasons for non-payment or carry over


                                                                                                                              115
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 Guangdong Yizumi Precision Injection
                                                                        1,020,000.00     Without settlement
 Technology Co., Ltd.

 Guangdong Jinhu Rili Polymer Material
                                                                        1,140,800.00     Without settlement
 Co., Ltd.

 Kunshan Zhongji Mould Co., Ltd.                                          379,068.97     Without settlement

 Wuhan Jufutai Technology Co., Ltd.                                       486,188.78     Without settlement

 Total                                                                  3,026,057.75                          --

Other explanation:


37. Accounts received in advance

(1) Accounts received in advance

                                                                                                                               In RMB

                     Item                                Ending balance                              Opening balance


(2) Important accounts received in advance with account age over one year

                                                                                                                               In RMB

                     Item                                Ending balance                    Reasons for outstanding or carry-over

Other note:


38. Contract liabilities

                                                                                                                               In RMB

                     Item                                Ending balance                              Opening balance

 Sales received in advance                                                   79,195.32                                     79,195.32

 Lease received in advance                                                686,360.65                                      207,945.34

 Total                                                                    765,555.97                                      287,140.66

Amount and reasons for significant changes in book value during the reporting period
                                                                                                                               In RMB

              Item                    Change Amount                                      Reason for change


39. Wage payable

(1) Wage payable

                                                                                                                               In RMB

                                                       Increase during the        Decrease during the
             Item             Opening balance                                                                      Ending balance
                                                              period                     period

                                                                                                                                    116
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 I. Short-term benefits           5,704,816.53         31,508,630.69           33,359,279.99        3,854,167.23

 II. Post-employment
 benefits-defined                    32,550.06           2,773,868.82           2,773,868.82           32,550.06
 contribution plans

 III. Dismiss welfare                                      434,715.43            434,715.43

 Total                            5,737,366.59         34,717,214.94           36,567,864.24        3,886,717.29


(2) Short-term benefits

                                                                                                           In RMB

                                                 Increase during the    Decrease during the
            Item            Opening balance                                                    Ending balance
                                                       period                 period

 1. Wages, bonuses,
                                  4,709,654.92         26,915,030.12           28,779,016.40        2,845,668.64
 allowances andsubsidies

 2. Employee benefits                  754.00            2,531,354.04           2,518,017.06           14,090.98

 3. Social insurance
                                     37,267.03           2,018,031.09           2,018,031.09           37,267.03
 premium

       Including:
                                     35,408.95           1,328,799.44           1,328,799.44           35,408.95
 Medical insurance

                Work
                                       768.30               74,744.97              74,744.97              768.30
 injury insurance

                Maternity
                                      1,089.78             116,269.95             116,269.95            1,089.78
 insurance

 4. Housing
                                     24,310.00              44,215.44              44,215.44           24,310.00
 accumulation fund

 5. Labor union
 expenditure and
                                   932,830.58                                                         932,830.58
 personnel education
 expense

 Total                            5,704,816.53         31,508,630.69           33,359,279.99        3,854,167.23


(3) Defined contribution plans

                                                                                                           In RMB

                                                 Increase during the    Decrease during the
            Item            Opening balance                                                    Ending balance
                                                       period                 period

 1. Basic endowment
                                     31,361.59           2,657,598.87           2,657,598.87           31,361.59
 insurance

 2. Unemployment                      1,188.47             116,269.95             116,269.95            1,188.47



                                                                                                                117
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 insurance

 Total                                     32,550.06        2,773,868.82              2,773,868.82                32,550.06

Other explanation:


40. Taxes payable

                                                                                                                     In RMB

                     Item                              Ending balance                          Opening balance

 VAT                                                                4,823,733.87                             2,980,992.11

 Corporate income tax                                               5,545,879.97                             6,558,810.68

 Individual income tax                                                     4,493.98                               25,195.14

 Urban maintenance and construction tax                                 532,508.80                           1,902,436.52

 Property tax                                                           520,220.76                               318,618.51

 Land use tax                                                           297,696.51                                33,280.48

 Educational surtax                                                     229,248.99                               816,098.15

 Local educational surtax                                               122,702.85                               418,611.03

 Dike fee                                                                  1,665.00                                1,665.00

 Stamp tax                                                               33,429.90                                28,895.00

 Disposal fund of waste electrical
                                                                        821,530.00                           1,120,040.00
 products

 Total                                                             12,933,110.63                            14,204,642.62

Other explanation:


41. Other accounts payable

                                                                                                                     In RMB

                     Item                              Ending balance                          Opening balance

 Interest payable                                                       179,523.72                                26,335.66

 Other payable                                                     36,894,932.73                            27,581,945.35

 Total                                                             37,074,456.45                            27,608,281.01


(1) Interest payable

                                                                                                                     In RMB

                     Item                              Ending balance                          Opening balance

 Interest of short-term loans payable                                   179,523.72                                26,335.66

 Total                                                                  179,523.72                                26,335.66

Significant overdue and unpaid interest:

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                                                                                                                             In RMB

                 Loan unit                                Overdue amount                             Reason for overdue

Other explanation:
Nil


(2) Dividend payable

                                                                                                                             In RMB

                     Item                                 Ending balance                              Opening balance

Other note, including important dividends payable that have not been paid for more than 1 year, should disclose the reasons for the
non-payment:
Nil


(3) Other accounts payable

1) Other account payable by nature

                                                                                                                             In RMB

                     Item                                 Ending balance                              Opening balance

 Margin & deposit                                                       14,026,279.22                                11,523,316.67

 Lease management fee                                                                                                 3,227,985.19

 Intercourse funds                                                      20,346,239.47                                 5,546,586.51

 After sale and repairment                                                1,027,879.01                                1,454,341.68

 Energy consumption                                                                                                   1,443,603.28

 Shipping                                                                 1,494,535.03                                  902,242.26

 Reserve fund                                                                                                         1,346,345.00

 Other                                                                                                                2,137,524.76

 Total                                                                  36,894,932.73                                27,581,945.35


2) Significant other account payable with over one year age

                                                                                                                             In RMB

                     Item                                 Ending balance                   Reasons for non-payment or carry over

 Shenzhen SED Property Development
                                                                          1,853,393.35    Without settlement
 Co., Ltd.

 Shenzhen Huayongxing Environmental
                                                                          1,000,000.00    Electricity fee deposit
 Protection Technology Co., Ltd.

 Linghang Technology (Shenzhen) Co.,
                                                                           656,345.28     Without settlement
 Ltd


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 Shenzhen Tongxing Electronics Co., Ltd.                                  578,259.83    Without settlement

 Total                                                                4,087,998.46                           --

Other explanation
Nil


42. Liabilities held for sale

                                                                                                                         In RMB

                      Item                              Ending balance                             Opening balance

Other note:


43. Non-current liabilities due within one year

                                                                                                                         In RMB

                      Item                              Ending balance                             Opening balance

 Long-term loans due within one year                                                                              12,000,000.00

 Total                                                                                                            12,000,000.00

Other explanation:
Nil


44. Other current liabilities

                                                                                                                         In RMB

                      Item                              Ending balance                             Opening balance

 Unterminated confirmation on note
                                                                           211,799.13                             18,309,336.77
 receivable

 Pending sales tax                                                                                                   13,636.04

 Total                                                                     211,799.13                             18,322,972.81
Changes in short-term bonds payable:
                                                                                                                         In RMB

                                                                                         Premiu
                                                                                                   Repay
                                                                             Interest    m and
                                     Bond      Issue   Openin                                      ment in
  Name        Face           Issue                               Current     accrued    discoun                         Ending
                                     maturit   Amoun     g                                           the
 of bond      value          date                                 issue       at face       t                          balance
                                       y         t     balance                                     current
                                                                              value      amortiz
                                                                                                   period
                                                                                          ation

Other explanation:
Nil




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45. Long-term loans

(1) Category

                                                                                                                                     In RMB

                       Item                                    Ending balance                               Opening balance

 Mortgage loan                                                                61,000,000.00                                 61,000,000.00

 Total                                                                        61,000,000.00                                 61,000,000.00
Description of Long-term loans classification:
Other explanation, including interest rate range:


46. Bonds payable

(1) Bonds payable

                                                                                                                                     In RMB

                       Item                                    Ending balance                               Opening balance


(2) Changes in increase or decrease in bonds payable (excluding preferred stocks, perpetual bonds and
other financial instruments classified as financial liabilities)

                                                                                                                                     In RMB

                                                                                                Premiu
                                                                                                            Repay
                                                                                    Interest    m and
                                          Bond     Issue     Openin                                         ment in
  Name         Face           Issue                                     Current     accrued    discoun                             Closing
                                         maturit   Amoun        g                                             the
 of bond       value          date                                        issue     at face         t                              balance
                                           y         t       balance                                        current
                                                                                     value      amortiz
                                                                                                            period
                                                                                                 ation



   Total        --             --          --


(3) Description of the conditions and time for the conversion of convertible corporate bonds

(4) Description of other financial instruments classified as financial liabilities

Basic situation of other financial instruments such as preferred stocks and perpetual bonds issued at the end of the period
Changes in financial instruments such as preferred stocks and perpetual bonds issued at the end of the period
                                                                                                                                     In RMB

  Financial                                         Increase in the current       Decrease in the current
                       Beginning of period                                                                            Ending of period
 instruments                                                period                         period
    issued           Amount           Book value   Amount        Book value       Amount       Book value       Amount         Book value


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Explanation of the basis for the classification of other financial instruments into financial liabilities
Other note


47. Lease liabilities

                                                                                                                                   In RMB

                     Item                                     Ending balance                                Opening balance

Other note


48. Long-term payables

                                                                                                                                   In RMB

                     Item                                     Ending balance                                Opening balance


(1) List long-term payables according to the nature of the payment

                                                                                                                                   In RMB

                     Item                                     Ending balance                                Opening balance

Other note:


(2) Special accounts payable

                                                                                                                                   In RMB

                                                   Increase in the        Decrease in the                                   Cause of
         Item               Opening balance                                                      Ending balance
                                                   current period         current period                                    formation

Other note:


49. Long-term Wages payable

(1) Long-term Wages payable

                                                                                                                                   In RMB

                     Item                                     Ending balance                                Opening balance


(2) Changes in defined benefit plans

Present value of defined benefit plan obligations:
                                                                                                                                   In RMB

                     Item                                       The Period                                    Last Period

Plan assets:
                                                                                                                                   In RMB


                                                                                                                                        122
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                       Item                                         The Period                                    Last Period

Defined benefit plan net liabilities (net assets)
                                                                                                                                           In RMB

                       Item                                         The Period                                    Last Period

Description of the content of the defined benefit plan and related risks, the impact on the company's future cash flow, time and
uncertainty:
Explanation of major actuarial assumptions and sensitivity analysis results of defined benefit plans:
Other note:


50. Accrual liability

                                                                                                                                           In RMB

                Item                            Ending balance                      Opening balance                      Causes

 Pending action                                               64,411.00                            64,411.00

 Total                                                        64,411.00                            64,411.00                 --
Other explanations, including important assumptions and estimation about important estimated liabilities:


51. Deferred income

                                                                                                                                           In RMB

                                                     Increase during        Decrease during
         Item                 Opening balance                                                         Ending balance              Causes
                                                       the period                 the period

 Industrial
 transformation                   4,043,640.00                                                            4,043,640.00
 subsidy

 Total                            4,043,640.00                                                            4,043,640.00

Items involving Government subsidy:
                                                                                                                                           In RMB

                                                     Amount
                                                                     Amount         Amount of
                                       New           reckoned
                                                                     included        cost and
                                      subsidy           in                                                                          Assets-rel
                   Opening                                           in other        expense          Other        Ending
  Liability                          increased      non-operat                                                                      ated/Inco
                       balance                                      income in        offset in       change        balance
                                       in the           ing                                                                        me-related
                                                                    the current     the current
                                       period       income in
                                                                       period         period
                                                    the period

 The
 transforma
                                                                                                                                   Assets-rel
 tion and         1,600,000.00                                                                                   1,600,000.00
                                                                                                                                   ated
 upgrading
 of


                                                                                                                                              123
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                                                                                             SEMI-ANNUAL REPORT 2021

 provincial
 traditional
 industries
 in 2018

 Intelligent
 transforma                                                                                                        Assets-rel
                 472,640.00                                                                         472,640.00
 tion in                                                                                                           ated
 2019

 Industrial
 transforma
                                                                                                                   Assets-rel
 tion and       1,971,000.00                                                                      1,971,000.00
                                                                                                                   ated
 intelligenc
 e in 2020

 Total          4,043,640.00                                                                      4,043,640.00

Other explanation:


52. Other non-current liabilities

                                                                                                                          In RMB

                     Item                                Ending balance                          Opening balance
Other note:


53. Share capital

                                                                                                                          In RMB

                                                           Changes in the Period (+,-)

                                                                     Shares
                     Opening                                                                                       Ending
                                     Issuing new                  transfer from
                      balance                      Bonus shares                          Other    Subtotal         balance
                                       shares                        public
                                                                    reserves

                 283,161,227.                                                                                    283,161,227.
 Total shares
                                00                                                                                           00

Other explanation:




                                                                                                                             124
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54. Other equity instruments

(1) Basic information of other financial instruments such as preferred stocks and perpetual bonds issued at
the end of the period

(2) Changes in financial instruments such as preferred stocks and perpetual bonds issued at the end of the
period

                                                                                                                                      In RMB

  Financial                                      Increase in the current        Decrease in the current
                     Beginning of period                                                                               Ending of period
 instruments                                              period                             period
    issued          Amount      Book value       Amount        Book value       Amount           Book value       Amount        Book value

Other equity instruments' changes in the current period, explanations of the reasons for the changes, and the basis for related
accounting treatments:
Other note:


55. Capital public reserve

                                                                                                                                      In RMB

                                                          Increase during the           Decrease during the
             Item               Opening balance                                                                          Ending balance
                                                                   period                        period

 Capital premium
                                      96,501,903.02                                                                           96,501,903.02
 (equity premium)

 Other capital public
                                      50,075,868.48                                                                           50,075,868.48
 reserve

 Total                              146,577,771.50                                                                          146,577,771.50

Other explanation, including changes and reasons of changes:


56. Treasury stocks

                                                                                                                                      In RMB

                                                         Increase in the current      Decrease in the current
             Item               Opening balance                                                                          Ending balance
                                                                   period                        period

Other note, including changes in the current period and explanations of the reasons for the changes:


57. Other comprehensive income

                                                                                                                                      In RMB

                                                                                     The Period                                      Endin
                                      Opening
                Item                                Account          Less:         Less:          Less:   Belong to      Belong to        g
                                       balance
                                                      before       written in      written       income       parent      minority   balanc


                                                                                                                                              125
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                                                     income        other         in other         tax     company      sharehold     e
                                                    tax in the   comprehen       compreh        expense    after tax    ers after
                                                      year          sive           ensive                                 tax
                                                                 income in         income
                                                                  previous           in
                                                                 period and      previous
                                                                  carried          period
                                                                 forward to         and
                                                                 gains and         carried
                                                                  losses in      forward
                                                                  current            to
                                                                   period        retained
                                                                                 earnings
                                                                                     in
                                                                                   current
                                                                                   period

Other explanation, including the adjustment on initial recognition for arbitrage items that transfer from the effective part of cash flow
hedge profit/loss:


58. Reasonable reserve

                                                                                                                                    In RMB

                                                         Increase in the current      Decrease in the current
            Item                Opening balance                                                                        Ending balance
                                                                 period                         period
Other explanation, including changes and reasons for changes:


59. Surplus public reserve

                                                                                                                                    In RMB

                                                           Increase during the            Decrease during the
            Item                Opening balance                                                                        Ending balance
                                                                 period                         period

 Statutory surplus
                                      21,322,617.25                                                                         21,322,617.25
 reserves

 Discretionary surplus
                                      56,068,976.00                                                                         56,068,976.00
 reserve

 Total                                77,391,593.25                                                                         77,391,593.25

Other explanation, including changes and reasons for changes:
Nil


60. Retained profit

                                                                                                                                    In RMB


                                                                                                                                         126
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                        Item                                        Current period                           Last period

 Retained profit at the end of the previous period
                                                                               -170,881,854.46                      -177,712,041.86
 before adjustment

 Retained profit at period-begin after adjustment                              -170,881,854.46                      -177,712,041.86

 Add: net profit attributable to owners of the
                                                                                  6,989,362.48                             3,165,597.55
 parent company

 Retained profit at period-end                                                 -163,892,491.98                      -174,546,444.31

Details about adjusting the retained profits at the beginning of the period:
1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations affect the retained
profits at the beginning of the period amounting to 0 Yuan.
2) The changes in accounting policies affect the retained profits at the beginning of the period amounting to 0 Yuan.
3) The major accounting error correction affects the retained profits at the beginning of the period amounting to 0 Yuan
4) Merge scope changes caused by the same control affect the retained profits at the beginning of the period amounting to 0 Yuan.
5) Other adjustments affect the retained profits at the beginning of the period amounting to 0 Yuan


61. Operating revenue and cost

                                                                                                                                 In RMB

                                                 Current Period                                       Last Period
            Item
                                    Revenue                        Cost                    Revenue                       Cost

 Main business                       323,468,602.68               287,075,943.86            268,465,953.89              249,723,766.92

 Other business                       68,165,205.87                47,447,861.39             32,237,467.49               14,235,885.71

 Total                               391,633,808.55               334,523,805.25            300,703,421.38              263,959,652.63

Information relating to revenue:
                                                                                                                                 In RMB

          Category                  Branch 1                      Branch 2                                               Total

      Including:

      Including:

      Including:

      Including:

      Including:

      Including:

      Including:

Information relating to performance obligations:
Nil
Information related to the transaction price apportioned to the remaining performance obligations:
The amount of income corresponding to the performance obligations that have been signed at the end of this reporting period but


                                                                                                                                     127
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have not yet been fulfilled or have not done with fulfillment is 0.00 yuan, among them, yuan of revenue is expected to be recognized
in YEAR, yuan of revenue is expected to be recognized in YEAR, and yuan of revenue is expected to be recognized in YEAR.
Other explanation
Nil


62. Tax and surcharges

                                                                                                                           In RMB

                     Item                                   Current Period                             Last Period

 Urban maintenance and construction tax                                        53,181.85                               61,315.21

 Educational surtax                                                            23,402.05                               27,476.42

 Property tax                                                                 671,892.72                              463,763.85

 Land use tax                                                                 380,897.71                              247,776.03

 Stamp tax                                                                    283,562.58                              187,803.80

                                                                               15,425.01                               15,920.74

 Total                                                                       1,428,361.92                            1,004,056.05

Other explanation:


63. Sales expense

                                                                                                                           In RMB

                     Item                                   Current Period                             Last Period

 Employee compensation                                                       1,940,607.71                            1,544,285.76

 Freight                                                                     4,858,694.34                            3,120,326.41

 Commodity inspection fee                                                     894,098.13                              512,749.42

 Customs fee                                                                  204,766.55                               30,322.36

 Commodity loss                                                              3,005,591.44                            2,042,886.52

 Other                                                                       3,190,859.79                            1,849,508.92

 Total                                                                     14,094,617.96                             9,100,079.39

Other explanation:
Other is the after-sales service fee, low value and easy consumption, office expenses, etc.


64. Administrative expense

                                                                                                                           In RMB

                     Item                                     The Period                               Last Period

 Salary                                                                      6,033,625.10                            4,290,516.96

 Depreciation                                                                1,259,331.29                            1,094,911.50


                                                                                                                                128
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 Social security fee                                      1,182,922.32                           307,654.93

 Communication fee                                        1,829,623.45                          2,149,616.64

 Employee benefits                                        1,205,669.37                           975,973.80

 Travel expenses                                           705,255.91                            997,820.46

 Amortization of intangible assets                         863,491.01                            911,802.71

 Transportation expenses                                   220,781.91                            728,044.47

 Consultation fee                                         1,448,658.63                           154,420.23

 Security costs                                            460,539.40                            826,723.53

 Repair cost                                              3,428,358.44                          1,186,397.36

 Audit fees                                                714,487.27                            703,883.50

 Office expenses                                          1,075,155.32                           534,213.91

 Communication fee                                          61,127.20                             66,922.51

 Amortization of low-value consumables                        6,196.30                           204,519.80

 Securities Information Disclosure Fee                      46,361.00                            247,008.75

 Employee education expenses                                12,689.53                            123,799.49

 Utility bill                                              284,729.15                            194,204.27

 Rental fees                                               521,230.00                            496,532.52

 Environmental protection fee                               47,617.53                            202,101.81

 Other fees                                               1,272,457.11                           685,293.51

 Total                                               22,680,307.24                             17,082,362.66

Other explanation:


65. R& D expenses

                                                                                                      In RMB

                     Item                Current Period                          Last Period

 Personnel labor costs                                    3,424,760.68                          1,801,065.20

 Depreciation and amortization expense                     437,009.74                            499,584.18

 Other related expenses                                     93,877.08                            122,775.88

 Total                                                    3,955,647.50                          2,423,425.26

Other explanation:


66. Financial expense

                                                                                                      In RMB

                     Item                Current Period                          Last Period



                                                                                                          129
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 Interest costs                                             3,731,443.17                          4,755,143.83

 Less: Interest income                                       203,041.26                            529,170.31

 Exchange loss                                              4,068,036.84                           800,845.19

 Less: exchange gains                                       2,461,568.22

 Handing expense                                             105,672.13                             59,100.48

 Other                                                          1,160.00

 Total                                                      5,241,702.86                          3,484,228.81

Other explanation:
Inquiry letter courier fee


67. Other income

                                                                                                        In RMB

                   Sources                 Current Period                          Last Period

 Three-agency handling fee                                      3,553.35

 Industrial Transformation Item                                                                    348,540.00

 Total                                                          3,553.35                           348,540.00


68. Investment income

                                                                                                        In RMB

                       Item                   Current Period                        Last Period

 Financial income                                                149,767.58                         66,780.40

 Total                                                           149,767.58                         66,780.40

Other explanation:


69. Net exposure hedging income

                                                                                                        In RMB

                     Item                   The Period                             Last Period

Other note:


70, Fair value change income

                                                                                                        In RMB

  Sources of income from changes in Fair
                                            The Period                             Last Period
                     value

Other note:



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71. Credit impairment loss

                                                                                                                                     In RMB

                      Item                                    Current Period                                   Last Period

Other explanation:


72. Losses on assets impairment

                                                                                                                                     In RMB

                      Item                                    Current Period                                   Last Period

 II. Inventory falling price loss and
 impairment loss of contract performance                                     -1,350,000.00
 cost

 Total                                                                       -1,350,000.00

Other explanation:


73. Asset disposal income

                                                                                                                                     In RMB

        Source of asset disposal income                       Current Period                                   Last Period

 Dispose income of fixed assets                                                      0.00                                      -99,867.53

 Total                                                                               0.00                                      -99,867.53


74. Non-operating income

                                                                                                                                     In RMB

                                                                                                             Amount included in current
               Item                          Current Period                     Last Period
                                                                                                            non-recurring profits or losses

 Government subsidy                                    256,000.00

 Disposal of assets                                        2,786.47                                                               2,786.47

 Fine                                                      1,400.00                           1,976.00                            1,400.00

 Other                                                  16,412.57                            43,224.00                          16,412.57

 Total                                                 276,599.04                            45,200.06                          20,599.04

Government subsidy reckoned into current gains/losses:
                                                                                                                                     In RMB

                                                                 Subsidy
                                                                               The special                                     Assets-rela
                    Issuing       Offering                       impact                        Amount in        Amount in
    Item                                          Nature                        subsidy                                        ted/Income
                    subject       causes                         current                       the Period       last period
                                                                                 (Y/N)                                           -related
                                                               gains/losse



                                                                                                                                            131
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                                                               s (Y/N)

                                          Subsidies
                                          received
                                          for
                                          research
                                          and
                                          developme                                                                        Income-rel
 C                             Award                       N               N                  256,000.00
                                          nt,                                                                              ated
                                          technologic
                                          al renewal
                                          and
                                          transformat
                                          ion, etc.

Other explanation:


75. Non-operating expenditure

                                                                                                                                  In RMB

                                                                                                           Amount included in current
             Item                      Current Period                          Last Period
                                                                                                        non-recurring profits or losses

 Dealing with fixed assets                            22,804.31                                                             22,804.31

 Fine expenditure                                 191,386.99                                 7,302.38                      191,386.99

 Total                                            215,202.92                                 7,302.38                      215,202.92

Other explanation:
Nil


76. Income tax expense

(1) Statement of income tax expense

                                                                                                                                  In RMB

                     Item                                Current Period                                      Last Period

 Current income tax expense                                               1,584,720.39                                     982,790.94

 Deferred income tax expense                                                                                               -145,421.36

 Total                                                                    1,584,720.39                                     837,369.58


(2) Adjustment on accounting profit and income tax expenses

                                                                                                                                  In RMB

                               Item                                                            Current Period



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 Total profit                                                                                                    8,574,082.87

 Income tax based on statutory/applicable rate                                                                   2,490,947.85

 Impact by different tax rate applied by subsidies                                                                230,760.37

 Impact of deductible loss of un-recognized deferred income
                                                                                                                  -145,421.36
 tax assets in the prior period of use

 Income tax expense                                                                                              1,584,720.39

Other explanation
Nil


77. Other comprehensive income

See note


78. Annotation of cash flow statement

(1) Cash received with other operating activities concerned

                                                                                                                       In RMB

                    Item                                     The Period                           Last Period

 Unit intercourse account                                                 15,891,476.38                           423,061.34

 Collection management fee and utilities
                                                                                                                  870,339.55
 etc.

 Repayment from employees                                                    81,510.67                                538.70

 Margin                                                                        3,420.00                           178,441.66

 Interest income                                                             30,133.34                             80,873.96

 Government subsidy                                                         259,553.35                           2,190,000.00

 Total                                                                    16,266,093.74                          3,743,255.21

Note of cash received with other operating activities concerned:
Nil


(2) Cash paid with other operating activities concerned

                                                                                                                       In RMB

                    Item                                     The Period                           Last Period

 Unit intercourse account                                                 19,499,576.94                         12,099,293.44

 Employee loan                                                               47,686.67                           1,518,843.50

 Deposit and security deposit                                              1,804,581.00                           777,760.00

 Communication fee                                                          165,926.34                           2,225,069.64



                                                                                                                           133
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 Utility bill                                                                 4,662,103.00                           195,404.27

 Travel expenses                                                              1,168,068.54                           631,364.12

 Shipping fee                                                                 2,706,778.65                          2,885,107.75

 Transportation expenses                                                                                             708,540.18

 Repair cost                                                                  1,369,952.77                          1,186,397.36

 Consultation fee                                                             1,400,000.00                           700,000.00

 Security fee                                                                                                        363,200.00

 Financial institution fee                                                                                            54,316.41

 Office expenses                                                                19,086.70                            184,663.65

 Communication fee                                                             437,439.91                             66,922.51

 Rental fees                                                                                                         496,532.52

 Other                                                                      18,919,703.62                           2,183,661.37

 Total                                                                      52,200,904.14                          26,277,076.72

Note of cash paid with other operating activities concerned:


(3) Cash received with other investment activities concerned

                                                                                                                          In RMB

                    Item                                     Current Period                          Last Period

 Redemption of principal of financial
                                                                                                                   35,000,000.00
 products

 Total                                                                                                             35,000,000.00

Note of cash received with other investment activities concerned:


(4) Cash paid related with investment activities

                                                                                                                          In RMB

                    Item                                     Current Period                          Last Period

 Purchasing financial products                                                                                     35,000,000.00

 Total                                                                                                             35,000,000.00

Note of cash paid related with investment activities:


(5) Other cash received related to financing activities

                                                                                                                          In RMB

                    Item                                       The Period                            Last Period

Description of other received cash related to financing activities:



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(6) Cash paid related with financing activities

                                                                                                                   In RMB

                       Item                            Current Period                          Last Period

Note of cash paid related with financing activities:


79. Supplementary information to statement of cash flow

(1) Supplementary information to statement of cash flow

                                                                                                                   In RMB

           Supplementary information                     This Period                           Last Period

 1. Net profit adjusted to cash flow of
                                                              --                                   --
 operation activities:

          Net profit                                                    7,023,114.72                         3,165,597.55

       Add: Assets impairment provision

           Depreciation of fixed assets,
 consumption of oil assets and depreciation                             5,855,066.65                         6,364,464.64
 of productive biology assets

               Depreciation of right-of-use
 assets

           Amortization of intangible assets                             875,257.88                           911,802.71

           Amortization of long-term deferred
                                                                         114,127.72                           116,167.92
 expenses

           Loss from disposal of fixed assets,
 intangible assets and other long-term                                                                       -156,701.09
 assets (gain is listed with “-”)

           Losses on scrapping of fixed assets
 (gain is listed with “-”)

            Gain/loss of fair value changes
 (gain is listed with “-”)

            Financial expenses (gain is listed
                                                                        5,241,702.86                         3,786,650.62
 with “-”)

            Investment loss (gain is listed
                                                                        -149,767.58                            -66,780.40
 with “-”)

            Decrease of deferred income tax
                                                                                                             -145,421.36
 asset ((increase is listed with “-”)

            Increase of deferred income tax
 liability (decrease is listed with “-”)



                                                                                                                       135
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           Decrease of inventory (increase is
                                                           -61,101,647.02                      -3,086,479.34
 listed with “-”)

          Decrease of operating receivable
                                                           97,224,785.91                      -15,138,062.21
 accounts (increase is listed with “-”)

          Increase of operating payable
                                                           -76,901,010.73                     25,448,973.20
 accounts (decrease is listed with “-”)

              Other

           Net cash flows arising from
                                                           -21,818,369.59                     21,200,212.24
 operating activities

 2. Material investment and financing not
                                                      --                                 --
 involved in cash flow

       Conversion of debt into capital

       Switching Company bonds due
 within one year

       Financing lease of fixed assets

 3. Net change of cash and cash
                                                      --                                 --
 equivalents:

     Balance of cash at period end                         59,612,186.22                      21,812,967.80

     Less: Balance of cash equivalent at
                                                           60,968,053.58                      36,645,061.61
 year-begin

     Add: Balance at year-end of cash
 equivalents

     Less: Balance at year-begin of cash
 equivalents

     Net increase of cash and cash
                                                            -1,355,867.36                     -14,832,093.81
 equivalents


(2) Net cash payment for the acquisition of a subsidiary in the period

                                                                                                      In RMB

                                                                                Amount

 Including:                                                                       --

 Including:                                                                       --

 Including:                                                                       --

Other note:


(3) Net cash received from the disposal of subsidiaries

                                                                                                      In RMB

                                                                                                          136
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                                                                                                   Amount

 Including:                                                                                            --

 Including:                                                                                            --

 Including:                                                                                            --

Other note:


(4) Constitution of cash and cash equivalent

                                                                                                                                  In RMB

                      Item                                   Ending balance                                 Opening balance

 I. Cash                                                                  59,612,186.22                                  60,968,053.58

 Including: Cash on hand                                                          903.40                                      136,673.02

           Bank deposit available for payment
                                                                          16,620,293.80                                  29,912,316.31
 at any time

           Other currency funds available for
                                                                          42,990,989.02
 payment at any time

 III. Balance of cash and cash equivalent at
                                                                          59,612,186.22                                  60,968,053.58
 period-end

Other explanation:


80. Note of the changes of owners’ equity

Explain the items and amount at period-end adjusted for “Other” at end of the last year:
Nil


81. Assets with ownership or use right restricted

                                                                                                                                  In RMB

                      Item                                 Ending book value                                Limited reason

 Money funds                                                              42,990,989.02      Margin

 Fixed assets                                                             12,375,571.51      Collateral for borrowing

 Intangible assets                                                          6,752,967.68     Collateral for borrowing

 Fixed assets liquidation                                                 92,857,471.69      Court seizure

 Investment real estate                                                    11,503,400.02     Collateral for borrowing

 Accounts receivable financing                                                       0.00    Bill pledge

 Total                                                                   166,480,399.92                           --

Other explanation:




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82. Item of foreign currency

(1) Item of foreign currency

                                                                                                                               In RMB

                                      Ending balance of foreign                                            Ending RMB balance
                Item                                                      Rate of conversion
                                               currency                                                          converted

 Monetary funds                                   --                               --

 Including: USD                                        1,346,535.80   6.4705                                            8,810,879.28

         Euro

         HKD



 Account receivable                               --                               --

 Including: USD                                        5,192,627.92   6.4705                                              604,526.76

         Euro

         HKD



 Long-term loans                                  --                               --

 Including: USD

         Euro

         HKD



Other explanation:


(2) Explanation on foreign operational entity, including as for the major foreign operational entity,
disclosed main operation place, book-keeping currency and basis for selection; if the book-keeping
currency changed, explain reasons

□ Applicable √Not applicable


83. Hedging

According to the hedge classification, disclose the qualitative and quantitative information of hedging items, related hedging tools,
and hedged risks:


84. Government subsidy

(1) Government subsidy

                                                                                                                               In RMB

                                                                                                                                    138
                                                                                          SHENZHEN ZHONGHEN HUAFA CO., LTD.
                                                                                                    SEMI-ANNUAL REPORT 2021

                                                                                                           Amount reckoned into current
              Category                         Amount                       Item for presentation
                                                                                                                   gains/losses


(2) Government grants rebate

□ Applicable √Not applicable
Other explanation:


85. Other

Nil


VIII. Changes of consolidation scope

1. Enterprise combine not under the same control

(1) Enterprise combination under the same control in Period

                                                                                                                                    In RMB

                                                                                                                             Net profit
                                                                                                               Income of
                                                                                             Standard to                           of
                                                                Acquired                                       purchaser
                  Time point      Cost of        Ratio of                                     determine                      purchaser
                                                               way Equity       Purchasing                       from
  Purchaser       for equity       equity         equity                                            the                           from
                                                                obtained           date                       purchasing
                   obtained       obtained       obtained                                     purchasing                    purchasing
                                                                   way                                          date to
                                                                                                    date                      date to
                                                                                                              period-end
                                                                                                                            period-end

Other note:


(2) Combination cost and goodwill

                                                                                                                                    In RMB

                         Combination cost

The method of determining the fair value of the merger cost, contingent consideration and there changes:
The main reasons for the formation of large amounts of goodwill:
Other explanation:


(3) Identifiable assets and liability on purchasing date under the purchaser

                                                                                                                                    In RMB



                                                     Fair value on purchasing date                   Book value on purchasing date

Method for determining the fair value of identifiable assets and liabilities:


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The contingent liabilities of the acquiree assumed in the business combination:
Other explanation:


(4) Gains or losses arising from re-measured by fair value for the equity held before purchasing date

Whether it is a business combination realized by two or more transactions of exchange and a transaction of obtained control rights in
the Period or not
□ Yes √ No


(5) Notes relating to the purchase date or the end of the period in which the merger consideration or the
fair value of the purchasee’s identifiable assets and liabilities cannot be reasonable determined

(6) Other explanations

2. Enterprise combine under the same control

(1) Enterprise combination under the same control in Period

                                                                                                                            In RMB
  Combined      Percentage         Constitute    Combining      Basis for   Income of      Net profit   Income of      Net profit
    party           of equity       the basis      date        determinin         the        of the         the          of the
                acquired in          for the                   g the date   combined       combined      combined      combined
                    enterprise     enterprise                      of       party from     party from      party          party
                combinatio         combinatio                  combinatio         the         the       during the     during the
                        n          n under the                     n        beginning      beginning    comparison    comparison
                                     same                                     of the         of the       period         period
                                     control                                period of      period of
                                                                            combinatio    combinatio
                                                                             n to the       n to the
                                                                              date of       date of
                                                                            combinatio    combinatio
                                                                                  n            n
Other note:


(2) Consolidation cost

                                                                                                                            In RMB

                            Consolidation cost

Contingent explanation of the consideration and its changes:
Other note:


(3) Book value of the assets/liabilities from combined party at date of combination

                                                                                                                            In RMB

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                                                           Combination date                       At the end of the previous period

Contingent liabilities of the combined party assumed in the enterprise combination:
Other note:


3. Reverse purchase

Basic information of the transaction, the basis for the reverse purchase of the transaction, whether the assets and liabilities retained by
the listed company constitute a business and its basis, the determination of the merger cost, the amount of equity adjusted in
accordance with the equity transaction and its calculation:


4. Disposal of subsidiaries

Whether there is a single disposal of an investment in a subsidiary that resulted in a loss of control
□ Yes √ No
Whether there is a step-by-step disposal of investment in a subsidiary through multiple transactions and loss of control during the
period
□ Yes √ No


5. Other reasons for consolidation range changed

Explain the reasons on consolidate scope changes (i.e. subsidiary newly established, subsidiary liquidation etc.) and relevant
information:


6. Other

IX. Equity in other entity

1. Equity in subsidiary

(1) Constitute of enterprise group


                     Main operation        Registration                                 Share-holding ratio
    Subsidiary                                                Business nature                                           Acquired way
                          place               place                                  Directly            Indirectly

                                                                                                                       New
 HUAFA Lease                                                  Property
                     Shenzhen            Shenzhen                                        60.00%                        investment
 Company                                                      management
                                                                                                                       acquisition

 HUAFA                                                                                                                 New
                                                              Property
 Property            Shenzhen            Shenzhen                                      100.00%                         investment
                                                              management
 Company                                                                                                               acquisition

 Hengfa                                                       Production &                                             New
                     Wuhan               Wuhan                                         100.00%
 Technology                                                   sales                                                    investment


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 Company                                                                                                                                      acquisition

 HUAFA                                                                                                                                        New
                                                                         Property
 Hengtian                Shenzhen              Shenzhen                                                100.00%                                investment
                                                                         management
 Company                                                                                                                                      acquisition

 HUAFA                                                                                                                                        New
                                                                         Property
 Hengtai                 Shenzhen              Shenzhen                                                100.00%                                investment
                                                                         management
 Company                                                                                                                                      acquisition
Explanation on share-holding ratio in subsidiary different from ratio of voting right:

Nil
Basis for controlling the invested entity with half or below voting rights held and without controlling invested entity but with over
half and over voting rights:

Nil
Major structured entity included in consolidates statement:

Nil
Basis of termination of agent or consignor:

Nil
Other explanation
Nil


(2) Important non-wholly-owned subsidiary

                                                                                                                                                           In RMB

                                                                          Gains/losses               Dividend announced to
                                   Share-holding ratio of                                                                                Ending equity of
          Subsidiary                                               attributable to minority          distribute for minority
                                         minority                                                                                             minority
                                                                          in the Period                  in the Period

Explanation on holding ratio different from the voting right ratio for minority shareholders:
Other note:


(3) Main finance of the important non-wholly-owned subsidiary

                                                                                                                                                           In RMB

                                       Ending balance                                                             Opening balance

                                                   Curren      Non-c                                                         Curren          Non-c
 Subsid                   Non-c                                              Total                     Non-c                                              Total
              Curren                   Total          t        urrent                     Curren                   Total         t           urrent
   iary                   urrent                                             liabilit                  urrent                                            liabiliti
              t assets                assets       liabiliti   liabilit                   t assets                 assets    liabiliti       liabiliti
                          assets                                               ies                     assets                                               es
                                                      es           ies                                                          es              es

                                                                                                                                                           In RMB

                                               The Period                                                             Last Period
  Subsidiary        Operation                              Total           Cash flow         Operation                               Total           Cash flow
                                      Net profit                                                                Net profit
                     Income                            comprehen              from            Income                           comprehen                 from



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                                                   sive         operation                                    sive        operation
                                                 income          activity                                   income        activity

Other note:
Nil


(4) Significant restrictions on the use of enterprise group assets and pay off debts of the enterprise group

Nil


(5) Financial or other supporting offers to the structured entity included in consolidated financial statement
range

Nil
Other note:
Nil


2. Transaction that has owners’ equity shares changed in subsidiary but still with controlling rights

(1) Owners’ equity shares changed in subsidiary

(2) Impact on minority’s interest and owners’ equity attributable to parent company

                                                                                                                               In RMB



Other note


3. Equity in joint venture and associated enterprise

(1) Important joint venture and associated enterprise


                                                                                      Share-holding ratio             Accounting
                                                                                                                     treatment on
 Joint venture or
                     Main operation        Registered                                                                investment for
      associated                                              Business nature
                          place               place                                Directly         Indirectly       joint venture
      enterprise
                                                                                                                     and associated
                                                                                                                       enterprise
Holding shares ratio different from the voting right ratio:
Has major influence with less 20% voting rights hold, or has minor influence with over 20% (20% included) voting rights hold:


(2) Main financial information of the important joint venture

                                                                                                                               In RMB

                                                      Ending balance /The Period                Opening balance /Last Period


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Other note


(3) Main financial information of the important associated enterprise

                                                                                                                                        In RMB

                                                         Ending balance /The Period                      Opening balance /Last Period



Other note


(4) Financial summary for non-important Joint venture and associated enterprise

                                                                                                                                        In RMB

                                                          Ending balance /The Period                     Opening balance /Last Period

 Joint venture:                                                         --                                            --

 Amount based on share-holding ratio                                    --                                            --

 Associated enterprise:                                                 --                                            --

 Amount based on share-holding ratio                                    --                                            --

Other note


(5) Major limitation on capital transfer ability to the Company from joint venture or associated enterprise

(6) Excess loss occurred in joint venture or associated enterprise

                                                                                                                                        In RMB

                                        Cumulative unrecognized               Unrecognized loss in the
    Name of joint venture or                                                                                   Accumulated unrecognized
                                          loss accumulated in the            current period (or net profit
      associated enterprise                                                                                    loss at the end of the period
                                             previous period                 shared in the current period)

Other note

(7) Unconfirmed commitment with joint venture investment concerned

(8) Intangible liability with joint venture or associated enterprise investment concerned

4. Major conduct joint operation


    Joint business        Principal place of                                                          Shareholding ratio/shares enjoyed
                                                     Registration            Business nature
         name                  business                                                                  Direct                Indirect

Explanation of the shareholding ratio or the share enjoyed in the joint operation is different from the voting rights ratio:
If a joint operation is a separate entity, the basis for classification as a joint operation:



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Other note


5. Structured body excluding in consolidate financial statement

Relevant explanations for structured entities not included in the scope of the consolidated financial statements:


6. Other

X. Risk related with financial instrument

XI. Disclosure of fair value


1. Ending fair value of the assets and liabilities measured by fair value

                                                                                                                            In RMB

                                                                         Ending fair value
             Item
                                   First-order               Second-order                Third-order                Total

 I. Sustaining measured
                                        --                         --                         --                     --
 by fair value

 II. Non-persistent
                                        --                         --                         --                     --
 measure




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2. Recognized basis for the market price sustaining and non-persistent measured by fair value on
first-order

3. The qualitative and quantitative information for the valuation technique and critical parameter that
sustaining and non-persistent measured by fair value on second-order

4. The qualitative and quantitative information for the valuation technique and critical parameter that
sustaining and non-persistent measured by fair value on third-order

5. Continuous third-level fair value measurement items, adjustment information between the opening and
closing book value and sensitivity analysis of unobservable parameters

6. Continuous fair value measurement items, if there is a conversion between various levels in the current
period, the reasons for the conversion and the policy for determining the timing of the conversion

7. Changes in valuation technology during the current period and reasons for the changes

8. The fair value of financial assets and financial liabilities not measured by fair value

9. Other

XII. Related party and related party transactions

1. Parent company of the enterprise


                                                                                        Share-holding
                                                                                          ratio on the    Voting right ratio
   Parent company       Registration place      Business nature    Registered capital
                                                                                         enterprise for   on the enterprise
                                                                                        parent company

                                              Production and
 Wuhan Zhongheng
                                              sales, real estate
 New Science &
                                              development and
 Technology            Wuhan                                       138,000,000.00                42.13%             42.13%
                                              sales, housing
 Industrial Group
                                              leasing and
 Co., Ltd
                                              management

Explanation on parent company of the enterprise
Nil
The ultimate control of the enterprise is Li Zhongqiu.
Other note:
Nil


2. Subsidiary of the Enterprise

Found more in VIII. Equity in other entity in the Note

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3. Joint venture and associated enterprise

Found more in Note
Other associated enterprise or joint ventures which has related transaction with the Company in the period or occurred previous:

          Name of joint venture or associated enterprise                           Relationship with the company

Other note


4. Other Related party


                       Other Related party                                         Relationship with the Enterprise

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Zhongheng Huafa Technology Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Hengsheng Yutian Industrial Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Hengsheng Photo-electricity Industry Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Hong Kong Yutian International Investment Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan New Oriental Real Estate Development Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Zhongheng Property Management Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Optical Valley Display System Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Yutian Industrial Real Estate Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Yutian Dongfang Property Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Xiahua Zhongheng Electronics Co. Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Zhongheng Yutian Trading Co,, Ltd
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Yutian Hongguang Real Estate Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Shenzhen Zhongheng Huayu Investment Holding Co., Ltd.
                                                                   controller

                                                                   Control by same controlling shareholder and ultimate
 Wuhan Yutian Investment Co., Ltd.
                                                                   controller

 Yutian International Co., Ltd.                                    Control by same controlling shareholder and ultimate


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                                                              controller

                                                              Control by same controlling shareholder and ultimate
 Hong Kong Zhongheng Yutian Co., Ltd.
                                                              controller

                                                              Control by same controlling shareholder and ultimate
 Shenzhen Yutian Henghua Co., Ltd.
                                                              controller

                                                              Control by same controlling shareholder and ultimate
 Shenzhen Zhongheng Yongye Technology Co., Ltd.
                                                              controller

                                                              Control by same controlling shareholder and ultimate
 Shenzhen Yutian Hengrui Co., Ltd.
                                                              controller

                                                              Control by same controlling shareholder and ultimate
 Wuhan Henglian Optoelectronics Co., Ltd.
                                                              controller

Other note
Nil


5. Related transaction

(1) Goods purchasing, labor service providing and receiving

Goods purchasing/labor service receiving
                                                                                                                      In RMB

                                                                                    Whether over the
                                                              Trading limit
      Related party           Content        Current Period                      approved limited or         Last Period
                                                               approved
                                                                                       not (Y/N)

 Hong Kong
 Yutian
 International         Purchase goods         37,751,811.11    156,979,200.00    N                             67,538,078.36
 Investment Co.,
 Ltd.

 Wuhan
 Hengsheng
                       Purchase goods         60,509,427.57    130,816,000.00    N                             60,232,724.51
 Photo-electricity
 Industry Co., Ltd.

Goods sold/labor service providing
                                                                                                                      In RMB

           Related party                     Content               Current Period                      Last Period

 Hong Kong Yutian
 International Investment Co.,      Sales of goods                         62,100,265.79                      59,074,589.93
 Ltd.

 Wuhan Hengsheng
                                    Sales of goods                         17,319,716.68                      10,283,633.89
 Photo-electricity Industry


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 Co., Ltd.

Explanation on goods purchasing, labor service providing and receiving
Nil


(2) Related trusteeship management/contract & entrust management/ outsourcing

The company's entrusted management/contracting situation table:
                                                                                                                                         In RMB

                                                                                                                                 Custody
   The name of
                                                                                                         Pricing basis       income/contrac
  the entrusting              Name of            Types of        Start date of       End date of
                                                                                                         for custody           ting income
        party /            contractor/contr   entrusted/contr   entrusted/contr    entrust/contract
                                                                                                      income/contrac           confirmed in
      outsourcing               actor          acted assets     acted start date         ing
                                                                                                         ting income            the current
         party
                                                                                                                                    period

Description of related custody/contracting situation
The company's entrusted management / outsourcing situation table:
                                                                                                                                         In RMB

   The name of                                                                                                                   Custody
  the entrusting              Name of         Entrusted/Outs     Start date of       End date of           Custody           fee/package fee
        party /            contractor/contr    ourced Asset     commission/out     entrustment/out    fee/package fee          confirmed in
      outsourcing               actor              Type           of package          sourcing           pricing basis          the current
         party                                                                                                                      period

Explanation on related lease


(3) Related lease

As a lessor for the Company:
                                                                                                                                         In RMB

                                                                          Lease income recognized in         Lease income recognized at
                  Lessee                          Assets type
                                                                                   the Period                            last Period
As a tenant for the Company:

                                                                                                                                         In RMB

                                                                          Rent costs recognized in the       Rent costs recognized at last
                  Lessor                          Assets type
                                                                                     Period                                Period

Explanation on related lease


(4) Related guarantee

As the guarantor
                                                                                                                                         In RMB




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                                                                                                                    Completed or not
      Secured party              Amount guarantee                    Start                      End
                                                                                                                          (Y/N)

 Hengfa Technology                         27,889,579.00   April 20, 2018            April 20, 2022             N

As the secured party
                                                                                                                                  In RMB

                                                                                                                    Completed or not
       Guarantor                 Amount guarantee                    Start                      End
                                                                                                                          (Y/N)

 Li Zhongqiu                               67,000,000.00   July 01, 2019             July 01, 2022              N

Explanation on related guarantee
Nil


(5) Related party’s borrowed/lending funds

                                                                                                                                  In RMB

      Related party                 Loan amount                  Start date                   Maturity                    Note

 Borrowing

 Lending


(6) Related party’s assets transfer and debt reorganization

                                                                                                                                  In RMB

           Related party               Related transaction content               The Period                         Last Period


(3) Remuneration of key manager

                                                                                                                                  In RMB

                    Item                                        The Period                                  Last Period


(8) Other related transactions

6. Receivable/payable items of related parties

(1) Receivable

                                                                                                                                  In RMB

                                                              Ending balance                             Opening balance
        Item                 Related party
                                                     Book balance        Bad debt provision      Book balance        Bad debt provision

                           Hong Kong Yutian
 Accounts
                           International              29,037,251.56                                41,513,718.58
 receivable
                           Investment Co.,


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                       Ltd.

                       Wuhan Hengsheng
 Accounts
                       Photo-electricity            1,434,688.52                               12,676.70
 receivable
                       Industry Co., Ltd.

                       Hong Kong Yutian
                       International
 Prepayments                                                                               27,025,766.19
                       Investment Co.,
                       Ltd.

 Total                                             30,471,940.08                           68,552,161.47


(2) Payable

                                                                                                                       In RMB

               Item                         Related party           Closing book balance            Opening book balance

                                  Wuhan Hengsheng
 Account payable                  Photo-electricity Industry                   23,803,488.38                    6,795,240.85
                                  Co., Ltd.

                                  Wuhan Hengsheng
 Notes payable                    Photo-electricity Industry
                                  Co., Ltd.

 Total                                                                         23,803,488.38                    6,795,240.85


7. Undertakings of related party

According to the claim request of the arbitration application of Shenzhen Vanke, Shen Huafa and Wuhan Zhongheng are required to
pay or bear jointly. The letter of Undertaking issued by Wuhan Zhongheng Group to Shenzhen Huafa will be fully borne by the
Wuhan Zhongheng Group if the arbitration is decided in favor of Vanke and the dispute arising from the contract leads to the
arbitration losses.


8. Other

Nil


XIII. Share-based payment

1. Overall situation of share-based payment

□ Applicable √Not applicable


2. Share-based payment settled by equity

□ Applicable √Not applicable



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3. Share-based payment settled by cash

□ Applicable √Not applicable


4. Modification and termination of share-based payment

Nil


5. Other

XIV. Undertakings or contingency

1. Important undertakings

Important undertakings on balance sheet date
Nil

2. Contingency

(1) Contingency on balance sheet date

Nil

(2) For the important contingency not necessary to disclosed by the Company, explained reasons

The Company has no important contingency that need to disclosed


3. Other

As of the date of this report, the company has no undisclosed commitments or contingencies that should be disclosed.


XV. Events after balance sheet date

1. Important non adjustment matters

                                                                                                                          In RMB

                                                                      Number of impacts on
                                                                                                     The reason why the impact
               Item                            Content             financial status and operating
                                                                                                    number cannot be estimated
                                                                              results


2. Profit distribution

                                                                                                                          In RMB




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3. Sales return

4. Other events after balance sheet date

As of the date of this report, the company has no undisclosed post-balance sheet events that should be disclosed.


XVI. Other important events

1. Previous accounting errors collection

(1) Retrospective restatement method

                                                                                                                              In RMB

                                                                     Names of report items in each
 Correction of accounting errors         Processing program                                                Cumulative influence
                                                                       comparison period affected


(2) Future applicable law


                                                                                             Reasons for adopting future applicable
       Correction of accounting errors                   Approval procedure
                                                                                                              law


2. Debt restructuring

3. Assets replacement

(1) Exchange of non-monetary assets

(2) Other asset replacement

4. Pension plan

5. Termination of operation

                                                                                                                              In RMB

                                                                                                                     Termination of
                                                                                                                    operation profit
                                                                                Income tax                           attributable to
       Item             Income             Expense            Total profit                           Net profit
                                                                                  expense                            owners of the
                                                                                                                         parent
                                                                                                                       company

Other note




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6. Segment

(1) Recognition basis and accounting policy for reportable segment

(2) Financial information for reportable segment

                                                                                                          In RMB

             Item                                             Offset of segment                 Total


(3) If the company has no reportable segments or is unable to disclose the total assets and liabilities of each
reportable segment, it should state the reasons

(4) Other explanations

7. Major transaction and events makes influence on investor’s decision

8. Other

1. Matters of adjudication of Southern International Arbitration Shen [2017] No. D376 from Southern China
International Economic & Trade Arbitration Commission
(1) Arbitration

In August 2015, Shenzhen Zhongheng Huafa Co., Ltd. (hereinafter referred to as “Shenzhen HUAFA”) and
Wuhan Zhongheng New Technology Industry Group Co., Ltd. (hereinafter referred to as “Wuhan Zhongheng”)
signed the “Cooperation Agreement on Urban Renewal Project of Update Units at Huafa Industrial Park,
Gongming Street, Guangming New District, Shenzhen”. As Shenzhen HUAFA and Wuhan Zhongheng planned to
cooperate with Shenzhen Vanke Real Estate CO., Ltd. (hereinafter referred to as “Shenzhen Vanke”) on the Huafa
urban renewal project (hereinafter referred to as “Huafa Renovation Project) at Gongming Street, Guangming
New District, Shenzhen, both parties appointed that Shenzhen HUAFA entrusted Wuhan Zhongheng to represent
it in this cooperation, and established project company - Shenzhen Vanke Guangming Real Estate Co., Ltd.
(hereinafter referred to as “Vanke Guangming”) as the subject of project implementation with Shenzhen Vanke;
Vanke Guangming signed “Demolition Compensation Agreement”              with Shenzhen HUAFA and Wuhan
Zhongheng, and paid the compensation for demolition.

On August 21, 2015, Shenzhen HUAFA, Wuhan Zhongheng and Shenzhen Vanke signed the “Cooperative
Operation Contract of Renovation Project at Huafa Industrial Park, Gongming Street, Guangming New
District”(hereinafter referred to as “Cooperative Operation Contract”), the contract refined and appointed the
cooperation model and operating steps of both sides. And then Shenzhen HUAFA, Wuhan Zhongheng and
Shenzhen Vanke signed the “Agreement on the Housing Acquisition and Removal Compensation and Settlement”.
After signing the above agreement, Shenzhen Vanke paid the cooperation price of 600 million Yuan to Wuhan
Zhongheng through Vanke Guangming.

In September 2016, Shenzhen Vanke filed an arbitration to South China International Economic and Trade

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Arbitration Commission (hereinafter referred to as “South China Arbitration”) as Shenzhen HUAFA and Wuhan
Zhongheng violated the appointment of “Cooperative Operation Contract” and handled the “Confirmation of
Subject of Reconstruction Implementation” at an overdue time, and required Shenzhen HUAFA and Wuhan
Zhongheng to pay liquidated damages and attorneys' fees of 464.60 million yuan.
While filing the arbitration, Shenzhen Vanke also applied for property preservation of 400 million Yuan of
property under the name of Shenzhen Huafa and Wuhan Zhongheng to Shenzhen Intermediate People’s Court.
According to the ruling of Shenzhen Intermediate People's Court and “Notification of Sealing up, Seizing and
Freezing Assets” (The reference numbers are (2016) Yue 03 Cai Bao No. 51, (2016) Yue 03 Cai Bao No. 53), the
27 house properties (Note: the property within the scope of Huafa renovation project) under the name of Shenzhen
HUAFA and 116,489,894 shares (Note: of which 116,100,000 shares have been pledged) of Shenzhen HUAFA
stock held by Wuhan Zhongheng were frozen.
(2) Progress of arbitration

On November 12, 2016, the arbitration court held a hearing on this case.

In December 2016, Wuhan Zhongheng to Shenzhen HUAFA issued a “Commitment Letter” which included that if
the arbitration (Note: the case) ruled in favor of Shenzhen Vanke, the loss of arbitration caused by the contract
disputes should be fully assumed by our company. In the above contingent losses, if the judicial decision ruled
your company to pay the compensation in advance, our company promised to pay your company in cash within
one month, if our company could not pay on time due to uncontrollable factors, our company would like to pay the
corresponding interest according to the benchmark interest rate of bank loans in the corresponding period.
Because the plots in the renovation project placed in our company hadn’t been applied for transfer procedures and
were still under your company’s name (Note: based on the “Asset Replacement Contract” signed by Wuhan
Zhongheng and Shenzhen HUAFA on April 29, 2009), therefore, there was no risk of compliance, at the same time,
our company promised to give priority to paying the above compensation with the compensation for demolition of
renovation project.
On August 16, 2017, South China International Economic and Trade Arbitration Commission made the “Arbitral
Award” SCIA [2017] D376, according to the arbitral award, the applicant and counterclaim respondent in
arbitration case SCIA [2017] D376 were Shenzhen Vanke Real Estate Co., Ltd. (hereinafter referred to as
“Applicant” and “Vanke”). The first respondent and the first applicant for counterclaim were Wuhan Zhongheng
New Science & Technology Industrial Group Co., Ltd (hereinafter referred to as “Wuhan Zhongheng” and “First
Respondent”). The second respondent and the second applicant for counterclaim were Zhongheng Huafa. The
award results were as follows:
① The first respondent and the second respondent pay liquidated damages to the applicant with a base number of
RMB 600 million, calculating by the annual interest rate of 36% from October 1, 2015 to November 11, 2016;
② The first respondent and the second respondent pay the lawyer fees of RMB 1.4 million to the applicant due to
the case;
③ The first respondent and the second respondent pay the property preservation fees of RMB 10,000 to the
applicant;


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④ The arbitration fees for this request and case was RMB 3,101,515.00, the first respondent and the second
respondent should bear 70%, i.e. RMB 2,171,060.50, and the applicant should bear 30%, i.e. RMB 930,454.50.
The applicant had already paid the arbitration fees in full amount for this request which could be used as the
arbitration fees of this case and request and shall not be refunded. The first respondent and the second respondent
should directly pay RMB 2,171,060.50 to the applicant;
The arbitration fee of counterclaim in this case was RMB 76,050 which was undertaken by the first respondent
and the second respondent at their own expense. The first respondent and the second respondent paid the
arbitration fees in full amount for this request which could be used as the arbitration fees of this case and request
and shall not be refunded;
The actual expenses of the arbitrators in this case amounted to RMB 7,754.90, the first respondent and the second
respondent assumed 70%, i.e. RMB 5,428.43, and the applicant assumed 30%, i.e. RMB 2,326.47; the above
actual expenses of the arbitrators had been paid by the Commission, so the first respondent and the second
respondent and the applicant should directly pay RMB 5,428.43 and RMB 2,326.47 respectively to the
Commission;
⑤ Reject the applicant’s other arbitration requests;
⑥ Reject the arbitration counterclaims of the first respondent and the second respondent.
In summary, Wuhan Zhongheng and Shenzhen Huafa should pay liquidated damages, interest, lawyer fees,
property preservation fees, and arbitration fees for this request to Vanke and pay actual expenses of the arbitrators
in this case and pay the actual expenses incurred by the arbitrators in this case to South China International
Economic and Trade Arbitration Commission.
On February 7, 2018, the company and Wuhan Zhongheng Group applied to Shenzhen Intermediate People’s
Court to revoke the Ruling HNGZSC [2017] D376, the court made a judgment on August 16, 2018, rejecting the
company’s request for revocation. The company and its controlling shareholder Wuhan Zhongheng Group
received the “Execution Notice of Shenzhen Intermediate People’s Court” ([2018] Yue03Zhi No. 1870), and the
executor applied to the court for compulsory execution, the company was listed as dishonest person subject to
execution by Shenzhen Intermediate People’s Court. On December 13, 2019, the company announced that it had
been removed from the list of dishonest persons subject to execution by the Shenzhen Intermediate People’s
Court.
The Company and Wuhan Zhongheng Group received an enforcement decision in 2020, terminate the execution
process and wait for the conditions for continuation to be fulfilled before restarting.
(3) The response of the company’s management and the identification of the event
The company engaged lawyers to make an independent investigation and judgment on the event, and issued
special legal opinion that the reasons of Wuhan Zhongheng resulted in a failure of a net handover, and Wuhan
Zhongheng received the full amount of 600 million yuan paid by Vanke Guangming. Therefore, Wuhan
Zhongheng should bear all responsibilities for faults in response to the breach of contract. Wuhan Zhongheng
issued the Commitment Letter in December 2016, pledged that if the arbitration judged Vanke to win the case,
Wuhan Zhongheng should bear all arbitration losses caused by the contract dispute; after the award came into
effect, Wuhan Zhongheng issued the Confirmation Letter again on November 23, 2017 to divide the duty of

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performance of the award; the independent directors of the company issued independent opinions after careful
study and judgment that Wuhan Zhongheng should bear all liability for satisfaction on the Award HNGZSC [2017]
D376.
2. Arbitration case of legal service contract dispute with V&T (Shenzhen) Law Firm
On March 12, 2018, the company received the arbitration notice No. SHEN DX20180087 from Shenzhen Court
of International Arbitration, V&T (Shenzhen) Law Firm requested to make a ruling that the Company and Wuhan
Zhongheng pay the delinquent lawyer’s fees of RMB 19,402,000 and the liquidated damages (The liquidated
damages shall take five ten-thousandths of a day as a standard based on RMB 19,402,000 from August 24, 2017 to
the date of payment of the above-mentioned lawyer’s fees, and the liquidated damages up to February 12, 2018
was RMB 1,678,273.00). The company should bear all the arbitration fees for this case.
On November 5, 2019, the company received the arbitration award HNGZSC [2019] D618 from Shenzhen Court
of International Arbitration, ruling that the company and its controlling shareholder Wuhan Zhongheng New
Science & Technology Industrial Group Co., Ltd should pay Shenzhen V & T Law Firm the arrears of legal fees
of RMB 19,402,000 and the liquidated damages.
Guangdong Haibu Attorneys-at-Law engaged by the company made verification opinion on the legal
responsibility assumed for the performance of the arbitration result and believed that this case was caused by the
Vanke arbitration case No. SHEN DP20160334, and the net land was not handed over on time due to Wuhan
Zhongheng, and Wuhan Zhongheng Heng received 600 million yuan paid by Vanke Guangming in full, so the
company is not liable for compensation under the judgment of the Vanke case. The nature of the attorney fees of
V&T Law Firm is deduction of royalties. V&T Law Firm's deduction for the company is 0, and V&T Law Firm's
attorney fees paid by the company is 0. In addition, Wuhan Zhongheng Group has issued a "Letter of
Commitment" to Shenzhen Huafa in December 2016, if the arbitration decides that Vanke wins the lawsuit,
Wuhan Zhongheng Group will bear the full amount of the arbitration losses caused by the contract disputes.
Wuhan Zhongheng Group, as the beneficiary of the "Entrusted Agency Contract", shall bear all the payment
responsibilities for the “Award” HNGZSC [2019] No. D618, and the company shall not be liable for the losses in
this case.
On November 17, 2020, the court enforced the attorney fees that Wuhan Zhongheng Group should assume. As a
joint defendant, the company was forced to enforce partial payment of 1,564,767.46 yuan, Wuhan Zhongheng
Group returned this partial payment to the listed company on the 24th of that month.
3. Dispute with Shenzhen Zhongheng Semiconductor Co., Ltd. (formerly known as "Shenzhen Zhongheng Huafa
Technology Co., Ltd.") concerning land transfer
(1) Cause of the case
On April 29, 2009, the company signed an Asset Replacement Contract with Wuhan Zhongheng Group.
According to the contract, the company would use the the land use rights of two plots of land located at Huafa
Road, Gongming Town, Bao’an District, Shenzhen, i.e. land parcel number A627-0005 (real estate registration
number 8000101219) and A627-0007 (real estate registration number 8000101218), which are worth 18.55
million yuan, to increase capital to Shenzhen Zhongheng Semiconductor Co., Ltd. (former Zhongheng Huafa
Technology Co., Ltd., hereinafter referred to as "Zhongheng Semiconductor") and transfer ownership to


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Zhongheng Semiconductor, Wuhan Zhongheng Group replaced the company's 100% equity in Zhongheng
Semiconductor with its 56% equity in Wuhan Hengfa Technology Co., Ltd. For the main content of the
above-mentioned Asset Replacement Contract, please refer to the Announcement on Related Transactions of Asset
Replacement with Controlling Shareholders published by the company on Juchao Website dated April 30, 2009,
with the announcement number 2009-17. After Wuhan Zhongheng Group fulfilled its obligations under the Asset
Replacement Contract, the company transferred 100% of its equity in Zhongheng Semiconductor to Wuhan
Zhongheng Group on December 21, 2009; the company also handed over the above two plots of land to
Zhongheng Semiconductor for possession, management, and use, but the land use right has not been transferred to
Zhongheng Semiconductor.
(2) Case progress
On April 17, 2020, the company received the "Notice of Response" (2020) Yue 03 Min Chu No. 17 and other
related materials delivered by the Shenzhen Intermediate People’s Court of Guangdong Province. Zhongheng
Semiconductor sued the company and required the company and the third party (Wuhan Zhongheng Group) to
continue to perform the contract, and transfer ownership of the above two plots of land and compensate for
economic losses of 52 million yuan. The Shenzhen Intermediate People's Court has filed a case with the case
number (2020) Yue 03 Min Chu No. 17.
Since Zhongheng Semiconductor's main appeal is the transfer of land to its name, the company is reaching a
settlement with Zhongheng Semiconductor. The company promises to actively cooperate with the land transfer.
Zhongheng Semiconductor has issued a letter of commitment to the company promising to abandon the demand
for economic compensation. The Company received the first trial verdict of the case in May 2021. Zhongheng
Semiconductor has appealed the decision to the Supreme People’s Court, and the first trial verdict is not yet
entered into force.


XVII. Principle notes of financial statements of parent company

1. Account receivable

(1) Category of account receivable

                                                                                                                        In RMB

                                       Ending balance                                         Opening balance

                                                  Bad debt
                       Book balance                                          Book balance         Bad debt provision
      Category                                    provision       Book                                                 Book
                      Amoun     Proport    Amoun        Accrua    value    Amoun      Proport     Amoun     Accrual    value
                         t       ion          t         l ratio              t          ion          t        ratio

 Account receivable
 with bad debt        10,293,   100.00     10,293,      100.00             10,293,     100.00     10,293,    100.00
                                                                    0.00                                                 0.00
 provision accrual    424.90           %   424.90             %            424.90             %    424.90         %
 on a single basis



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 Including:

 Including:

                         10,293,             10,293,                         10,293,                   10,293,
 Total
                         424.90               424.90                          424.90                   424.90

Accrual of bad debt provision on single basis: 10,293,424.90
                                                                                                                                 In RMB

                                                                      Ending balance
          Name
                                   Book balance         Bad debt provision             Accrual ratio                 Accrual causes

 Hong Kong Haowei
                                       1,870,887.18            1,870,887.18                     100.00%          Uncollectible
 Industrial Co., Ltd.

 TCL ACE ELECTRIC
 APPLIANCE
                                       1,325,431.75            1,325,431.75                     100.00%          Uncollectible
 (HUIZHOU) CO.,
 LTD.

 Qingdao Haier Parts
                                       1,225,326.15            1,225,326.15                     100.00%          Uncollectible
 Procurement Co., Ltd.

 SKYWORTH
 Multimedia                              579,343.89              579,343.89                     100.00%          Uncollectible
 (Shenzhen) Co., Ltd.

 Shenzhen Huixin
 Video Technology Co.,                   381,168.96              381,168.96                     100.00%          Uncollectible
 Ltd.

 Shenzhen Wandelai
 Digital Technology                      351,813.70              351,813.70                     100.00%          Uncollectible
 Co., Ltd.

 Shenzhen Dalong
                                         344,700.00              344,700.00                     100.00%          Uncollectible
 Electronic Co., Ltd.

 Shenzhen Keya
                                         332,337.76              332,337.76                     100.00%          Uncollectible
 Electronic Co., Ltd.

 Shenzhen Qunping
                                         304,542.95              304,542.95                     100.00%          Uncollectible
 Electronic Co., Ltd.

 China Galaxy
 Electronics (Hong                       288,261.17              288,261.17                     100.00%          Uncollectible
 Kong) Co., Ltd.

 Dongguan Weite
                                         274,399.80              274,399.80                     100.00%          Uncollectible
 Electronic Co., Ltd.

 Hong Kong New
 Century Electronics                     207,409.40              207,409.40                     100.00%          Uncollectible
 Co., Ltd.


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 Shenyang Beitai
                                         203,304.02                 203,304.02                       100.00%      Uncollectible
 Electronic Co., Ltd.

 Beijing Xinfang Weiye
                                         193,000.00                 193,000.00                       100.00%      Uncollectible
 Technology Co., Ltd.

 TCL Electronics (Hong
                                         145,087.14                 145,087.14                       100.00%      Uncollectible
 Kong) Co., Ltd.

 Huizhou TCL Xinte
                                         142,707.14                 142,707.14                       100.00%      Uncollectible
 Electronics Co., Ltd.

 Sky Worth – RGB
                                         133,485.83                 133,485.83                       100.00%      Uncollectible
 Electronic Co., Ltd.

 Other                                 1,990,217.45               1,990,217.45                       100.00%      Uncollectible

 Total                                10,293,424.29              10,293,424.29                  --                          --

Accrual of bad debt provision on single basis:
                                                                                                                                   In RMB

                                                                         Ending balance
          Name
                                   Book balance            Bad debt provision            Accrual ratio                Accrual causes

Accrual of bad debt provision on portfolio:
                                                                                                                                   In RMB

                                                                              Ending balance
             Name
                                            Book balance                     Bad debt provision                    Accrual ratio

Explanation on portfolio basis:
If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses, please
refer to the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √Not applicable
By account age
                                                                                                                                   In RMB

                           Account age                                                          Ending balance

 Over 3 years                                                                                                             10,293,424.90

    Over 5 years                                                                                                          10,293,424.90

 Total                                                                                                                    10,293,424.90


(2) Bad debt provision accrual, collected or reversal in the period

Bad debt provision accrual in the period:
                                                                                                                                   In RMB

                         Opening                              Amount changed in the period
     Category                                                                                                            Ending balance
                         balance              Accrual         Collected or        Written-off             Other



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                                                                reversal

Including major amount bad debt provision that collected or reversal in the period:
                                                                                                                                In RMB

                    Name                              Amount collected or reversal                       Way of collection


(3) Actual written-off accounts receivable in the current period

                                                                                                                                In RMB

                                Item                                                          Written-off amount

Including the important accounts receivable written-off situation:
                                                                                                                                In RMB

                                                                                                                      Whether the
                             Nature of                                                           Written-off           payment is
                                                  Written-off
         Name                 accounts                               Written-off reason          procedure            generated by
                                                     amount
                             receivable                                                          performed            related party
                                                                                                                       transactions

Written-off description of accounts receivable:
Nil


(4) Top 5 account receivables collected by arrears party at ending balance

                                                                                                                                In RMB

                                    Ending balance    of account       Proportion in total account       Ending balance of bad debt
           Company
                                             receivable                    receivables at year-end                 provision

 Hong Kong Haowei
                                                     1,870,887.18                            18.18%                      1,870,887.18
 Industrial Co., Ltd.

 TCL ACE ELECTRIC
 APPLIANCE (HUIZHOU)                                 1,325,431.75                            12.88%                      1,325,431.75
 CO., LTD.

 Qingdao Haier Parts
                                                     1,225,326.15                             11.90%                     1,225,326.15
 Procurement Co., Ltd.

 SKYWORTH Multimedia
                                                      579,343.89                               5.63%                       579,343.89
 (Shenzhen) Co., Ltd.

 Shenzhen Huixin Video
                                                      381,168.96                               3.70%                       381,168.96
 Technology Co., Ltd.

 Total                                               5,382,157.93                            52.29%


(5) Account receivable derecognition due to financial assets transfer

Nil


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(6) Assets and liabilities resulted by account receivable transfer and continues involvement

Nil
Other note:
Nil


2. Other account receivable

                                                                                                               In RMB

                    Item                          Ending balance                          Opening balance

 Other account receivable                                     87,948,585.04                            93,922,057.92

 Total                                                        87,948,585.04                            93,922,057.92


(1) Interest receivable

1) Category of interest receivable

                                                                                                               In RMB

                    Item                          Ending balance                          Opening balance


2) Significant overdue interest


                                                                                                  Whether there is
         Borrower                Ending balance   Overdue time           Overdue reason          impairment and its
                                                                                                  judgment basis

Other note:


3)Accrual of bad debt provision

□ Applicable √Not applicable


(2)Dividend receivable

1) Category of dividend receivable

                                                                                                               In RMB

           Item (or invested unit)                Ending balance                          Opening balance


2) Important dividend receivable with account age over one year

                                                                                                               In RMB

  Item (or invested unit)        Ending balance    Account age            Reasons for             Whether there is


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                                                                                        non-recovery             impairment and its
                                                                                                                   judgment basis


3) Accrual of bad debt provision

□ Applicable √Not applicable
Other note:


(3) Other account receivable

1) Other account receivable by nature

                                                                                                                                In RMB

                  Nature                               Ending book balance                              Opening book balance

 Margin & deposit                                                           4,427,575.45                                  304,608.00

 Borrow money                                                               2,419,063.12                                1,869,073.12

 Intercourse funds                                                        70,565,408.13                               107,488,541.28

 Rental receivable                                                        29,316,713.51                                 5,847,389.48

 Other                                                                          37,294.00                                 168,162.09

 Less: Bad debt provision                                                 -18,817,469.17                              -18,512,750.12

 Total                                                                    87,948,585.04                                97,165,023.85


2)Accrual of bad debt provision

                                                                                                                                In RMB

                                     Phase I               Phase II                         Phase III

                                                   Expected credit losses for     Expected credit losses for
                                 Expected credit
   Bad debt provision                                 the entire duration          the entire duration (with            Total
                            losses over next 12
                                                        (without credit               credit impairment
                                    months
                                                     impairment occurred)                   occurred)

 Balance on1 Jan. 2021                                                111.75                   18,817,357.42           18,817,469.17

 Balance of 1 Jan. 2021
                                      ——                   ——                             ——                      ——
 in the period

 Balance on Dec. 31,
                                                                      111.75                   18,817,357.42           18,817,469.17
 2021

Change of book balance of loss provision with amount has major changes in the period
□ Applicable √Not applicable
By account age
                                                                                                                                In RMB



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                           Account age                                                          Ending balance

 Within one year (one year included)                                                                                    8,752,615.17

 1-2 years                                                                                                             79,196,078.82

 2-3 years                                                                                                                   312,212.44

 Over 3 years                                                                                                          18,505,147.78

    Over 5 years                                                                                                       18,505,147.78

 Total                                                                                                                106,766,054.21


3) Bad debt provision accrual, collected or reversal in the period

Bad debt provision accrual in the period:
                                                                                                                                 In RMB

                                                                Amount changed in the period
                        Opening
     Category                                                   Collected or                                          Ending balance
                         balance             Accrual                              Written-off           Other
                                                                  reversal

Including the important amount collected or switches back in the period:
                                                                                                                                 In RMB

                   Name                           Amount collected or switches back                      Way of collection


4) The actual written-off other receivables in the current period

                                                                                                                                 In RMB

                               Item                                                         Written-off amount

Including the important written-off situation of other receivables:
                                                                                                                                 In RMB

                                                                                                                      Whether the
                                                                                                 Written-off          payment is
                           Nature of other         Written-off
          Name                                                         Written-off reason         procedure          generated by
                             receivables               amount
                                                                                                 performed           related party
                                                                                                                      transactions

Description of other receivables written-off:


5) Top 5 other receivables collected by arrears party at ending balance

                                                                                                                                 In RMB

                                                                                            Proportion in total
                                                                                                                   Ending balance of
         Company               Nature            Ending balance          Account ages        other receivables
                                                                                                                   bad debt provision
                                                                                                at period-end

 Wuhan Hengfa            Intercourse funds         82,263,990.66       Within one year;                 77.00%


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 Technology Co.,                                                        1-2 years
 Ltd.

 Shenzhen
 Zhongheng HUAFA          Intercourse funds             8,588,951.51    Within one year                    8.00%
 Property Co., Ltd

 Shenzhen HUAFA
                          Rental fee
 Property Leasing                                       4,588,859.19    Over 3 years                       4.00%           4,588,859.19
                          receivable
 Co., Ltd.

 Portman                  Intercourse funds             4,021,734.22    Over 3 years                       4.00%           4,021,734.22

 Shenzhen Jifang          Rental fee
                                                        1,071,160.00    Over 3 years                       1.00%           1,071,160.00
 Investment Co., Ltd      receivable

 Total                              --                100,534,695.58             --                                        9,681,753.41


6) Receivables involving government subsidies

                                                                                                                                   In RMB

                                 Government subsidy                                                              Estimated time, amount
             Name                                               Ending balance           Ending account age
                                           item                                                                    and basis of receipt


7) Other receivable for termination of confirmation due to the transfer of financial assets

8) The amount of assets and liabilities that are transferred other receivable and continued to be involved

Other note:


3. Long-term equity investments

                                                                                                                                   In RMB

                                           Ending balance                                             Opening balance
         Item                                Provision for                                             Provision for
                       Book balance                               Book value          Book balance                         Book value
                                             impairment                                                 impairment

 Investment for
                      186,618,400.00                            186,618,400.00       187,218,400.00       600,000.00     186,618,400.00
 subsidiary

 Total                186,618,400.00                            186,618,400.00       187,218,400.00       600,000.00     186,618,400.00


(1) Investment for subsidiary

                                                                                                                                   In RMB

                       Opening                               Changes in the period                            Closing         Closing
  The invested
                       balance                                           Accrual of                           balance       balance of
        entity                           Additional          Reduce                           Other
                     (Book value)                                        impairment                       (Book value)      impairment


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                                         investment         investment      provision                                            provision

 Shenzhen
 Huafa
 Property
 Leasing Co.,
 Ltd.

 Shenzhen
 Zhongheng
 HUAFA                1,000,000.00                                                                            1,000,000.00
 Property Co.,
 Ltd

 Wuhan
 Hengfa               183,608,900.                                                                            183,608,900.
 Technology                        00                                                                                  00
 Co., Ltd.

 Shenzhen
 HUAFA
                      1,000,000.00                                                                            1,000,000.00
 Hengtian Co.,
 Ltd.

 Shenzhen
 HUAFA
                      1,000,000.00                                                                            1,000,000.00
 Hengtai Co.,
 Ltd.

 Ruth Co., Ltd.           9,500.00                                                                                9,500.00

                      186,618,400.                                                                            186,618,400.
 Total
                                   00                                                                                  00


(2) Investment for associates and joint venture

                                                                                                                                      In RMB

                                                              Current changes (+, -)

                                                  Investm                                                                           Ending
                                                                                         Cash
             Openin                                   ent       Other                                                               balance
                                                                                        dividen                         Ending
                  g       Additio                 gain/los      compre                                                                 of
                                        Capital                            Other         d or       Impair              balance
 Enterpr     balance         nal                       s        hensive                                                             depreci
                                        reducti                            equity       profit       ment     Other     (book
   ise        (book       investm                 recogni       income                                                               ation
                                          on                              change        announ      accrual             value)
              value)         ent                      zed      adjustm                                                              reserve
                                                                                        ced to
                                                   under          ent                                                                  s
                                                                                        issued
                                                  equity

 I. Joint venture

 II. Associated enterprise


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(3) Other note

4. Operating revenue and cost

                                                                                                                                In RMB

                                                The Period                                         Last Period
             Item
                                    Revenue                      Cost                    Revenue                        Cost

 Other business                      22,146,204.31               4,439,887.16             16,720,522.47                  2,040,226.11

 Total                               22,146,204.31               4,439,887.16             16,720,522.47                  2,040,226.11

Information relating to revenue:
                                                                                                                                In RMB

          Category                 Branch 1                   Branch 2                                                  Total

      Including:

      Including:

      Including:

      Including:

      Including:

      Including:

      Including:

Information relating to performance obligations:
Nil
Information relating to the transaction price assigned to the remaining performance obligation:
At end of the period, the corresponding revenue amount for performance obligations that have been signed but have not been
performed or have not been performed is 0.00 yuan, of which, yuan expected to recognized as revenue in the year.
Other explanation:
Nil


5. Investment income

                                                                                                                                In RMB

                     Item                                     The Period                                  Last Period


6. Other

Nil




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XVIII. Supplementary Information

1. Current non-recurring gains/losses

√ Applicable □ Not applicable
                                                                                                                                In RMB

                     Item                                        Amount                                       Note

 Gain/loss of entrusted investment or assets
                                                                             149,767.58
 management

 Other non-operating income and
 expenditure except for the aforementioned                                  -194,603.88
 items

 Total                                                                        -44,836.30                        --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √Not applicable


2. ROE and earnings per share


                                                                                                   Earnings per share
    Profits during report period                Weighted average ROE                 Basic earnings per         Diluted earnings per
                                                                                     share (RMB/Share)          share (RMB/Share)

 Net profits belong to common
 stock stockholders of the                                                2.40%                     0.0248                     0.0248
 Company

 Net profits belong to common
 stock stockholders of the
                                                                          2.40%                     0.0286                     0.0286
 Company after deducting
 nonrecurring gains and losses


3. Difference of the accounting data under accounting rules in and out of China

(1) Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable




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                                                                               SEMI-ANNUAL REPORT 2021

(2) Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable


(3) Explanation on data differences under the accounting standards in and out of China; as for the
differences adjustment audited by foreign auditing institute, listed name of the institute

4. Other

Nil




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