SHENZHEN ZHONGHENG HUAFA CO., LTD.SEMI-ANNUAL REPORT 2020
SHENZHEN ZHONGHENG HUAFA CO., LTD.
SEMI-ANNUAL REPORT 2020
August 2020
SHENZHEN ZHONGHENG HUAFA CO., LTD.SEMI-ANNUAL REPORT 2020
Section I. Important Notice, Contents and InterpretationBoard of Directors, Supervisory Committee, the directors, supervisors andsenior executives (excluding the follow who has objection statement) ofShenzhen 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 semi-annual report, and shall take allresponsibilities, individual and/or joint, for the reality, accuracy and completionof the whole contents.Li Zhongqiu, Principal of the Company, Yang Bin, person in charger ofaccounting works and Wu Ai’jie, person in charge of accounting organ(accounting principal) hereby confirm that the Financial Report of 2020Semi-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 theReport, they do not constitute a substantial commitment for investors. Majorityinvestors are advised to exercise caution of investment risks.Risks factors are being well-described in the Report, found more in risks factorsand countermeasures disclosed in Prospects for Future Development of theBoard of Directors’ Report.The Company has no plan of cash dividends carried out, bonus issued andcapitalizing of common reserves either.
SHENZHEN ZHONGHENG HUAFA CO., LTD.SEMI-ANNUAL REPORT 2020
Contents
Semi-annual Report 2020 ...... 1
Section I Important Notice, Contents and Interpretation ...... 2
Section II Company Profile and Main Financial Indexes ...... 5
Section III Summary of Company Business ...... 8
Section IV Discussion and Analysis of Operation ...... 9
Section V Important Events ...... 18
Section VI Changes in shares and particular about shareholders ...... 36
Section VII Preferred Stock ...... 40
Section VIII Convertible Bonds ...... 41
Section IX Particulars about Directors, Supervisors and Senior Executives ...... 42
Section X Corporate Bonds ...... 43
Section XI Financial Report ...... 44
Section XII Documents Available for Reference ...... 151
SHENZHEN ZHONGHENG HUAFA CO., LTD.SEMI-ANNUAL REPORT 2020
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 |
| HUAFA Trade | Refers to | Wuhan Zhongheng HUAFA Trade Co., Ltd. |
| Wuhan Zhongheng Group | Refers to | Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd |
| HK Yutian | Refers to | Hong Kong Yutian International Investment Co., Ltd. |
| Hengsheng 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 | Refers to | Shenzhen Vanke Real Estate Co., Ltd., now renamed as Shenzhen Vanke 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 |
| Huafa Technology | Refers to | Shenzhen Zhongheng Huafa Technology Co., Ltd. |
SHENZHEN ZHONGHENG HUAFA CO., LTD.SEMI-ANNUAL REPORT 2020
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 Chinese) | 深圳中恒华发股份有限公司 | ||
| Short form of the Company (in Chinese if applicable) | 深华发 | ||
| Foreign name of the Company (if applicable) | SHENZHEN ZHONGHENG HUAFA CO., LTD. | ||
| Abbr. of the foreign name (if applicable) | N/A | ||
| Legal representative | Li Zhongqiu | ||
II. Person/Way to contact
| Secretary of the Board | Rep. of security affairs | |
| Name | Niu Zhuo | |
| Contact add. | 618, East Tower, Huafa Building, No.411 Bldg, Huafa (N) Road, Futian District, Shenzhen | |
| Tel. | 0755-86360201 | |
| Fax. | 0755-86360206 | |
| 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 ornot
√Applicable □ Not applicable
| Address for registration | No.411 Bldg, Huafa (N) Road, Futian District, Shenzhen |
| Post code of the address for registration | 518031 |
| Office address | 6/F, East Tower, Huafa Building, No.411 Bldg, Huafa (N) Road, Futian District, Shenzhen |
| Post code of the address for office address | 518031 |
| Company’s Internet Web Site | http://www.hwafa.com.cn/ |
| huafainvestor@126.com | |
| Inquiry date for the extraordinary notice released on appointed website (if applicable) |
2. Information disclosure and preparation place
Whether information disclosure and preparation place changed in reporting period or not
√ Applicable □ Not applicable
| Newspaper appointed for information disclosure | Securities Times; Hong Kong Commercial Daily |
| Website for annual report publish appointed by CSRC | http://www.cninfo.com.cn |
SHENZHEN ZHONGHENG HUAFA CO., LTD.SEMI-ANNUAL REPORT 2020
| Preparation place for semi-annual report | Office of the Board in 6/F, Huafa Building, Futian District, Shenzhen |
| Inquiry date for the extraordinary notice released on appointed website (if applicable) |
IV. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data or not
□Yes √No
| Current period | Same period last year | Changes over last year (+, -) | |
| Operating income (RMB) | 300,703,421.38 | 339,190,174.05 | -11.35% |
| Net profit attributable to shareholders of the listed company (RMB) | 3,165,597.55 | 2,580,411.13 | 22.68% |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB) | 3,167,896.46 | 190,686.95 | 1,561.31% |
| Net cash flow arising from operating activities (RMB) | 21,200,212.24 | 45,194,220.56 | -53.09% |
| Basic earnings per share (RMB/Share) | 0.0112 | 0.0091 | 23.08% |
| Diluted earnings per share (RMB/Share) | 0.0112 | 0.0091 | 23.08% |
| Weighted average ROE | 0.96% | 0.79% | 0.17% |
| Period-end | Period-end of last year | Changes over period-end of last year (+, -) | |
| Total assets (RMB) | 610,602,250.47 | 614,163,899.86 | -0.58% |
| Net assets attributable to shareholder of listed company (RMB) | 332,593,647.44 | 329,428,049.89 | 0.96% |
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 (InternationalAccounting 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 (InternationalAccounting 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 accountingrules 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 orChinese GAAP (Generally Accepted Accounting Principles) in the period.
VI. Items and amounts of extraordinary profit (gains)/loss
√Applicable □ Not applicable
In RMB
| Item | Amount | Note |
| Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | -99,867.53 | |
| Gains/losses from entrusted investment or assets management | 66,780.40 | |
| Other non-operating income and expenditure except for the aforementioned items | 37,897.68 |
SHENZHEN ZHONGHENG HUAFA CO., LTD.SEMI-ANNUAL REPORT 2020
| Less: Impact on income tax | 7,109.46 | |
| Total | -2,298.91 | -- |
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according tothe lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering TheirSecurities 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 ofextraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities tothe Public --- Extraordinary Profit/loss
SHENZHEN ZHONGHENG HUAFA CO., LTD.SEMI-ANNUAL REPORT 2020
Section III. Summary of Company BusinessI. Main businesses of the company in the reporting periodAfter years of development, the company has gradually formed two main businesses in industry and propertymanagement. Among them, the industrial business mainly includes injection molding, POLYLON (light-weightpackaging materials), and complete machine production and sales of liquid crystal display, property managementbusiness is mainly the lease of its own property.
II. Major changes in main assets
1. Major changes in main assets
| Major assets | Note of major changes |
| Equity assets | No major changes |
| Fixed assets | No major changes |
| Intangible assets | No major changes |
| Construction in progress | No major changes |
2. Main overseas assets
□ Applicable √ Not applicable
III. Core competitiveness analysis
All industrial lands of the Company located in Shenzhen were taken into the first batch of plan under 2010Shenzhen urban upgrade planning. In the future, development and operation of self-owned land resources wouldbecome the income source of the Company on a long-term and stable basis.
Section IV. Discussion and Analysis of OperationI. Introduction
After years of development, the company has gradually formed two main businesses in industry and property management. Amongthem, the industrial business mainly includes injection molding, POLYLON (light-weight packaging materials), and completemachine production and sales of liquid crystal display, property management business is mainly the lease of its own property.Affected by the outbreak of COVID-19, in the first half of 2020, the company achieved operation revenue of 300.7034 million yuanwith a y-o-y declined of 11.35%; operation profit of 3.9651 million yuan, a y-o-y growth of 34.29%; net profit achieved 3.1656million yuan , a y-o-y growth of 22.68%. The operation revenue from industry production has 281.1885 million yuan , a 11.79%down from a year earlier, operation profit has 987300 yuan loss, a declined of 158.28% on a y-o-y basis, net profit has 824100 yuanloss with a 150.38% down on a y-o-y basis. In property lease business, operation revenue achieved 18.7013 million yuan in first halfof the year, a 6.22% increased over same period last year, operation profit achieved 4.9531 million yuan, a y-o-y growth of 292..85%,the net profit achieved 3.9904 million yuan , a y-o-y growth of 321.94%.II. Main business analysisSee the “I-Introduction” in “Discussion and Analysis of Operation”Change of main financial data on a y-o-y basis
In RMB
| Current period | Same period last year | y-o-y changes(+,-) | Reasons | |
| Operation revenue | 300,703,421.38 | 339,190,174.05 | -11.35% | |
| Operation cost | 263,959,652.63 | 297,580,208.34 | -11.30% | |
| Sales expenses | 9,100,079.39 | 9,130,380.22 | -0.33% | |
| Administrative expenses | 17,082,362.66 | 19,616,991.39 | -12.92% | |
| Financial expenses | 3,484,228.81 | 5,068,371.24 | -31.26% | Short-term loans declined in the period |
| Income tax expenses | 837,369.58 | 603,910.08 | 38.66% | Profit from property increased in the period |
| R&D investment | 2,423,425.26 | 3,726,992.86 | -34.98% | Orders from new products declined in the period |
| Net cash flow from operating activities | 21,200,212.24 | 45,194,220.56 | -53.09% | Return of sales declined due to the COVID-19 |
| Net cash flow from investment activities | -1,338,379.56 | -3,964,794.99 | 66.24% | Production equipment have changed last period |
| Net cash flow from financing activities | -34,838,186.71 | -32,459,238.76 | -7.33% | |
| Net increase of cash and cash equivalent | -14,832,093.81 | 8,869,836.86 | -267.22% | Return of sales declined due to the COVID-19 |
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 revenue
In RMB
| Current period | Same period last year | y-o-y changes(+,-) | |||
| Amount | Ratio in operation revenue | Amount | Ratio in operation revenue | ||
| Total operation revenue | 300,703,421.38 | 100% | 339,190,174.05 | 100% | -11.35% |
| According to industries | |||||
| Video | 163,278,927.45 | 54.30% | 164,964,344.94 | 48.63% | 5.67% |
| Injection molding | 85,278,752.42 | 28.36% | 111,142,622.51 | 32.77% | -4.41% |
| EPS | 19,908,274.02 | 6.62% | 34,292,527.88 | 10.11% | -3.49% |
| Property leasing | 18,701,335.82 | 6.22% | 18,911,444.99 | 5.58% | 0.64% |
| Income from materials | 12,121,666.69 | 4.03% | 7,710,873.76 | 2.27% | 1.76% |
| Utilities and others | 1,414,464.98 | 0.47% | 2,168,359.97 | 0.64% | -0.17% |
| According to products | |||||
| Display | 163,278,927.45 | 54.30% | 164,964,344.94 | 48.63% | 5.67% |
| Injection molding | 85,278,752.42 | 28.36% | 111,142,622.51 | 32.77% | -4.41% |
| EPS | 19,908,274.02 | 6.62% | 34,292,527.88 | 10.11% | -3.49% |
| Property leasing | 18,701,335.82 | 6.22% | 18,911,444.99 | 5.58% | 0.64% |
| Income from materials | 12,121,666.69 | 4.03% | 7,710,873.76 | 2.27% | 1.76% |
| Utilities and others | 1,414,464.98 | 0.47% | 2,168,359.97 | 0.64% | -0.17% |
| According to region | |||||
| Hong Kong, Taiwan | 105,186,479.34 | 34.98% | 63,962,270.03 | 18.86% | 16.12% |
| Central China | 136,683,631.65 | 45.45% | 166,693,597.80 | 49.14% | -3.69% |
| East China | 39,318,383.66 | 13.08% | 88,099,858.28 | 25.97% | -12.89% |
| South China | 19,514,926.73 | 6.49% | 20,434,447.94 | 6.02% | 0.47% |
About the industries, products, or regions accounting for over 10% of the company’s operating income or operating profit
√Applicable □ Not applicable
In RMB
| Operation revenue | Operation cost | Gross profit ratio | Increase/decrease of operation revenue y-o-y | Increase/decrease of operation cost y-o-y | Increase/decrease of gross profit ratio y-o-y | |
| According to industries | ||||||
| Video | 163,278,927.45 | 152,549,452.35 | 6.57% | -1.02% | -2.75% | 1.65% |
| Injection molding | 85,278,752.42 | 78,749,817.82 | 7.66% | -23.27% | -19.11% | -4.75% |
| EPS | 19,908,274.02 | 18,424,496.75 | 7.45% | -41.95% | -41.10% | -1.34% |
| Property leasing | 18,701,335.82 | 2,040,226.11 | 89.09% | -1.11% | -35.68% | 5.86% |
| According to products | ||||||
| Display | 163,278,927.45 | 152,549,452.35 | 6.57% | -1.02% | -2.75% | 1.65% |
| Injection molding | 85,278,752.42 | 78,749,817.82 | 7.66% | -23.27% | -19.11% | -4.75% |
| EPS | 19,908,274.02 | 18,424,496.75 | 7.45% | -41.95% | -41.10% | -1.34% |
| Property leasing | 18,701,335.82 | 2,040,226.11 | 89.09% | -1.11% | -35.68% | 5.86% |
| According to region | ||||||
| Hong Kong, Taiwan | 105,186,479.34 | 98,581,390.01 | 6.28% | 64.45% | 63.55% | 0.52% |
| Central China | 124,089,406.22 | 114,338,203.97 | 7.86% | -21.63% | -18.90% | -3.10% |
| East China | 39,318,383.66 | 36,804,172.94 | 6.39% | -55.37% | -56.30% | 1.99% |
| South China | 18,573,020.49 | 2,040,226.11 | 89.02% | -1.79% | -35.68% | 5.79% |
Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based onlatest one year’s scope of period-end
□ Applicable √ Not applicable
Reasons for y-o-y relevant data with over 30% changes
√Applicable □ Not applicable
| Item | 2020-6-30 | 2020-1-1 | y-o-y changes(+,-) | Reasons of changes |
| Monetary fund | 25,894,233.18 | 38,095,501.00 | -32.03% | Sales declined and the return of sales decreased |
| Other current assets | 234,014.36 | 1,395,071.36 | -83.23% | Tax to be deducted for the current period |
| Long-term deferred expenses | 193,613.23 | 309,781.15 | -37.50% | Amortization of cloud service fee |
| Short-term loans | - | 24,633,898.20 | -100.00% | Pay back the short-term loans to the bank |
| Note payable | 8,617,287.25 | 16,761,590.51 | -48.59% | Issuance of notes decreased in the Period |
| Account received in advance | 866,746.45 | 356,446.21 | 143.16% | Part of the customer deposit is received in advance |
| Including: dividend payable | - | 89,365.28 | -100.00% | Pay back the short-term loans to the bank |
| Deferred income | 4,173,180.00 | 2,331,720.00 | 78.97% | Government subsidy related to assets received in the Period |
| Item | Jan.- Jun. 2020 | Jan.- Jun. 2019 | y-o-y changes(+,-) | Reasons of changes |
| R&D expenses | 2,423,425.26 | 3,726,992.86 | -34.98% | R&D investment declined in the Period |
| Financial expenses | 3,484,228.81 | 5,068,371.24 | -31.26% | Pay back the short-term loans to the |
| bank | ||||
| Other income | 348,540.00 | - | Subsidy revenue was recognized in the Period | |
| Income from assets disposal | -99,867.53 | 129,039.57 | -177.39% | Loss from assets disposal in the Period |
| Non-operation revenue | 45,200.06 | 232,758.00 | -80.58% | Outstanding enterprise award last period |
| Non-operation expenditure | 7,302.38 | 1,100.00 | 563.85% | Liquidated damages incurred in the Period |
| Income tax expenses | 837,369.58 | 603,910.08 | 38.66% | Profit from property increased in the Period |
| Item | Jan.- Jun. 2020 | Jan.- Jun. 2019 | y-o-y changes(+,-) | Reasons of changes |
| Cash paid for purchasing fixed assets, intangible assets and other long-term assets | 1,816,159.96 | 4,360,231.13 | -58.35% | Last period, Zhongzhou new workshop purchased production equipment |
| Cash received from borrowings | 6,725,056.80 | 61,315,748.80 | -89.03% | Pay back the short-term loans in the Period |
| Cash pay for debts | 37,370,812.20 | 88,051,864.63 | -57.56% | Pay back the short-term loans in the Period |
| Cash paid for dividend and profit distribution or interest payment | 4,192,431.31 | 5,723,122.93 | -26.75% | Pay back the short-term loans in the Period |
| Impact on cash and cash equivalent from change of foreign exchange | 144,260.22 | 99,650.05 | -44.77% | The effect of exchange rate fluctuation in the Period |
III. Analysis of the non-main business
√Applicable □Not applicable
In RMB
| Amount | Ratio in total profit | Description of formation | Whether be sustainable | |
| Investment income | 66,780.40 | 1.67% | Revenue from short-term financial products | N |
| Non-operation revenue | 45,200.06 | 1.13% | Revenue from handling charge | N |
| Non-operation expense | 7,302.38 | 0.18% | The liquidated damages paid | N |
IV. Assets and liability
1. Major changes of assets composition
In RMB
| Period-end | Period-end last year | Ratio changes | Notes of major changes | |||
| Amount | Ratio in | Amount | Ratio in | |||
| total assets | total assets | |||||
| Monetary fund | 25,894,233.18 | 4.24% | 47,981,541.61 | 7.69% | -3.45% | |
| Account receivable | 162,983,895.27 | 26.69% | 149,540,866.46 | 23.97% | 2.72% | |
| Inventory | 70,058,031.39 | 11.47% | 86,709,541.76 | 13.90% | -2.43% | |
| Investment real estate | 48,088,827.43 | 7.88% | 49,817,157.72 | 7.98% | -0.10% | |
| Long-term equity investment | 0.00% | 0.00% | 0.00% | |||
| Fixed assets | 196,754,132.05 | 32.22% | 185,008,101.52 | 29.65% | 2.57% | |
| Construction in process | 500,000.00 | 0.08% | 7,552,776.46 | 1.21% | -1.13% | |
| Short-term loans | 134,676,280.00 | 21.58% | -21.58% | |||
| Long-term loans | 67,000,000.00 | 10.97% | 10.97% |
2. Assets and liability measured by fair value
□ Applicable √ Not applicable
3. Assets right restriction till end of reporting period
| Item | Ending book value | Restriction reasons |
| Monetary fund | 4,081,265.38 | Bank acceptance deposit:2,529,797.38 yuan; court freeze: 1,551,468 yuan |
| Receivable financing | 9,294,702.94 | Pledge |
| Investment real estate | 36,260,337.64 | Mortgage to obtain bank loans |
| Fixed assets | 12,779,094.73 | Mortgage to obtain bank loans |
| Disposal of fixed assets | 92,857,471.69 | Court seizure |
| Intangible assets | 2,761,798.94 | Mortgage to obtain bank loans |
| Total | 158,034,671.32 | -- |
V. 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 measured by fair value
□ Applicable √ Not applicable
5. 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.
VI. 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
VII. 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 name | Type | Main business | Register capital | Total assets | Net Assets | Operating revenue | Operating profit | Net profit |
| Hengfa Technology Company | Subsidiary | R&D, production and sales of the products as well as import & export business etc. | 181,643,111.00 | 467,146,282.12 | 222,329,622.80 | 281,188,494.65 | -987,280.78 | -824,054.38 |
| Huafa Property Company | Subsidiary | Leasing and management of own property | 1,000,000.00 | 8,014,037.30 | -1,289,292.12 | 2,794,404.26 | 1,039,727.42 | 1,042,065.26 |
| HUAFA Lease Company | Subsidiary | Leasing and management of own property | 1,000,000.00 | 1,900,692.20 | -5,026,990.71 | |||
| HUAFA Hengtian Company | Subsidiary | Leasing and management of own property | 1,000,000.00 | 995,061.88 | 995,061.88 | 0.00 | -393.10 | -393.10 |
| HUAFA Hengtai Company | Subsidiary | Leasing and management of own property | 1,000,000.00 | 996,097.86 | 996,097.86 | 0.00 | -393.05 | -393.05 |
Particular about subsidiaries obtained or disposed in report period
□Applicable √ Not applicable
Explanation of main holding company and stock-jointly companiesNilVIII. Structured vehicle controlled by the Company
□ Applicable √Not applicable
IX. Prediction of business performance from January – September 2020
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or thewarning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
X. Risks and countermeasures
1. Operational risks of industrial business: industrial restructuring, fluctuations in raw material prices, decline inmarket demand, and frustration of new product promotion.Countermeasures: continue to open up the market, maintain the existing customers, positively develop newcustomers, and continue to improve production efficiency;
2. Financial risks: large demands for funds, substantial increase or decrease in financial costs caused by exchangerate fluctuations, and bank credit constraints caused by changes in financial costs and so on.Countermeasures: pay close attention to macroeconomic policy trends, actively expand the financing channels andindustrial upgrading, establish a virtuous circle mechanism for funds, improve the service efficiency, and usefinancial instruments to avoid exchange rate risks.
Section V. Important Events
I. In the report period, the Company held annual shareholders’ general meeting andextraordinary shareholders’ general meeting
1. Annual Shareholders’ General Meeting in the report period
| Session of meeting | Type | Ratio of investor participation | Date | Date of disclosure | Index of disclosure |
| 2020 First Extraordinary General Meeting of Shareholders | Extraordinary general meeting | 6.26% | 2020-02-11 | 2020-02-12 | http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000020&announcementId=1207302289&orgId=gssz0000020&announcementTime=2020-02-12 |
| Annual General Meeting of 2019 | AGM | 48.03% | 2020-05-21 | 2020-05-22 | http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000020&announcementId=1207845176&orgId=gssz0000020&announcementTime=2020-05-22 |
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √Not applicable
II. Profit distribution plan in the period and capitalizing of common reserves plan
□ Applicable √Not applicable
The Company plans not to distribute cash dividend and bonus for the semi-annual, and no capitalizing of common reserves either.
III. Commitments that the actual controller, shareholders, related party, offeror andcommitted party as the Company etc. have fulfilled during the reporting period and have notyet fulfilled by the end of reporting period
□ Applicable √ Not applicable
There are no commitments that the committed party as the actual controller, shareholders, related party, buyer and the Company havefulfilled during the reporting period and have not yet fulfilled by the end of reporting period
IV. Appointment and non-reappointment (dismissal) of CPAWhether 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
VIII. Lawsuits
Significant lawsuits and arbitration
√Applicable □Not applicable
| The basic situation of litigation (Arbitration) | Amount of money involved (in 10 thousand Yuan) | Predicted liabilities (Y/N) | Advances in litigation (Arbitration) | The results and effects of litigation (Arbitration) | Execution of the litigation (Arbitration) | Disclosure date | Disclosure index |
| In September 2016, Wuhan Zhongheng Group Co., Ltd. and the Company and Shenzhen Vanke were applied for arbitration due to the dispute case of “Contract for the Cooperative Operation of the Old Projects at Huafa Industrial Park, Gongming Street, Guangming New District”. | 46,460 | No | Ruling on 16 August 2017; put forward the application for dismantling by the Company and controlling shareholder, the application was rejected by the court | Found more in announcement of the Company | Implementing | 2018-02-09 | http://www.cninfo.com.cn/cninfo-new/disclosure/szse_main/bulletin_detail/true/1204406606?announceTime=2018-02-09 ；http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&stockCode=000020&announcementId=120 |
| 5326846&announcementTime=2018-08-25 http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000020&announcementId=1205418798&orgId=gssz0000020&announcementTime=2018-09-07 | |||||||
| In March 2016, the Company and HUAFA Science & Technology suit against the follow companies, including Shenzhen Huayongxing Environmental Technology Co., Ltd., Shenzhen Guangyong Breadboard Co., Ltd., Shenzhen Mingyi Electronic Co., Ltd., Shenzhen Ouruilai Technology Co., | 1,964.92 | No | The judgment of 2nd trial has been issued, and has applied for compulsory execution | Ended | Ended | 2016-09-14 | http://www.cninfo.com.cn/cninfo-new/disclosure/szse_main/bulletin_detail/true/1202702423?announceTime=2016-09-14 07:41 |
| Ltd and Shenzhen Kangzhengxin Technology Co., Ltd., for arrears of rent. and refuse to move the site, forcibly occupied switch board room and other power unit under the name of the Company | |||||||
| In March 2016, the Company and HUAFA Property suit against Shenzhen Huayongxing Environmental Technology Co., Ltd., and Shenzhen Yidaxin Technology Co., Ltd. for contract violation and refuse to move the site | 947.26 | No | The second trial decides the Company wins the lawsuit on 15 March 2018, and has applied for enforcement | Implementing | Implementing | 2016-09-14 | http://www.cninfo.com.cn/cninfo-new/disclosure/szse_main/bulletin_detail/true/1202702423?announceTime=2016-09-14 07:41 |
| Application for arbitration in case of contract dispute between the V&T (Shenzhen) Law Firm and Shenzhen Zhongheng Huafa Co., Ltd. and Wuhan Zhongheng Group | 1,940.2 | No | Arbitration has been heard for adjudication | A ruling has been issued and the company filed an application for revocation | In trial | 2018-11-14 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&stockCode=000020&announcementId=1205602053&announcementTime=2018 |
| -11-14 http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000020&announcementId=1205880594&orgId=gssz0000020&announcementTime=2019-03-06 http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000020&announcementId=1207111414&orgId=gssz0000020&announcementTime=2019-11-25 | |||||||
| Shenzhen Zhongheng Huafa Technology Co., Ltd sued the Company and controlling shareholder Wuhan | 5,200 | No | The court has opened a hearing | Found more in announcement of the Company | In trial | 2020-04-21 | http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000020&announcementI |
| Zhongheng New Science & Technology Industrial Group Co., Lt for the dispute of assets replacement contract | d=1207540113&orgId=gssz0000020&announcementTime=2020-04-21 |
Other lawsuits
□Applicable √ Not applicable
IX. Major litigation and arbitration of the controlling shareholder
China Merchants Securities Asset Management Co., Ltd. (hereinafter referred to as CMAM) sued the Wuhan Zhongheng Group toThe Shenzhen Intermediate Peoples Court (hereinafter referred to as Shenzhen Intermediate Court) against “dispute over repurchaseof pledged securities”, CMAM changed the litigious claims later, and the case referred to the Guangdong Higher People’s Court( hereinafter referred to as Guangdong Higher Court), a verdict has yet to be issued. Found more in the Notice on major litigation andarbitration of the controlling shareholder (Notice No.: 2019-25) released on 5 September 2019, website onhttp://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000020&stockCode=000020&announcementId=1206889179&announcementTime=2019-09-05X. Media questioning
□Applicable √Not applicable
During the reporting period, the company had no media generally questioned matters.XI. Penalty and rectification
□Applicable √ Not applicable
The Company has no penalty and rectification in the periodXII. Integrity of the company and its controlling shareholders and actual controllers
□ Applicable √Not applicable
XIII. Implementation of the company’s stock incentive plan, employee stock ownership planor 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.
XIV. Major related transaction
1. Related transaction with routine operation concerned
√Applicable □ Not applicable
| Related party | Relationship | Type of related transaction | Content of related transaction | Pricing principle | Related transaction price | Related transaction amount (in 10 thousand Yuan) | Proportion in similar transactions | Trading limit approved (in 10 thousand Yuan) | Whether over the approved limited or not (Y/N) | Clearing form for related transaction | Available similar market price | Date of disclosure | Index of disclosure |
| HK | Sharin | Purch | Purch | Synch | 6,753. | 6,753. | 38.95 | 13,77 | N | Telegr | —— | 2020- | http: |
| Yutian | g the same controlling shareholder | ase | asing LCD monitors | ronized with the market | 81 | 81 | % | 5.2 | aphic transfer | 01-22 | //www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000020&stockCode=000020&announcementId=1207276013&announcementTime=2020-01-22 | ||
| Hengsheng Photoelectri | Sharing the same contro | Purchase | Purchasing LCD monit | Confirmed with 1% of | 3,476.16 | 3,476.16 | 20.05% | 13,775.2 | N | Telegraphic transfer | The average marke | 2020-01-22 | http://www.cnin |
| city | lling shareholder | ors | current market average price in principle, and refer to both their bargaining power | t price refers to the price of same specifications which is searched from through the world famous professional market survey company website http://www.witsview.com recognized authority in the industry and LCD professional | fo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000020&stockCode=000020&announcementId=1207276013&announcementTime=2020-01-22 |
| market survey company website http://www.witsview.com | |||||||||||||
| Hengsheng Photoelectricity | Sharing the same controlling shareholder | Purchase | Purchasing LCD monitors | According to the order price, deducted 1 Yuan each for operation charge | 2,547.12 | 2,547.12 | 14.69% | 16,530.24 | N | Telegraphic transfer | —— | 2020-01-22 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000020&stockCode=000020&announcementId=120727 |
| 6013&announcementTime=2020-01-22 | |||||||||||||
| HK Yutian | Sharing the same controlling shareholder | Sales | Sales LCD overall monitor machine set | According to the customer sales order price sure | 5,907.46 | 5,907.46 | 30.46% | 27,550.4 | N | Telegraphic transfer | —— | 2020-01-22 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000020&stockCode=000020&announcementId=1207276013&anno |
| uncementTime=2020-01-22 | ||||||||||
| Total | -- | -- | 18,684.55 | -- | 71,631.04 | -- | -- | -- | -- | -- |
| Detail of sales return with major amount involved | N/A | |||||||||
| Report the actual implementation of the daily related transactions which were projected about their total amount by types during the reporting period (if applicable) | In the reporting, Hengfa Technology purchased LCD display screen from HK Yutian with US$ 9.5617 million approximately, 47.81% of the annual amount predicted at the beginning of the year; purchased LCD display screen from Hengsheng Photo-electricity with US $ 4.9161 million approximately, 24.58% of the annual amount predicted at the beginning of the year; purchasing LCD from Hengsheng Photoelectricity with about US $ 3.6022 million, 15.01% of the annual amount predicted at the beginning of the year; sold LCD whole machine to HK Yutian with US $ 8.3686 million approximately, 20.92% of the annual amount predicted at the beginning of the year. Sold LCD to Hengsheng Photo-electricity with US $ 1.4543 million approximately, 11.63% of the annual amount predicted at the beginning of the year; the sales of LCD glass to Hengsheng Photo-electricity amounted to approximately US$ 0.3751 million, accounting for 15.63% of the total amount expected at the beginning of the year. | |||||||||
| Reasons for major differences between trading price and market reference price (if applicable) | Not applicable | |||||||||
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 in the period
5. Other related transactions
□ Applicable √Not applicable
The Company had no other significant related transactions in reporting period.
XV. 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.
XVI. 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
(1) Guarantees
In 10 thousand Yuan
| The company and its subsidiaries' external guarantees (Barring the guarantee for subsidiaries) | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening | Actual guarantee limit | Guarantee type | Guarantee term | Implemented (Y/N) | Guarantee for related party (Y/N) |
| Guarantee of the Company and the subsidiaries | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening | Actual guarantee limit | Guarantee type | Guarantee term | Implemented (Y/N) | Guarantee for related party (Y/N) |
| Wuhan Hengfa Technology Co., Ltd. | 2020-04-28 | 30,000 | Joint liability guarantee | One year | N | Y | ||
| Total amount of approving guarantee for subsidiaries in report period (B1) | 30,000 | Total amount of actual occurred guarantee for subsidiaries in report period (B2) | ||||||
| Total amount of approved guarantee for subsidiaries at the end of reporting period (B3) | 30,000 | Total balance of actual guarantee for subsidiaries at the end of reporting period (B4) | ||||||
| Guarantee of the subsidiaries for the subsidiaries | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening | Actual guarantee limit | Guarantee type | Guarantee term | Implemented (Y/N) | Guarantee for related party (Y/N) |
| Total amount of guarantee of the Company (total of three abovementioned guarantee) | |||
| Total amount of approving guarantee in report period (A1+B1+C1) | 30,000 | Total amount of actual occurred guarantee in report period (A2+B2+C3) | |
| Total amount of approved guarantee at the end of report period (A3+B3+C2) | 30,000 | Total balance of actual guarantee at the end of report period (A4+B4+C4) | |
| Including: | |||
| Explanations on possibly bearing joint and several liquidating responsibilities for undue guarantees (if applicable) | N/A | ||
| Explanations on external guarantee against regulated procedures (if applicable) | N/A | ||
Explanation on compound guaranteeNil
(2) Guarantee outside against the regulation
□Applicable √ Not applicable
No guarantee outside against the regulation in Period.
3. Trust financing
√Applicable □Not applicable
In 10 thousand Yuan
| Type | Capital sources | Amount occurred | Outstanding balance | Overdue amount |
| Bank financial products | Own funds | 3,500 | 0 | 0 |
| Total | 3,500 | 0 | 0 | |
Details of the single major amount, or high-risk trust investment with low security, poor fluidity and non-guaranteed
□Applicable √Not applicable
Entrust financial expected to be unable to recover the principal or impairment might be occurred
□ Applicable √ Not applicable
4. Other material contracts
□ Applicable √Not applicable
No other material contracts for the Company in reporting period.XVII. Social responsibility
1. Material environmental protection
The listed Company and its subsidiary whether belong to the key sewage units released from environmental protection departmentNoListed companies and their subsidiaries do not belong to key pollutant discharge units announced by environmental protectiondepartments.
2. Execution of social responsibility of targeted poverty alleviation
(1) Targeted poverty alleviation
(2) Summary of targeted poverty alleviation
(3) Performance of the targeted poverty alleviation
| Index | Unit of | Quantity /implementation |
| measure | ||
| I. Overall condition | —— | —— |
| II. Poverty alleviation by items | —— | —— |
| 1.Industry development | —— | —— |
| 2.Shift employment | —— | —— |
| 3. Relocating in other places | —— | —— |
| 4. Education | —— | —— |
| 5. Health | —— | —— |
| 6.Ecological protection | —— | —— |
| 7. Reveal all the details | —— | —— |
| 8. Society | —— | —— |
| 9.Other | —— | —— |
| III. Award received (content and grade) | —— | —— |
(4) Follow-up targeted poverty alleviation scheme
XVIII. Explanation on other significant events
√Applicable □ Not applicable
(1) The Company signed Asset Exchange Contract with Wuhan Zhongheng New Science & Technology Industrial GroupCo., Ltd. (Hereinafter referred to as "Wuhan Zhongheng Group") on 29 April 2009 (details were referred to in theannouncement dated 30 April 2009), and pursuant to the contract, since part of the assets of the Company (namelytwo parcel of industrial lands located at Huafa road, Gongming town, Guangming new district, Shenzhen (theproperty certificate No. were SFDZ No.7226760 and SFDZ No.7226763, No. of parcels were A627-005andA627-007, and the aggregate area was 48,200 sq.m) were the lands listed in the first batch of plan for 2010Shenzhen urbanization unit planning preparation plan. For promotion of such urbanization project and jointcooperation, 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 firstextraordinary 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 atGongming street, Guangming new district, Shenzhen”, specified that the Company and Wuhan Zhongheng Groupshall obtain the corresponding compensatory consideration for removal from the respectively owned project plotsand the respectively contributed and constructed above-ground buildings before the land development, it isestimated that the compensatory consideration obtained by the Company accounts for 50.5% of the totalconsideration 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 haveconsidered and adopted the “Proposal on the project promotion and implementation of urban renewal and theprogress 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 updatedunits at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”, “Contract for the cooperativeventure of reconstruction project for Huafa Industrial Park, Gong Ming Street, Guangming New District” and“Agreement on housing acquisition and removal compensation and resettlement” with 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 ofurban 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) hasgiven a ruling in August 2017. On August 29, 2018, the court accepted the compulsory execution application ofShenzhen Vanke. In October 2019, as a number of outsiders filed an “execution objection” and applied for “noexecution” to Shenzhen Intermediate People’s Court, the Shenzhen Intermediate People’s Court ruled to terminatethe enforcement procedure on March 20, 2020. If the “execution objection” and “no execution” proposed byoutsiders are rejected according to law, Shenzhen Vanke may continue to apply to the Shenzhen IntermediatePeople’s Court to resume execution. Progress of the case found more in the Notices released on Juchao website(www.cninfo.com.cn) dated 14 Sept. 2016, 1 Nov. 2016, 16 Nov. 2016, on 18 Feb. 2017, 24 March 2017, 25 April2017, 1 July 2017, 18 August 2017, 9 Feb. 2018, 25 Aug. 2018 and 7 Sept. 2018 respectively.In November 2019, the company was listed by Shenzhen Intermediate People’s Court as the dishonest personsubjected to execution, and was removed from the dishonest person subjected to execution list by the ShenzhenIntermediate People’s Court in December 2019. For details, see the “Announcement About the Company BeingIncluded in the List of Dishonest Person Subjected to Execution” (Announcement No.: 2019-33) and“Announcement About the Company Being Removed from the List of Dishonest Person Subjected to Execution”(Announcement No.: 2019 -35) issued by the company on November 9, 2019 and December 14, 2019 onwww.cninfo.com.cn.
(2) On 31 December 2015, the 88,750,047 shares held by Wuhan Zhongheng Group, are pledge to ChinaMerchants Securities Assets Co., Ltd. with due date of 31 December 2016. on 1 Feb. 2016, Wuhan ZhonghengGroup pledge the 27,349,953 shares held to China Merchants Securities Assets Co., Ltd. with due date of 31December 2016. The above-mentioned pledged shares are deferred by Wuhan Zhongheng Group; pledge expiredon 31 December 2017. The trading day for repurchase put off to the date when pledge actually removed. Till endof 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 noticereleased on Juchao website (www.cninfo.com.cn) date 2 Feb. 2018.
(3) 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 frozenby Shenzhen Intermediate People's Court (hereinafter referred to as "Shenzhen Intermediate Court") on September27, 2016, which were frozen again by the Shenzhen Intermediate People's Court on December 14, 2018, with afrozen period of 36 months; the remaining 2,800,000 shares were frozen by the Shenzhen Intermediate People'sCourt 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 www.cninfo.com.cn on October 27,2016, January 11, 2019, May 31, 2019 and August 7, 2019.
(4) 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 “SupplementalAgreement 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 todifferences in the payment of attorney fees, V&T sued our company and Wuhan Zhongheng Group to theShenzhen Court of International Arbitration, and applied to the court to seize a bank account under our company’sname and part of our company dormitories, please refer to “Other Announcements on the Progress InvolvingLitigation and Arbitration” (Announcement Numbers: 2018-43, 2019-02) released by our company onwww.cninfo.com on November 14, 2018 and March 6, 2019. 02. In November 2019, the Shenzhen Court ofInternational Arbitration ruled that the company and Wuhan Zhongheng Group paid the corresponding fees.According to the “Agency Contract” and “Supplemental Agreement for Agency Contract” signed by the threeparties, the loss of the arbitrament in this case was borne by Wuhan Zhongheng Group, so it had no impact on thecompany’s 2019 annual profit. For details, see the company’s “Other Announcements on the Progress InvolvingLitigation and Arbitration” (Announcement No.: 2019-34) released on www.cninfo.com.cn on November 25,2019.
(5) 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 HuafaRoad, Gongming Town, Bao’an District, Shenzhen, i.e. land parcel number A627-0005 (real estate registrationnumber 8000101219) and A627-0007 (real estate registration number 8000101218), which are worth 18.55million yuan, to increase capital to Shenzhen Zhongheng Huafa Technology Co., Ltd. (hereinafter referred to as"Huafa Technology") and transfer ownership to Huafa Technology, Wuhan Zhongheng Group replaced thecompany's 100% equity in Huafa Technology with its 56% equity in Wuhan Hengfa Technology Co., Ltd.. For themain content of the above-mentioned Asset Replacement Contract, please refer to the Announcement on RelatedTransactions of Asset Replacement with Controlling Shareholders published by the company on cninfo on April30, 2009, with the announcement number 2009-17. After Wuhan Zhongheng Group fulfilled its obligations underthe Asset Replacement Contract, the company transferred 100% of its equity in Huafa Technology to WuhanZhongheng Group on December 21, 2009; the company also handed over the above two plots of land to HuafaTechnology for possession, management, and use, but the land use right has not been transferred to HuafaTechnology. In April 2020, the company received a court summons, Huafa Technology sued the company,demanding that the company transfer the above two plots of land and compensate economic losses of 52 millionyuan. As of the disclosure date of this report, the case has not yet been decided.
XIX. Significant event of subsidiary of the Company
□ Applicable √Not applicable
Section VI. Changes in Shares and Particulars about ShareholdersI. Changes in Share Capital
1. Changes in Share Capital
In Share
| Before the Change | Increase/Decrease in the Change (+, -) | After the Change | |||||||
| Amount | Proportion | New shares issued | Bonus shares | Capitalization of public reserve | Others | Subtotal | Amount | Proportion | |
| I. Restricted shares | 0 | 0.00% | 0 | 0.00% | |||||
| II. Unrestricted shares | 283,161,227 | 100.00% | 283,161,227 | 100.00% | |||||
| 1. RMB Ordinary shares | 181,165,391 | 63.98% | 181,165,391 | 63.98% | |||||
| 2. Domestically listed foreign shares | 101,995,836 | 36.02% | 101,995,836 | 36.02% | |||||
| III. Total shares | 283,161,227 | 100.00% | 283,161,227 | 100.00% | |||||
Reasons for share changed
□ Applicable √ Not applicable
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 the reduction of repurchases shares 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 commonshareholders 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 restricted shares
□ 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 common stock shareholders in reporting period-end | 24,154 | Total preference shareholders with voting rights recovered at end of reporting period (if applicable) (found in note 8) | 0 |
| Particulars about common shares held above 5% by shareholders or top ten common shareholders | |||
| Full name of Shareholders | Nature of shareholder | Proportion of shares held | Total common shareholders at the end of report period | Changes in report period | Amount of restricted common shares held | Amount of un-restricted common shares held | Number of share pledged/frozen | |
| State of share | Amount | |||||||
| Wuhan Zhongheng Group | Domestic non-state-owned legal person | 42.13% | 119,289,894 | 0 | 0 | 119,289,894 | Pledged | 116,100,000 |
| Frozen | 119,289,894 | |||||||
| SEG (HONG KONG) CO., LTD. | Overseas legal person | 5.85% | 16,569,560 | 0 | 0 | 16,569,560 | Pledged | 0 |
| Frozen | 0 | |||||||
| GOOD HOPE CORNER INVESTMENTS LTD | Overseas legal person | 3.43% | 9,722,000 | 0 | 9,722,000 | Pledged | 0 | |
| Frozen | 0 | |||||||
| Changjiang Securities Brokerage (Hong Kong) Co., Ltd. | Overseas legal person | 1.89% | 5,355,249 | 0 | 5,355,249 | Pledged | 0 | |
| Frozen | 0 | |||||||
| Guoyuan Securities Brokerage (Hong Kong) Co., Ltd. | Overseas legal person | 1.37% | 3,870,117 | 0 | 3,870,117 | Pledged | 0 | |
| Frozen | 0 | |||||||
| Li Zhongqiu | Overseas nature person | 1.00% | 2,830,000 | 0 | 2,830,000 | Pledged | 0 | |
| Frozen | 0 | |||||||
| Zhong Jiachao | Domestic nature person | 0.47% | 1,329,602 | 0 | 1,329,602 | Pledged | 0 | |
| Frozen | 0 | |||||||
| China Merchants Securities Hong Kong Limited | State-owned legal person | 0.39% | 1,113,288 | 0 | 1,113,288 | Pledged | 0 | |
| Frozen | 0 | |||||||
| LI SHERYN ZHAN MING | Overseas nature person | 0.38% | 1,074,000 | 0 | 1,074,000 | Pledged | 0 | |
| Frozen | 0 | |||||||
| Li Senzhuang | Domestic nature person | 0.36% | 1,017,773 | 0 | 1,017,773 | Pledged | 0 | |
| Frozen | 0 | |||||||
| Strategy investors or general | N/A | |||||||
| corporation comes top 10 shareholders due to rights issue (if applicable) (see note 3) | |||
| Explanation on associated relationship among the aforesaid shareholders | Among the top ten shareholders, Li Zhongqiu is the actual controller of Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. and is a party acting in concert. The Company neither knew whether there exists associated relationship among the other tradable shareholders, nor they belong to consistent actors that are prescribed in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies. | ||
| Particular about top ten shareholders with un-restrict common shares held | |||
| Shareholders’ name | Amount of un-restrict common shares held at Period-end | Type of shares | |
| Type | Amount | ||
| Wuhan Zhongheng Group | 119,289,894 | RMB common share | 119,289,894 |
| SEG (HONG KONG) CO., LTD. | 16,569,560 | Domestically listed foreign shares | 16,569,560 |
| GOOD HOPE CORNER INVESTMENTS LTD | 9,722,000 | Domestically listed foreign shares | 9,722,000 |
| Changjiang Securities Brokerage (Hong Kong) Co., Ltd. | 5,355,249 | Domestically listed foreign shares | 5,355,249 |
| Guoyuan Securities Brokerage (Hong Kong) Co., Ltd. | 3,870,117 | Domestically listed foreign shares | 3,870,117 |
| Li Zhongqiu | 2,830,000 | Domestically listed foreign shares | 2,830,000 |
| Zhong Jiachao | 1,329,602 | RMB common share | 1,329,602 |
| China Merchants Securities Hong Kong Limited | 1,113,288 | Domestically listed foreign shares | 1,113,288 |
| LI SHERYN ZHAN MING | 1,074,000 | Domestically listed foreign shares | 1,074,000 |
| Li Senzhuang | 1,017,773 | Domestically listed foreign shares | 1,017,773 |
| Expiation on associated relationship or consistent actors within the top 10 un-restrict common shareholders and between top 10 un-restrict | Among the top ten shareholders, Li Zhongqiu is the actual controller of Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. and is a party acting in concert. The Company neither knew whether there exists associated relationship among the other tradable shareholders, nor they belong to consistent actors that are prescribed in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies. | ||
Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-backagreement dealing in reporting period
□ Yes √ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have nobuy-back agreement dealing in reporting period.IV. Change of controlling shareholder or actual controllerChanges of controlling shareholders in reporting period
□ Applicable √Not applicable
The Company had no changes of controlling shareholders in reporting periodChanges of actual controller in reporting period
□ Applicable √Not applicable
No changes of actual controllers for the Company in reporting period.
Section VII. Preferred Stock
□ Applicable √Not applicable
The Company had no preferred stock in the Period.
Section VIII. Convertible Bonds
□ Applicable √ Not applicable
The Company had no convertible bonds in the Period.
Section IX. Particulars about Directors, Supervisors and Senior
Officers
I. Changes of shares held by directors, supervisors and senior officers
□ Applicable √ Not applicable
Shares held by directors, supervisors and senior officers have no changes in reporting period, found more details in Annual Report2019.II. Resignation and dismissal of directors, supervisors and senior officers
□ Applicable √ Not applicable
The directors, supervisors and senior management of the company did not change during the reporting period, found more details inAnnual Report 2019.
Section X. Corporate BondWhether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date whensemi-annual report approved for released or fail to cash in full on dueNo
Section XI. Financial Report
I. Audit report
Whether the semi-annual report was audited or not
□ Yes √ No
The financial report of this semi-annual report was un-auditedII. Financial statementCurrency used in note of financial statement is RMB (Yuan)
1. Consolidated Balance Sheet
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
2020-06-30
In RMB
| Item | 2020-6-30 | 2019-12-31 |
| Current assets: | ||
| Monetary funds | 25,894,233.18 | 38,095,501.00 |
| Settlement provisions | ||
| Capital lent | ||
| Tradable financial assets | ||
| Derivative financial assets | ||
| Note receivable | ||
| Account receivable | 162,983,895.27 | 138,755,691.43 |
| Receivable financing | 29,776,291.10 | 42,096,834.02 |
| Accounts paid in advance | 22,083,401.55 | 23,007,637.46 |
| Insurance receivable | ||
| Reinsurance receivables | ||
| Contract reserve of reinsurance receivable | ||
| Other account receivable | 4,804,531.82 | 6,351,361.16 |
| Including: Interest receivable | ||
| Dividend receivable | ||
| Buying back the sale of financial assets | ||
| Inventories | 70,058,031.39 | 66,971,551.96 |
| Contractual assets | ||
| Assets held for sale | ||
| Non-current asset due within one year | ||
| Other current assets | 234,014.36 | 1,395,071.36 |
| Total current assets | 315,834,398.67 | 316,673,648.39 |
| 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 | 48,088,827.43 | 48,952,992.57 |
| Fixed assets | 196,754,132.05 | 198,229,817.31 |
| Construction in progress | 500,000.00 | |
| Productive biological asset | ||
| Oil and gas asset | ||
| Right-of-use assets | ||
| Intangible assets | 42,056,797.73 | 42,968,600.44 |
| Expense on Research and Development | ||
| Goodwill | ||
| Long-term expenses to be apportioned | 193,613.23 | 309,781.15 |
| Deferred income tax asset | 6,948,781.36 | 6,803,360.00 |
| Other non-current asset | 225,700.00 | 225,700.00 |
| Total non-current asset | 294,767,851.80 | 297,490,251.47 |
| Total assets | 610,602,250.47 | 614,163,899.86 |
| Current liabilities: | ||
| Short-term loans | 24,633,898.20 | |
| Loan from central bank | ||
| Capital borrowed | ||
| Trading financial liability | ||
| Derivative financial liability | ||
| Note payable | 8,617,287.25 | 16,761,590.51 |
| Account payable | 140,297,671.23 | 108,804,905.20 |
| Accounts received in advance | 866,746.45 | 356,446.21 |
| Contractual liability | ||
| Selling financial asset of repurchase | ||
| Absorbing deposit and interbank deposit | ||
| Security trading of agency | ||
| Security sales of agency | ||
| Wage payable | 4,280,621.68 | 5,877,341.25 |
| Taxes payable | 12,568,567.03 | 12,877,944.98 |
| Other account payable | 28,140,118.39 | 28,027,592.62 |
| Including: Interest payable | 89,365.28 | |
| Dividend payable |
| Commission charge and commission payable | ||
| Reinsurance payable | ||
| Liability held for sale | ||
| Non-current liabilities due within one year | 12,000,000.00 | 12,000,000.00 |
| Other current liabilities | ||
| Total current liabilities | 206,771,012.03 | 209,339,718.97 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term loans | 67,000,000.00 | 73,000,000.00 |
| 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 | 4,173,180.00 | 2,331,720.00 |
| Deferred income tax liabilities | ||
| Other non-current liabilities | ||
| Total non-current liabilities | 71,237,591.00 | 75,396,131.00 |
| Total liabilities | 278,008,603.03 | 284,735,849.97 |
| Owner’s 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 | ||
| Reasonable reserve | ||
| Surplus public reserve | 77,391,593.25 | 77,391,593.25 |
| Provision of general risk | ||
| Retained profit | -174,546,444.31 | -177,712,041.86 |
| Total owner’ s equity attributable to parent company | 332,593,647.44 | 329,428,049.89 |
| Minority interests | ||
| Total owner’ s equity | 332,593,647.44 | 329,428,049.89 |
| Total liabilities and owner’ s equity | 610,602,250.47 | 614,163,899.86 |
Legal representative: Li ZhongqiuPerson in charge of accounting works: Yang BinPerson in charge of accounting institution: Wu Aijie
2. Balance Sheet of Parent Company
In RMB
| Item | 2020-6-30 | 2019-12-31 |
| Current assets: | ||
| Monetary funds | 3,898,679.16 | 3,494,245.90 |
| Trading financial assets | ||
| Derivative financial assets | ||
| Note receivable | ||
| Account receivable | ||
| Receivable financing | ||
| Accounts paid in advance | 71,888.56 | |
| Other account receivable | 95,507,010.91 | 97,165,023.85 |
| Including: Interest receivable | ||
| Dividend receivable | ||
| Inventories | 14,806.50 | 14,806.50 |
| Contractual assets | ||
| Assets held for sale | ||
| Non-current assets maturing within one year | ||
| Other current assets | 173,950.26 | |
| Total current assets | 99,492,385.13 | 100,848,026.51 |
| Non-current assets: | ||
| Debt investment | ||
| Other debt investment | ||
| Long-term receivables | ||
| Long-term equity investments | 186,608,900.00 | 186,608,900.00 |
| Investment in other equity instrument | ||
| Other non-current financial assets | ||
| Investment real estate | 24,562,099.74 | 25,166,301.06 |
| Fixed assets | 97,873,874.16 | 98,410,024.38 |
| Construction in progress | 500,000.00 | |
| Productive biological assets | ||
| Oil and natural gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 4,469,157.57 | 4,553,709.24 |
| Research and development costs | ||
| Goodwill | ||
| Long-term deferred expenses | ||
| Deferred income tax assets | 7,367,646.35 | 7,367,646.35 |
| Other non-current assets | ||
| Total non-current assets | 321,381,677.82 | 322,106,581.03 |
| Total assets | 420,874,062.95 | 422,954,607.54 |
| Current liabilities | ||
| Short-term borrowings | ||
| Trading financial liability | ||
| Derivative financial liability | ||
| Notes payable | ||
| Account payable | 9,740,367.33 | 10,745,840.16 |
| Accounts received in advance | 64,745.01 | 57,266.01 |
| Contractual liability | ||
| Wage payable | 820,979.02 | 1,220,979.02 |
| Taxes payable | 7,498,209.68 | 8,489,130.72 |
| Other accounts payable | 22,460,372.88 | 19,100,375.42 |
| Including: Interest payable | ||
| Dividend payable | ||
| Liability held for sale | ||
| Non-current liabilities due within one year | 12,000,000.00 | 12,000,000.00 |
| Other current liabilities | ||
| Total current liabilities | 52,584,673.92 | 51,613,591.33 |
| Non-current liabilities: | ||
| Long-term loans | 67,000,000.00 | 73,000,000.00 |
| 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 | 67,064,411.00 | 73,064,411.00 |
| Total liabilities | 119,649,084.92 | 124,678,002.33 |
| 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 |
| Retained profit | -205,915,113.72 | -208,863,486.54 |
| Total owner’s equity | 301,224,978.03 | 298,276,605.21 |
| Total liabilities and owner’s equity | 420,874,062.95 | 422,954,607.54 |
3. Consolidated Profit Statement
In RMB
| Item | 2020 semi-annual | 2019 semi-annual |
| I. Total operating income | 300,703,421.38 | 339,190,174.05 |
| Including: Operating income | 300,703,421.38 | 339,190,174.05 |
| Interest income | ||
| Insurance gained | ||
| Commission charge and commission income | ||
| II. Total operating cost | 297,053,804.80 | 336,433,054.05 |
| Including: Operating cost | 263,959,652.63 | 297,580,208.34 |
| 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 | 1,004,056.05 | 1,310,110.00 |
| Sales expense | 9,100,079.39 | 9,130,380.22 |
| Administrative expense | 17,082,362.66 | 19,616,991.39 |
| R&D expense | 2,423,425.26 | 3,726,992.86 |
| Financial expense | 3,484,228.81 | 5,068,371.24 |
| Including: Interest expenses | 4,018,202.27 | 5,355,676.92 |
| Interest income | 11,856.69 | 419,336.28 |
| Add: other income | 348,540.00 |
| Investment income (Loss is listed with “-”) | 66,780.40 | 74,936.14 |
| 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 “-”) | ||
| 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 “-”) | -8,432.50 | |
| Losses of devaluation of asset (Loss is listed with “-”) | ||
| Income from assets disposal (Loss is listed with “-”) | -99,867.53 | 129,039.57 |
| III. Operating profit (Loss is listed with “-”) | 3,965,069.45 | 2,952,663.21 |
| Add: Non-operating income | 45,200.06 | 232,758.00 |
| Less: Non-operating expense | 7,302.38 | 1,100.00 |
| IV. Total profit (Loss is listed with “-”) | 4,002,967.13 | 3,184,321.21 |
| Less: Income tax expense | 837,369.58 | 603,910.08 |
| V. Net profit (Net loss is listed with “-”) | 3,165,597.55 | 2,580,411.13 |
| (i) Classify by business continuity | ||
| 1.continuous operating net profit (net loss listed with ‘-”) | 3,165,597.55 | 2,580,411.13 |
| 2.termination of net profit (net loss listed with ‘-”) | ||
| (ii) Classify by ownership | ||
| 1.Net profit attributable to owner’s of parent company | 3,165,597.55 | 2,580,411.13 |
| 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 | ||
| 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 | 3,165,597.55 | 2,580,411.13 |
| Total comprehensive income attributable to owners of parent Company | 3,165,597.55 | 2,580,411.13 |
| Total comprehensive income attributable to minority shareholders | ||
| VIII. Earnings per share: | ||
| (i) Basic earnings per share | 0.0112 | 0.0091 |
| (ii) Diluted earnings per share | 0.0112 | 0.0091 |
Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, andrealized 0 Yuan at last period for combined partyLegal representative: Li ZhongqiuPerson in charge of accounting works: Yang BinPerson in charge of accounting institution: Wu Aijie
4. Profit Statement of Parent Company
In RMB
| Item | 2020 semi-annual | 2019 semi-annual |
| I. Operating income | 16,720,522.47 | 18,041,135.31 |
| Less: Operating cost | 2,040,226.11 | 3,172,031.59 |
| Taxes and surcharge | 542,709.33 | 562,061.05 |
| Sales expenses | ||
| Administration expenses | 6,208,200.98 | 9,024,394.50 |
| R&D expenses | ||
| Financial expenses | 4,015,977.09 | 4,423,699.05 |
| Including: interest expenses | 4,018,202.27 | 4,398,333.30 |
| Interest income | 6,881.46 | 9,938.10 |
| Add: other income | ||
| 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 “-”) | 3,913,408.96 | 858,949.12 |
| Add: Non-operating income | 17,754.80 | 1,300.00 |
| Less: Non-operating expense | ||
| III. Total Profit (Loss is listed with “-”) | 3,931,163.76 | 860,249.12 |
| Less: Income tax | 982,790.94 | 215,062.28 |
| IV. Net profit (Net loss is listed with “-”) | 2,948,372.82 | 645,186.84 |
| (i)continuous operating net profit (net loss listed with ‘-”) | 2,948,372.82 | 645,186.84 |
| (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 | ||
| 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 | 2,948,372.82 | 645,186.84 |
| VII. Earnings per share: | ||
| (i) Basic earnings per share | 0.0104 | 0.0023 |
| (ii) Diluted earnings per share | 0.0104 | 0.0023 |
5. Consolidated Cash Flow Statement
In RMB
| Item | 2020 semi-annual | 2019 semi-annual |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 251,602,049.92 | 283,565,570.88 |
| 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 | ||
| Other cash received concerning operating activities | 3,743,255.21 | 3,403,272.55 |
| Subtotal of cash inflow arising from operating activities | 255,345,305.13 | 286,968,843.43 |
| Cash paid for purchasing commodities and receiving labor service | 179,132,887.12 | 182,811,441.04 |
| 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 | 24,991,943.90 | 33,770,584.01 |
| Taxes paid | 3,743,185.15 | 4,582,072.62 |
| Other cash paid concerning operating activities | 26,277,076.72 | 20,610,525.20 |
| Subtotal of cash outflow arising from operating activities | 234,145,092.89 | 241,774,622.87 |
| Net cash flows arising from operating activities | 21,200,212.24 | 45,194,220.56 |
| II. Cash flows arising from investing activities: | ||
| Cash received from recovering investment | ||
| Cash received from investment income | 66,780.40 | 74,936.14 |
| Net cash received from disposal of fixed, intangible and other long-term assets | 411,000.00 | 320,500.00 |
| Net cash received from disposal of subsidiaries and other units | ||
| Other cash received concerning investing activities | 35,000,000.00 | 49,000,000.00 |
| Subtotal of cash inflow from investing activities | 35,477,780.40 | 49,395,436.14 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 1,816,159.96 | 4,360,231.13 |
| 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 | 49,000,000.00 |
| Subtotal of cash outflow from investing activities | 36,816,159.96 | 53,360,231.13 |
| Net cash flows arising from investing activities | -1,338,379.56 | -3,964,794.99 |
| 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 | 6,725,056.80 | 61,315,748.80 |
| Other cash received concerning financing activities | ||
| Subtotal of cash inflow from financing activities | 6,725,056.80 | 61,315,748.80 |
| Cash paid for settling debts | 37,370,812.20 | 88,051,864.63 |
| Cash paid for dividend and profit distributing or interest paying | 4,192,431.31 | 5,723,122.93 |
| Including: Dividend and profit of minority shareholder paid by subsidiaries | ||
| Other cash paid concerning financing activities | ||
| Subtotal of cash outflow from financing activities | 41,563,243.51 | 93,774,987.56 |
| Net cash flows arising from financing activities | -34,838,186.71 | -32,459,238.76 |
| IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | 144,260.22 | 99,650.05 |
| V. Net increase of cash and cash equivalents | -14,832,093.81 | 8,869,836.86 |
| Add: Balance of cash and cash equivalents at the period -begin | 36,645,061.61 | 27,961,209.60 |
| VI. Balance of cash and cash equivalents at the period -end | 21,812,967.80 | 36,831,046.46 |
6. Cash Flow Statement of Parent Company
In RMB
| Item | 2020 semi-annual | 2019 semi-annual |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 17,825,898.30 | 16,386,026.55 |
| Write-back of tax received | ||
| Other cash received concerning operating activities | 7,210,631.17 | 4,240,814.47 |
| Subtotal of cash inflow arising from operating activities | 25,036,529.47 | 20,626,841.02 |
| Cash paid for purchasing commodities and receiving labor service | ||
| Cash paid to/for staff and workers | 2,100,854.64 | 1,551,291.30 |
| Taxes paid | 1,790,646.36 | 791,510.74 |
| Other cash paid concerning operating activities | 11,480,046.39 | 25,327,205.64 |
| Subtotal of cash outflow arising from operating activities | 15,371,547.39 | 27,670,007.68 |
| Net cash flows arising from operating activities | 9,664,982.08 | -7,043,166.66 |
| II. Cash flows arising from investing activities: | ||
| Cash received from recovering investment | ||
| Cash received from investment income | ||
| Net cash received from disposal of fixed, intangible and other long-term assets | ||
| Net cash received from disposal of subsidiaries and other units | ||
| Other cash received concerning investing activities | ||
| Subtotal of cash inflow from investing activities | ||
| Cash paid for purchasing fixed, intangible and other long-term assets | ||
| 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 | |
| Cash paid for dividend and profit distributing or interest paying | 3,366,124.47 | 4,398,333.30 |
| Other cash paid concerning financing activities | ||
| Subtotal of cash outflow from financing activities | 9,366,124.47 | 4,398,333.30 |
| Net cash flows arising from financing activities | -9,366,124.47 | -4,398,333.30 |
| IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | 2,210.11 | |
| V. Net increase of cash and cash equivalents | 301,067.72 | -11,441,499.96 |
| Add: Balance of cash and cash equivalents at the period -begin | 2,046,143.44 | 12,024,179.58 |
| VI. Balance of cash and cash equivalents at the period -end | 2,347,211.16 | 582,679.62 |
7. Statement of Changes in Owners’ Equity (Consolidated)
This Period
In RMB
| Item | 2020 semi-annual | ||||||||||||||
| Owners’ equity attributable to the parent Company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instrument | Capital reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Provision of general risk | Retained profit | Other | Subtotal | |||||
| Preferred stock | Perpetual capital securities | Other | |||||||||||||
| I. Balance at the end of the last year | 283,161,2 | 146,587,271. | 77,391,593.2 | -177,712,041. | 329,428,049. | 329,428,049. | |||||||||
| 27.00 | 50 | 5 | 86 | 89 | 89 | ||||||||||
| Add: Changes of accounting policy | |||||||||||||||
| Error correction of the last period | |||||||||||||||
| Enterprise combine under the same control | |||||||||||||||
| Other | |||||||||||||||
| II. Balance at the beginning of this year | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -177,712,041.86 | 329,428,049.89 | 329,428,049.89 | |||||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 3,165,597.55 | 3,165,597.55 | 3,165,597.55 | ||||||||||||
| (i) Total comprehensive income | 3,165,597.55 | 3,165,597.55 | 3,165,597.55 | ||||||||||||
| (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 | |||||||||||||||
| (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 comprehensive income | |||||||||||||||
| 6. Other | |||||||||||||||
| (V) Reasonable reserve | |||||||||||||||
| 1. Withdrawal in the report period |
| 2. Usage in the report period | |||||||||||||||
| (VI)Others | |||||||||||||||
| IV. Balance at the end of the report period | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -174,546,444.31 | 332,593,647.44 | 332,593,647.44 |
Last Period
In RMB
| Item | 2019 semi-annual | ||||||||||||||
| Owners’ equity attributable to the parent Company | Minority interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instrument | Capital reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Provision of general risk | Retained profit | Other | Subtotal | |||||
| Preferred stock | Perpetual capital securities | Other | |||||||||||||
| I. Balance at the end of the last year | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -183,172,091.01 | 323,968,000.74 | 323,968,000.74 | |||||||||
| Add: Changes of accounting policy | |||||||||||||||
| Error correction of the last period | |||||||||||||||
| Enterprise combine under the same control | |||||||||||||||
| Other | |||||||||||||||
| II. Balance at | 283 | 146, | 77,3 | -183 | 323, | 323,9 | |||||||||
| the beginning of this year | ,161,227.00 | 587,271.50 | 91,593.25 | ,172,091.01 | 968,000.74 | 68,000.74 | |||||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 5,460,049.15 | 5,460,049.15 | 5,460,049.15 | ||||||||||||
| (i) Total comprehensive income | 5,460,049.15 | 5,460,049.15 | 5,460,049.15 | ||||||||||||
| (ii) Owners’ devoted and decreased capital | |||||||||||||||
| 1.Common shares invested by shareholders | |||||||||||||||
| 2. Capital invested by holders of other equity instruments | |||||||||||||||
| 3. Amount reckoned into owners equity with share-based payment | |||||||||||||||
| 4. Other | |||||||||||||||
| (III) Profit distribution | |||||||||||||||
| 1. Withdrawal of surplus reserves | |||||||||||||||
| 2. Withdrawal of general risk provisions | |||||||||||||||
| 3. Distribution for owners (or shareholders) | |||||||||||||||
| 4. Other | |||||||||||||||
| (IV) Carrying |
| forward internal owners’ equity | |||||||||||||||
| 1. Capital reserves conversed to capital (share capital) | |||||||||||||||
| 2. Surplus reserves conversed to capital (share capital) | |||||||||||||||
| 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 | |||||||||||||||
| IV. Balance at the end of the report period | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -177,712,041.86 | 329,428,049.89 | 329,428,049.89 |
8. Statement of Changes in Owners’ Equity (Parent Company)
This Period
In RMB
| Item | 2020 semi-annual | |||||||||||
| Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Retained profit | Other | Total owners’ equity | |||
| Preferred stock | Perpetual capital securities | Other | ||||||||||
| I. Balance at the end of the last year | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -208,863,486.54 | 298,276,605.21 | |||||||
| Add: Changes of accounting policy | ||||||||||||
| Error correction of the last period | ||||||||||||
| Other | ||||||||||||
| II. Balance at the beginning of this year | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -208,863,486.54 | 298,276,605.21 | |||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 2,948,372.82 | 2,948,372.82 | ||||||||||
| (i) Total comprehensive income | 2,948,372.82 | 2,948,372.82 | ||||||||||
| (ii) Owners’ devoted and decreased capital | ||||||||||||
| 1.Common shares invested by shareholders | ||||||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount reckoned into | ||||||||||||
| owners equity with share-based payment | ||||||||||||
| 4. Other | ||||||||||||
| (III) Profit distribution | ||||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution for owners (or shareholders) | ||||||||||||
| 3. Other | ||||||||||||
| (IV) Carrying forward internal owners’ equity | ||||||||||||
| 1. Capital reserves conversed to capital (share capital) | ||||||||||||
| 2. Surplus reserves conversed to capital (share capital) | ||||||||||||
| 3. Remedying loss with surplus reserve | ||||||||||||
| 4．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 |
| IV. Balance at the end of the report period | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -205,915,113.72 | 301,224,978.03 |
Last period
In RMB
| Item | 2019 semi-annual | |||||||||||
| Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus reserve | Retained profit | Other | Total owners’ equity | |||
| Preferred stock | Perpetual capital securities | Other | ||||||||||
| I. Balance at the end of the last year | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -211,855,430.41 | 295,284,661.34 | |||||||
| Add: Changes of accounting policy | ||||||||||||
| Error correction of the last period | ||||||||||||
| Other | ||||||||||||
| II. Balance at the beginning of this year | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -211,855,430.41 | 295,284,661.34 | |||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 2,991,943.87 | 2,991,943.87 | ||||||||||
| (i) Total comprehensive income | 2,991,943.87 | 2,991,943.87 | ||||||||||
| (ii) Owners’ devoted and decreased capital | ||||||||||||
| 1.Common shares | ||||||||||||
| invested by shareholders | ||||||||||||
| 2. Capital invested by holders of other equity instruments | ||||||||||||
| 3. Amount reckoned into owners equity with share-based payment | ||||||||||||
| 4. Other | ||||||||||||
| (III) Profit distribution | ||||||||||||
| 1. Withdrawal of surplus reserves | ||||||||||||
| 2. Distribution for owners (or shareholders) | ||||||||||||
| 3. Other | ||||||||||||
| (IV) Carrying forward internal owners’ equity | ||||||||||||
| 1. Capital reserves conversed to capital (share capital) | ||||||||||||
| 2. Surplus reserves conversed to capital (share capital) | ||||||||||||
| 3. Remedying loss with surplus reserve | ||||||||||||
| 4．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 | ||||||||||||
| IV. Balance at the end of the report period | 283,161,227.00 | 146,587,271.50 | 77,391,593.25 | -208,863,486.54 | 298,276,605.21 |
III. Company profile
1. The registration place of the enterprise, the form of organization and the headquarters addressShenzhen 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, ShenzhenLegal representative: Li ZhongqiuRegistered 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)for various electronic products and supporting parts, plating and surface treatment and tin wire, development andoperation of real estate (Shen Fang Di Zi No.: 7226760) and property management. Funded affiliated companiesin Wuhan and Jilin. Setting up branches in capital of the province (Lhasa City excluded) in China andmunicipality 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 21 August 2020. According to Article ofAssociation, the statement shall be submitted for deliberation in shareholders general meeting.
Consolidate scope in the Period including: subsidiaries including Shenzhen HUAFA Property Lease ManagementCo., Ltd (no annual inspection in 2011, and business license revoke on 1 April 2014), Shenzhen ZhonghengHUAFA Property Co., Ltd, Wuhan Hengfa Technology Co., Ltd., Shenzhen HUAFA Hengtian Co., Ltd. andShenzhen 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 forBusiness Enterprise – Basic Standards and specific principle of accounting standards issued by the Ministry ofFinance, the Company prepared and formulate the financial statement lies on the followed important accountingpolicy 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 ofhe reporting period, and there is no risk that affects the continued operations.
V. Important accounting policy and estimationNotes on specific accounting policies and accounting estimation:
The following disclosure has covered the specific accounting policies and accounting estimates formulated by the Companyaccording 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 Enterpriseand also a true and thorough reflection to the relevant information as the Company’s financial position dated 30
th
June 2020 and the operation results as well as cash flow for the first half year of 2020.
2. Accounting period
The Company’s accounting year is Gregorian calendar year, namely from 1
st
January to 31
stDecember of everyyear.
3. Business cycle
The Company’s business cycle is one year (12 months) as a normal cycle, and the business cycle is thedetermining 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
1. Consolidation of enterprises under the same control
Where the Company for long term equity investment arising from business combination under common controlsatisfies the combination consideration by payment of cash, transfer of non-cash assets or assumption of debt, thecarrying value of the net assets of the acquire in combined financial statement of the ultimate controller shared bythe Company as at the combination date shall be deemed as the initial investment cost of such long term equityinvestment. 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 oflong-term equity investment and book value of consideration (or total face value of the shares issued) paid, capitalsurplus adjusted; if the capital surplus not enough to written down, than retained earning adjusted.
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 theassets paid, liabilities occurred or assumed as well as equity securities issued by the acquirer to obtain control overthe 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 valueon day of purchased. If the consolidation cost larger than the fair value amount of identified net assets fromacquiree’s, the differences should be recognized as goodwill. If the consolidation cost less than the fair valueamount of identified net assets from acquiree’s, the differences should reckoned into current non-operatingincome.
6. Preparation methods for consolidated financial statements
1. Consolidation financial statement range
The Company includes all the subsidiaries (including the separate entities controlled by the Company) intoconsolidated financial statement, including companies controlled by the Company, non-integral part of theinvestees and structural main body.
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, thenecessary adjustment is made on the subsidiaries’ financial statements in the preparation of the consolidatedfinancial statements according to the Company’s accounting policies and periods.
3. Offset of consolidated financial statement
The consolidated financial statements shall be prepared on the basis of the balance sheet of the parent companyand subsidiaries, which offset the internal transactions incurred between the parent company and subsidiaries andwithin subsidiaries. The owner’s equity of the subsidiaries not attributable to the parent company shall bepresented as minority equity under the owner’s equity item in the consolidated balance sheet. The long term equityinvestment of the parent company held by the subsidiaries, deemed as treasury stock of the corporate group aswell as the reduction of owners’ equity, shall be presented as “Less: treasury stock” under the owners’ equity itemin the consolidated balance sheet.
4. Accounting 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 financialstatements from the beginning of the financial year in which the combination took place. Whenpreparing the consolidated financial statements, for the subsidiaries acquired from businesscombination not involving entities under common control, the identifiable net assets of the subsidiaries areadjusted on the basis of their fair values on the date of acquisition.
5. Accounting treatment of disposal subsidiaries
In the case of partial disposal of long-term equity investments in subsidiaries without loss of control, in theconsolidated financial statements, the difference between the disposal price and the net asset share correspondingto the disposal of long-term equity investments and enjoying the subsidiaries’ continued calculation from thepurchase date or the merger date is used to adjust the capital reserve (capital premium or equity premium). If thecapital reserve is insufficient to offset, the retained earnings are adjusted.
If the control power of the investee is lost due to the disposal of part of the equity investment, etc., when preparingthe consolidated financial statements, the remaining equity shall be re-measured according to its fair value on thedate of loss of control. The sum of the consideration obtained from the disposal of equity and the fair value of the
remaining equity minus the difference between the share of the original subsidiary’s net assets that should becontinuously calculated from the purchase date or the merger date is included in the current investment incomewhen the control is lost and also offsets goodwill. Other comprehensive income related to the equity investment ofthe original subsidiary is converted into current investment income when the control is lost.
7. 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 depositsavailable for payment anytime. The cash equivalents recognized in the preparation of the cash flow statementsrefers to the investment held by the Company with characteristic of short-term, strong mobility, easy transfer toknown sum cash and has slim risk from value changes.
8. Foreign currency exchange and the conversion of foreign currency statements
1. Foreign currency exchange
The approximate exchange rate of the spot exchange rate on transaction occurred should be used for standardmoney conversion while foreign currency exchange occurred On the balance sheet day, the monetary items areconverted on the current rate on the balance sheet day, concerning the exchange differences between the spotexchange 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 specificloans, which was reckoned into cost for capitalizing. The non-monetary items measured on the historic cost arestill 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 exchangerate on the confirmation day of fair value, difference between the converted amount of bookkeeping currency andoriginal 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.
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 accountingcheck and preparation of the consolidated financial statements are made. Assets and liabilities items in the balancesheet 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, shouldconverted by the approximate exchange rate of spot exchange rate on occurring date. The conversion difference ofthe foreign currency financial statements is listed specifically in the owners’ equity in the balance sheet. If theforeign cash flow determined by rational system method, the approximate exchange rate of spot exchange rate onoccurring date should prevail. The cash influenced by the rate fluctuation is listed specifically in the cash flowstatement. As for the foreign operation, the conversion difference of the foreign currency statement related to theforeign operation is transferred in proportion into the disposal of the current loss/gain.
9. Financial instrument
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
The Company classifies financial assets that meet the following conditions as financial assets measured atamortized cost: ① The Company’s business model for managing financial assets is to collect contractual cashflows as its goal; ② The contractual terms of the financial assets stipulate that the cash flow generated on aspecific date is only the payment of principal and interest based on the outstanding principal amount.The Company classifies financial assets that meet the following conditions as financial assets measured at fairvalue and whose changes are included in other comprehensive income: ① The Company’s business model formanaging financial assets is to collect contractual cash flows and sell the financial assets as its goal; ② Thecontractual terms of the financial assets stipulate that the cash flow generated on a specific date is only for thepayment of principal and interest based on the outstanding principal amountFor investment in non-trading equity instruments, the Company may irrevocably designate it as a financial assetmeasured at fair value and its changes included in other comprehensive income at initial recognition. Thedesignation is made on the basis of a single investment, and the relevant investment meets the definition of equityinstruments from the perspective of the issuer.Except for financial assets classified as financial assets measured at amortized cost and financial assets measuredat fair value and whose changes are included in other comprehensive income, the Company classifies the financialassets as financial assets measured at fair value and whose changes are included in current profit or loss. At theinitial recognition, if the accounting mismatch can be eliminated or reduced, the Company can irrevocablydesignate the financial asset as a financial asset measured at fair value and its changes are included in the currentprofit and loss.When the Company changes the business model for managing financial assets, it will reclassify all affected relatedfinancial assets on the first day of the first reporting period after the business model has been changed, and willapply future applicable methods from the date of reclassification for relevant accounting treatment, no retroactiveadjustments shall be made for previously recognized gains, losses (including impairment losses or gains) orinterest.
(2) Financial liabilities
Financial liabilities are classified as financial liabilities measured at fair value and whose changes are included inthe current profit or loss, financial liabilities formed by the transfer of financial assets that does not meet theconditions for derecognition or continues to be involved in the transferred financial assets, and financial liabilitiesmeasured at amortized cost at initial recognition. All financial liabilities are not reclassified.
2. Measurement of financial instruments
The initial recognition of the Company’s financial instruments is measured at fair value. For financial assets andfinancial liabilities measured at fair value and whose changes are included in the current profit and loss, therelated transaction costs are directly included in the current profit and loss; for other types of financial assets orfinancial liabilities, the related transaction costs are included in the initial recognition amount. For the accountsreceivable or bills receivable arising from the sale of products or the provision of labor services, not containing ornot 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 ontheir classification.
(1) Financial assets
① Financial assets measured at amortized cost. After initial recognition, such financial assets are measured atamortized cost by using the effective interest method. Gains or losses arising from financial assets that aremeasured at amortized cost and do not belong to any hedging relationship are included in the current profit or losswhen they are derecognized, reclassified, amortized in accordance with the effective interest rate method, orrecognized for impairment.
② Financial assets measured at fair value and whose changes are included in the current profit and loss. Afterinitial recognition, for such financial assets (except for a part of financial assets that belong to the hedgingrelationship), the fair value is used for subsequent measurement, and the resulting gains or losses (includinginterest 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 comprehensiveincome. 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 gainsand losses are included in the current profit and loss, and other gains or losses are included in othercomprehensive income. In derecognition, the accumulated gains or losses previously included in othercomprehensive income are transferred out of other comprehensive income and included in the current profit andloss.
(2) Financial liabilities
① Financial liabilities measured at fair value and whose changes are included in the current profit and loss. Suchfinancial liabilities include transactional financial liabilities (including derivatives that belong to financialliabilities) and financial liabilities designated to be measured at fair value and whose changes are included in thecurrent profit and loss. After initial recognition, the subsequent measurement of such financial liabilities is at fairvalue, except for those related to hedge accounting, gains or losses (including interest expenses) resulting fromchanges in the fair value of transactional financial liabilities are included in the current profit and loss. If afinancial liability designated to be measured at fair value and whose changes are included in the current profit orloss, the amount of change in the fair value of the financial liability caused by changes in the enterprise’s owncredit risk is included in other comprehensive income, other changes in fair value are included in the current profitand loss. If the impact of changes in the financial liability’s own credit risk included in other comprehensiveincome causes or expands the accounting mismatch in profit or loss, the Company will include all gains or losseson the financial liability in the current profit and loss.
② Financial liabilities measured at amortized cost. After initial recognition, such financial liabilities are measuredat amortized cost by using the effective interest method.
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 activemarket; 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 ofpossible estimated amounts of fair value is widely distributed, and the cost represents the best estimate of fairvalue within this range, the cost may represent the appropriate estimates of fair value within this distribution range.The Company uses all information on the performance and operation of the investee gettable after the initialrecognition date to determine whether the cost represents the fair value or not.
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:
①The contract right to receive the cash flow of the financial asset is terminated; ② The financial asset has beentransferred, and the Company has transferred almost all risks and rewards of ownership of the financial asset; ③The financial asset has been transferred, although the Company has neither transferred nor retained almost all theremuneration in the ownership of the financial asset, it has not retained control of the financial asset.
If the Company neither transfers nor retains almost all the remuneration in the ownership of financial assets, andretains control over the financial assets, the relevant financial assets are recognized according to the extent thatthey continue to be involved in the transferred financial assets, and the related liabilities are accordinglyrecognized.
If the transfer of financial assets meets the conditions for derecognition, the difference between the following twoamounts shall be included in the current profit and loss: ① The book value of the transferred financial assets onthe date of derecognition; ② The sum of the consideration received for the transfer of financial assets and theamount corresponding to the derecognized part of the cumulative amount of changes in fair value that was directlyincluded in other comprehensive income (the financial assets involved in the transfer are classified as financialassets measured at fair value and their changes are included in other comprehensive income).
If partial transfer of financial assets satisfies the conditions for derecognition, the book value of the transferredfinancial assets as a whole is apportioned respectively according to the relative fair value on the transfer datebetween the derecognition portion and the non- derecognition portion, and then the difference of following twoamounts is included in the current profit and loss: ①The book value of the derecognition part on the derecognitiondate; ②The sum of the consideration received in the derecognition part and the amount corresponding to thederecognized part of the cumulative amount of changes in fair value that was directly included in othercomprehensive income (the financial assets involved in the transfer are classified as financial assets measured atfair 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 thefinancial 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 bookvalue and the consideration paid (including non-cash assets transferred out or liabilities assumed) into the currentprofit and loss.
10.Note receivable
Found more in 11.Account receivable
11.Account receivable
1. How to determine expected credit losses
Based on expected credit losses, the Company makes impairment accounting treatment and confirm lossprovisions for financial assets (including receivables) measured at amortized cost and financial assets (includingreceivables financing) that are measured at fair value and whose changes are included in other comprehensiveincome, and lease receivables.The Company assesses on each balance sheet date whether the credit risk of relevant financial instruments hasincreased significantly since initial recognition, and divides the process of credit impairment of financialinstruments into three stages, and adopts different accounting treatment methods for financial instrumentsimpairment at different stages: (1) In the first stage, if the credit risk of a financial instrument has not increasedsignificantly since its initial recognition, the Company shall measure the loss provisions according to the expectedcredit losses of the financial instrument in the next 12 months, and calculate the interest income according to itsbook balance (i.e. without deducting impairment) and actual interest rate; (2) In the second stage, if the credit riskof a financial instrument has increased significantly since the initial recognition but no credit impairment hasoccurred, the Company shall measure the loss provisions according to the expected credit losses of the financialinstrument during the entire duration, and calculate the interest income according to its book balance and actualinterest rate; (3) In the third stage, if the credit impairment occurs after initial recognition, the Company shallmeasure loss provisions based on the expected credit losses of the financial instrument for the entire duration, andcalculate the interest income according to its book balance and actual interest rate.
(1) Methods of measuring loss provisions for financial instruments with lower credit riskFor financial instruments with lower credit risk on the balance sheet date, the Company can directly make theassumption that the credit risk of the instrument has not increased significantly since the initial recognitionwithout 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 obligationsis strong in the short term, and even if there are adverse changes in the economic situation and operatingenvironment over a long period of time, it may not necessarily reduce the borrower’s ability to fulfill thecontractual 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 transactionsregulated by “Accounting Standards for Business Enterprises No.14-Revenue” and without containing significantfinancing components, the Company adopts a simplified method, that is, it always calculates the loss provisionsbased on the expected credit losses for the entire duration.
Based on the nature of financial instruments, the Company assesses whether credit risk has increased significantlyon the basis of individual financial assets or financial assets portfolios. The Company divides the notes receivableand accounts receivable into several portfolios based on the characteristics of credit risk, and calculates theexpected 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 riskcharacteristics,Accounts receivable portfolio 2: Combination of related parties included in the scope of consolidated statementsNotes receivable portfolio 1: Same as the division of accounts receivable portfolioNotes receivable portfolio 2: Management evaluates that this type of fund is bank acceptance portfolio with lowercredit riskFor the accounts receivable and notes receivable being divided into portfolio 1, the Company refers to thehistorical credit loss experience, combines with the current conditions and the prediction of future economicsituation, and prepares a comparison table of the aging of accounts receivable and the expected credit loss rate ofthe entire duration, and calculates the expected credit losses.For accounts receivable and notes receivable being divided into portfolio 2, the Company refers to historical creditloss experience, combines with the current conditions and the predictions of future economic conditions, andcalculates the expected credit losses of 0% through default risk exposure and expected credit loss rate for theentire duration.
②Accounts receivables and leases receivables that contain significant financing components. For accountsreceivables that contain significant financing components and leases receivables regulated by “AccountingStandards for Business Enterprises No. 21-Leases”, the Company measures loss provisions in accordance with thegeneral method, that is, the “third stage” model.
(3)Accrual method of bad debt provision for those accrual by account age as the portfolio
Account age
| Account age | Expected credit loss rate of receivable (%) |
| Within one year (one year included) | 0 |
| 1-2 years | 5 |
| 2-3 years | 10 |
| Over 3 years | 30 |
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 Companyremeasures the expected credit losses on each balance sheet date, and the resulting increase or reversal of the lossprovisions should be counted as an impairment loss or gain and included in the current profit and loss, and basedon the type of financial instrument, offsets the book value of the financial asset listed in the balance sheet orincludes in the estimated liability (loan commitment or financial guarantee contract) or includes in othercomprehensive income (debt investments measured at fair value and whose changes are included in othercomprehensive income).
12.Receivable financing
Accounts receivable financing reflects the bills receivable and receivables that are measured at fair value on thebalance sheet date and whose changes are included in other comprehensive income, for example, the companyuses bank acceptance discounts or endorsements as a daily fund management business model, then the companyaims to both collect contractual cash flow and sell the bank’s acceptance bill, and classifies it as a financial assetmeasured at fair value and whose changes are included in other comprehensive income. The occasional bankacceptance discounts or endorsements not used as a daily fund management business model cannot be classifiedas financial assets measured at fair value and whose changes are included in other comprehensive income or beincluded in accounts receivable financing.Accounting treatment reference to the 9.4 Classification, recognition basis and measurement method of financialassets above mentioned
13. Other account receivable
Determination and accounting treatment on the expected credit losses of other account receivableThe Company measures the loss provisions according to the general method, that is, the “third stage” model.When measuring the credit impairment of financial instruments, the Company considers the following factors toassess whether the credit risk has increased significantly:
The Company divides other receivables into several portfolios based on the nature of the payments, and calculatesthe expected credit losses on the basis of the portfolio, the basis for determining the portfolio is as follows:
Other receivables portfolio 1: Combination of non-related parties that make provision for impairment according tothe expected loss rateOther receivables portfolio 2: Combination of related parties included in the scope of consolidated statementsFor other receivables 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 comparisontable of the aging of accounts receivable and the expected credit loss rate of the entire duration, and calculates theexpected credit losses.For other receivables 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 theexpected credit losses of 0% through default risk exposure and expected credit loss rate for the entire duration.
Accrual method of bad debt provision for those accrual by account age as the portfolio
Account age
| Account age | Expected credit loss rate of other receivable (%) |
| Within one year (one year included) | 0 |
| 1-2 years | 5 |
| 2-3 years | 10 |
| Over 3 years | 30 |
14. Inventory
1. Categories of inventory
The inventory is goods or manufactured products held for sale, products in process, and materials and mattersutilized in the production or supply of labor. Mainly including raw material, revolving materials (wrappage andlow-value consumption goods etc.), outside processing materials, goods in process, semi-finished goods, stocksand so on.
2. Accounting method for inventory delivery
When inventories are issued, the actual cost is determined by the first in first out method.
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 oflarge quantity and low price, the provision is accrued on the inventory category.
4. Inventory system
Inventory system of the Company is perpetual inventory system
5. Amortization method for the low-value consumables and wrap page
Low-value consumables and packages are amortized by one-point method
15. Long-term equity investment
1. Recognition of initial investment cost
For a long-term equity investment obtained by a business combination, if it is a business combination under thesame control, take the share of the combine party obtained in the book value of the net assets in the consolidatedfinancial statements of the ultimate controlling party on the combination date as the initial investment cost; in thecase of the consolidation of enterprises not under the same control, recognized as the initial cost is the recognizedconsolidation cost on the purchase day. As for the long term equity investment obtained by cash payment, theinitial investment cost is the actual purchase payment. As for the long term equity investment obtained by theequity securities offering, the initial investment cost is the fair value of the equity securities. As for the long-termequity investment obtained by debt reorganization, initial investment cost of such investment should determine byrelevant regulation of the “Accounting Standards for Business Enterprise No.12- Debt Reorganization”; as for thelong term equity investment obtained by the exchange of the non-monetary assets, the initial investment cost isrecognized on the relevant rules in the “Accounting Standards for Business Enterprise No. 7- Exchange ofNon-Monetary Assets”
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 ofthe 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 ofequity investments indirectly held by the investor shall be measured at fair value through profit or loss accordingto 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 onsuch part of equity investments, while the remaining part shall be measured using equity method.
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 certainarrangement could be decided only by mutual consent of the investing parties sharing the control, which includesthe 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 tothat: significant influence over the investee exists when holding more than 20% but less than 50% of the shareswith voting rights or even if the holding is below 20%, there is still significant influence if any of the followingconditions 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 onthe technology or technical information of the investing company; or major transactions with the investee.
16. Investment real estate
Measurement for investment real estateCost methodDepreciation or amortization method
The types of investment real estate of the Company include the leased land use rights, leased buildings, and landuse rights held and prepared for transfer after appreciation. Investment real estate is initially measured at cost andsubsequently measured by using the cost model.
The leased buildings in the Company’s investment property adopts straight-line depreciation to calculate anddistill depreciation, specific accounting policy are same as part of the fixed assets. The leased land use rights inthe 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.
17. Fixed assets
(1) Recognition
Fixed assets refers to the tangible assets holding for purpose of producing goods, providing labor services, leasingor operation management, which has one accounting fiscal year of using life. Meanwhile as up to the followingconditions, 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
Category
| Category | Depreciation method | Depreciation life (year) | Salvage rate | Annual depreciation rate |
| House building | Straight-line depreciation | 20-50 | 10.00 | 1.80-4.50 |
| Machinery equipment | Straight-line depreciation | 10 | 10.00 | 9.00 |
Mold equipment
| Mold equipment | Straight-line depreciation | 3 | 10.00 | 30.00 |
| Transportation equipment | Straight-line depreciation | 5 | 10.00 | 18.00 |
| Instrument equipment | Straight-line depreciation | 5 | 10.00 | 18.00 |
| Tool equipment | Straight-line depreciation | 5 | 10.00 | 18.00 |
| Office equipment | Straight-line depreciation | 5 | 10.00 | 18.00 |
The fixed assets of the Company mainly include house and buildings, machinery equipment, electronic equipment,transportation equipment, etc.; the method of depreciation is based on the straight-line method. Determine theuseful life and estimated net residual value of fixed assets according to the nature and use of various types of fixedassets. At the end of the year, review the useful life, estimated net residual value, and depreciation method of fixedassets, if there is a difference from the original estimate, make corresponding adjustments. Except for the fixedassets that have been fully depreciated and continue to be used and the land that is separately accounted for, theCompany calculates and depreciates all fixed assets.
(3) Recognition basis, valuation and depreciation method for fixed assets under financing leaseThe fixed assets under financing lease are the lease that has substantially transferred all the risks and rewardsassociated with asset ownership. The initial valuation of the fixed assets under financing lease is to take the lowerone between the fair value of the leased assets and the present value of the minimum lease payments on the startdate of the lease period as the entry value; the subsequent valuation of the fixed assets under financing leaseadopts the depreciation policy consistent with the own fixed assets to make depreciation and impairmentprovision.
18. Construction in process
Construction in process of the Company divided as self-run construction and out-bag construction. TheConstruction in process of the Company carried forward as fixed assets while the construction is ready for theintended use. Criteria of the expected condition for use should apply one of the follow conditions: The substanceconstruction (installation included) of the fixed assets has completed all or basically; As the projects have been intest production or operation, and the results show that the assets can operate properly and produce the qualifiedproducts stably, or the test operation result shows the assets can operate or open properly. The expenditure of thefixed assets on the construction is a little or little. The fixed assets of the project constructed have been up to therequirements of the design or contract, or basically up to.
19. Borrowing expenses
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 iscapitalized and reckoned into the relevant assets cost; as for other borrowing expenses, it is recognized on theactual sum and reckoned into the current loss/gain. The assets up to the capitalization are assets as the capitalassets, 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 periodof capitalization suspended is not included. The capitalization of borrowing expenses should be suspended whilethe abnormal interrupt, which surpass three months continuously, in the middle of acquisition or construction orproduction.
As for the borrowing of the specific borrowing, the capitalization sum is recognized on the current actualinterest expenses less the interest income of the borrowing capital not utilized but deposited in the bank or thereturn of the temporary investment; As for the appropriation of the general borrowing, the capitalization sum isrecognized on the weighted average of, the accumulative assets expenditure above the specific borrowing, andtimes the capitalization rate of the appropriation; As for the discount or premium of the borrowing, the discount orpremium 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 interestexpenses on the actual interest rate; and the actual interest rate is the interest rate used in the discount of the futurecash flow in the expectant duration period as the current book value of the borrowing.
20. Intangible assets
(1) Accounting method, service life and impairment test
1. Accounting method of intangible assets
The Company’s intangible assets are measured initially on cost. The intangible assets purchased in are taken as theactual cost on the actual payment and relevant expenditure. As for the intangible assets invested in by theinvestors, the actual cost is recognized on the value stipulated in the contract or agreement; however, if what isstipulated in the contract or agreement is not fair value, the actual cost is recognized on fair value. As for theself-developed intangible assets, their cost is the actual total expenditure before reaching the expectant purpose.
The follow-up measurements of the Company’s intangible assets respectively are: the line amortization method istaken on the intangible assets of finite service life, and at the yea-end, the check is taken on the service life anddilution of the intangible assets, and the corresponding adjustment is made if there is inconsistency with theprevious expected ones. As for the intangible assets of uncertain service life, it is not diluted, however, the servicelife is checked at year-end; If there is solid evidence to its finite service life, its service life is estimated anddiluted in straight line method.
2. Judgment basis for uncertain service life
The Company will not be able to foresee the time limit within which the asset brings economic benefits to thecompany, or the intangible assets with uncertain useful life identified as intangible assets with uncertain useful life.The basis for judging the uncertainty of useful life is from the contractual rights or other legal rights, but thecontract stipulates or the law rules there is no definite useful life; combining the same industry case and or therelevant expert argumentation, it is still incapable of judging the time limit within which the intangible assets
bring economic benefits to the company.
At the end of each year, review the useful life of intangible assets with indefinite useful life by mainly adoptingthe bottom-up method, the relevant departments of intangible assets take the basic review and evaluate whetherthere is any change in the judgment basis for indefinite useful life.
(2) Accounting policies for internal research and development expenditure
Expenditures for internal research and development projects at the research phase shall be included in the currentprofit or loss when incurred; expenditures incurred at the development phase and recognized as intangible assetsshall be transferred to intangible assets accounting.
21. 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 andgoodwill are tested for impairment if there is any indication that an asset may be impaired at the balance date. Ifthe 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 carryingamount 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 futurecash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized onthe individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, therecoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallestgroup 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 ofwhether there is any indication that the asset may be impaired. For the purpose of impairment testing, the carryingamount of goodwill acquired in a business combination is allocated from the acquisition date on a reasonablebasis to each of the related asset groups; if it is impossible to allocate to the related asset groups, it is allocated toeach of the related set of asset groups. If the carrying amount of the asset group or set of asset groups is higherthan its recoverable amount, the amount of the impairment loss first reduced by the carrying amount of thegoodwill allocated to the asset group or set of asset groups, and then the carrying amount of other assets (otherthan the goodwill) within the asset group or set of asset groups, pro rata based on the carrying amount of eachasset.
Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent period.
22. Long-term deferred expenditure
The Company’s long-term deferred expenditure are expenses paid out and with one year above (one-yearexcluded) 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 theproject undiluted yet, are transferred into the current loss/gain.
23. 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 profitor loss, or if otherwise required or allowed by other accounting standards, to the related costs of assets for thecurrent period. At the time of actual occurrence, The Company’s employee benefits are recorded into the profitsand losses of the current year or assets associated costs according to the actual amount. The non-monetaryemployee benefits are measured at fair value. Regarding to the medical and health insurance, industrial injuryinsurance, maternity insurance and other social insurances, housing fund and labor union expenditure andpersonnel education that the Company paid for employees, the Company should recognize correspondingemployees benefits payable according to the appropriation basis and proportion as stipulated by relevantrequirements and recognize the corresponding liabilities and include these expenses in the profits or losses of thecurrent 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 underdefined contribution scheme shall be recognized as a liability and recorded in profit and loss of the current periodor in assets. In respect of the defined benefit scheme, the Company shall use the projected unit credit method andattribute the welfare obligations calculated using the formula stipulated by the defined benefit scheme to theservice 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 earlierof the following dates: when the Company can no longer withdraw the offer of those benefits; and when theCompany 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 ofdefined contribution scheme, the Company shall account for them according to relevant requirements of thedefined contribution scheme. In addition, the Company recognizes and measures the net liabilities or net assets ofthe other long-term employee benefits according to relevant requirements of the defined contribution scheme.
24. Accrual liability
The obligation related to contingencies is the current obligation assumed by the company, and performing thisobligation may result in an outflow of economic benefits, and this obligation can be determined as the estimatedliabilities when the amount can be reliably measured. The Company makes initial measurement in accordancewith the best estimate for performing the related current obligation, if the expenditure as needed has a continuousrange, and the likelihood of occurrence of various results in this range is the same, the best estimate is determinedby the median value within the range; if a number of items are involved, the best estimate is determined by thecalculation of various possible outcomes and related probabilities.
At the balance sheet date, the book value of estimated liabilities should be rechecked, if there is conclusiveevidence indicates that this book value cannot truly reflect the current best estimate, and then the book valueshould be adjusted in accordance with the current best estimate.
25. Revenue(Income)
Accounting policy for recognition and measurement of revenue(income)
1. Sales of goods
The Company shall ascertain the revenue incurred by selling goods in accordance with the received or receivableprice stipulated in the contract or agreement signed between the enterprise and the buyer unless the followingconditions are met simultaneously: ① the significant risks and rewards of ownership of the goods have beentransferred to the buyer by the enterprise; ② the enterprise retains neither continuous management right thatusually keeps relation with the ownership nor effective control over the sold goods; ③the relevant amount ofrevenue can be measured in a reliable way; ④ relevant economic benefits may flow into the enterprise and ⑤ therelevant costs incurred or to be incurred can be measured in a reliable way.
Money collection for the contract or agreement use the mode of deferred, actually has the financing features. Therevenue of commodity sales is recognized by the fair value of the money receivable on contract or agreement.
2. Labor service providing
If an enterprise can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning thelabor services it provides, it shall recognize the revenue from providing services employing thepercentage-of-completion method. The enterprise can ascertain the schedule of completion(percentage-of-completion) under the transaction concerning the providing of labor services based on calculationof completed works.
If an enterprise cannot, on the date of the balance sheet, measure the result of a transaction concerning theproviding of labor service in a reliable way, it shall be conducted in accordance with the following circumstances,respectively: ①if the cost of labor services incurred is expected to be compensated, the revenue from theproviding of labor services shall be recognized in accordance with the amount of the cost of labor servicesincurred, and the cost of labor services shall be carried forward at the same amount; ②if the cost of labor servicesincurred is not expected to compensate, the cost incurred should be included in the current profits and losses, andno revenue from the providing of labor services may be recognized.
3. Transition of asset use right
When economic benefits relating to transition of asset use right is likely to inflow into the Company and therelevant income can be measured reliably, the Company shall recognize such income from transition of asset useright.
The Company’s specific income recognition method: it is recognized as income when the product has been sentout and signed for receipt by the other party for domestic sales; it is recognized as income when the product hasbeen shipped and its customs procedures have been completed with the relevant declaration documents for exportsales. Income from house leases and property management is recognized according to the lease contractagreement, receipt of relevant payments, or relevant collection proof.
Different business models of similar business resulted in different accounting policies for revenue recognitionN/A
26. Government subsidy
1.Category of government subsidy and accounting treatment
Governments subsidy of the Company refer to the monetary and non-monetary assets obtained from governmentfor 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-monetaryassets, it shall be measured at fair value; if the fair value cannot be obtained reliably, it shall be measured at thenominal amount.
Government grants related to daily activities are included in other income in accordance with the economicbusiness. Government grants not related to daily activities are included in the non-operating income andexpenditure.
Government grants that the government documents clearly stipulate to be used for the purchase and establishmentor forming long-term assets in other way are recognized as government grants related to assets. For thegovernment grants that the government documents do not clearly specify the subsidy target and can formlong-term assets, the part corresponding to the asset value is recognized as the government grants related to theassets, and the rest is recognized as the government grants related to the income. For the government grants whichare difficult to be distinguished, recognize the whole as the government grants related to the income. Governmentgrants related to assets are recognized as deferred income. The amount recognized as deferred income is includedin the current profit and loss in a reasonable and systematic manner within the useful life of the relevant asset.
Government grants other than government grants related to assets are recognized as government grants related toincome. If the government grants related to the income are used to compensate the related expenses or losses ofthe enterprise in the future period, recognize them as deferred income and include them in the current profit andloss during the period of recognizing the related expenses. The government grants used to compensate the relevantexpenses 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 subsidyfunds to the loan bank, and the loan bank provides loans to the Company at a preferential interest rate, take theactual amount of the loan received as the entry value of the loan, and calculate the relevant borrowing costsaccording to the loan principal the policy preferential interest rate. If the finance directly appropriates the interestsubsidy funds to the Company, the Company will offset the relevant borrowing costs with the correspondinginterest subsidy.
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 isconclusive evidence at the end of the period that it meets the relevant conditions stipulated in the financial supportpolicy and is expected to receive financial support funds. Other government grants other than government grantsmeasured in accordance with the receivable amount are recognized when the grant is actually received.
27. Deferred income tax asset / deferred income tax liability
1. Where there is difference between the carrying amount of the assets or liabilities and its tax base, (as for an itemthat has not been recognized as an asset or liability, if its tax base can be determined in light of the tax law, the taxbase shall recognized as the difference) the deferred income tax and deferred income tax liabilities shall bedetermined according to the applicable tax rate in period of assets expected to recover or liability expected to payoff.
2. The deferred income tax assets shall be recognized to the extent of the amount of the taxable income which it ismost 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 deductibletemporary difference, the un-confirmed deferred income tax assets in previous accounting period shall berecognized. If there has no enough taxable amounts, obtained in future period, to deducted the deferred income taxassets, book value of the deferred income tax assets shall be kept in decreased.
3. The taxable temporary differences related to the investments of subsidiary companies and associated enterprisesshall recognized as deferred income tax liability, unless the Company can control the time of the reverse oftemporary differences and the temporary differences are unlikely to be reversed in the expected future. As for thedeductible 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 theexpected future and it is likely to acquire any amount of taxable income tax that may be used for making up thedeductible temporary differences.
28. 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 eitherincluded 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 leasedasset at an amount equal to the lower of the fair value of the leased asset and the present value of the minimumlease 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 deductingunrecognized financing charges are listed as long-term payable.
29. Changes in important accounting policies and estimates
(1) Changes in important accounting policies
√ Applicable □ Not applicable
Content and reason of changes in
accounting policies
| Content and reason of changes in accounting policies | Approval procedure | Note |
| On 5 July 2017, the Ministry of Finance | Deliberated and approved by 3rd session |
issued the Notice on Revision andIssuance of Accounting Standards forBusiness Enterprise No.14- Revenue(Cai Kuai [2017] No.22), enterprises thatare listed both at home and abroad, aswell as those listed overseas andprepared their financial statements usingIFRS or Accounting Standards forBusiness Enterprise, shall enter intoforce as of 1 Jan. 2018; other enterpriselisted at home shall enter into force as of1 Jan. 2020; and the non-listedenterprises that implement theAccounting Standards for BusinessEnterprise shall enter into force as of 1Jan. 2021. In accordance with therequirements of the above document, theCompany will implement the NewRevenue Standards as of 1 Jan. 2020,and will make changes to the relevantaccounting policies in line with theprovisions of the New RevenueStandards.
| issued the Notice on Revision and Issuance of Accounting Standards for Business Enterprise No.14- Revenue (Cai Kuai [2017] No.22), enterprises that are listed both at home and abroad, as well as those listed overseas and prepared their financial statements using IFRS or Accounting Standards for Business Enterprise, shall enter into force as of 1 Jan. 2018; other enterprise listed at home shall enter into force as of 1 Jan. 2020; and the non-listed enterprises that implement the Accounting Standards for Business Enterprise shall enter into force as of 1 Jan. 2021. In accordance with the requirements of the above document, the Company will implement the New Revenue Standards as of 1 Jan. 2020, and will make changes to the relevant accounting policies in line with the provisions of the New Revenue Standards. | of 10th BOD |
N/A
(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 revenuestandards and new leasing standards since 2020ApplicableIs it necessary to adjust the items of balance sheet at beginning of the year
□Yes √No
Explanation on the items of balance sheet at beginning of the year without adjustmentImplementation of the New Revenue Standards has no impact on the statement of the Company
(4)Retrospective adjustment of early comparison data description when initially implemented the newrevenue standards and new leasing standards since 2020
□ Applicable √Not applicable
VI. Taxes
1. Major tax and tax rate
| Taxes | Taxation basis | Tax rate |
| VAT | Domestic sales revenue | 16%, 13% 6%, 5%, 3% |
| Urban maintenance and construction tax | Turnover tax payable | 7% |
| Corporate income tax | Taxable income | 15%, 25% |
| Educational surtax | Turnover tax payable | 3% |
| Local educational surtax | Turnover tax payable | 2%, 1.5% |
Property tax
| Property tax | 0% of original value of the property | 1.2% |
Explain the different taxation entity of the enterprise income tax
| Taxation entity | Income tax rate |
| Shenzhen Zhongheng Huafa Co., Ltd. | 25% |
| Wuhan Hengfa Technology Co., Ltd. | 15% |
2. Tax preferences
According to the “Measures for the Determination of High-tech Enterprises”, and through the enterpriseapplication, expert review, and public announcement and other procedures, the Company’s wholly-ownedsubsidiary, 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 HubeiProvince on November 28, 2017, the certificate number is GR201742001840, which is valid for 3 years. Theapplicable corporate income tax rate of the subsidiary Wuhan Hengfa Technology Co., Ltd. for 2020 was 15%.VII. Notes to main items in consolidated financial statement
1. Monetary fund
RMB/CNY
| Item | Closing balance | Opening balance |
| Cash on hand | 363,912.99 | 432,301.32 |
| Bank deposit | 23,000,522.81 | 37,660,862.75 |
| Other monetary fund | 2,529,797.38 | 2,336.93 |
| Total | 25,894,233.18 | 38,095,501.00 |
| The total amount of money that has restrictions on use due to mortgage, pledge or freezing | 4,081,265.38 | 1,450,439.39 |
Other explanationOther monetary funds are bank acceptance deposits.
2. Account receivable
(1)Category
RMB/CNY
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Proportion | Amount | Accrual ratio | Amount | Proportion | Amount | Accrual ratio | |||
| Account receivable with bad debt provision accrual on a single basis | 13,146,290.18 | 7.46% | 13,146,290.18 | 100.00% | 13,146,290.18 | 8.65% | 13,146,290.18 | 100.00% | ||
| Including: | ||||||||||
| Ending Account receivable with single significant | 7,556,363.72 | 4.29% | 7,556,363.72 | 100.00% | 7,556,363.72 | 4.29% | 7,556,363.72 | 100.00% | ||
amount andwithdrawal baddebt provision onsingle basis
| amount and withdrawal bad debt provision on single basis | ||||||||||
| Ending Account receivable with single minor amount but with bad debts provision accrued on a single basis | 5,589,926.46 | 3.17% | 5,589,926.46 | 100.00% | 5,589,926.46 | 3.17% | 5,589,926.46 | 100.00% | ||
| Account receivable with bad debt provision accrual on portfolio | 162,988,083.33 | 92.54% | 4,188.06 | 0.00% | 162,983,895.27 | 138,759,879.49 | 91.35% | 4,188.06 | 0.00% | 138,755,691.43 |
| Including: | ||||||||||
| Take account ages of receivables as a combination of credit risk characteristics | 162,988,083.33 | 92.54% | 4,188.06 | 0.00% | 162,983,895.27 | 138,759,879.49 | 91.35% | 4,188.06 | 0.00% | 138,755,691.43 |
| Total | 176,134,373.51 | 100.00% | 13,150,478.24 | 7.47% | 162,983,895.27 | 151,906,169.67 | 100.00% | 13,150,478.24 | 4.53% | 138,755,691.43 |
Accrual of bad debt provision on single basis: 5,589,926.46 Yuan
RMB/CNY
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
| Hong Kong Haowei Industrial Co. Ltd. | 1,870,887.18 | 1,870,887.18 | 100.00% | Uncollectible |
| TCL ACE ELECTRIC APPLIANCE (HUIZHOU) CO., LTD. | 1,325,431.75 | 1,325,431.75 | 100.00% | Uncollectible |
| Qingdao Haier Parts Procurement Co., Ltd. | 1,225,326.15 | 1,225,326.15 | 100.00% | Uncollectible |
| SKYWORTH Multimedia (Shenzhen) Co., Ltd. | 579,343.89 | 579,343.89 | 100.00% | Uncollectible |
| Shenzhen Portman Bowling Club Co., Ltd. | 2,555,374.75 | 2,555,374.75 | 100.00% | Uncollectible |
| Total | 7,556,363.72 | 7,556,363.72 | -- | -- |
Accrual of bad debt provision on single basis: 5,587,643.49 Yuan
RMB/CNY
Name
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
| Shenzhen Huixin Video Technology Co., Ltd. | 381,168.96 | 381,168.96 | 100.00% | Uncollectible |
| Shenzhen Wandelai Digital Technology Co., Ltd. | 351,813.70 | 351,813.70 | 100.00% | Uncollectible |
| Shenzhen Dalong Electronic Co., Ltd. | 344,700.00 | 344,700.00 | 100.00% | Uncollectible |
| Shenzhen Keya Electronic Co., Ltd. | 332,337.76 | 332,337.76 | 100.00% | Uncollectible |
| Shenzhen Qunping Electronic Co., Ltd. | 304,542.95 | 304,542.95 | 100.00% | Uncollectible |
| China Galaxy Electronics (Hong Kong) Co., Ltd. | 288,261.17 | 288,261.17 | 100.00% | Uncollectible |
| Dongguan Weite Electronic Co., Ltd. | 274,399.80 | 274,399.80 | 100.00% | Uncollectible |
| Chuangjing | 247,811.87 | 247,811.87 | 100.00% | Uncollectible |
| Hong Kong New Century Electronics Co., Ltd. | 207,409.40 | 207,409.40 | 100.00% | Uncollectible |
| Shenyang Beitai Electronic Co., Ltd. | 203,304.02 | 203,304.02 | 100.00% | Uncollectible |
| Beijing Xinfang Weiye Technology Co., Ltd. | 193,000.00 | 193,000.00 | 100.00% | Uncollectible |
| TCL Electronics (Hong Kong) Co., Ltd. | 145,087.14 | 145,087.14 | 100.00% | Uncollectible |
| Huizhou TCL Xinte Electronics Co., Ltd. | 142,707.14 | 142,707.14 | 100.00% | Uncollectible |
| SkyWorth – RGB Electronic Co., Ltd. | 133,485.83 | 133,485.83 | 100.00% | Uncollectible |
| Wuhan Hongxin Communication Technology Co., Ltd. | 2,282.97 | 2,282.97 | 100.00% | Uncollectible |
| Other | 2,037,613.75 | 2,037,613.75 | 100.00% | Uncollectible |
| Total | 5,589,926.46 | 5,589,926.46 | -- | -- |
Accrual of bad debt provision on single basis:
RMB/CNY
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
Accrual of bad debt provision on portfolio: 4,188.06 Yuan
RMB/CNY
Name
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrual ratio | |
| Within one year | 162,906,849.90 | ||
| 1-2 years | 78,705.66 | 3,935.28 | 5.00% |
| 2-3 years | 2,527.77 | 252.78 | 10.00% |
| Over 3 years | |||
| Total | 162,988,083.33 | 4,188.06 | -- |
Explanation on portfolio basis:
Take account ages of receivables as a combination of credit risk characteristicsAccrual of bad debt provision on portfolio:
RMB/CNY
| Name | Closing balance | ||
| 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, pleaserefer to the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √Not applicable
By account age
RMB/CNY
| Account age | Closing balance |
| Within one year(One year included) | 162,906,849.90 |
| 1-2 years | 78,705.66 |
| 2-3 years | 2,527.77 |
| Over 3 years | 13,146,290.18 |
| Over 5 years | 13,146,290.18 |
| Total | 176,134,373.51 |
(2)Bad debt provision accrual, collected or reversal in the period
Bad debt provision accrual in the period:
RMB/CNY
| Category | Opening balance | Amount changed in the period | Closing balance | |||
| Accrual | Collected or reversal | Written-off | Other | |||
| Take account ages of receivables as a combination of credit risk characteristics | 4,188.06 | 4,188.06 | ||||
| Total | 4,188.06 | 4,188.06 | ||||
Including major amount bad debt provision that collected or reversal in the period:
RMB/CNY
| Enterprise | Amount collected or reversal | Collection by |
(4)Top 5 account receivables at ending balance by arrears party
RMB/CNY
Company
| Company | Closing balance of account receivable | Proportion in total account receivables at year-end | Closing balance of bad debt provision |
| Qingdao Haidayuan Purchasing Service Co., Ltd. | 40,178,068.82 | 22.81% | |
| Hong Kong Yutian International Investment Co., Ltd. | 39,240,084.73 | 22.28% | |
| ViewSonic Technology (China) Co., Ltd. | 20,316,906.99 | 11.53% | |
| Viewsonic International Copera | 12,471,107.43 | 7.08% | |
| Wuhan Edmond Technology Co., Ltd. | 8,322,183.18 | 4.72% | |
| Total | 120,528,351.15 | 68.42% |
3. Receivable financing
RMB/CNY
| Item | Closing balance | Opening balance |
| Note receivable | 29,776,291.10 | 42,096,834.02 |
| Total | 29,776,291.10 | 42,096,834.02 |
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, pleaserefer to the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √ Not applicable
Other explanation:
The amount of pledged notes receivable at the end of the year is 9,294,702.94 yuan, and the amount of notes receivable endorsed ordiscounted at the end of the year but not yet due at the balance sheet date is 83,072,587.83 yuan. At the end of the year, there is no billconverted into accounts receivable due to the drawer's failure to perform the contract.
4. Account paid in advance
(1) By account age
RMB/CNY
| Account age | Closing balance | Opening balance | ||
| Amount | Ratio | Amount | Ratio | |
| Within one year | 21,510,905.11 | 97.41% | 22,879,096.29 | 99.44% |
| 1-2 years | 114,550.00 | 0.52% | 128,541.17 | 0.56% |
| 2-3 years | 457,946.44 | 2.07% | ||
| Total | 22,083,401.55 | -- | 23,007,637.46 | -- |
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
| Company | Closing balance | Proportion in total accounts paid in advance (%) |
| Hong Kong Yutian International Investment Co., Ltd. | 7,712,238.37 | 34.92% |
| Haier Digital Technology (Qingdao) Co., Ltd. | 4,857,494.00 | 22.00% |
| Hubei Century United Innovation Technology Co., Ltd. | 2,422,299.74 | 10.97% |
| Nanjing Zhongdian Panda LCD Technology Co., Ltd. | 1,177,502.40 | 5.33% |
| Guangzhou Shikun Electronic Technology Co., Ltd. | 1,102,431.05 | 4.99% |
| Total | 17,271,965.56 | 78.21% |
Other explanation:
Nil
5. Other account receivable
RMB/CNY
| Item | Closing balance | Opening balance |
| Other account receivable | 4,804,531.82 | 6,351,361.16 |
| Total | 4,804,531.82 | 6,351,361.16 |
(1)Other account receivable
1) By nature
RMB/CNY
| Nature | Closing book balance | Opening book balance |
| Margin and deposit | 1,611,408.99 | 1,583,408.99 |
| Borrow money | 2,135,739.46 | 1,944,700.12 |
| Intercourse funds | 8,912,181.51 | 11,534,893.51 |
| Rent receivable | 5,847,389.48 | |
| Other | 7,209,793.66 | 505,560.36 |
| Less: bad debt provision | -15,064,591.80 | -15,064,591.30 |
| Total | 4,804,531.82 | 6,351,361.16 |
2) Accrual of bad debt provision
RMB/CNY
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| Expected credit losses over next 12 months | Expected credit losses for the entire duration (without credit impairment occurred) | Expected credit losses for the entire duration (with credit impairment occurred) | ||
| Balance on Jan. 1, 2020 | 252,531.52 | 14,812,059.78 | 15,064,591.30 | |
| Balance of Jan. 1, 2020 in the period | —— | —— | —— | —— |
| Balance on Jun. 30, 2020 | 252,531.52 | 14,812,059.78 | 15,064,591.30 |
Change of book balance of loss provision with amount has major changes in the period
□ Applicable √Not applicable
By account age
RMB/CNY
Account age
| Account age | Closing balance |
| Within one year(One year included) | 3,813,383.34 |
| 1-2 years | 447,859.44 |
| 2-3 years | 3.00 |
| Over 3 years | 15,607,877.84 |
| 3-4 years | 2,250,126.00 |
| Over 5 years | 13,357,751.84 |
| Total | 19,869,123.62 |
3) Bad debt provision accrual, collected or reversal in the period
Bad debt provision accrual in the period:
RMB/CNY
| Category | Opening balance | Amount changed in the period | Closing balance | |||
| Accrual | Collected or reversal | written-off | Other | |||
| Phase I | 252,531.52 | 252,531.52 | ||||
| Phase III | 14,812,059.78 | 14,812,059.78 | ||||
| Total | 15,064,591.30 | 15,064,591.30 | ||||
NilIncluding the important amount collected or switches back in the period：
RMB/CNY
| Company | Amount collected or switches back | Way of collection |
Nil
4) Top 5 other account receivables at ending balance by arrears party
RMB/CNY
| Enterprise | Nature | Closing balance | Account age | Ratio in total ending balance of other receivables | Closing balance of bad debt reserve |
| Portman | Rent receivable | 4,021,734.22 | Over 3 years | 20.24% | 4,021,734.22 |
| Shenzhen Jifang Investment Co., Ltd | Rent receivable | 1,380,608.00 | Over 3 years | 6.95% | 1,380,608.00 |
| Fujian Jielian Electronics Co., Ltd. | Margin & deposit | 800,000.00 | Over 3 years | 4.03% | 240,000.00 |
| Traffic accident compensation | Intercourse funds | 555,785.81 | Over 3 years | 2.80% | 555,785.81 |
| Hebei Botou Court | Intercourse funds | 520,021.00 | Over 3 years | 2.62% | 520,021.00 |
| Total | -- | 7,278,149.03 | -- | 36.63% | 6,718,149.03 |
6. Inventory
Whether implemented the new revenue standards
□Yes √No
(1)Category
RMB/CNY
Item
| Item | Closing balance | Opening balance | ||||
| Book balance | Inventories fall provision or contract performance costs impairment provision | Book value | Book balance | Inventories fall provision or contract performance costs impairment provision | Book value | |
| Raw materials | 34,099,631.66 | 2,844,484.06 | 31,255,147.60 | 33,817,180.23 | 2,844,484.06 | 30,972,696.17 |
| In product | 0.00 | 0.00 | 0.00 | |||
| Inventory goods | 31,527,522.07 | 486,362.31 | 31,041,159.76 | 27,590,425.68 | 486,362.31 | 27,104,063.37 |
| Low priced and easily worn articles | 276,946.52 | 111,981.81 | 164,964.71 | 463,639.07 | 111,981.81 | 351,657.26 |
| Homemade semi-finished products | 7,828,849.32 | 232,090.00 | 7,596,759.32 | 8,775,225.16 | 232,090.00 | 8,543,135.16 |
| Total | 73,732,949.57 | 3,674,918.18 | 70,058,031.39 | 70,646,470.14 | 3,674,918.18 | 66,971,551.96 |
(2) Inventories fall provision or contract performance costs impairment provision
RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Closing balance | ||
| Accrual | Other | Reversal or write-off | Other | |||
| Raw materials | 2,844,484.06 | 2,844,484.06 | ||||
| In product | 0.00 | 0.00 | ||||
| Inventory goods | 486,362.31 | 486,362.31 | ||||
| Low priced and easily worn articles | 111,981.81 | 111,981.81 | ||||
| Homemade semi-finished products | 232,090.00 | 232,090.00 | ||||
| Total | 3,674,918.18 | 0.00 | 0.00 | 3,674,918.18 | ||
Nil
(3) Explanation on the ending balance of inventory contains an capitalized amount of borrowing costs
(4) Explanation on the current amortization amount of contract performance costs
7. Other current assets
RMB/CNY
| Item | Closing balance | Opening balance |
| Value-added tax to be deducted | 191,700.06 | 1,352,757.06 |
| Advance payment of income tax | 42,314.30 | 42,314.30 |
Total
| Total | 234,014.36 | 1,395,071.36 |
Other explanation:
Nil
8. Investment real estate
(1) Investment real estate measured at cost
√ Applicable □Not applicable
RMB/CNY
| Item | House and building | Land use right | Construction in process | Total |
| I. Original book value | ||||
| 1.Opening balance | 133,661,686.94 | 133,661,686.94 | ||
| 2.Current increased | ||||
| (1) Outsourcing | ||||
| (2)inventory\fixed assets\construction in process transfer-in | ||||
| (3)increased by combination | ||||
| 3.Current decreased | ||||
| (1) Disposal | ||||
| (2) other transfer-out | ||||
| 4.Closing balance | 133,661,686.94 | 133,661,686.94 | ||
| II. Accumulated depreciation and accumulated amortization | ||||
| 1.Opening balance | 84,708,694.37 | 84,708,694.37 | ||
| 2.Current increased | 864,165.14 | 864,165.14 | ||
| (1) Accrual or amortization | 864,165.14 | 864,165.14 | ||
| 3.Current decreased | ||||
| (1) Disposal | ||||
| (2) other transfer-out | ||||
| 4.Closing balance | 85,572,859.51 | 85,572,859.51 | ||
| III. Depreciation reserves | ||||
| 1.Opening balance | ||||
| 2.Current increased | ||||
| (1)Accrual |
| 3. Current decreased | ||||
| (1) Disposal | ||||
| (2) other transfer-out | ||||
| 4.Closing balance | ||||
| IV. Book value | ||||
| 1.Ending book value | 48,088,827.43 | 48,088,827.43 | ||
| 2.Opening book value | 48,952,992.57 | 48,952,992.57 |
9. Fixed assets
RMB/CNY
| Item | Closing balance | Opening balance |
| Fixed assets | 103,896,660.36 | 105,372,345.62 |
| Disposal of fixed assets | 92,857,471.69 | 92,857,471.69 |
| Total | 196,754,132.05 | 198,229,817.31 |
(1)Fixed asset
RMB/CNY
| Item | House building | Machinery equipment | Transportation equipment | Tool equipment | Office equipment | Mold equipment | Instrument equipment | Total |
| I. Original book value | 73,200,617.41 | 94,646,254.95 | 6,170,584.89 | 8,754,968.35 | 7,180,143.39 | 21,250,262.83 | 3,211,408.06 | 214,414,239.88 |
| 1.Opening balance | 4,837,879.93 | 144,092.43 | 61,543.16 | 566,194.98 | 6,637.17 | 5,616,347.67 | ||
| 2.Current increased | 4,837,879.93 | 144,092.43 | 61,543.16 | 566,194.98 | 6,637.17 | 5,616,347.67 | ||
| (1) Purchasing | ||||||||
| (2)Construction in process transfer-in | ||||||||
| (3)increased by combination | ||||||||
| 4,478,578. | 76,005.58 | 38,466.72 | 21,550.00 | 4,614,600. |
3.Current
decreased
| 3.Current decreased | 34 | 64 | ||||||
| (1) Disposal or scrapping | 4,478,578.34 | 76,005.58 | 38,466.72 | 21,550.00 | 4,614,600.64 | |||
| 4.Closing balance | 73,200,617.41 | 95,005,556.54 | 6,170,584.89 | 8,823,055.20 | 7,203,219.83 | 21,816,457.81 | 3,196,495.23 | 215,415,986.91 |
| II. Accumulative depreciation | ||||||||
| 1.Opening balance | 18,788,535.27 | 61,361,126.34 | 4,652,063.93 | 3,809,126.76 | 5,017,484.12 | 12,840,239.70 | 2,573,318.14 | 109,041,894.26 |
| 2.Current increased | 1,023,481.84 | 2,617,622.15 | 371,522.84 | 567,726.36 | 163,539.20 | 1,772,335.30 | 65,549.82 | 6,581,777.51 |
| (1)Accrual | 1,023,481.84 | 2,617,622.15 | 371,522.84 | 567,726.36 | 163,539.20 | 1,772,335.30 | 65,549.82 | 6,581,777.51 |
| 3.Current decreased | 3,985,319.96 | 65,010.21 | 34,620.05 | 19,395.00 | 4,104,345.22 | |||
| (1) Disposal or scrapping | 3,985,319.96 | 65,010.21 | 34,620.05 | 19,395.00 | 4,104,345.22 | |||
| 4.Closing balance | 19,812,017.11 | 59,993,428.53 | 5,023,586.77 | 4,311,842.91 | 5,146,403.27 | 14,612,575.00 | 2,619,472.96 | 111,519,326.55 |
| III. Depreciation reserves | ||||||||
| 1.Opening balance | ||||||||
| 2.Current increased | ||||||||
| (1)Accrual |
| 3.Current decreased | ||||||||
| (1) Disposal or scrapping | ||||||||
| 4.Closing balance | ||||||||
| IV. Book value | ||||||||
| 1.Ending book value | 53,388,600.30 | 35,012,128.01 | 1,146,998.12 | 4,511,212.29 | 2,056,816.56 | 7,203,882.81 | 577,022.27 | 103,896,660.36 |
| 2.Opening book value | 54,412,082.14 | 33,285,128.61 | 1,518,520.96 | 4,945,841.59 | 2,162,659.27 | 8,410,023.13 | 638,089.92 | 105,372,345.62 |
(2)Fixed assets leasing-out by operational lease
RMB/CNY
| Item | Ending book value |
| House building | 774,175.19 |
(3)Disposal of fixed assets
RMB/CNY
| Item | Closing balance | Opening balance |
| Renovation of Gongming Huafa Electric Town | 92,857,471.69 | 92,857,471.69 |
| Total | 92,857,471.69 | 92,857,471.69 |
Other explanationAt the end of the period, the original value of fixed assets that had been fully depreciated and still in use was RMB 43,595,200.48. Atthe end of the period, there was no fixed asset for which the property right certificate was not completed.
10. Construction in process
RMB/CNY
| Item | Closing balance | Opening balance |
| Construction in process | 500,000.00 | |
| Total | 500,000.00 |
(1) Construction in process
RMB/CNY
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Gongming Electronic City | 500,000.00 | 500,000.00 | ||||
ReconstructionProject
| Reconstruction Project | ||||||
| Total | 500,000.00 | 500,000.00 |
(2) Change of major construction in process in the period
RMB/CNY
| Item | Budget | Opening balance | Current increased | Fixed assets transfer-in in the Period | Other decreased in the Period | Closing balance | Proportion of project investment in budget | Progress | Accumulated amount of interest capitalization | including: interest capitalized amount of the year | Interest capitalization rate of the year | Source of funds |
| Gongming Electronic City Reconstruction Project | 500,000.00 | 500,000.00 | Other | |||||||||
| Total | 500,000.00 | 500,000.00 | -- | -- | -- |
11. Intangible assets
(1)Intangible assets
RMB/CNY
| Item | Land use right | Patent right | Non-patented technology | Software charges | Total |
| I. Original book value | 55,089,774.36 | 3,696,416.41 | 58,786,190.77 | ||
| 1.Opening balance | |||||
| 2.Current increased | |||||
| (1) Purchasing | |||||
| (2) internal R&D | |||||
| (3)increased by combination | |||||
3.Current
decreased
| 3.Current decreased | |||||
| (1) Disposal | |||||
| 4.Closing balance | 55,089,774.36 | 3,696,416.41 | 58,786,190.77 | ||
| II. Accumulated amortization | 14,879,506.53 | 828,655.90 | 15,708,162.43 | ||
| 1.Opening balance | 734,823.26 | 176,979.45 | 911,802.71 | ||
| 2.Current increased | 734,823.26 | 176,979.45 | 911,802.71 | ||
| (1)Accrual | |||||
| 3.Current decreased | |||||
| (1) Disposal | |||||
| 4.Closing balance | 15,614,329.79 | 1,005,635.35 | 16,619,965.14 | ||
| III. Depreciation reserves | |||||
| 1.Opening balance | 109,427.90 | 109,427.90 | |||
| 2.Current increased | |||||
| (1)Accrual | |||||
| 3.Current decreased | |||||
| (1) Disposal | |||||
| 4.Closing balance | 109,427.90 | 109,427.90 | |||
| IV. Book value | |||||
| 1.Ending book value | 39,475,444.57 | 2,581,353.16 | 42,056,797.73 | ||
| 2.Opening book value | 40,210,267.83 | 2,758,332.61 | 42,968,600.44 |
The 100.00% proportion of intangible assets form by internal R&D in total book value of intangible assets at period-end
12. Long-term deferred expenditure
RMB/CNY
Item
| Item | Opening balance | Current increased | Amortized in Period | Other decreased | Closing balance |
| Cloud service charge | 309,781.15 | 116,167.92 | 193,613.23 | ||
| Total | 309,781.15 | 116,167.92 | 193,613.23 |
Other explanationNil
13. Deferred income tax asset/Deferred income tax liability
(1)Deferred income tax assets without offset
RMB/CNY
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax asset | Deductible temporary differences | Deferred income tax asset | |
| Provision for assets impairment | 28,835,877.81 | 6,787,257.25 | 28,835,877.80 | 6,787,257.25 |
| Deductible loss | 969,475.74 | 145,421.36 | ||
| Accrual liability | 64,411.00 | 16,102.75 | 64,411.00 | 16,102.75 |
| Total | 29,869,764.55 | 6,948,781.36 | 28,900,288.80 | 6,803,360.00 |
(2)Amount of deferred income tax asset and deferred income tax liability after trade-off
RMB/CNY
| Item | Trade-off between the deferred income tax assets and liabilities | Ending balance of deferred income tax assets or liabilities after off-set | Trade-off between the deferred income tax assets and liabilities at period-begin | Opening balance of deferred income tax assets or liabilities after off-set |
| Deferred income tax asset | 6,948,781.36 | 6,803,360.00 |
(3)Deferred income tax asset without recognized
RMB/CNY
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 3,163,837.81 | 3,163,837.81 |
| Total | 3,163,837.81 | 3,163,837.81 |
14. Other non-current assets
RMB/CNY
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Advance payment for equipment | 225,700.00 | 225,700.00 | 225,700.00 | 225,700.00 | ||
| Total | 225,700.00 | 225,700.00 | 225,700.00 | 225,700.00 | ||
Other explanation:
Nil
15. Short-term loans
(1)Category
RMB/CNY
Item
| Item | Closing balance | Opening balance |
| Loan in pledge | 12,000,000.00 | |
| Secured portfolio loan | 12,633,898.20 | |
| Total | 24,633,898.20 |
Explanation on category of Short-term loansNil
16. Note payable
RMB/CNY
| Category | Closing balance | Opening balance |
| Bank acceptance bill | 8,617,287.25 | 16,761,590.51 |
| Total | 8,617,287.25 | 16,761,590.51 |
Totally 0 Yuan due note payable are paid at period-end
17. Account payable
(1)Account payable
RMB/CNY
| Item | Closing balance | Opening balance |
| Within one year(One year included) | 128,535,980.81 | 95,647,603.05 |
| Over one year | 11,761,690.42 | 13,157,302.15 |
| Total | 140,297,671.23 | 108,804,905.20 |
(2)Major account payable over one year
RMB/CNY
| Item | Closing balance | Reasons for non-payment or carry over |
| Shenzhen Yuehai Global Logistics Co., Ltd. | 2,858,885.97 | Without settlement |
| LG | 1,906,267.50 | Without settlement |
| Dongjin Electronics (Nanjing) Plasma Co., Ltd. | 617,963.45 | Without settlement |
| Total | 5,383,116.92 | -- |
Other explanation:
Nil
18. Account received in advance
(1)Account received in advance
RMB/CNY
| Item | Closing balance | Opening balance |
| Within one year | 713,265.94 | 257,789.27 |
| Over one year | 153,480.51 | 98,656.94 |
| Total | 866,746.45 | 356,446.21 |
19. Employees remuneration payable
(1) Employees remuneration payable
RMB/CNY
Item
| Item | Opening balance | Increase during the period | Decrease during this period | Closing balance |
| I. Short-term benefits | 5,848,652.79 | 28,058,836.53 | 29,658,577.70 | 4,248,911.62 |
| II. Post-employment benefits-defined contribution plans | 28,688.46 | 402,183.31 | 399,161.71 | 31,710.06 |
| III. Dismiss welfare | 45,365.00 | 45,365.00 | ||
| Total | 5,877,341.25 | 28,506,384.84 | 30,103,104.41 | 4,280,621.68 |
(2)Short-term benefits
RMB/CNY
| Item | Opening balance | Increase during the period | Decrease during this period | Closing balance |
| 1. Wages , bonuses, allowances and subsidies | 4,854,064.03 | 24,374,368.64 | 26,034,732.48 | 3,193,700.19 |
| 2. Welfare for workers and staff | 2,866,768.25 | 2,816,528.25 | 50,240.00 | |
| 3. Social insurance | 37,448.18 | 624,962.00 | 615,419.33 | 46,990.85 |
| Including: Medical insurance | 35,718.92 | 536,635.36 | 527,221.51 | 45,132.77 |
| Work injury insurance | 740.73 | 9,908.69 | 9,881.12 | 768.30 |
| Maternity insurance | 988.53 | 78,417.95 | 78,316.70 | 1,089.78 |
| 4. Housing accumulation fund | 24,310.00 | 191,777.64 | 190,937.64 | 25,150.00 |
| 5. Labor union expenditure and personnel education expense | 932,830.58 | 960.00 | 960.00 | 932,830.58 |
| Total | 5,848,652.79 | 28,058,836.53 | 29,658,577.70 | 4,248,911.62 |
(3)Defined contribution plans
RMB/CNY
| Item | Opening balance | Increase during the period | Decrease during this period | Closing balance |
| 1. Basic endowment insurance | 27,561.59 | 386,165.97 | 383,205.97 | 30,521.59 |
| 2. Unemployment insurance | 1,126.87 | 16,017.34 | 15,955.74 | 1,188.47 |
| Total | 28,688.46 | 402,183.31 | 399,161.71 | 31,710.06 |
Other explanation:
Nil
20. Tax payable
RMB/CNY
Item
| Item | Closing balance | Opening balance |
| VAT | 2,937,402.63 | 3,192,458.47 |
| Corporate income tax | 5,779,084.29 | 7,032,715.76 |
| Individual income tax | 14,384.24 | 30,265.20 |
| Urban maintenance and construction tax | 1,033,187.22 | 1,050,282.59 |
| Property tax | 548,114.12 | 310,683.11 |
| Land use tax | 239,920.53 | 25,424.98 |
| Educational surtax | 443,562.78 | 450,889.35 |
| Local educational surtax | 229,494.62 | 234,049.86 |
| Dike fee | 1,665.00 | 1,665.00 |
| Stamp tax | 39,201.60 | 39,940.66 |
| Disposal fund of waste electrical products | 1,302,550.00 | 509,570.00 |
| Total | 12,568,567.03 | 12,877,944.98 |
Other explanation:
Nil
21. Other account payable
RMB/CNY
| Item | Closing balance | Opening balance |
| Interest payable | 89,365.28 | |
| Other account payable | 28,140,118.39 | 27,938,227.34 |
| Total | 28,140,118.39 | 28,027,592.62 |
(1)Interest payable
RMB/CNY
| Item | Closing balance | Opening balance |
| Interest of short-term loans payable | 89,365.28 | |
| Total | 89,365.28 |
Significant overdue and unpaid interest:
RMB/CNY
| Loan unit | Overdue amount | Reason for overdue |
Other explanation:
Nil
(2)Other account payable
1) Other account payable by nature
RMB/CNY
| Item | Closing balance | Opening balance |
| Margin and deposit | 9,918,627.97 | 10,354,134.67 |
| Lease management fee | 5,702,755.27 | 3,251,610.67 |
| Intercourse funds | 9,134,770.37 | 8,544,383.61 |
| After sale and repairmen | 1,318,518.00 | 1,747,809.47 |
| Other | 2,065,446.78 | 4,040,288.92 |
| Total | 28,140,118.39 | 27,938,227.34 |
2) Significant other account payable with over one year age
RMB/CNY
Item
| Item | Closing balance | Reasons for non-payment or carry over |
| Shenzhen SED Property Development Co., Ltd. | 1,853,393.35 | Without settlement |
| Shenzhen Huayongxing Environmental Protection Technology Co., Ltd. | 1,000,000.00 | Margin |
| Linghang Technology (Shenzhen) Co., Ltd | 656,345.28 | Without settlement |
| Shenzhen Tongxing Electronics Co., Ltd. | 578,259.83 | Without settlement |
| Shenzhen Yongdasheng Investment Development Co., Ltd. | 558,970.00 | Margin |
| Total | 4,646,968.46 | -- |
Other explanation
22. Long-term loans
(1) Category
RMB/CNY
| Item | Closing balance | Opening balance |
| Mortgage loan | 67,000,000.00 | 73,000,000.00 |
| Total | 67,000,000.00 | 73,000,000.00 |
Description of Long-term loans classification:
NilOther explanation, including interest rate range:
The borrowing interest rate is the same as the bank's benchmark interest rate for loans of the same grade in the same period, and thecurrent period is 7.9166%.
23. Accrual liability
RMB/CNY
| Item | Closing balance | Opening balance | Causes |
| Pending action | 64,411.00 | 64,411.00 | Business and labor disputes |
| Total | 64,411.00 | 64,411.00 | -- |
Other explanations, including important assumptions and estimation about important estimated liabilities:
According to the Enforcement Notice ( (2008) SFFZZ No.522-529) of Shenzhen Intermediate People's Court, Shenzhen LaborDispute Arbitration Commission issued SLZC [2007] No. 1069-1077, No. 1079, No. 1081, and No. 1085-1087 arbitration awards forthe labor dispute case of Cai Yaoqiang and other thirteen people, which has taken legal effect. According to the Basic InformationCredit Report of Enterprises, the Company has total unexecuted labor dispute subject of 64,411.00 yuan, and the Companyrecognizes it as the estimated liability.
24. Deferred income
RMB/CNY
| Item | Opening balance | Increase during the period | Decrease during this period | Closing balance | Causes |
| Government subsidy | 2,331,720.00 | 2,190,000.00 | 348,540.00 | 4,173,180.00 | Industrial transformation subsidies |
| Total | 2,331,720.00 | 2,190,000.00 | 348,540.00 | 4,173,180.00 | -- |
Items involving Government subsidy:
RMB/CNY
Liability
| Liability | Opening balance | New subsidy increased in the period | Amount reckoned in non-operating income in the period | Amount included in other income in the current period | Amount of cost and expense offset in the current period | Other change | Closing balance | Assets-related/Income-related |
| Government subsidy | 2,331,720.00 | 2,190,000.00 | 348,540.00 | 4,173,180.00 | Assets-related |
Other explanation:
Nil
25. Share capital
In RMB
| Opening balance | Changes in the Period (+,-) | Closing balance | |||||
| Issuing new shares | Bonus shares | Shares transfer from public reserves | Other | Subtotal | |||
| Total shares | 283,161,227.00 | 283,161,227.00 | |||||
Other explanation:
Up to 30
thJune 2020, the shares of the Company held by controlling shareholder has 116,100,000 shares in status of pledge, taking41% of the total share capital; mortgagee is China Merchants Securities Assets Management Co., Ltd. Shares in judicial freezeamounted as 119,289,894 shares.
26. Capital surplus
RMB/CNY
| Item | Opening balance | Increase during the period | Decrease during this period | Closing balance |
| Capital premium (equity premium) | 96,501,903.02 | 96,501,903.02 | ||
| Other capital surplus | 50,085,368.48 | 50,085,368.48 | ||
| Total | 146,587,271.50 | 146,587,271.50 |
Other explanation, including changes and reasons of changes:
Nil
27. Surplus reserves
RMB/CNY
| Item | Opening balance | Increase during the period | Decrease during this period | Closing balance |
| Statutory surplus reserves | 21,322,617.25 | 21,322,617.25 | ||
| Discretionary surplus reserve | 56,068,976.00 | 56,068,976.00 | ||
| Total | 77,391,593.25 | 77,391,593.25 |
Other explanation, including changes and reasons for changes:
Nil
28. Retained profit
RMB/CNY
Item
| Item | Current period | Last period |
| Retained profit at period-begin after adjustment | -177,712,041.86 | -183,172,091.01 |
| Add: net profit attributable to owners of the parent company | 3,165,597.55 | 5,460,049.15 |
| Retained profit at period-end | -174,546,444.31 | -177,712,041.86 |
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 retainedprofits 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
29. Operating income and cost
RMB/CNY
| Item | Current period | Last period | ||
| Income | Cost | Income | Cost | |
| Main business | 268,465,953.89 | 249,723,766.92 | 310,399,495.33 | 285,485,316.56 |
| Other business | 32,237,467.49 | 14,235,885.71 | 28,790,678.72 | 12,094,891.78 |
| Total | 300,703,421.38 | 263,959,652.63 | 339,190,174.05 | 297,580,208.34 |
Information relating to revenue:
RMB/CNY
| Category | Branch 1 | Branch 2 | Total | |
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: |
Information relating to performance obligations:
NilInformation 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 buthave not yet been fulfilled or have not done with fulfillment is 0.00 yuan, among them, yuan of revenue is expected to be recognizedin YEAR, yuan of revenue is expected to be recognized in YEAR, and yuan of revenue is expected to be recognized in YEAR.Other explanation
30. Tax and surcharges
RMB/CNY
| Item | Current period | Last period |
| Urban maintenance and construction tax | 61,315.21 | 68,304.63 |
| Educational surtax | 27,476.42 | 33,062.14 |
Property tax
| Property tax | 463,763.85 | 706,398.83 |
| Land use tax | 247,776.03 | 278,113.28 |
| Vehicle use tax | 0.00 | 3,420.00 |
| Stamp tax | 187,803.80 | 205,372.70 |
| Local education development fee | 15,920.74 | 15,438.42 |
| Total | 1,004,056.05 | 1,310,110.00 |
Other explanation:
Nil
31. Sales expense
RMB/CNY
| Item | Current period | Last period |
| Employees remuneration | 1,544,285.76 | 2,350,311.18 |
| Freight | 3,120,326.41 | 2,883,611.66 |
| Commodity inspection fee | 512,749.42 | 46,041.22 |
| Customs fee | 30,322.36 | 85,340.66 |
| Commodity loss | 2,042,886.52 | 1,669,582.49 |
| Other | 1,849,508.92 | 2,095,493.01 |
| Total | 9,100,079.39 | 9,130,380.22 |
Other explanation:
Others are mainly after-sales service fees, low-value and easy-to-use amortization, and office expenses.
32. Administrative expense
RMB/CNY
| Item | Current period | Last period |
| Salary | 4,290,516.96 | 4,819,623.00 |
| Depreciation charge | 1,094,911.50 | 1,108,894.27 |
| Social insurance premium | 307,654.93 | 1,183,069.73 |
| Social expenses | 2,149,616.64 | 1,975,609.14 |
| Taxes and surcharge | 0.00 | 0.00 |
| Employee benefits | 975,973.80 | 453,205.88 |
| Travel expenses | 997,820.46 | 913,668.77 |
| Amortization of intangible assets | 911,802.71 | 872,474.94 |
| Traffic expenses | 728,044.47 | 880,726.46 |
| Consulting fee | 154,420.23 | 365,549.99 |
| Security | 826,723.53 | 478,584.83 |
| Repairs | 1,186,397.36 | 981,308.38 |
| Audit fee | 703,883.50 | 812,786.23 |
| Office expenses | 534,213.91 | 775,082.77 |
| Communication fee | 66,922.51 | 106,108.39 |
| Amortization of low cost and short lived articles | 204,519.80 | 76,180.62 |
| Securities information disclosure fee | 247,008.75 | 255,915.74 |
| Litigation fee | 0.00 | 0.00 |
| Staff education | 123,799.49 | 86,051.41 |
Water and electricity fee
| Water and electricity fee | 194,204.27 | 336,221.83 |
| Lease fee | 496,532.52 | 2,444,912.69 |
| Eco fee | 202,101.81 | 194,709.07 |
| Premium | 0.00 | 45,221.73 |
| Other expenses | 685,293.51 | 451,085.52 |
| Total | 17,082,362.66 | 19,616,991.39 |
Other explanation:
Nil
33. R& D expenses
RMB/CNY
| Item | Current period | Last period |
| Personnel cost | 1,801,065.20 | 2,086,504.20 |
| Direct input cost | 846,252.61 | |
| Depreciation and amortization expenses | 499,584.18 | 218,337.01 |
| Other related expenses | 122,775.88 | 575,899.04 |
| Total | 2,423,425.26 | 3,726,992.86 |
Other explanation:
Nil
34. Financial expense
RMB/CNY
| Item | Current period | Last period |
| Interest expenditure | 4,755,143.83 | 5,355,676.92 |
| Less: interest income | 529,170.31 | 419,336.28 |
| Add: Exchange loss | -800,845.19 | -87,878.70 |
| Add: Other expense | 59,100.48 | 219,909.30 |
| Total | 3,484,228.81 | 5,068,371.24 |
Other explanation:
Nil
35. Other income
RMB/CNY
| Sources | Current Period | Last Period |
| Incentive fund for Wuhan industrial intelligent transformation demonstration project in 2019 | 100,000.00 | 200,000.00 |
| Provincial special fund for transformation and upgrading of traditional industry for 2018 | 29,540.00 | 59,080.00 |
| Industrial investment and technological transformation and intelligent transformation in 2020 | 219,000.00 | |
| Total | 348,540.00 | 259,080.00 |
36. Investment income
RMB/CNY
Item
| Item | Current period | Last period |
| Investment income generated by financial products | 66,780.40 | 74,936.14 |
| Total | 66,780.40 | 74,936.14 |
Other explanation:
Nil
37. Credit impairment loss
RMB/CNY
| Item | Current period | Last period |
| Bad debt loss of other account receivable | -8,432.50 | |
| Total | -8,432.50 |
Other explanation:
38. Assets impairment loss
RMB/CNY
| Item | Current period | Last period |
Other explanation:
Nil
39. Asset disposal income
RMB/CNY
| Source of asset disposal income | Current period | Last period |
| Income from fixed assets sold | -99,867.53 | 129,039.57 |
40. Non-operating income
RMB/CNY
| Item | Current period | Last period | Amount included in current non-recurring profits or losses |
| Government subsidy | 223,300.00 | ||
| Liquidated damages income | 1,976.00 | 1,976.00 | |
| Fine income | 9,458.00 | ||
| Other | 43,224.06 | 43,224.06 | |
| Total | 45,200.06 | 232,758.00 | 45,200.06 |
Government subsidy reckoned into current gains/losses:
RMB/CNY
| Item | Issuing subject | Offering causes | Nature | Subsidy impact current gains/losses (Y/N) | The special subsidy (Y/N) | Amount in the Period | Amount in last period | Assets-related/income-related |
Other explanation:
Nil
41. Non-operating expenditure
RMB/CNY
| Item | Current period | Last period | Amount included in current non-recurring profits or losses |
Penalty expenditure
| Penalty expenditure | 7,302.38 | 1,100.00 | |
| Total | 7,302.38 | 1,100.00 |
Other explanation:
Nil
42. Income tax expenses
(1)Statement of income tax expense
RMB/CNY
| Item | Current period | Last period |
| Current income tax expense | 982,790.94 | 388,847.80 |
| Deferred income tax expense | -145,421.36 | 215,062.28 |
| Total | 837,369.58 | 603,910.08 |
(2)Adjustment on accounting profit and income tax expenses
RMB/CNY
| Item | Current period |
| Total profit | 4,002,967.13 |
| Income tax based on statutory/applicable rate | 1,000,741.78 |
| Impact by different tax rate applied by subsidies | 96,947.57 |
| Impact of deductible loss of un-recognized deferred income tax assets in the prior period of use | -260,516.32 |
| Impact of the deductible temporary differences or deductible loss of deferred income tax asset without recognized in the period | 196.54 |
| Income tax expense | 837,369.58 |
Other explanationNil
43. Annotation of cash flow statement
(1)Cash received with other operating activities concerned
RMB/CNY
| Item | Current period | Last period |
| Unit intercourse account | 423,061.34 | 1,869,387.03 |
| Collection management fee and utilities etc. | 870,339.55 | 1,189,095.86 |
| Repayment from employees | 538.70 | 32,462.10 |
| Margin | 178,441.66 | 40,263.30 |
| Interest income | 80,873.96 | 48,764.26 |
| Government subsidy | 2,190,000.00 | 223,300.00 |
| Total | 3,743,255.21 | 3,403,272.55 |
Note of cash received with other operating activities concerned:
The cash received with other operating activities concerned in the period mainly including collection management fee and utilities,government subsidy, margin and other intercourse funds
(2)Cash paid with other operating activities concerned
RMB/CNY
| Item | Current period | Last period |
Unit intercourse account
| Unit intercourse account | 12,099,293.44 | 1,315,156.92 |
| Advances to employees | 1,518,843.50 | 2,563,755.64 |
| Deposit, margin | 777,760.00 | 1,656,408.00 |
| Social expenses | 2,225,069.64 | 1,299,864.19 |
| Water and electricity | 195,404.27 | 2,365,472.40 |
| Travel expenses | 631,364.12 | 638,939.25 |
| Freight | 2,885,107.75 | 2,983,611.66 |
| Traffic expenses | 708,540.18 | 521,848.44 |
| Repairs | 1,186,397.36 | 1,067,602.12 |
| Audit and consulting fees | 700,000.00 | 792,049.00 |
| Security | 363,200.00 | 620,945.00 |
| Financial institutions handling fee | 54,316.41 | 62,759.86 |
| Office expenses | 184,663.65 | 508,512.98 |
| Communication fee | 66,922.51 | 154,173.54 |
| Lease fee | 496,532.52 | 2,444,912.69 |
| Other | 2,183,661.37 | 1,614,513.51 |
| Total | 26,277,076.72 | 20,610,525.20 |
Note of cash paid with other operating activities concerned:
Other cash paid in this period related to operating activities mainly include cash payment of management expenses, sales expenses,personal transactions, deposits, payment of utilities and management fees.
(3)Cash received with other investment activities concerned
RMB/CNY
| Item | Current period | Last period |
| Redemption of principal of financial products | 35,000,000.00 | 49,000,000.00 |
| Total | 35,000,000.00 | 49,000,000.00 |
Note of cash received with other investment activities concernedNil
(4)Cash paid related with investment activities
RMB/CNY
| Item | Current period | Last period |
| Purchasing financial products | 35,000,000.00 | 49,000,000.00 |
| Total | 35,000,000.00 | 49,000,000.00 |
Note of cash paid related with investment activitiesNil
44.Supplementary information to statement of cash flow
(1)Supplementary information to statement of cash flow
RMB/CNY
| Supplementary information | Current period | Last period |
| 1. Net profit adjusted to cash flow of operation activities: | -- | -- |
| Net profit | 3,165,597.55 | 2,580,411.13 |
| Depreciation of fixed assets, | 6,364,464.64 | 6,025,283.55 |
consumption of oil assets and depreciationof productive biology assets
| consumption of oil assets and depreciation of productive biology assets | ||
| Amortization of intangible assets | 911,802.71 | 872,474.94 |
| Amortization of long-term deferred expenditure | 116,167.92 | 116,167.92 |
| Loss from disposal of fixed assets, intangible assets and other long-term assets(gain is listed with “-”) | -156,701.09 | -129,039.57 |
| Financial expenses (gain is listed with “-”) | 3,786,650.62 | 5,262,857.89 |
| Investment loss (income is listed with “-”) | -66,780.40 | -74,936.14 |
| Decrease of deferred income tax assets (increase is listed with “-”) | -145,421.36 | |
| Decrease of inventory (increase is listed with “-”) | -3,086,479.43 | -23,735,632.38 |
| Decrease of operating receivable accounts (increase is listed with “-”) | -15,138,062.18 | -17,697,245.84 |
| Increase of operating payable accounts (decrease is listed with “-”) | 25,448,973.26 | 71,973,879.06 |
| Net cash flow arising from operating activities | 21,200,212.24 | 45,194,220.56 |
| 2. Material investment and financing not involved in cash flow: | -- | -- |
| 3. Net change of cash and cash equivalents: | -- | -- |
| Balance of cash at period end | 21,812,967.80 | 38,041,641.85 |
| Less: Balance of cash at period-begin | 36,645,061.61 | 29,171,804.99 |
| Net increased amount of cash and cash equivalent | -14,832,093.81 | 8,869,836.86 |
(2)Constitution of cash and cash equivalent
RMB/CNY
| Item | Closing balance | Opening balance |
| Ⅰ. Cash | 21,812,967.80 | 36,645,061.61 |
| Including: Cash on hand | 363,912.99 | 432,301.32 |
| Bank deposit available for payment at any time | 21,449,054.81 | 36,212,760.29 |
| Ⅲ. Balance of cash and cash equivalent at period-end | 21,812,967.80 | 36,645,061.61 |
Other explanation:
Ending Monetary fund-other monetary fund refers to the margin of bank acceptance 2,529,797.38 Yuan, which isnot belonging to the cash and cash equivalent. Ending monetary fund-Bank deposit has 1,551,468.00 Yuan frozenby the court, which is not belonging to the cash and cash equivalent either.
45. Assets with ownership or use right restricted
RMB/CNY
| Item | Ending book value | Restriction reasons |
Monetary fund
| Monetary fund | 4,081,265.38 | Bank acceptance deposit is 25,297.38 yuan, and the court freezes 1,551,468 yuan |
| Fixed assets | 12,779,094.73 | Bank loan secured |
| Intangible assets | 2,761,798.94 | Bank loan secured |
| Receivable financing | 9,294,702.94 | Pledged |
| Investment real estate | 36,260,337.64 | Bank loan secured |
| Disposal of fixed assets | 92,857,471.69 | Court closure |
| Total | 158,034,671.32 | -- |
Other explanation:
Nil
46. Item of foreign currency
(1) Item of foreign currency
RMB/CNY
| Item | Closing balance of foreign currency | Rate of conversion | Closing RMB balance converted |
| Monetary fund | -- | -- | |
| Including:USD | 760,991.14 | 7.07 | 5,380,968.35 |
| Euro | |||
| HKD | 100,032.66 | 0.91 | 91,369.83 |
| Account receivable | -- | -- | |
| Including:USD | 9,158,403.66 | 7.07 | 64,759,072.28 |
| Euro | |||
| HKD | |||
| Long-term loans | -- | -- | |
| Including:USD | |||
| Euro | |||
| HKD | |||
| Account paid in advance | |||
| Including:USD | 1,090,685.67 | 7.07 | 7,712,238.37 |
Other explanation:
Nil
47. Government subsidy
(1)Government subsidy
RMB/CNY
| Category | Amount | Item | Amount reckoned into current gains/losses |
| Industrial investment and technological transformation and intelligent transformation in 2020 | 2,190,000.00 | Deferred income | 2,190,000.00 |
VIII. Equity in other subjects
1. Equity in subsidiary
(1)Constitute of enterprise group
Subsidiary
| Subsidiary | Main operation place | Registered place | Business nature | Share-holding ratio | Acquired way | |
| Directly | Indirectly | |||||
| HUAFA Lease Company | Shenzhen | Shenzhen | Property management | 60.00% | New investment | |
| HUAFA Property Company | Shenzhen | Shenzhen | Property management | 100.00% | New investment | |
| Hengfa Technology Company | Wuhan | Wuhan | Production sales | 100.00% | New investment | |
| HUAFA Hengtian Company | Shenzhen | Shenzhen | Property management | 100.00% | New investment | |
| HUAFA Hengtai Company | Shenzhen | Shenzhen | Property management | 100.00% | New investment | |
Explanation on share-holding ratio in subsidiary different from ratio of voting right:
NilBasis for controlling the invested entity with half or below voting rights held and without controlling invested entity but with overhalf and over voting rights:
NilMajor structured entity included in consolidate statement:
NilBasis of termination of agent or consignor:
NilOther explanation:
NilIX. The risk associated with financial instrumentsThe Group's main financial instruments include loans, receivables, payable, tradable financial assets, trading andfinancial liabilities, etc. The risks associated with these financial instruments and the risk management policiesadopted by the Group to reduce these risks are described below. The management of the Group manages andmonitors these risk exposures to ensure that the above risks are controlled within the limits.Various risk management goals and policiesThe objective of the Group's risk management is to strike a proper balance between risks and profits, minimize thenegative impact of risks on the Group's operating results, and maximize the benefits of shareholders and otherequity investors. Based on this risk management objectives, the Group's basic strategy for risk management is toidentify and analyze the risks faced by the Group, establish appropriate risk bottom lines and carry out riskmanagement, and timely and reliably monitor the risks control them within the limits.
(1) Market risk
The market risk of financial instruments refers to the risk that the fair value or the future cash flows of financialinstruments fluctuate due to the changes in market prices, including foreign exchange risk, interest rate risk and
other price risk.
1) FX risk
The Group's exchange rate risk is mainly related to US dollars and Hong Kong dollars. Except the Group's secondlevel subsidiary, Hengfa Technology Company’s monitor business has day-to-day operations in US dollars; otherprincipal business activities of the Group settle accounts in RMB. On 30 June 2020, except for the US dollarbalance of assets and liabilities in below table and the sporadic Hong Kong dollar balance, the Group's assets andliabilities are all RMB balance. The exchange rate risk arising from the assets and liabilities of the US dollar,Hong Kong dollar balance may have an impact on the Group's operating results.
Item
| Item | 2020-6-30(RMB conversion) | 2019-12-31(RMB conversion) | 2018-12-31(RMB conversion) |
| Monetary fund -USD | 760,991.14 | 9,356,958.43 | 2,010,146.81 |
| Monetary fund -HKD | 100,032.66 | 28.61 | 28.62 |
| Account receivable -USD | 9,158,403.66 | 40,836,244.74 | 44,086,655.90 |
| Account paid in advance-USD | 1,090,685.67 | 15,454,592.53 | 19,035,307.91 |
| Account payable -USD | - | - | |
| Short-term loans-USD | - | 22,676,280.00 | 25,068,657.88 |
The Company eyes on the influence from variation of exchange
2) Interest rate risk
The interest rate risk of the Group arises from bank loans. The financial liabilities of floating interest rate makethe Group face cash flow interest rate risk, and the financial liabilities of fixed rate make the Group face theinterest rate risk of fair value. The Group determines the relative proportion of fixed rate and floating interest ratecontracts based on the prevailing market environment. On 30 June 2020, the Group's interest-bearing debt wasmainly the floating interest rate loan contract denominated in Renminbi and US dollars, amounting to RMB79,000,000.00 (December 31, 2019: RMB 109,633,898.20).The Group's risk of changes in the cash flow of financial instruments due to changes in interest rates is mainlyrelated to the floating interest rate bank loans. The Group's policy is to maintain the floating interest rate of theseloans so as to eliminate the fair value risk of the interest rate changes.
3) Price risk
The Group sells monitors and so on at market prices and is therefore affected by such price fluctuations.
(2) Credit risk
Credit risk refers to the risk that a party of the financial instrument does not fulfill its obligations and causesproperty loss to another party. On June 30, 2020, the maximum credit risk exposure that may cause financiallosses to the Group is mainly attributable to the failure of the other party to fulfill its obligations resulting in thelosses of the Group's financial assets and the Group's financial guarantees, including:
The carrying amount of the financial assets recognized in the consolidated balance sheet; for the financialinstruments measured at fair value, the book value reflects its risk exposures but not the maximum risk exposure,and its maximum risk exposure changes with the future changes in fair value.In order to reduce the credit risk, the Group has set up a special department to determine the credit line, carry outthe credit approval, and implement other monitoring procedures to take necessary measures to recover the overdue
credit. In addition, the Group reviews the recovery of each individual receivable at every balance sheet date toaccrue sufficient provision for bad debts of uncollectible funds. As a result, the Group's management believes thatthe Group's credit risk has been greatly reduced.The Group's working capital is deposited in banks with higher credit ratings, so the credit risk of working capitalis low.The Group has adopted necessary policies to ensure that all customers have good credit records. In addition to thetop five account receivables, the Group has no other significant credit risk.The total amount of the top five account receivables is RMB 120,528,351.15.
(3) Liquidity risk
The liquidity risk is the risk that the Group is unable to fulfill its financial obligations on the due date. The Group'sapproach to manage liquidity risk is to ensure that there is sufficient financial liquidity to fulfill its due debts butnot cause unacceptable losses or damages to the corporate reputation. The Group regularly analyzes the structureand duration of liabilities to ensure there are sufficient funds. The management of the Group monitors the use ofbank loans and ensures the compliance with loan agreement, and conducts financing consultations with financialinstitutions in order to maintain a certain line of credit and reduce the liquidity risk.The financial assets and financial liabilities held by the Group based on the maturity of the undiscountedoutstanding contractual obligations are analyzed as followsAmount on 30 June 2020
Item
| Item | Within one year | 1-2 years | 2-3 years | Over 3 years | Total |
| Financial assets | |||||
| Monetary funds | 25,894,233.18 | 25,894,233.18 |
| Receivable financing | 29,776,291.10 | 29,776,291.10 | |||
| Account receivable | 162,906,849.90 | 78705.66 | 2,527.77 | 13,146,290.18 | 176,134,373.51 |
| Other account receivable | 3,813,383.34 | 447859.44 | 3.00 | 15,607,877.84 | 19,869,123.62 |
| Account paid in advance | 22,083,401.55 | 22,083,401.55 |
| Financial liabilities | - | ||||
| Notes payable | 8,617,287.25 | 8,617,287.25 | |||
| Account payable | 140,297,671.23 | 140,297,671.23 |
| Other accounts payable | 28,140,118.39 | 28,140,118.39 | |||
| Advance receivable | 866,746.45 | 866,746.45 |
| Wage payable | 4,280,621.68 | 4,280,621.68 |
2. Sensitivity analysis
The Group uses the sensitivity analysis technique to analyze the possible impacts of the reasonable and possiblechanges in risk variable on the currents profit and losses or the owner's equity. Since any risk variable rarelychanges in isolation, and the correlation among the variables has a significant effect on the final effect amount of acertain risk variable changes, and the following contents are on the assumption that the change in each variable isindependent.
(1) Sensitivity analysis of foreign exchange risk
Sensitivity analysis of foreign exchange risk assumes that all overseas operating net investment hedges and cash
flow hedges are highly effective.On the basis of the above assumptions, in case that other variable don’t change, the after-tax effect of the possibleand reasonable changes in the exchange rate on the current profits and losses are as follows
Item
| Item | Exchange rate fluctuation | Jan.-Jun. 2020 | Jan.-Jun. 2019 | ||
| Impact on net profit | Impact on owner's equity | Impact on net profit | Impact on owner's equity | ||
| All foreign currency | 5% appreciation of the RMB | 2,984,313.25 | 2,984,313.25 | 1,031,885.69 | 1,031,885.69 |
| All foreign currency | 5% devaluation of the RMB | -2,984,313.25 | -2,984,313.25 | -1,031,885.69 | -1,031,885.69 |
X. Related party and related transactions
1. Parent company of the enterprise
| Parent company | Registration place | Business nature | Registered capital | Share-holding ratio on the enterprise for parent company | Voting right ratio on the enterprise |
| Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd | Wuhan | Production and sales, real estate development and sales, housing leasing and management | 138,000,000.00 | 42.13% | 42.13% |
Explanation on parent company of the enterpriseNilThe ultimate control of the enterprise is Li Zhongqiu.Other explanation:
Nil
2. Subsidiary of the Enterprise
Found more in VIII. Equity in other entity in the Note
3. Other Related party
| Other Related party | Relationship with the Enterprise |
| Shenzhen Zhongheng Huafa Technology Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan Hengsheng Yutian Industrial Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Hong Kong Yutian International Investment Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan New Oriental Real Estate Development Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan Zhongheng Property Management Co., Ltd. | Control by same controlling shareholder and ultimate |
controller
| controller | |
| Wuhan Optical Valley Display System Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan Yutian Xingye Property Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan Yutian Dongfang Property Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan Xiahua Zhongheng Electronics Co. Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan Zhongheng Yutian Trading Co,, Ltd | Control by same controlling shareholder and ultimate controller |
| Wuhan Yutian Hongguang Real Estate Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Shenzhen Zhongheng Huayu Investment Holding Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Yutian Investment Co., Ltd.(Famous Sky Capital Limited) | Control by same controlling shareholder and ultimate controller |
| Yutian International Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Hong Kong Zhongheng Yutian Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Shenzhen Yutian Henghua Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Shenzhen Zhongheng Yongye Technology Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Shenzhen Yutian Hengrui Co., Ltd. | Control by same controlling shareholder and ultimate controller |
| Wuhan Henglian Optoelectronics Co., Ltd. | Control by same controlling shareholder and ultimate controller |
Other explanationNil
4. Related transaction
(1) Goods purchasing, labor service providing and receiving
Goods purchasing/labor service receiving
RMB/CNY
| Related party | Content | Current Period | Trading limit approved | Whether over the approved limited or not (Y/N) | Last period |
| Hong Kong Yutian International Investment Co., Ltd. | Purchasing goods | 67,538,078.36 | 137,752,000.00 | N | 55,314,886.74 |
| Wuhan | Purchasing | 60,232,724.51 | 303,054,400.00 | N | 57,732,114.71 |
HengshengPhoto-electricityIndustry Co., Ltd.
| Hengsheng Photo-electricity Industry Co., Ltd. | goods |
Goods sold/labor service providing
RMB/CNY
| Related party | Content | Current period | Last period |
| Hong Kong Yutian International Investment Co., Ltd. | Sales of goods | 59,074,589.93 | 64,136,216.85 |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Sales of goods | 10,283,633.89 | 12,184,138.45 |
Explanation on goods purchasing, labor service providing and receivingNil
(2)Related guarantee
As the guarantor
RMB/CNY
| Secured party | Amount guarantee | Start | End | Completed or not (Y/N) |
As the secured party
RMB/CNY
| Guarantor | Amount guarantee | Start | End | Completed or not (Y/N) |
| Li Zhongqiu | 90,000,000.00 | 2020-07-01 | 2022-07-01 | N |
Explanation on related guaranteeNil
(3)Remuneration of key manager
RMB/CNY
| Item | Current period | Last period |
| Total remuneration | 721,500.00 | 781,248.00 |
5. Receivable/payable items of related parties
(1) Receivable item
RMB/CNY
| Item | Related party | Closing balance | Opening balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Account receivable | Hong Kong Yutian International Investment Co., Ltd. | 39,240,084.73 | 25,582,267.94 | ||
| Account receivable | Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | 350,779.63 | |||
| Account paid in advance | Hong Kong Yutian International | 7,712,238.37 | 13,902,631.23 | ||
Investment Co.,Ltd.
(2)Payable item
RMB/CNY
Investment Co.,Ltd.Item
| Item | Related party | Closing book balance | Opening book balance |
| Account payable | Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | 3,491,812.05 | 3,186,713.37 |
| Notes payable | Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | 138,355.71 |
6. Commitments of related party
In line with the claim of application for arbitration from Shenzhen Vanke, Shen HUAFA and Wuhan Zhongheng paid and moneytogether. As the commitment letter to Shen HUAFA from Wuhan Zhongheng Group, if the Vanke wins, the losses from disputesarising by contract will bear by Wuhan Zhongheng Group in full.XI. Commitment or contingency
1. Important commitment
Important commitment on balance sheet dateNil
2. Contingency
(1) Contingency on balance sheet date
On April 17, 2020, Shenzhen Zhongheng Huafa Co., Ltd. (hereinafter referred to as the "company" or the"defendant") received the Notice of Response to the Prosecution sent by the Shenzhen Intermediate People's Courtof Guangdong Province (hereinafter referred to as the Shenzhen Intermediate Court) [(2020) Yue 03 Minchu No.17] and other related materials. Shenzhen Zhongheng Huafa Technology Co., Ltd. (hereinafter referred to as"Huafa Technology" or "plaintiff") sued the company and its controlling shareholder Wuhan Zhongheng NewScience & Technology Industrial Group Co., Ltd (hereinafter referred to as "Wuhan Zhongheng Group" or "thirdparty") for the Asset Replacement Contract disputes, the Shenzhen Intermediate Court has filed a case, the casenumber is (2020) Yue 03 Minchu No. 17.
Shenzhen Zhongheng Huafa Technology Co., Ltd.’s claims ① Request to order the defendant and the third partyto continue to perform the Asset Replacement Contract; ② Request to order the defendant to assist the plaintiff toregister the land use right and transfer ownership of the land parcel numbers A627-0005 and A627-0007 to theplaintiff within the time limit; ③Request to order the defendant to compensate the plaintiff for the economiclosses of 52 million yuan (including the loss of benefits available); the lawsuit has not yet been heard.
(2) For the important contingency not necessary to disclosed by the Company, explained reasons
The Company has no important contingency that need to disclosed
XII. Events after balance sheet date
1. Explanation on other events after balance sheet date
Nil
XIII. Other important event
1. Other
(i) Matters of adjudication of Southern International Arbitration Shen [2017] No. D376 from Southern ChinaInternational Economic & Trade Arbitration Commission
(1) Arbitration
In August 2015, Shenzhen HUAFA and Wuhan Zhongheng New Technology Industry Group Co., Ltd. (hereinafterreferred to as “Wuhan Zhongheng”) signed the “Cooperation Agreement on Urban Renewal Project of UpdateUnits at Huafa Industrial Park, Gongming Street, Guangming New District, Shenzhen”. As Shenzhen HUAFA andWuhan 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) atGongming Street, Guangming New District, Shenzhen, both parties appointed that Shenzhen HUAFA entrustedWuhan Zhongheng to represent it in this cooperation, and established project company - Shenzhen VankeGuangming Real Estate Co., Ltd. (hereinafter referred to as “Vanke Guangming”) as the subject of projectimplementation with Shenzhen Vanke; Vanke Guangming signed “Demolition Compensation Agreement” withShenzhen HUAFA and Wuhan Zhongheng, and paid the compensation for demolition.On August 21, 2015, Shenzhen HUAFA, Wuhan Zhongheng and Shenzhen Vanke signed the “CooperativeOperation Contract of Renovation Project at Huafa Industrial Park, Gongming Street, Guangming NewDistrict”(hereinafter referred to as “Cooperative Operation Contract”), the contract refined and appointed thecooperation model and operating steps of both sides. And then Shenzhen HUAFA, Wuhan Zhongheng andShenzhen 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 WuhanZhongheng through Vanke Guangming.In September 2016, Shenzhen Vanke filed an arbitration to South China International Economic and TradeArbitration Commission (hereinafter referred to as “South China Arbitration”) as Shenzhen HUAFA and WuhanZhongheng violated the appointment of “Cooperative Operation Contract” and handled the “Confirmation ofSubject of Reconstruction Implementation” at an overdue time, and required Shenzhen HUAFA and WuhanZhongheng 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 ofproperty 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 andFreezing Assets” (The reference numbers are (2016) Yue 03 Cai Bao No. 51, (2016) Yue 03 Cai Bao No. 53), the27 house properties (Note: the property within the scope of Huafa renovation project) under the name of ShenzhenHUAFA and 116,489,894 shares (Note: of which 116,100,000 shares have been pledged) of Shenzhen HUAFAstock 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 ifthe 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 ruledyour company to pay the compensation in advance, our company promised to pay your company in cash withinone month, if our company could not pay on time due to uncontrollable factors, our company would like to pay thecorresponding 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 andwere still under your company’s name (Note: based on the “Asset Replacement Contract” signed by WuhanZhongheng 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 ofrenovation project.On March 14, 2017, Shenzhen HUAFA received the “Decision of Arbitrator not Granting Avoiding” issued bySouth China Arbitration, which rejected the application for avoiding of chief arbitrator proposed by ShenzhenVanke. On March 15, 2017, Shenzhen HUAFA received the “Letter About the Resignation of the Chief Arbitratorof No. SHEN DP20160334 Case” signed by the chief arbitrator and forwarded by South China Arbitration. OnMarch 20, 2017, Shenzhen HUAFA received the “Letter About the Resignation of the Arbitrator of No. SHENDP20160334 Case” forwarded by South China Arbitration, the arbitrator selected by Shenzhen Vanke said toresign from the arbitrator of this case due to physical reasons.The deadline for giving a ruling to this case was originally scheduled on February 12, 2017. According to the“Decision of Adjourning the Ruling” issued by South China Arbitration on February 10, 2017, the deadline forgiving a ruling to this case shall be prolonged to May 12, 2017. Due to the changes in the members of abovearbitration court, this case needs South China Arbitration to reassign the chief arbitrator and Shenzhen Vanke toreselect the arbitrators. According to the provisions of article 32 of the Arbitration Rules of South ChinaArbitration, after constituting the new arbitration court, it shall decide whether all or part of the hearingprocedures that have been carried out before need to be reopened; if the arbitration court decides to reopen allhearing procedures, then the deadline for giving a ruling shall be calculated from the date that the arbitration courtdecides to reopen the hearing procedures.On August 16, 2017, South China International Economic and Trade Arbitration Commission made the “ArbitralAward” SCIA [2017] D376, according to the arbitral award, the applicant and counterclaim respondent inarbitration 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 ZhonghengNew Science & Technology Industrial Group Co., Ltd (hereinafter referred to as “Wuhan Zhongheng” and “FirstRespondent”). The second respondent and the second applicant for counterclaim were Zhongheng Huafa. Theaward results were as follows:
① The first respondent and the second respondent pay liquidated damages to the applicant with a base number ofRMB 600 million, calculating by the annual interest rate of 36% from October 1, 2015 to November 11, 2016;
②The first respondent and the second respondent pay the lawyer fees of RMB 1.4 million to the applicant due tothe case;
③The first respondent and the second respondent pay the property preservation fees of RMB 10,000 to theapplicant;
④The arbitration fees for this request and case was RMB 3,101,515.00, the first respondent and the secondrespondent 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 thearbitration fees of this case and request and shall not be refunded. The first respondent and the second respondentshould 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 respondentand the second respondent at their own expense. The first respondent and the second respondent paid thearbitration fees in full amount for this request which could be used as the arbitration fees of this case and requestand shall not be refunded;The actual expenses of the arbitrators in this case amounted to RMB 7,754.90, the first respondent and the secondrespondent assumed 70%, i.e. RMB 5,428.43, and the applicant assumed 30%, i.e. RMB 2,326.47; the aboveactual expenses of the arbitrators had been paid by the Commission, so the first respondent and the secondrespondent and the applicant should directly pay RMB 5,428.43 and RMB 2,326.47 respectively to theCommission;
⑤ Reject the applicant’s other arbitration requests;
⑥Reject 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 arbitratorsin this case and pay the actual expenses incurred by the arbitrators in this case to South China InternationalEconomic and Trade Arbitration Commission.On February 7, 2018, the company and Wuhan Zhongheng Group applied to Shenzhen Intermediate People’sCourt to revoke the Ruling HNGZSC [2017] D376, the court made a judgment on August 16, 2018, rejecting thecompany’s request for revocation. The company and its controlling shareholder Wuhan Zhongheng Groupreceived the “Execution Notice of Shenzhen Intermediate People’s Court” ([2018] Yue03Zhi No. 1870), and theexecutor applied to the court for compulsory execution, the company was listed as dishonest person subject toexecution by Shenzhen Intermediate People’s Court. On December 13, 2019, the company announced that it hadbeen removed from the list of dishonest persons subject to execution by the Shenzhen Intermediate People’sCourt.
(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 issuedspecial legal opinion that the reasons of Wuhan Zhongheng resulted in a failure of a net handover, thecorresponding urban renewal functional department could not issue the corresponding demolition documents,which in turn made the project company fail to be confirmed as the subject of implementation, and finally anddirectly made the subject of implementation fail to get the “Land Value Payment Notification” and sign the “LandUse Rights Transfer Contract”. Therefore, Wuhan Zhongheng should bear all responsibilities for faults in responseto the breach of contract. Wuhan Zhongheng issued the Commitment Letter in December 2016, pledged that if thearbitration judged Vanke to win the case, Wuhan Zhongheng should bear all arbitration losses caused by thecontract dispute; after the award came into effect, Wuhan Zhongheng issued the Confirmation Letter again on
November 23, 2017 to divide the duty of performance of the award; the independent directors of the companyissued independent opinions after careful study that Wuhan Zhongheng should bear the arbitration losses in full;the management of the company also made an investigation and affirmed that Wuhan Zhongheng should bear allliability for satisfaction on the Award HNGZSC [2017] D376, and the award amount should be paid by WuhanZhongheng in full.(ii) Arbitration case of legal service contract dispute with V&T (Shenzhen) Law FirmOn March 12, 2018, the company received the arbitration notice No. SHEN DX20180087 from Shenzhen Courtof International Arbitration, V&T (Shenzhen) Law Firm requested to make a ruling that the Company and WuhanZhongheng pay the delinquent lawyer’s fees of RMB 19,402,000 and the liquidated damages (The liquidateddamages shall take five ten-thousandths of a day as a standard based on RMB 19,402,000 from August 24, 2017 tothe date of payment of the above-mentioned lawyer’s fees, and the liquidated damages up to February 12, 2018was 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 Courtof International Arbitration, ruling that the company and its controlling shareholder Wuhan Zhongheng NewScience & Technology Industrial Group Co., Ltd should pay Shenzhen V & T Law Firm the arrears of legal feesof RMB 19,402,000 and the liquidated damages.The verification opinion of Guangdong HAIBU Attorneys-at-law engaged by the company on the performance oflegal liability of the arbitration result believed that the case is caused by the Vanke arbitration case No. SHENDP20160334, there is a close causal relationship between the two cases, as the ultimate beneficiary of the“Agency Contract”, Wuhan Zhongheng shall be responsible for all payment in response to the Arbitration AwardHNGZSC [2019] D618According to the company’s announcement, the dispute between V & T Law Firm and Wuhan Zhongheng Groupand the company on attorney fees was caused by its agency of the Vanke arbitration case, and it was of the samenature as the loss of the Vanke arbitration case. In addition, Wuhan Zhongheng Group has issued a “CommitmentLetter” to Shenzhen Hwafa in December 2016 that if the arbitration decides that Vanke wins, Wuhan ZhonghengGroup shall bear the full amount of arbitration losses caused by the contract disputes. Wuhan Zhongheng Group,as the beneficiary of the “Agency Contract”, should bear full payment responsibility for the Arbitration AwardHNGZSC [2019] D618, and the company should not bear the arbitration losses in this case.XIV. Principle notes of financial statements of parent company
1. Account receivable
(1)Category of account receivable
RMB/CNY
Category
| Category | Closing balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Ratio | Amount | Accrual ratio | Amount | Ratio | Amount | Accrual ratio | |||
| Account receivable with bad debt provision accrual on a single basis | 10,293,424.29 | 50.00% | 10,293,424.29 | 100.00% | 10,293,424.29 | 100.00% | 10,293,424.29 | 100.00% | ||
| Including: | ||||||||||
Ending Accountreceivable withsingle significantamount andwithdrawal baddebt provision onsingle basis
| Ending Account receivable with single significant amount and withdrawal bad debt provision on single basis | 5,000,988.97 | 24.29% | 5,000,988.97 | 100.00% | 5,000,988.97 | 24.29% | 5,000,988.97 | 100.00% | ||
| Ending Account receivable with single minor amount but with bad debts provision accrued on a single basis | 5,292,435.32 | 25.71% | 5,292,435.32 | 100.00% | 5,292,435.32 | 25.71% | 5,292,435.32 | 100.00% | ||
| Including: | ||||||||||
| Total | 10,293,424.29 | 100.00% | 10,293,424.29 | 100.00% | 10,293,424.29 | 1.00% | 10,293,424.29 | 100.00% |
Accrual of bad debt provision on single basis: 5,000,988.97 Yuan
RMB/CNY
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
| Hong Kong Haowei Industrial Co., Ltd. | 1,870,887.18 | 1,870,887.18 | 100.00% | Uncollectible |
| TCL ACE ELECTRIC APPLIANCE (HUIZHOU) CO., LTD. | 1,325,431.75 | 1,325,431.75 | 100.00% | Uncollectible |
| Qingdao Haier Parts Procurement Co., Ltd. | 1,225,326.15 | 1,225,326.15 | 100.00% | Uncollectible |
| SKYWORTH Multimedia (Shenzhen) Co., Ltd. | 579,343.89 | 579,343.89 | 100.00% | Uncollectible |
| Total | 5,000,988.97 | 5,000,988.97 | -- | -- |
Accrual of bad debt provision on single basis: 5,292,435.32
RMB/CNY
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
| Shenzhen Huixin Video Technology Co., Ltd. | 381,168.96 | 381,168.96 | 100.00% | Uncollectible |
| Shenzhen Wandelai Digital Technology Co., Ltd. | 351,813.70 | 351,813.70 | 100.00% | Uncollectible |
| Shenzhen Dalong | 344,700.00 | 344,700.00 | 100.00% | Uncollectible |
Electronic Co., Ltd.
| Electronic Co., Ltd. | ||||
| Shenzhen Keya Electronic Co., Ltd. | 332,337.76 | 332,337.76 | 100.00% | Uncollectible |
| Shenzhen Qunping Electronic Co., Ltd. | 304,542.95 | 304,542.95 | 100.00% | Uncollectible |
| China Galaxy Electronics (Hong Kong) Co., Ltd. | 288,261.17 | 288,261.17 | 100.00% | Uncollectible |
| Dongguan Weite Electronic Co., Ltd. | 274,399.80 | 274,399.80 | 100.00% | Uncollectible |
| Hong Kong New Century Electronics Co., Ltd. | 207,409.40 | 207,409.40 | 100.00% | Uncollectible |
| Shenyang Beitai Electronic Co., Ltd. | 203,304.02 | 203,304.02 | 100.00% | Uncollectible |
| Beijing Xinfang Weiye Technology Co., Ltd. | 193,000.00 | 193,000.00 | 100.00% | Uncollectible |
| TCL Electronics (Hong Kong) Co., Ltd. | 145,087.14 | 145,087.14 | 100.00% | Uncollectible |
| Huizhou TCL Xinte Electronics Co., Ltd. | 142,707.14 | 142,707.14 | 100.00% | Uncollectible |
| Sky Worth – RGB Electronic Co., Ltd. | 133,485.83 | 133,485.83 | 100.00% | Uncollectible |
| Other | 1,990,217.45 | 1,990,217.45 | 100.00% | Uncollectible |
| Total | 5,292,435.32 | 5,292,435.32 | -- | -- |
Accrual of bad debt provision on single basis:
RMB/CNY
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
Accrual of bad debt provision on portfolio:
RMB/CNY
| Name | Closing balance | ||
| 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 referto the disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √Not applicable
By account age
RMB/CNY
| Account age | Closing balance |
| Over 3 years | 10,293,424.29 |
| Over 5 years | 10,293,424.29 |
| Total | 10,293,424.29 |
(2)Top 5 account receivables at ending balance by arrears party
RMB/CNY
Company
| Company | Closing balance of account receivable | Proportion in total account receivables at year-end | Closing balance of bad debt provision |
| Hong Kong Haowei Industrial Co., Ltd. | 1,870,887.18 | 18.18% | |
| TCL ACE ELECTRIC APPLIANCE (HUIZHOU) CO., LTD. | 1,325,431.75 | 12.88% | |
| Qingdao Haier Parts Procurement Co., Ltd. | 1,225,326.15 | 11.90% | |
| SKYWORTH Multimedia (Shenzhen) Co., Ltd. | 579,343.89 | 5.63% | |
| Shenzhen Huixin Video Technology Co., Ltd. | 381,168.96 | 3.70% | |
| Total | 5,382,157.93 | 52.29% |
2. Other account receivable
RMB/CNY
| Item | Closing balance | Opening balance |
| Other account receivable | 95,507,010.91 | 97,165,023.85 |
| Total | 95,507,010.91 | 97,165,023.85 |
(1)Other account receivable
1) Other account receivable by nature
RMB/CNY
| Nature | Closing book balance | Opening book balance |
| Margin deposit | 304,608.00 | 304,608.00 |
| Borrow money | 1,914,312.46 | 1,869,073.12 |
| Intercourse funds | 104,591,046.91 | 107,488,541.28 |
| Rental receivable | 7,209,793.66 | 5,847,389.48 |
| Other | 168,162.09 | |
| Less: Bad debt provision | -18,512,750.12 | -18,512,750.12 |
| Total | 95,507,010.91 | 97,165,023.85 |
2)Accrual of bad debt provision
RMB/CNY
| Bad debt provision | Phase I | Phase II | Phase III | Total |
| Expected credit losses over next 12 months | Expected credit losses for the entire duration (without credit impairment occurred) | Expected credit losses for the entire duration (with credit impairment occurred) | ||
| Balance on Jan. 1, 2020 | 0.30 | 18,512,749.82 | 18,512,750.12 | |
| Balance of Jan. 1, 2020 in the period | —— | —— | —— | —— |
Balance on Jun. 30,2020
| Balance on Jun. 30, 2020 | 0.30 | 18,512,749.82 | 18,512,750.12 |
Change of book balance of loss provision with amount has major changes in the period
□ Applicable √Not applicable
By account age
RMB/CNY
| Account age | Closing balance |
| Within one year(One year included) | 95,202,400.21 |
| 1-2 years | 312,209.44 |
| 2-3 years | 3.00 |
| Over 3 years | 18,505,148.38 |
| 3-4 years | 1,446,706.00 |
| Over 5 years | 17,058,442.38 |
| Total | 114,019,761.03 |
3) Bad debt provision accrual, collected or reversal in the period
Bad debt provision accrual in the period:
RMB/CNY
| Category | Opening balance | Amount changed in the period | Closing balance | |||
| Accrual | Collected or reversal | written-off | Other | |||
| Phase I | 0.30 | 0.30 | ||||
| Phase III | 18,512,749.82 | 18,512,749.82 | ||||
| Total | 18,512,750.12 | 18,512,750.12 | ||||
NilIncluding important bad debt provision that collected or reversal in the period:
RMB/CNY
| Enterprise | Amount collected or reversal | Collection by |
Nil
4) Top 5 other account receivables at ending balance by arrears party
RMB/CNY
| Enterprise | Nature | Closing balance | Account age | Ratio in total ending balance of other receivables | Closing balance of bad debt reserve |
| Wuhan Hengfa Technology Co., Ltd. | Intercourse funds | 84,697,345.02 | Within one year | 74.28% | |
| Shenzhen Zhongheng HUAFA Property Co., Ltd | Intercourse funds | 9,472,698.34 | Within one year | 8.31% | |
| HUAFA Lease Company | Lease fee receivable etc | 4,558,859.15 | Over 3 years | 4.00% | 4,558,859.15 |
| Portman | Intercourse funds | 4,021,734.22 | Over 3 years | 3.53% | 4,021,734.22 |
Shenzhen JifangInvestment Co., Ltd
| Shenzhen Jifang Investment Co., Ltd | Lease fee receivable etc | 1,380,608.00 | Over 3 years | 1.21% | 1,380,608.00 |
| Total | -- | 104,131,244.73 | -- | 92.02% | 9,961,201.37 |
3. Long-term equity investment
RMB/CNY
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investment for subsidiary | 187,208,900.00 | 600,000.00 | 186,608,900.00 | 187,208,900.00 | 600,000.00 | 186,608,900.00 |
| Total | 187,208,900.00 | 600,000.00 | 186,608,900.00 | 187,208,900.00 | 600,000.00 | 186,608,900.00 |
(1)Investment for subsidiary
RMB/CNY
| The invested entity | Opening balance (Book value) | Changes in the period | Closing balance (Book value) | Closing balance of impairment provision | |||
| Additional investment | Negative investment | Accrual of impairment provision | Other | ||||
| HUAFA Lease Company | 0.00 | 600,000.00 | |||||
| HUAFA Property Company | 1,000,000.00 | 1,000,000.00 | |||||
| Hengfa Technology Company | 183,608,900.00 | 183,608,900.00 | |||||
| Huafa Trading Company | 0.00 | ||||||
| HUAFA Hengtian Company | 1,000,000.00 | 1,000,000.00 | |||||
| HUAFA Hengtai Company | 1,000,000.00 | 1,000,000.00 | |||||
| Total | 186,608,900.00 | 186,608,900.00 | 600,000.00 | ||||
4. Operating income and cost
RMB/CNY
| Item | Current period | Last period | ||
| Income | Cost | Income | Cost | |
| Other business | 16,720,522.47 | 2,040,226.11 | 18,041,135.31 | 3,172,031.59 |
| Total | 16,720,522.47 | 2,040,226.11 | 18,041,135.31 | 3,172,031.59 |
Information relating to revenue:
RMB/CNY
Category
| Category | Branch 1 | Branch 2 | Total | |
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: | ||||
| Including: |
Information relating to performance obligations:
NilInformation 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 beenperformed or have not been performed is 0.00 yuan, of which, yuan expected to recognized as revenue in the year.Other explanation:
NilXV. Supplementary Information
1. Current non-recurring gains/losses
√ Applicable □Not applicable
RMB/CNY
| Item | Amount | Note |
| Gains/losses from the disposal of non-current asset | -99,867.53 | |
| Gain/loss of entrusted investment or assets management | 66,780.40 | |
| Other non-operating income and expenditure except for the aforementioned items | 37,897.68 | |
| Less: Impact on income tax | 7,109.46 | |
| Total | -2,298.91 | -- |
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according tothe lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering TheirSecurities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √Not applicable
2. ROE and earnings per share
| Profits during report period | Weighted average ROE | Earnings per share | |
| Basic earnings per share(RMB/Share) | Diluted earnings per share(RMB/Share) | ||
| Net profits belong to common stock stockholders of the Company | 0.96% | 0.0112 | 0.0112 |
| Net profits belong to common stock stockholders of the Company after deducting | 0.96% | 0.0112 | 0.0112 |
nonrecurring gains and losses
Section XII. 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 theaccounting 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 AssociationV. Other relevant files.