SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
April 2021
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
Section I. Important Notice, Contents and InterpretationBoard of Directors, Supervisory Committee, all directors, supervisors and seniorexecutives of Shenzhen Zhongheng HUAFA Co., Ltd. (hereinafter referred to asthe Company) hereby confirm that there are no any fictitious statements,misleading statements, or important omissions carried in this report, and shalltake all responsibilities, individual and/or joint, for the reality, accuracy andcompletion of 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 2020 AnnualReport 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.
ANNUAL REPORT 2020
Contents
Section I Important Notice, Contents and Interpretation ...... 2
Section II Company Profile and Main Financial Indexes ...... 5
Section III Summary of Company Business ...... 10
Section IV Discussion and Analysis of the Operation ...... 11
Section V Important Events ...... 23
Section VI Changes in shares and particular about shareholders ...... 42
Section VII Preferred Stock ...... 50
section VIII Convertible Bonds ...... 51Section IX Particulars about Directors, Supervisors, Senior Executives and Employees ........ 52Section X Corporate Governance ...... 60
Section XI Corporate bond ...... 66
Section XII Financial Report ...... 67
Section XIII Documents available for reference ...... 198
SHENZHEN ZHONGHENG HUAFA CO., LTD.
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 |
| Zhongheng Semiconductor (former “Huafa Technology ”) | Refers to | Shenzhen Zhongheng Semiconductor Co., Ltd. (former “Zhongheng Huafa Technology Co., Ltd”) |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
Section II. Company Profile and Main Financial IndexesI. 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) | 深华发 | ||
| Foreign name of the Company (if applicable) | SHENZHEN ZHONGHENG HUAFA CO., LTD. | ||
| Legal representative | Li Zhongqiu | ||
| Registrations add. | 411 Bldg., Huafa (N) Road, Futian District, Shenzhen | ||
| Code for registrations add | 518031 | ||
| Offices add. | 6/F, East Tower, No.411 Building, Huafa (N) Road, Futian District, Shenzhen | ||
| Codes for office add. | 518031 | ||
| Company’s Internet Web Site | http://www.hwafa.com.cn | ||
| huafainvestor@126.com.cn | |||
II. Person/Way to contact
| Secretary of the Board | Rep. of security affairs | |
| Name | Niu Zhuo | |
| Contact add. | 618, 6/F, East Tower, Huafa Building, No.411 Building, Huafa (N) Road, Futian District, Shenzhen | |
| Tel. | 0755-86360201 | |
| Fax. | 0755-86360206 | |
| huafainvestor@126.com.cn |
III. Information disclosure and preparation place
| Newspaper appointed for information disclosure | Securities Times; Hong Kong Commercial Daily |
| Website for annual report publish appointed by | http://www.cninfo.com.cn |
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ANNUAL REPORT 2020
| CSRC | |
| Preparation place for annual report | Office of the Board of SHENZHEN ZHONGHENG HUAFA CO., LTD. |
IV. Registration changes of the Company
| Organization code | Before change: 61883037-2; after changed: 91440300618830372G |
| Changes of main business since listing (if applicable) | Before the change of controlling shareholders: the main business was production and sales of color TV, printed circuit board and injection molded parts etc. After the change of controlling shareholders: the main business gradually adjusted to production and sales of injection molded parts, foam part (light packaging materials) and LCD whole machine. |
| Previous changes for controlling shareholders (if applicable) | The Company’s predecessor was Shenzhen Huafa Electronic Co., LTD, which was founded in 1981, initiated and established by three legal persons-- Shenzhen Electronics Group Co., LTD, China Zhenhua Electronic Group Co., LTD and Hong Kong Luks Industrial Co., LTD. In June 2005, Wuhan Zhongheng Group transferred the 44.12% equity of company, held by original first and second largest shareholder of the Company Shenzhen Electronics Group Co., LTD and China Zhenhua Electronic Group Co., LTD, and equity transfer formalities completed in April 2007; Wuhan Zhongheng Group became the controlling shareholder of the Company. In September 2007, the company officially changed its name to “Shenzhen Zhongheng HUAFA Co., Ltd”. |
V. Other relevant informationCPA engaged by the Company
| Name of CPA | WUYIGE Certified Public Accountants LLP |
| Offices add. for CPA | 15/F College International Mansion, No.1 Zhi Chun Road, Haidian District, Beijing |
| Signing Accountants | Fan Zhang, Yang Ting |
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
VI. Main accounting data and financial indexesWhether it has retroactive adjustment or re-statement on previous accounting data
□ Yes √ No
| 2020 | 2019 | Changes over last year(+,-) | 2018 | |
| Operating income(RMB) | 691,742,269.12 | 721,557,440.51 | -4.13% | 637,046,707.03 |
| Net profit attributable to | 6,830,187.40 | 5,460,049.15 | 25.09% | 3,295,022.72 |
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ANNUAL REPORT 2020
| shareholders of the listed company(RMB) | ||||
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses(RMB) | 4,103,393.55 | 4,843,096.96 | -15.27% | 1,535,043.65 |
| Net cash flow arising from operating activities(RMB) | 59,719,269.60 | 74,463,707.01 | -19.80% | -21,894,459.66 |
| Basic earnings per share(RMB/Share) | 0.0241 | 0.0193 | 24.87% | 0.0116 |
| Diluted earnings per share(RMB/Share) | 0.0241 | 0.0193 | 24.87% | 0.0116 |
| Weighted average ROE | 2.05% | 1.67% | 0.38% | 1.02% |
| Year-end of 2020 | Year-end of 2019 | Changes over end of last year | Year-end of 2018 | |
| Total assets(RMB) | 627,779,621.06 | 614,163,899.86 | 2.22% | 617,090,153.46 |
| Net assets attributable to shareholder of listed company(RMB) | 336,248,737.29 | 329,428,049.89 | 2.07% | 323,968,000.74 |
The lower of the company’s net profit before or after deduction of non-recurring profit (gain)/loss for the last three financial years isnegative, and the audit report for the latest year indicates that there is uncertainty about the company’s ability to continue as a goingconcern
□Yes √No
The lower of the net profit before or after deduction of non-recurring profit (gain)/loss is negative
□Yes √No
VII. 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 or
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
Chinese GAAP (Generally Accepted Accounting Principles) in the period.VIII. Quarterly main financial index
In RMB
| Q 1 | Q 2 | Q 3 | Q 4 | |
| Operating income | 87,800,584.55 | 212,902,836.83 | 200,183,800.78 | 190,855,046.96 |
| Net profit attributable to shareholders of the listed company | -400,741.17 | 3,566,338.72 | 1,685,488.94 | 2,496,470.28 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | -208,179.52 | 3,376,075.98 | 1,108,517.51 | 344,348.95 |
| Net cash flow arising from operating activities | 7,931,308.59 | 13,268,903.65 | -7,509,489.19 | 46,028,546.55 |
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financialindex disclosed in the company’s quarterly report and semi-annual report
□Yes √ No
IX. Items and amounts of extraordinary profit (gains)/loss
√Applicable □ Not applicable
In RMB
| Item | 2020 | 2019 | 2018 | Note |
| Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | 817,533.49 | 9,298.34 | 49,159.75 | |
| Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) | 2,728,618.05 | 534,380.00 | 3,795,820.00 | |
| Gain/loss of entrusted investment or assets management | 165,317.73 | 180,964.60 | 326,439.49 | |
| Switch back of provision for depreciation of account receivable and contractual assets which were singly taken depreciation test | 553,901.68 |
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ANNUAL REPORT 2020
| Other non-operating income and expenditure except for the aforementioned items | -385,232.40 | -424,941.86 | -167,795.70 | |
| Loss on assignment of claims | -2,158,200.00 | |||
| Less: Impact on income tax | 599,443.02 | 236,650.57 | 85,444.47 | |
| Total | 2,726,793.85 | 616,952.19 | 1,759,979.07 | -- |
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
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ANNUAL REPORT 2020
Section III. Summary of Company Business
I. 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 change |
| Fixed assets | No major change |
| Intangible assets | No major change |
| Construction in progress | No major change |
2. Main overseas assets
□ Applicable √ Not applicable
III. Core competitiveness analysisAll 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.
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ANNUAL REPORT 2020
Section IV. Discussion and Analysis of Operation
1. Introduction
2020 was a very unusual year, the sudden outbreak of COVID-19 epidemic caused the company's importantsubsidiary in Wuhan to be affected by the epidemic, the resumption of work and production was later than in otherareas of the country, and the loss of orders was relatively serious. Faced with such a difficult businessenvironment, all employees of the company worked together to actively overcame the adverse effects of theepidemic, complied with the industry environment and the adjustment of national policies, broke through thinkingand management strategies, and achieved good operating results.
In 2020, the company achieved operating revenue of 691.7423 million yuan, a decrease of 4.13% on ayear-on-year basis, total profits of 8.82 million yuan, increased by 13.76% compared with the same period lastyear, net profit amounted to 6.8302 million yuan, a 25.09% up from a year earlier.
●Video service business achieved annual operating income of 396.06 million yuan, an increase of 19.29% on ayear-on-year basis, operation profit amounted as 6.4795 million yuan with 132.49% up from a year earlier. Duringthe reporting period, the Video Business Division adjusted the product structure and optimized the sales ratio ofeach brand of products. The sales ratio of AOC, VSCN and VSC series brands have increased, which openedonline sales channels such as Jingdong while completing existing customer orders, and sold 900,000 LCDmonitors in 2020, an increase of 9.68% over last year.
●Injection molding business achieved annual operating income of 185.4917 million yuan, a decrease of 25.86%over the same period last year, operation profit amounted as 548,600 yuan, an increase of 2.39% from a yearearlier. With the unceasingly fierce competition in the market, the profit margin of injection molding wassqueezed, but the new production line put into production by this business division at the end of 2018 gave fullplay to its automation advantages in 2020, which greatly improved production efficiency and reduced productioncosts. The injection molding division achieved annual sales volume of 9,900 tons, completed the annual salestarget.
●Polylon business achieved annual operating income of 35.8333 million yuan, a decrease of 44.30% over thesame period last year. Actual sales for the year were 2,500 tons, basically reaching the sales target. In order tobetter fulfill the sales target of 2021, the EPS business division maintained existing orders, increased theproportion of structural parts orders, developed new customer resources, and strive to accept more domestic andforeign large-scale household appliance customers’ orders.
●The property rental business achieved annual operating income of 40.5875 million yuan, an increase of 4.55%from a year earlier, operating profit amounted as 6 million yuan with a growth of 7.86% over that of lat year. In2020, the company optimized the structural proportion of commercial tenants, and the occupancy rate was greatlyimproved, at the same time, the company strictly controlled costs and reduced unnecessary expenditures.
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ANNUAL REPORT 2020
Therefore, the company’s overall rental profits increased significantly compared with the previous year.II. Main business analysis
1. Introduction
See the “I-Introduction” in “Discussion and Analysis of Operation”
2. Revenue and cost
(1) Constitute of operating income
In RMB
| 2020 | 2019 | Increase/decrease y-o-y (+,-) | |||
| Amount | Ratio in operation income | Amount | Ratio in operation income | ||
| Total operation income | 691,742,269.12 | 100% | 721,557,440.51 | 100% | -4.13% |
| According to industries | |||||
| Display | 396,060,015.82 | 57.26% | 332,014,645.59 | 46.01% | 19.29% |
| Plastic injection hardware | 185,491,674.08 | 26.82% | 250,187,919.33 | 34.67% | -25.86% |
| EPS products | 35,833,322.61 | 5.18% | 64,330,319.24 | 8.92% | -44.30% |
| Property leasing | 40,587,453.21 | 5.87% | 38,819,374.89 | 5.38% | 4.55% |
| Scrap income | 424,864.96 | 0.06% | 30,416,394.86 | 4.22% | -98.60% |
| Utilities and others | 33,344,938.44 | 4.82% | 5,788,786.60 | 0.80% | 476.03% |
| According to products | |||||
| Display | 396,060,015.82 | 57.26% | 332,014,645.59 | 46.01% | 19.29% |
| Plastic injection hardware | 185,491,674.08 | 26.82% | 250,187,919.33 | 34.67% | -25.86% |
| EPS products | 35,833,322.61 | 5.18% | 64,330,319.24 | 8.92% | -44.30% |
| Property leasing | 40,587,453.21 | 5.87% | 38,819,374.89 | 5.38% | 4.55% |
| Scrap income | 424,864.96 | 0.06% | 30,416,394.86 | 4.22% | -98.60% |
| Utilities and others | 33,344,938.44 | 4.82% | 5,788,786.60 | 0.80% | 476.03% |
| According to region | |||||
| Overseas | 89,452,347.92 | 12.93% | 46,013,771.11 | 6.38% | 94.40% |
| Central China | 559,316,357.64 | 80.86% | 632,345,774.07 | 87.64% | -11.55% |
| South China | 42,973,563.56 | 6.21% | 43,197,895.33 | 5.99% | -0.52% |
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ANNUAL REPORT 2020
(2) About the industries, products, or regions accounting for over 10% of the company’s operating incomeor operating profit
√Applicable □ Not applicable
In RMB
| Operating income | Operating cost | Gross profit ratio | Increase/decrease of operating income y-o-y | Increase/decrease of operating cost y-o-y | Increase/decrease of gross profit ratio y-o-y | |
| According to industries | ||||||
| Display | 396,060,015.82 | 369,785,369.91 | 6.63% | 19.29% | 19.09% | 0.15% |
| Plastic injection hardware | 185,491,674.08 | 168,053,472.02 | 9.40% | -25.86% | -24.71% | -1.39% |
| EPS products | 35,833,322.61 | 37,890,056.81 | -5.74% | -44.30% | -39.07% | -9.07% |
| Property leasing | 40,587,453.21 | 5,329,922.72 | 86.87% | 4.55% | 115.05% | -6.75% |
| According to products | ||||||
| Display | 396,060,015.82 | 369,785,369.91 | 6.63% | 19.29% | 19.09% | 0.15% |
| Plastic injection hardware | 185,491,674.08 | 168,053,472.02 | 9.40% | -25.86% | -24.71% | -1.39% |
| EPS products | 35,833,322.61 | 37,890,056.81 | -5.74% | -44.30% | -39.07% | -9.07% |
| Property leasing | 40,587,453.21 | 5,329,922.72 | 86.87% | 4.55% | 115.05% | -6.75% |
| According to region | ||||||
| Overseas | 89,452,347.92 | 78,686,490.50 | 12.04% | 94.40% | 87.74% | 3.13% |
| Central China | 528,166,573.20 | 497,562,335.89 | 5.79% | -12.05% | -10.28% | -1.86% |
| South China | 40,353,544.60 | 4,809,995.07 | 88.08% | 4.55% | 115.05% | -5.54% |
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
(3) Income from physical sales larger than income from labors
√ Yes □ No
| According to industries | Item | Unit | 2020 | 2019 | Increase/decrease(+,-) y-o-y |
| Display | Sales volume | Set | 900,704 | 821,188 | 9.68% |
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ANNUAL REPORT 2020
| Output | Set | 876,231 | 881,992 | -0.65% | |
| Storage | Set | 16,555 | 41,028 | -59.65% | |
| Plastic injection hardware | Sales volume | Ton | 9,902.24 | 10,701.62 | -7.47% |
| Output | Ton | 10,272.97 | 10,538.27 | -2.52% | |
| Storage | Ton | 918.25 | 547.52 | 67.71% | |
| EPS products | Sales volume | Ton | 2,511.02 | 3,902.94 | -35.66% |
| Output | Ton | 2,508.54 | 3,886.34 | -35.45% | |
| Storage | Ton | 214.41 | 216.89 | -1.14% |
Reasons for y-o-y relevant data with over 30% changes
√Applicable □ Not applicable
Storage of display declined mainly due to the soaring sales volume in the period. Storage of plastic injection hardware mainly due tothe stock up in the Period. Order from EPS declined in the Period.
(4) Fulfillment of the company’s signed significant sales contracts up to this reporting period
□ Applicable √ Not applicable
(5) Constitute of operation cost
Category of products
In RMB
| Category of products | Item | 2020 | 2019 | Increase/decrease(+,-) y-o-y | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Display | Raw materials | 356,756,101.94 | 96.48% | 297,635,346.58 | 95.85% | 0.63% |
| Display | Labor wages | 4,188,729.59 | 1.13% | 8,056,874.03 | 2.59% | -1.46% |
| Display | Depreciation | 3,420,883.01 | 0.93% | 2,707,468.22 | 0.87% | 0.06% |
| Plastic injection hardware | Raw materials | 128,039,531.19 | 76.19% | 188,922,768.85 | 84.54% | -8.35% |
| Plastic injection hardware | Labor wages | 13,052,940.69 | 7.77% | 19,712,637.41 | 8.82% | -1.05% |
| Plastic injection hardware | Depreciation | 3,694,753.86 | 2.20% | 3,758,398.37 | 1.68% | 0.52% |
| Plastic injection hardware | Utilities | 6,028,382.94 | 3.59% | 6,020,663.99 | 2.69% | 0.90% |
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| EPS products | Raw materials | 20,188,707.50 | 53.28% | 37,579,378.81 | 60.43% | -7.15% |
| EPS products | Labor wages | 3,585,503.44 | 9.46% | 9,502,156.33 | 15.28% | -5.82% |
| EPS products | Depreciation | 1,331,746.04 | 3.51% | 1,545,988.21 | 2.49% | 1.02% |
| EPS products | Energy | 6,500,077.80 | 17.16% | 11,106,824.84 | 17.86% | -0.70% |
ExplanationNil
(6) Whether the changes in the scope of consolidation in Reporting Period
√Yes □No
| Combined party | Percentage of equity acquired in enterprise combination | Constitute the basis for the enterprise combination under the same control | Combining date | Basis for determining the date of combination | Income of the combined party from the beginning of the period of combination to the date of combination | Net profit of the combined party from the beginning of the period of combination to the date of combination | Income of the combined party during the comparison period | Net profit of the combined party during the comparison period |
| Ruth Co., Ltd. | 100.00% | 2020.11.10 | Equity Transfer Agreement |
Ruth Co., Ltd was established in Hong Kong dated 25 October 2020 with registered capital of HK$ 10,000.00, no actual capitalcontributed and has not yet commenced production and operation activities.
(7) Major changes or adjustment in business, product or service of the Company in Reporting Period
□ Applicable √ Not applicable
(8) Major sales and main suppliers
Major sales client of the Company
| Total top five clients in sales (RMB) | 430,413,456.39 |
| Proportion in total annual sales volume for top five clients | 69.72% |
| Ratio of related parties in annual total sales among the top five clients | 25.90% |
Information of top five clients of the Company
| Serial | Clients | Sales (RMB) | Proportion in total annual sales |
| 1 | No.1 | 178,588,504.49 | 28.93% |
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ANNUAL REPORT 2020
| 2 | No.2 | 115,083,586.10 | 18.64% |
| 3 | No.3 | 53,115,268.80 | 8.60% |
| 4 | No.4 | 44,794,067.79 | 7.26% |
| 5 | No.5 | 38,832,029.21 | 6.29% |
| Total | -- | 430,413,456.39 | 69.72% |
Other situation of main clients
□ Applicable √ Not applicable
Main suppliers of the Company
| Total purchase amount from top five suppliers (RMB) | 396,183,756.23 |
| Proportion in total annual purchase amount for top five suppliers | 68.51% |
| Ratio of related parties in annual total sales among the top five suppliers | 49.18% |
Information of top five suppliers of the Company
| Serial | Supplier | Purchase (RMB) | Proportion in total purchase |
| 1 | No.1 | 152,365,734.55 | 26.35% |
| 2 | No.2 | 132,041,813.88 | 22.83% |
| 3 | No.3 | 74,847,951.50 | 12.94% |
| 4 | No.4 | 24,318,911.86 | 4.21% |
| 5 | No.5 | 12,609,344.44 | 2.18% |
| Total | -- | 396,183,756.23 | 68.51% |
Other notes of main suppliers
□ Applicable √ Not applicable
3. Expenses
In RMB
| 2020 | 2019 | Increase/decrease(+,-) y-o-y | Note of major changes | |
| Sales expense | 15,417,760.60 | 20,879,256.97 | -26.16% | |
| Administrative expense | 34,481,219.11 | 38,034,071.63 | -9.34% | |
| Financial expense | 12,640,702.89 | 9,946,778.92 | 27.08% | |
| R&D expenses | 7,285,833.84 | 6,649,163.02 | 9.58% |
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ANNUAL REPORT 2020
4. R&D investment
√Applicable □Not applicable
Investment of the R&D expenses for the year mainly conducts in order to reducing the production costs and increase productivity.R&D investment of the Company
| 2020 | 2019 | Ratio changes (+,-) | |
| Number of R&D (people) | 76 | 65 | 16.92% |
| Ratio of number of R&D | 9.07% | 8.72% | 0.35% |
| R&D investment (RMB) | 7,399,966.31 | 7,525,869.98 | -1.67% |
| R&D investment accounted for R&D income | 1.07% | 1.04% | 0.03% |
| R&D investment capitalization (RMB) | 0.00 | 0.00 | |
| Capitalization R&D investment accounted for R&D investment | 0.00% | 0.00% |
The reason of great changes in the proportion of total R&D investment accounted for operation income than last year
□ Applicable √ Not applicable
Reason for the great change in R&D investment capitalization rate and rational description
□ Applicable √ Not applicable
5. Cash flow
In RMB
| Item | 2020 | 2019 | Increase/decrease(+,-) y-o-y |
| Subtotal of cash in-flow from operation activity | 580,631,785.58 | 567,726,597.98 | 2.27% |
| Subtotal of cash out-flow from operation activity | 520,912,515.98 | 493,262,890.97 | 5.61% |
| Net cash flow arising from operating activities | 59,719,269.60 | 74,463,707.01 | -19.80% |
| Subtotal of cash in-flow from investment activity | 56,951,415.71 | 75,379,501.53 | -24.45% |
| Subtotal of cash out-flow from investment activity | 60,471,921.66 | 78,288,039.15 | -22.76% |
| Net cash flow arising from investment activities | -3,520,505.95 | -2,908,537.62 | -21.04% |
| Subtotal of cash in-flow from financing activity | 34,380,634.80 | 215,911,217.10 | -84.08% |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| Subtotal of cash out-flow from financing activity | 96,093,364.01 | 278,912,458.77 | -65.55% |
| Net cash flow arising from financing activities | -61,712,729.21 | -63,001,241.67 | 2.05% |
| Net increased amount of cash and cash equivalent | -6,594,072.28 | 8,683,852.01 | -175.93% |
Main reasons for y-o-y major changes in aspect of relevant data
√Applicable □ Not applicable
Bank loans declined in the Period.Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
□ Applicable √ Not applicable
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 | 165,317.73 | 1.81% | Income from short-term financial products | N |
| Asset impairment | 170,241.33 | 1.93% | Mainly due to the current accrued for inventory loss and loss of intangible assets impairment | N |
| Non-operating income | 488,657.30 | 5.34% | Mainly due to the government grants not related to the day-to-day activities of the business | N |
| Non-operating expense | 408,809.90 | 4.47% | Mainly due to the tax delay charge paid. | N |
IV. Assets and liability
1. Major changes of assets composition
New revenue standards or new leasing standards implemented by the Company at first time since 2020 and adjusted relevant items ofthe financial statement on beginning of the year when implemented the StandardsApplicable
In RMB
| Year-end of 2020 | Year-end of 2020 | Ratio | Notes of major changes |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| Amount | Ratio in total assets | Amount | Ratio in total assets | changes | ||
| Monetary fund | 60,968,053.58 | 9.71% | 38,095,501.00 | 6.20% | 3.51% | |
| Account receivable | 128,063,911.79 | 20.39% | 138,755,691.43 | 22.59% | -2.19% | |
| Inventory | 70,166,013.49 | 11.18% | 66,971,551.96 | 10.90% | 0.28% | |
| Investment real estate | 47,224,662.27 | 7.52% | 48,952,992.57 | 7.97% | -0.45% | |
| Long-term equity investment | 0.00% | 0.00% | 0.00% | |||
| Fixed assets | 193,605,444.53 | 30.83% | 198,229,817.31 | 32.28% | -1.45% | |
| Construction in process | 740,000.00 | 0.12% | 0.00% | 0.12% | ||
| Short-term loans | 12,527,808.00 | 1.99% | 24,633,898.20 | 4.01% | -2.02% | |
| Long-term | 61,000,000.00 | 9.71% | 73,000,000.00 | 11.89% | -2.18% |
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 | 30,917,064.25 | Note deposit, judicial freeze |
| Receivable financing | 6,752,967.68 | Pledge of notes |
| Account receivable | ||
| Investment real estate | 35,526,155.89 | Secured bank loans |
| Fixed assets | 12,577,333.12 | Secured bank loans |
| Disposal of fixed assets | 92,857,471.69 | Court seizure |
| Intangible assets | 6,799,575.98 | Secured bank loans |
| Total | 185,430,568.61 | -- |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
V. Investment
1. Overall situation
□ Applicable √ Not applicable
2. The major equity investment obtained in the reporting period
□ Applicable √ Not applicable
3. The major non-equity investment doing in the reporting period
□ Applicable √ Not applicable
4. Financial assets investment
(1) Securities investment
□ Applicable √ Not applicable
The Company has no securities investment in the Period.
(2) Derivative investment
□ Applicable √ Not applicable
The Company has no derivatives investment in the Period.
5. Application of raised proceeds
□ Applicable √ Not applicable
The Company has no application of raised proceeds 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
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
The condition of major subsidiaries and joint-stock companies which have an impact on the company’s net profit by more than 10%
Unit：Yuan
| Name of companies | Type of companies | Main business | Registered capital | Total assets | Net assets | Operating revenue | Operating profits | Net profits |
| Wuhan Hengfa Technology Co., Ltd. | Subsidiary | Production and Sales | 181,643,111.00 | 486,156,920.70 | 226,199,033.23 | 648,768,705.56 | 2,287,769.88 | 3,045,356.05 |
| Shenzhen Zhongheng Huafa Property Co., Ltd. | Subsidiary | Property Management | 1,000,000.00 | 8,958,666.85 | -621,839.98 | 5,711,449.55 | 1,897,153.42 | 1,709,517.40 |
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable
| Name of companies | Methods of acquiring and disposing of subsidiaries during the reporting period | Impact on overall production and performance |
| Ruth Co., Ltd. | Transfer agreements | None |
Description of the major holding and joint-stock corporationsNo operating activities yet.VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable
IX. Future Development Prospects
（一）Operation analysis
As an important subsidiary of Wuhan Constant Fa Technology Co., Ltd., the pressure of Wuhan Constant FaTechnology Co., Ltd. is increasing due to the intensification of market competition and the shortage of raw andauxiliary materials supply. The core to solve the dilemma is to improve the added value of technology andprofitability through technological upgrading. In the context of downstream consumer demand upgrading, byincreasing research and development of new products, adjusting and improving the product structure, improvingthe production process, improve production efficiency; At the same time, the supply channels of raw and auxiliarymaterials should be expanded to avoid material shortage affecting production.For a certain period of time, property leasing is still another important business for the development of thecompany. Making full use of self-owned property to provide business of operation, leasing and service will bringcertain contributions to the cash flow of the company. After the urban renewal project is gradually implementedand implemented, it will bring a long-term and stable source of income for the company.
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
（二）New Annual Business Plan
◆Industrial Business UpgradeAlthough affected by the COVID-19 epidemic, all colleagues in the company continued to work hard to serveexisting customers, vigorously expanded the market, and gained more market share; actively looked forhigh-quality technology projects in consumer electronics, and gradually realized industrial upgrading throughtechnology optimization and management optimization; at the same time, it strengthened management, improvedproduction efficiency, improved product quality, and made full use of the geographical advantages of the companyto make the business bigger and stronger.
◆Promote the urban renewal projectSpeed up the promotion of renewal unit project of Huafa District, Gongming Street, Guangming New District,Shenzhen and the renewal project renovation progress of Huafa Building, Huaqiang North Street, Futian District,Shenzhen, accelerate the settlement of project procedures, and strive to make stage progress as early as possible.◆Continue to focus on strengthening the company’s internal controlIn 2020, the company will further optimize the corporate governance structure and improve the internal controlsystem and process and strictly implement and improve the executive ability of relevant system in accordancewith the governance requirements of listed companies, the company’s management and relevant departments willexecute the administrative provisions for approval procedures of fund utilizing, management system of relatedtransactions, working system of internal audit, internal reporting system of major information in strict accordancewith the requirements of internal control documents.
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√Applicable □ Not applicable
| Time | Reception location | Way | Reception type | Object | Main content and information provided | Basic situation index of investigation |
| 2020-01-04 | Office of the BOD locates in 6/F, Huafa Building | Telephone communication | Other | Individual | Operation of the Company and progress of the urban renewal projects | N/A |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| Reception (times) | 20 |
| Number of hospitality | 0 |
| Number of individual reception | 20 |
| Number of other reception | 0 |
| Disclosed, released or let out major undisclosed information | No |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
Section V. Important Events
I. Profit distribution plan of common stock and capitalizing of common reserves planFormulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy duringthe Reporting Period
□ Applicable √ Not applicable
Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years(including the reporting period)In recent three years the Company accumulated retained net profit is negative and it did not have the conditions for profit distribution,so the Company did not undertake profit allocation in recent years and no capital reserve shall be converted into share capital either.
Cash dividend of common stock in latest three years (including the reporting period)
In RMB
| Year for bonus shares | Amount for cash bonus (tax included) | Net profit attributable to common stock shareholders of listed company in consolidation statement for bonus year | Ratio of the cash bonus in net profit attributable to common stock shareholders of listed company contained in consolidation statement | Proportion for cash bonus by other ways(i.e. share buy-backs) | Ratio of the cash bonus by other ways in net profit attributable to common stock shareholders of listed company contained in consolidation statement | Total cash bonus (including other ways) | Ratio of the total cash bonus (other ways included) in net profit attributable to common stock shareholders of listed company contained in consolidation statement |
| 2020 | 0.00 | 6,830,187.40 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2019 | 0.00 | 5,460,049.15 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2018 | 0.00 | 3,295,022.72 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company ispositive but no plan of cash dividend proposed of common stock
□ Applicable √ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
II. Profit distribution plan and capitalizing of common reserves plan for the Period
□ Applicable √ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either forthe year.III. Implementation of commitment
1. Commitments that the actual controller, shareholders, related party, offeror and committed party as theCompany etc. have fulfilled during the reporting period and have not yet fulfilled by the end of reportingperiod
√Applicable □ Not applicable
| Commitments | Promise | Type of commitments | Content of commitments | Commitment date | Commitment term | Implementation |
| Commitments for share reform | Wuhan Zhongheng Group | The enterprise and its subsidiaries will not participate directly or indirectly in operation of the business with competitive of Shen Huafa and its controlling subsidiary concerned, and not to damage the interest of the Shen Huafa and its controlling subsidiary by making use of the potential controlling-ship of the Shen Huafa either | 2007-03-29 | Implement since 12 April 2007 throughout the year | In normal implementing | |
| Wuhan Zhongheng Group | The enterprise and its subordinate enterprise shall avoid a related transaction as far as possible with Shen Huafa and its controlling subsidiary, as for the related dealings occurred inevitable or have reasonable cause, the enterprise promise to follow the principle of fair-ness, justice and open-ness, signed the agreement in line with the laws, perform legal | 2007-03-29 | Implement since 12 April 2007 throughout the year | In normal implementing |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| program, fulfill information disclosure obligation and relevant approval procedures according to the relevant laws, regulations and “Listing Rules” of the Shenzhen Stock Exchange, guarantee not to damage the legal interest of Shen Huafa and its shareholders through related transactions | ||||||
| Wuhan Zhongheng Group | After acquisition and assets restructuring, guarantee to have an independent staff, owns independent and completed assets, and independent in aspect of business, financial and institution from Shen Huafa | 2007-03-29 | Implement since 12 April 2007 throughout the year | In normal implementing | ||
| Commitments in report of acquisition or equity change | ||||||
| Commitments in assets reorganization | ||||||
| Commitments make in initial public offering or re-financing | ||||||
| Equity incentive commitment | ||||||
| Other commitments for medium and small shareholders | Wuhan Zhongheng Group | Regarding the lawsuit with Shenzhen Vanke: 1. If the arbitration judges Shenzhen Vanke to win, the arbitration losses caused by the contract disputes shall be undertaken by Wuhan Zhongheng Group in full; 2. The contingent losses and risks arising from the termination of relevant contracts shall be undertaken by Wuhan Zhongheng Group | 2016-12-20 | Implemented since 20 December 2016 | In normal implementing |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| in advance. | |||
| Completed on time(Y/N) | Yes | ||
| If the commitments is not fulfilled on time, shall explain the specify reason and the next work plan | Not applicable | ||
2. Concerning assets or project of the Company, which has profit forecast, and reporting period still inforecasting period, explain reasons of reaching the original profit forecast
□ Applicable √ Not applicable
IV. 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.V. Explanation from Board of Directors, Supervisory Committee and Independent Directors(if applicable) for “Qualified Opinion” that issued by CPA
□ Applicable √ Not applicable
VI. Particulars about the changes in aspect of accounting policy, estimates and calculationmethod compared with the financial report of last year
□ Applicable √ Not applicable
There was no changes in aspect of accounting policy, estimates and calculation methodVII. Major accounting errors within reporting period that needs retrospective restatement
□Applicable √Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
VIII. Compare with last year’s financial report; explain changes in consolidation statement’sscope
√Applicable □Not applicable
| Combined party | Percentage of equity acquired in enterprise | Constitute the basis for the enterprise | Combining date | Basis for determining the date of | Income of the combined party from the beginning of | Net profit of the combined party from the beginning of | Income of the combined party | Net profit of the combined party |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| combination | combination under the same control | combination | the period of combination to the date of combination | the period of combination to the date of combination | during the comparison period | during the comparison period | ||
| Ruth Co., Ltd. | 100.00% | 2020.11.10 | Equity Transfer Agreement |
Ruth Co., Ltd was established in Hong Kong dated 25 October 2020 with registered capital of HK$ 10,000.00, no actual capitalcontributed and has not yet commenced production and operation activities.
IX. Appointment and non-reappointment (dismissal) of CPAAccounting firm appointed
| Name of domestic accounting firm | WUYIGE Certified Public Accountants LLP |
| Remuneration for domestic accounting firm (in 10 thousand Yuan) | 50 |
| Continuous life of auditing service for domestic accounting firm | 5 |
| Name of domestic CPA | Fan Zhang, Yang Ting |
| Consecutive years for auditing service from domestic CPA | 1 |
| Name of foreign accounting firm (if applicable) | N/A |
| Remuneration for foreign accounting firm (in 10 thousand Yuan) (if applicable) | 0 |
| Continuous life of auditing service for foreign accounting firm (if applicable) | N/A |
| Name of foreign CPA | N/A |
| Consecutive years for auditing services from foreign CPA (If applicable) | 0 |
Re-appointed accounting firms in this period
□Yes √ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable □ Not applicable
The Company employed WUYIGE Certified Public Accountants LLP as internal control audit institutions in the year.
X. Particular about delisting after annual report disclosed
□ Applicable √ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
XI. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization for the Company in reporting periodXII. Significant lawsuits and arbitration of the Company
√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 | N | 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 notice of the Company | In September 2018, Shenzhen Vanke applied for compulsory execution. In October 2019, due to the application of "objection to execution" and "no execution" by the outsider, the execution procedure was terminated. If the outsider's application was rejected by Shenzhen intermediate people's court, Shenzhen Vanke has the right to continue to | 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=1205326846&announcementTime=2018-08-25 |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| apply for resumption of compulsory execution. | |||||||
| 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 | N | The second trial decides the Company wins the lawsuit on 15 March 2018, and has applied for enforcement | Implementing | Completion of enforcement | 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 Law Firm and Shenzhen Zhongheng Huafa Co., Ltd. and Wuhan Zhongheng Group | 1,940.2 | N | The arbitration has been heard | A decision was issued and the Company’s motion to dismiss was denied | Implementing | 2018-11-14 | http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&stockCode=000020&announcementId=1205602053&announcementTime=2018-11-14 |
XIII. Penalty and rectification
□ Applicable √ Not applicable
No penalties or rectifications during the reporting period.
XIV. Integrity of the company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
XV. Implementation of the company’s stock incentive plan, employee stock ownership plan orother employee incentives
□ Applicable √ Not applicable
The Company had no stock incentive plan, employee stock ownership plan or other employee incentive in the reporting period.
XVI. 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 |
| Hong Kong Yutian International Investment Co., Ltd. | Sharing the same controlling shareholder | Purchase | Display | In principle, the transaction price of purchased raw materials is determined at approximately 1% lower than the prevailing average market price, with reference to the respective bargaining power of both parties. | 15,236.57 | 15,236.57 | 38.53% | 16,208.94 | N | Telegraphic transfer | The average market price refers to the price of products of the same specification that can be found in the website of globally renowned professional market research companies (http://www.displaysearch.com) and LCD professional market research companies (http://www.witsview.com) that are recognized in the industry | 2020-01-22 | http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000020&announcementId=1207276013&orgId=gssz0000020&announcementTime=2020-01-22、http://www.cninfo.com.cn/new/disclosure/detail?stockCode=000020&announcementId=1208828787&orgId=gssz0000020&announcementTime=2020-12-02 |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Sharing the same controlling shareholder | Purchase | Display | Ditto | 9,252.23 | 9,252.23 | 23.40% | 13,592.4 | N | Telegraphic transfer | Ditto | Ditto | Ditto |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Sharing the same controlling shareholder | Purchase | Display | Synchronize with the market situation | 3,951.95 | 3,951.95 | 100.00% | 16,310.88 | N | Telegraphic transfer | Ditto | Ditto | Ditto |
| Hong Kong Yutian International Investment Co., Ltd. | Sharing the same controlling shareholder | Sales | Display | Synchronize with the market situation | 11,508.36 | 11,508.36 | 31.12% | 27,184.8 | N | Telegraphic transfer | Ditto | Ditto | Ditto |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Sharing the same controlling shareholder | Sales | Display | Synchronize with the market situation | 4,105.68 | 4,105.68 | 11.10% | 8,495.25 | N | Telegraphic transfer | Ditto | Ditto | Ditto |
| Wuhan Hengsheng | Sharing the | Sales | Materia | Synchronize with the market situation | 299.03 | 299.03 | 20.15% | 1,631.09 | N | Telegraphic | Ditto | Ditto | Ditto |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| Photo-electricity Industry Co., Ltd. | same controlling shareholder | l | transfer | ||||||||||
| Total | -- | -- | 44,353.82 | -- | 83,423.36 | -- | -- | -- | -- | -- | |||
| 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 monitors from HK Yutian with US $ 22.12 million approximately, 92.75% of the annual amount predicted at the beginning of the year; purchased LCD monitor from Hengsheng Photo-electricity with US $ 13.61 million approximately, 68.07% of the annual amount predicted at the beginning of the year; purchasing LCD Display from Hengsheng Photo-electricity with about US$ 5.81 million, 24.23% of the annual amount predicted at the beginning of the year; sold LCD Display whole machine to HK Yutian with US$ 16.67 million approximately, 41.68% of the annual amount predicted at the beginning of the year. | ||||||||||||
| Reasons for major differences between trading price and market reference price | N/A | ||||||||||||
2. Related transactions by assets acquisition and sold
□Applicable √Not applicable
No above mentioned transactions occurred
3. Main related transactions of mutual investment outside
□ Applicable √ Not applicable
No main related transactions of mutual investment outside for the Company in reporting period.
4. Contact of related credit and debt
□ Applicable √ Not applicable
No contact of related credit and debt during the reporting period.
5. Other related transactions
□ Applicable √ Not applicable
The company had no other significant related transactions in reporting period.
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
XVII. 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
| Particulars about the external guarantee of the Company (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) |
| N/A | ||||||||
| 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. | 2021-04-27 | 30,000 | 3,356.33 | Joint liability guarantee | One year | N | N | |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| 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) | 3,356.33 | |||||
| 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) | 1,252.78 | |||||
| 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 | Complete implementation or not | Guarantee for related party |
| Total amount of guarantee of the Company (total of three above mentioned 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) | 3,356.33 | |||||
| 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) | 1,252.78 | |||||
| The proportion of the total amount of actually guarantee in the net assets of the Company (that is A4+ B4+C4) | 3.73% | |||||||
| Including: | ||||||||
Explanation on compound guaranteeNil
(2) Guarantee outside against the regulation
□Applicable √Not applicable
No guarantee outside against the regulation in Period.
3. Entrust others to cash asset management
(1) Trust financing
√Applicable □Not applicable
Trust financing in the period
In 10 thousand Yuan
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| Type | Capital sources | Amount occurred | Outstanding balance | Overdue amount |
| Bank financial products | Own funds | 5,500 | 0 | 0 |
| Total | 5,500 | 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
(2) Entrusted loans
□ Applicable √ Not applicable
The company had no entrusted loans in the reporting period.
4.Material contracts for daily operations
□ Applicable √ Not applicable
5. Other material contracts
□ Applicable √ Not applicable
No other material contracts for the Company in reporting period.
XVIII. Social responsibility
1. Performance of social responsibility
Not applicable
2. Execution of social responsibility of targeted poverty alleviation
(1) Targeted poverty alleviation scheme
Not applicable
(2) Summary of targeted poverty alleviation
Not applicable
(3) Targeted poverty alleviation effect
| Index | Unit of measure | Quantity /implementation |
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
| 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
Not applicable
3. Environmental protection
The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department
□ Yes √No
NoThe listed Company and its subsidiary don’t belongs to the key sewage units released from environmental protection department
XIX. Explanation on other significant events
√ Applicable □ Not applicable
(i) The Company signed Asset Exchange Contract with Wuhan Zhongheng New Science & Technology IndustrialGroup Co., Ltd (hereinafter referred to as Wuhan Zhongheng Group) on 29 April 2009 (details were referred to inthe announcement dated 30 April 2009), and pursuant to the contract, since part of the assets of the Company(namely two parcel of industrial lands located at Huafa road, Gongming town, Guangming new district, Shenzhen(the property certificate No. were SFDZ No.7226760 and SFDZ No.7226763, No. of parcels were A627-005andA627-007, 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
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
“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 of2015 have considered and adopted the “Proposal on the project promotion and implementation of urban renewaland the progress of related transactions of ‘the updated units at Huafa Area, Gong Ming Street, Guangming NewDistrict, Shenzhen’”, the company has signed the “Agreement on the cooperation of urban renewal project of theupdated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”, “Contract for thecooperative venture of reconstruction project for Huafa Industrial Park, Gong Ming Street, Guangming NewDistrict” and “Agreement on housing acquisition and removal compensation and resettlement” with WuhanWuhan 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 “VankeGuangming”).
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. In mid April 2020, Heng semiconductor sued the company in Shenzhenintermediate people's court, requiring the company to transfer the above two pieces of land and compensate for theeconomic loss of 52 million yuan. As of the disclosure date of this report, the case has not yet beenconcluded.Progress of the case found more in the Notices released on Juchao website dated 14 Sept. 2016, 1 Nov.2016, 16 Nov. 2016, on 18 Feb. 2017, 24 March 2017, 25 April 2017, 1 July 2017, 18 August 2017, 9 Feb. 2018,25 Aug. 2018 and 7 Sept. 2018 respectively.
(ii) 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 end
SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2020
of this period released, controlling shareholder still not removed the pledge and the Company has apply by letter,relevant Notice of Presentment on Stock Pledge from Controlling Shareholder was released. Found more in noticereleased on Juchao website date 2 Feb. 2018.
Wuhan Zhongheng Group received the first-instance judgment of Guangdong Higher People’s Court to the“pledged securities repurchase dispute” case sued by China Merchants Securities Asset Management Co., Ltd. inMarch 2021. Wuhan Zhongheng Group refused to accept the judgment and has appealed to the Supreme People'sCourt, the judgment of first instance has not yet taken effect. For details, please refer to the companyannouncement issued by the company on www.cninfo.com.cn on March 19, 2021.
(iii) The controlling shareholder Wuhan Zhongheng Group holds 119,289,894 shares of the Company’ stock,accounting for 42.13% of the total share capital of the Company, of which 116,489,894 shares were judicially 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 Juchao Website dated October 27,2016, January 11, 2019, May 31, 2019 and August 7, 2019.
(iv) 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 WuhanZhongheng 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 on JuchaoWebsite dated 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 profit. For details, see the company’s “Other Announcements on the Progress Involving Litigation andArbitration” (Announcement No.: 2019-34) released on Juchao Website dated November 25, 2019.XX. 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 | 0 | 0 | 0 | 0 | 0.00% |
| 1. State-owned shares | |||||||||
| 2. State-owned legal person’s shares | |||||||||
| 3. Other domestic shares | |||||||||
| Including: Domestic legal person’s shares | |||||||||
| Domestic natural person’s shares | |||||||||
| 4. Foreign shares | |||||||||
| Including: Foreign legal person’s shares | |||||||||
| Foreign natural person’s shares | |||||||||
| II. Unrestricted shares | 283,161,227 | 100.00% | 0 | 0 | 0 | 0 | 0 | 283,161,227 | 100.00% |
| 1. RMB ordinary shares | 181,165,391 | 63.98% | 0 | 0 | 0 | 0 | 0 | 181,165,391 | 63.98% |
| 2. Domestically listed foreign shares | 101,995,836 | 36.02% | 0 | 0 | 0 | 0 | 0 | 101,995,836 | 36.02% |
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III. Total shares | 283,161,227 | 100.00% | 0 | 0 | 0 | 0 | 0 | 283,161,227 | 100.00% |
Reasons for share changed
□ Applicable √ Not applicable
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
1. Security offering (without preferred stock) in Reporting Period
□ Applicable √ Not applicable
2. Changes of total shares and shareholders structure as well as explanation on changes of assets andliability structure
□ Applicable √ Not applicable
3. Existing internal staff shares
□ Applicable √ Not applicable
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
In Share
| Total common stock shareholders | 21,840 | Total common stock shareholders at end of last | 22,456 | Total preference shareholders with voting rights recovered | 0 | Total preference shareholders with voting | 0 |
| in reporting period-end | month before annual report disclosed | at end of reporting period (if applicable) (found in note 8) | rights recovered at end of last month before annual report disclosed (if applicable) (found in note 8) | |||||||||||
| Particulars about shares held above 5% by shareholders or top ten shareholders | ||||||||||||||
| Full name of Shareholders | Nature of shareholder | Proportion of shares held | Total shareholders at the end of report period | Changes in report period | Amount of restricted shares held | Amount of un-restricted 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 | 2.50% | 7,072,000 | 0 | 0 | 7,072,000 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||||
| Changjiang Securities Brokerage (Hong Kong) Co., Ltd. | Overseas legal person | 1.89% | 5,355,249 | 0 | 0 | 5,355,249 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||||
| Guoyuan Securities Brokerage (Hong Kong) Limited | Overseas legal person | 1.37% | 3,870,117 | 0 | 0 | 3,870,117 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||||
| Li Zhongqiu | Overseas nature person | 1.00% | 2,830,000 | 0 | 0 | 2,830,000 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||||
| LI SHERYN ZHAN MING | Overseas nature person | 0.51% | 1,446,100 | 0 | 0 | 1,446,100 | Pledged | 0 | ||||||
| Frozen | 0 | |||||||||||||
| China Merchants Securities Hong Kong Co., Ltd. | State-owned legal person | 0.50% | 1,413,888 | 0 | 0 | 1,413,888 | Pledged | 0 |
| Frozen | 0 | |||||||
| Shengyin Investment Co., Ltd. | Overseas legal person | 0.50% | 1,408,600 | 0 | 0 | 1,408,600 | Pledged | 0 |
| Frozen | 0 | |||||||
| Li Senzhuang | Domestic nature person | 0.37% | 1,041,073 | 0 | 0 | 1,041,073 | Pledged | 0 |
| Frozen | 0 | |||||||
| Strategy investors or general corporation comes top 10 shareholders due to rights issue (if applicable) (see note 3) | N/A | |||||||
| 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. Shengyin Investment Co., Ltd. is an overseas wholly-owned subsidiary of Wuhan Zhongheng group.The Company neither knew whether there exists associated relationship among the other shareholders, nor they belong to consistent actors that are prescribed in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies. | |||||||
| Description of the above shareholders in relation to delegate/entrusted voting rights and abstention from voting rights. | N/A | |||||||
| Particular about top ten shareholders with un-restrict shares held | ||||||||
| Shareholders’ name | Amount of un-restrict 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. | 7,072,000 | Domestically listed foreign shares | 7,072,000 | |||||
| Changjiang Securities Brokerage (Hong Kong) Co., Ltd. | 5,355,249 | Domestically listed foreign shares | 5,355,249 | |||||
| Guoyuan Securities Brokerage (Hong Kong) Limited | 3,870,117 | Domestically listed foreign shares | 3,870,117 | |||||
| Li Zhongqiu | 2,830,000 | Domestically listed foreign shares | 2,830,000 |
| LI SHERYN ZHAN MING | 1,446,100 | Domestically listed foreign shares | 1,446,100 |
| China Merchants Securities Hong Kong Co., Ltd. | 1,413,888 | Domestically listed foreign shares | 1,413,888 |
| Shengyin Investment Co., Ltd. | 1,408,600 | Domestically listed foreign shares | 1,408,600 |
| Li Senzhuang | 1,041,073 | Domestically listed foreign shares | 1,041,073 |
| Expiation on associated relationship or consistent actors within the top 10 un-restrict shareholders and between top 10 un-restrict shareholders and top 10 shareholders | Among the top ten unrestricted shareholders, Li Zhongqiu is the actual controller of Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. and is a party acting in concert.Shengyin Investment Co., Ltd. is an overseas wholly-owned subsidiary of Wuhan Zhongheng group. The Company neither knew whether there exists associated relationship among the other shareholders, nor they belong to consistent actors that are prescribed in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies. | ||
| Explanation on top 10 shareholders involving margin business (if applicable) (see note 4) | N/A | ||
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.
2. Controlling shareholder of the Company
Nature of controlling shareholders: Foreign-funds controllingType of controlling shareholders: legal person
| Controlling shareholders | Legal person/person in charge of the unit | Date of foundation | Organization code | Main operation business |
| Wuhan Zhongheng Group | Li Zhongqiu | March 21, 1996 | 91420114711954601W | Production, sales of computers, TV set, display, other hardware and computer software; |
| approval) | ||
| Equity of other domestic/oversea listed company control by controlling shareholder as well as stock-joint in report period | Not applicable | |
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
The Company had no changes of controlling shareholders in reporting period
3. Actual controller and persons acting in concert
Nature of actual controller: Overseas nature personType of actual controller: Natural person
| Actual controller’s name | Relationship | Nationality | Enjoy the residence rights in the other country or area (Y/N) |
| Li Zhongqiu | Li Zhongqiu himself | Hong Kong | N |
| Li Li | Person acting in concert (including agreement, relatives, share the same controlling) | P.R.C | N |
| Main occupation in position | Chairman and General Manager | ||
| Listed companies in and out of China that controlled in last 10 years | The Company | ||
Changes of actual controller in reporting period
□ Applicable √ Not applicable
No changes of actual controllers for the Company in reporting period.Property right and controlling relationship between the actual controller and the Company is as follow:
51% 49%
42.21%
| Li Zhongqiu | Li Li (Son of Li Zhongqiu) |
Actual controller controlling the Company by entrust or other assets management
□ Applicable √ Not applicable
4. Particulars about other legal person shareholders with over 10% shares held
□ Applicable √ Not applicable
5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers,restructuring side and other commitment subjects
□ Applicable √ Not applicable
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, Senior
Executives and EmployeesI. Changes of shares held by directors, supervisors and senior executives
| Name | Title | Working status | Sex (F/M) | Age | Start dated of office term | End date of office term | Shares held at period-begin (Share) | Amount of shares increased in this period (Share) | Amount of shares decreased in this period (Share) | Other changes (share) | Shares held at period-end (Share) |
| Li Zhongqiu | Chairman | Currently in office | M | 56 | July 8, 2007 | September 11, 2022 | 2,830,000 | 0 | 0 | 0 | 2,830,000 |
| Jiang Junming | Vice Chairman | Currently in office | M | 42 | September 12, 2019 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Chen Zhigang | Director | Currently in office | M | 47 | September 12, 2019 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Zheng Chunmei | Independent director | Currently in office | F | 55 | September 12, 2019 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Wu Weihua | Independent director | Currently in office | M | 42 | September 12, 2019 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Yang Xiongwen | Independent director | Currently in office | M | 50 | September 12, 2019 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Huang Yanbo | Chairman of the Supervisory Board | Currently in office | F | 58 | January 16, 2012 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Chen | Supervi | Current | F | 34 | Novem | Septem | 0 | 0 | 0 | 0 | 0 |
| Qin | sor | ly in office | ber 6, 2015 | ber 11, 2022 | |||||||
| Wu Aijie | Supervisor | Currently in office | F | 49 | October 10, 2019 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Yang Bin | Deputy General Manager, Chief Financial Officer | Currently in office | M | 48 | November 6, 2015 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Tang Ganyu | Deputy General Manager | Leave office | F | 43 | August 23, 0013 | October 21, 2020 | 0 | 0 | 0 | 0 | 0 |
| Niu Zhuo | Secretary of the Board | Currently in office | F | 38 | October 25, 2019 | September 11, 2022 | 0 | 0 | 0 | 0 | 0 |
| Total | -- | -- | -- | -- | -- | -- | 2,830,000 | 0 | 0 | 0 | 2,830,000 |
II. Changes of directors, supervisors and senior executives
√ Applicable □ Not applicable
| Name | Title | Type | Date | Reasons |
| Tang Ganyu | Deputy General Manager | Leave office | October 21, 2020 | Personal reasons |
III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors,supervisors and senior executiveLi Zhongqiu: Male, was born in 1964 with Master of Engineering, members of the Hubei Political ConsultativeConference, May the first of labor medalist of Wuhan. He serves as Chairman of Wuhan Zhongheng New Science& Technology Industrial Group Co., Ltd. since 1996. And he serves as Chairman and the General Manager of theCompany since July 2007.Jiang Junming, male, born in February 1978 in Dalian, Liaoning, Han nationality, holds a bachelor degree in Lawfrom Shenyang University of Technology and a master degree in Finance from Peking University. He is currently
deputy general manager of Risk Control Department of Shenzhen SEG Group Co., Ltd. He has servedsuccessively as legal assistant of Shenzhen Gemdale Real Estate Co., Ltd., legal supervisor of Shenzhen Maoye(Group) Co., Ltd., legal deputy manager of Shenzhen Changcheng Investment Holding Co., Ltd., legal affairs postof Shenzhen SEG Group Co., Ltd., and partner of Guangdong Guanghe Law Firm.Chen Zhigang, male, born in 1973, master of business administration, he is currently the assistant to chairman ofWuhan Zhongheng Group. He has successively served as supervisor, investment manager and securities affairsrepresentative of Wuhan Huaxin High-Tech Co., Ltd., financial director, secretary of the board of directors andexecutive deputy general manager of Wuhan Zhongheng New Technology Industry Group Co., Ltd., and directorof the Company, etc.Ms. Zheng Chunmei, Chinese nationality, without permanent residency abroad, female, born in 1965. Shegraduated from the Department of Economics and Management of Wuhan University in June 1986, in 1990, shewas awarded the certificate of completion of the University Teachers Training Course of International Accountingand International Finance and Taxation (Co-sponsored by the World Bank and the State Education Commission)of the School of Economics, Xiamen University, she received a master’s degree in business management(accounting) from Wuhan University in 1997 and a doctorate degree in economics from Wuhan University in2005. She acted as a visiting scholar at St. Mary's University in Canada, Seoul National University in South Korea,and Ohio State University in the United States. She has been teaching at Wuhan University since June 1986, and iscurrently a professor and a doctoral tutor in the School of Economics and Management of Wuhan University, amember of Canadian Management Science (ASAC), an independent director of Routon Electronics Co., Ltd., andWuhan Accelink Co., Ltd.Yang Xiongwen, male, born in 1970, Doctor of Civil and Commercial Law, Renmin University of China, avisiting scholar at the Faculty of Law, University of Oxford, he is currently a professor at the School of Law ofSouth China University of Technology, a senior engineer, a member of the Local People’s Congress of PanyuDistrict (2016.9.26), a member of the Supervision and Judicial Work Committee of the Standing Committee of the
thLocal People’s Congress of Panyu District, a member of the Legal Committee of the Guangdong ProvincialCommittee of the China Democratic National Construction Association, a part-time attorney of GuangdongHanrui Law Firm, and is concurrently serving as deputy secretary general and executive director of ChinaIntellectual Property Law Research Association.Wu Weihua, male, born in 1978, master of law at Peking University, he is currently General Manager of ShenzhenHeadquarters of Huajin Securities Co., Ltd. Investment Bank, he once served as General Manager of InvestmentBanking Division 3 of Founder Securities Underwriting Sponsor Co., Ltd., served as the managing director of theinvestment banking department and principal of the M & A financing business department of HuachuangSecurities Co., Ltd.; the managing director of the investment banking department and principal of Shenzhenbusiness department of Tianfeng Securities Co., Ltd.; executive deputy general manager of the investmentbanking department X of Guosen Securities Co., Ltd.; assistant director of the investment banking department ofDapeng Securities Co., Ltd.; auditor of Shenzhen Tianjian Xinde Certified Public Accountants.Huang Yanbo: female, born in 1962, a university background and a senior accountant. She served as financialdirector of Wuhan Zhongda Shopping Mall since 1985 to 1998; and worked as financial manager of Wuhan
Zhongheng New Science & Technology Industrial Group Co., Ltd. from 1998 to 2007 and GM assistant in chargeof auditing supervise from 2007 to 2011; she serves as CFO of the Company from 2012 to 2016; she serves asdeputy GM of Wuhan Zhongheng New Science & Technology Industrial Group Co., Ltd. since October 2016, andthe supervisor of the Company since January 2012 and she is the chairman of supervisory committee of theCompany since August 2013.Chen Qin: Female, born in 1986, bachelor degree, human resources professional. Worked on administrative workin Merida Bicycle (China) Co., Ltd. from July 2002 to July 2003, engaged in purchasing work in Hui PuElectronics (Shenzhen) Co., Ltd. from August 2003 to September 2004, and served as the administration managerin Huake United Technology (Shenzhen) Co., Ltd. from September 2004 to 2005 October; works in the Companysince October 2005 and serves as supervisor of the Company since 2015.Wu Aijie, female, born in 1971, bachelor degree, she is currently the person in charge of the company’saccounting organization. She successively served as the accounting director of Wuhan No. 2 PharmaceuticalFactory, Wuhan Benben Electronics Co., Ltd., Wuhan Hengsheng Photo-electricity Industry Co., Ltd., and WuhanZhongheng New Science & Technology Industrial Group Co., LtdYang Bin, male, born in April 1972, a master degree holder graduated from Xi’an Jiaotong University. He onceserved as the executive deputy general manager and secretary of the board of Shenzhen China AgriculturalUniversity Technology Co., Ltd., an independent director of Livzon Group, and an independent director of CTLTesting. Now served as the Supervisor of Shenzhen Moyi Investment Co., Ltd., he used to be the company'sdirector and secretary to the board of directors, and now serves as the company's deputy general manager andchief financial officer.Niu Zhuo, former name was Niu Yuxiang, female, born in 1982, master, intermediate economist. From July 2006to August 2010, she worked on securities affairs at Shenzhen OFILM Technology Co., Ltd. From September 2010to present, she has been serving in the Company, she once held the posts of deputy director of the office of theboard of directors, securities affairs representative, and currently holds the post of the company’s board secretary.
Post-holding in shareholder’s unit
√ Applicable □ Not applicable
| Name | Name of shareholder’s unit | Position in shareholder’s unit n | Start dated of office term | End date of office term | Received remuneration from shareholder’s unit (Y/N) |
| Li Zhongqiu | Wuhan Zhongheng Group and its subsidiaries | Chairman | March 21, 1996 | N | |
| Jiang Junming | Shenzhen SEG Group Co., Ltd. | Deputy GM | July 2, 2018 | Y | |
| Chen Zhigang | Wuhan Zhongheng Group | Assistant to the | January 1, 2019 | Y |
| chairman | |||||
| Huang Yanbo | Wuhan Zhongheng Group | Deputy GM | October 12, 2016 | Y |
Post-holding in other unit
√ Applicable □ Not applicable
| Name | Name of other units | Position in other unit n | Start dated of office term | End date of office term | Received remuneration from other unit (Y/N) |
| Zheng Chunmei | Wuhan University | Teacher | June 1, 1986 | Y | |
| Zheng Chunmei | Jinglun Electronics Co., Ltd. | Independent director | October 1, 2015 | Y | |
| Zheng Chunmei | Wuhan Guangxun Technology Co., Ltd. | Independent director | August 1, 2016 | Y | |
| Wu Weihua | Huajin Securities Co., Ltd. | GM | January 1, 2020 | Y | |
| Yang Xiongwen | South China University of Technology | Teacher | August 1, 2008 | Y | |
| Yang Xiongwen | Guangdong Hanrui Law Firm | Part-time lawyer | January 14, 2021 | N | |
| Explanation on post-holding in other unit | N/A | ||||
Punishment of securities regulatory authority in recent three years to the company’s current and outgoing directors, supervisors andsenior management during the reporting period
√ Applicable □ Not applicable
1. Mr. Yang Bin, deputy general manager and Chief Financial Officer of the Company, due to the failure to urge and organize theinformation disclosure work for the temporary announcement of Shenzhen China Agricultural University Technology Co., Ltd. inaccordance with relevant regulations during his tenure as Secretary of the Board of Directors of Shenzhen China AgriculturalUniversity Science and Technology Co., Ltd., in August 2018, he was given a warning and fined 30000 yuan by Shenzhen SecuritiesRegulatory Bureau of China Securities Regulatory Commission.
IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executivesRemuneration of directors and supervisors are determined by general meeting, and the allowance standard foreach independent director is RMB 60, 000 per year (tax included).Remuneration of senior management is determined by the board based on the unified remuneration management
system and actual completion of operational targets, and the “Proposal of Basic Remuneration for High-rankingManagers of the Company” was deliberated and approved in 2
nd
extraordinary meeting of the Board for year of2012.
Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
| Name | Title | Sex (F/M) | Age | Post-holding status | Total remuneration obtained from the Company (before taxes) | Whether remuneration obtained from related party of the Company |
| Li Zhongqiu | Chairman, GM | M | 56 | Currently in office | 49.9 | N |
| Jiang Junming | Vice Chairman | M | 42 | Currently in office | 0 | Y |
| Chen Zhigang | Director | M | 47 | Currently in office | 0 | Y |
| Yang Bin | Deputy General Manager, Chief Financial Officer | M | 48 | Currently in office | 34.6 | N |
| Zheng Chunmei | Independent director | F | 55 | Currently in office | 6 | N |
| Yang Xiongwen | Independent director | M | 42 | Currently in office | 6 | N |
| Wu Weihua | Independent director | M | 50 | Currently in office | 6 | N |
| Huang Yanbo | Supervisor | F | 58 | Currently in office | 0 | Y |
| Chen Qin | Supervisor | F | 34 | Currently in office | 14.7 | N |
| Tang Ganyu | Deputy General Manager | F | 43 | Leave office | 24 | N |
| Wu Aijie | Employee supervisor | F | 49 | Currently in office | 14.26 | N |
| Niu Zhuo | Secretary of the Board | F | 38 | Currently in office | 25.4 | N |
| Total | -- | -- | -- | -- | 180.86 | -- |
Delegated equity incentive for directors, supervisors and senior executives in reporting period
□ Applicable √ Not applicable
V. Particulars of workforce
1. Number of Employees, Professional composition, Education background
| Employee in-post of the parent Company (people) | 12 |
| Employee in-post of main Subsidiaries (people) | 1,120 |
| The total number of current employees (people) | 1,132 |
| The total number of current employees to receive pay (people) | 1,132 |
| Retired employee’ s expenses borne by the parent Company and main Subsidiaries (people) | 0 |
| Professional composition | |
| Category of professional composition | Numbers of professional composition (people) |
| Production personnel | 914 |
| Sales personnel | 33 |
| Technical personnel | 94 |
| Financial personnel | 18 |
| Administrative personnel | 73 |
| Total | 1,132 |
| Education background | |
| Category of education background | Numbers (people) |
| Master and on-the-job graduate students | 6 |
| Undergraduate | 65 |
| Junior college | 84 |
| Other | 977 |
| Total | 1,132 |
2. Remuneration Policy
The company’s directors (excluding independent directors), supervisors and senior management personnel aremonthly paid by basic pay and performance pay, and the annual remunerations are paid after annual assessment;the company’s independent directors are paid 60,000 Yuan per person per year as allowances (including tax), thetravel expenses for attending the board meeting and stockholders' meeting and the necessary expenses generatedby exercising their powers in accordance with relevant laws and regulations can be applied for reimbursementaccording to the company’s regulations; the remuneration ordinary employees are decided by the positions,including probationary period salary regular employee salary, and the company pays social security and publicaccumulated funds for them in accordance with the national regulations.
3. Training programs
(1) The directors, supervisors and senior management personnel actively participate in the relevant training andassessment organized by the regulatory agencies, such as Shenzhen Stock Exchange, Shenzhen SecuritiesRegulatory Bureau, etc.
(2) The company regularly or irregularly organizes professional training for employees according to thedepartments and division of labor, including internal training and external training, therein to, internal training areprovided by specialized personnel in the company; external training are provided by organizing employees toparticipate in the trade associations and the training organized by supervision department.
(3) Organize staff in all positions to actively participate in the learning and assessment of technical professionalqualifications required by different positions.
4. Labor outsourcing
□ Applicable √ Not applicable
Section X. Corporate Governance
I. Corporate governance of the Company
During the reporting period, in accordance with the laws and regulations of the "Company Law", "Securities Law",and "Governance Norms of Listed Companies", and the relevant rules and requirements promulgated by the ChinaSecurities Regulatory Commission, the company has constantly improved the corporate governance structure,established a sound internal control system, enhanced the level of standard operation, strictly followed theprovisions of the production and management control and the financial management and control and theinformation disclosure and control, carried out the work on the basis of the "Articles of Association", "Rules ofProcedure of the Board of Directors”, "Rules of Procedure of the Board of Supervisors”, “Working System of theIndependent Directors”, and “Working Rules of the General Manager”, and ensured that the shareholders' meeting,the board of directors and the board of supervisors can perform their duties and responsibilities normally. Thecompany's governance meets the requirements on the documents of governance norms of listed companies issuedby China Securities Regulatory Commission.
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance forlisted company from CSRC?
□Yes √ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governancefor listed company from CSRC.II. Independent of the Company relative to controlling shareholders’ in aspect of businesses,personnel, assets, organization and financeDuring the reporting period, the company’s controlling shareholder - Wuhan Zhongheng Group has separated thebusiness, personnel, assets, organization and finance from the controlling shareholders in accordance with the lawsand regulations of the "Company Law" and "Articles of Association", and had the independent and completebusiness system and the capabilities of independent management.
1. Personnel: The company fully and independently operates in the labor, personnel and salary managementsystems and has established the independent management system, all of the company's senior executives areworking in the Company and receive the salaries, no senior executive has held a post in both the Company and thecontrolling shareholder’s company, and no financial staff has held a post in two or more of the related companies.
2. Assets: The company has the clear property rights with the controlling shareholders and the capabilities ofindependent management, possesses the full rights to control the production system, supporting facilities and landuse rights, no major shareholder has occupied or dominated the assets.
3. Finance: The company has established the independent, complete, standardized financial accounting system andfinancial management system, and the corresponding internal control system and internal audit system in
accordance with the requirements of the" Accounting Standards for Business Enterprises" to make the independentfinancial decisions.
4. Organization: the board of directors, the board of supervisors, and other internal organizations are sound andoperate independently, the organization is completely separated from the controlling shareholders, all organizationsof the company are set up based on the norms and requirements of the listed company and the company’s actualbusiness features which have the independent office addresses and there is no mixed operation or co-working, andthe controlling shareholders legally exercise the investors’ rights and undertake the corresponding obligations.
5. Business: the company has the completely independent business operation system, the capabilities ofindependent management, the independent purchasing system, production system and marketing system, doesn’tdepend on the controlling shareholders to gain profits or have the horizontal competition relationship with thecontrolling shareholders or the subsidiaries.III. Horizontal competition
□ Applicable √ Not applicable
IV. In the report period, the Company held annual general meeting and extraordinaryshareholders’ general meeting
1. 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 shareholders’ general meeting | Extraordinary shareholders’ general meeting | 6.26% | February 11, 2020 | February 12, 2020 | 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% | May 22, 2020 | 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
V. Responsibility performance of independent directors
1. The attending of independent directors to Board meetings and shareholders’ general meeting
| The attending of Board Meeting and shareholders’ general meeting by independent directors | |||||||
| Independent director | Times of Board meeting supposed to attend in the report period | Times of present in person | Times of attending by communication | Times of entrusted presence | Times of Absence | Absent the Board Meeting for the second time in a row (Y/N) | Times presented in shareholders’ general meeting |
| Zheng Chunmei | 5 | 0 | 5 | 0 | 0 | N | 2 |
| Yang Xiongwen | 5 | 0 | 5 | 0 | 0 | N | 2 |
| Wu Weihua | 5 | 0 | 5 | 0 | 0 | N | 2 |
Explanation of absent the Board Meeting for the second time in a rowNil
2. Objection for relevant events from independent directors
Independent directors come up with objection about Company’s relevant matters
□Yes √No
Independent directors has no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directors
The opinions from independent directors have been adopted
√ Yes □ No
Explanation on advice that accepted/not accepted from independent directorsAdvises about the Company from independent directors are all accepted in the reporting period.VI. Duty performance of the special committees under the board during the reporting period
1. Duty performance of the audit committee
During the reporting period, the work carried out by the audit committee mainly included: listening to thecompany's annual operating, financial and internal audit work, continuing to concern and guide the company’sfinancial affairs and internal audit supervision, carrying forward the audit work to the company’s annual financialreport, sending a letter to urge the audit report to be submitted on time, communicating with the certified publicaccountants time after time during the annual audit, objectively evaluating the annual audit work of the accounting
firm, and making the resolution to agree to re-appoint the accounting firm.
2. Remuneration & appraisal committee
During the reporting period, the remuneration & appraisal committee has audited remuneration of the company’sdirectors, supervisors and senior management which was considered to be consistent with the actual situation andin line with the provisions of relevant laws and the regulations of remuneration and appraisal system.
3. The nominations committee
During the reporting period, the nominations committee has investigated the proposal for the supplement ofindependent directors, and made the decision to agree to submit to the board of directors for consideration.
4. The Strategic Committee
In the reporting period, the Strategic Committee puts forward reasonable suggestions for the strategicdevelopment of the Company by combining with actual situation of the Company.VII. Works from Supervisory CommitteeThe Company has risks in reporting period that found in supervisory activity from supervisory committee
□ Yes √ No
Supervisory committee has no objection about supervision events in reporting period.VIII. Examination and incentives of senior managementDuring the reporting period, in order to enable the senior management to better perform their duties and maintainthe interests of the company and its shareholders, the company has variable paid the remuneration to urge thecompany's management to work more diligently and ensure the realization of the company's development strategyand operation target accordingly to the “Staff rank and basic salary system” and the performance assessment andcombining with the company's actual operating conditions.IX. Internal Control
1. Details of major defects in IC appraisal report that found in reporting period
□Yes √ No
2. Appraisal Report of Internal Control
| Disclosure date of full internal control evaluation report | April 27, 2021 |
| Disclosure index of full internal control evaluation report | Juchao Website http://www.cninfo.com.cn |
| The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the | 100.00% |
| company's consolidated financial statements | ||
| The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the company's consolidated financial statements | 100.00% | |
| Defects Evaluation Standards | ||
| Category | Financial Reports | Non-financial Reports |
| Qualitative criteria | 1. General deficiencies: the amount of direct property loss is between 50,000 yuan and 150,000 yuan, penalized by the district-level (including district-level) government sector but not having a negative impact on the company’s regular disclosure; 2. Important deficiencies: the amount of direct property loss is between 150,000 yuan and 450,000 yuan, penalized by the provincial level (including provincial level) government sector but not having a negative impact on the company’s regular disclosure; 3. Major deficiencies: the amount of direct property loss is more than 450,000 yuan, penalized by the government sector and having a negative impact on the company’s regular disclosure; | 1. General deficiencies: when facing low-risk matters in the process of business operation, the unit being inspected didn’t take corresponding internal control measures and respond effectively; 2. Important deficiencies: when facing matters at a moderate risk level in the process of business operation, the unit being inspected didn’t take corresponding internal control measures and respond effectively; 3. Major deficiencies: when facing high-risk matters in the process of business operation, the unit being inspected didn’t take corresponding internal control measures and respond effectively. |
| Quantitative standard | 1. It belongs to important deficiency if the misstatement of the company’s cash on hand, bank deposits, notes receivable, and notes payable caused by internal control deficiencies is less than RMB 1000 Yuan; it belongs to major deficiency if the misstatement caused by internal control deficiencies is greater than or equal to RMB 1000 Yuan. 2. Other deficiencies in internal controls: general deficiencies: misstatement index 1 ≥ 0.5 ‰, and misstatement index 2 < 0.5 ‰; important deficiencies: 0.5 ‰ ≤ misstatement index 2 <1 ‰; major deficiencies: misstatement index 2 ≥ 1 ‰ | General deficiencies: misstatement index 1 ≥0.5‰, and misstatement index 2 < 0.5‰; Important deficiencies: 0.5‰ ≤ misstatement index 2 < 1‰; Major deficiencies: misstatement index 2≥1‰ |
| Amount of significant defects in financial reports | 0 |
| Amount of significant defects in non-financial reports | 0 |
| Amount of important defects in financial reports | 0 |
| Amount of important defects in non-financial reports | 0 |
X. Auditing report of internal control
√ Applicable □ Not applicable
| Deliberations in Internal Control Audit Report | |
| We believe that the Huafa Company was in accordance with the "basic norms of internal control" and the relevant provisions and maintained effective internal control of financial reporting in all material respects | |
| Disclosure details of audit report of internal control | Disclosed |
| Disclosure details of audit report of internal control | April 27, 2021 |
| Disclosure date of audit report of internal control (full-text) | Juchao Website http://www.cninfo.com.cn |
| Opinion type of auditing report of IC | Standard unqualified |
| Whether the non-financial report had major defects | No |
Carried out modified opinion for internal control audit report from CPA
□Yes √ No
The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board
√ Yes □ No
Section XI. Corporate Bond
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and withoutdue on the date when annual report approved for released or fail to cash in full on dueNo
Section XII. Financial Report
I. Audit report
| Type of audit opinion | Standard unqualified opinion |
| Signing date of audit report | April 23, 2021 |
| Name of audit institute | DAXIN Certified Public Accountants (LLP) |
| Document serial of audit report | Da Xin Shen Zi[2021] No.: 5-10006 |
| Name of CPA | Fan Zhang, Yang Ting |
Text of Audit report
To all shareholders of SHENZHEN ZHONGHENG HUAFA CO., LTD.:
I. Auditing opinionsWe have audited the financial statement under the name of SHENZHEN ZHONGHENG HUAFA CO., LTD.(hereinafter referred to as the Company), including the consolidated and parent Company’s balance sheet of 31December 2020 and profit statement, and cash flow statement, and statement on changes of shareholders’ equityfor the year ended, and notes to the financial statements for the year ended.In our opinion, the Company’s financial statements have been prepared in accordance with the EnterprisesAccounting Standards and Enterprises Accounting System, and they fairly present the financial status of theCompany and of its parent company as of 31 December 2020 and its operation results and cash flows for the yearended.II. Basis of opinionWe conducted our audit in accordance with the Auditing Standards for Certified Public Accountants of China. Ourresponsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of theFinancial Statements” section of the auditor’s report. We are independent of the Company in accordance with theCertified Public Accountants of China’s Code of Ethics for Professional Accountants, and we have fulfilled ourother ethical responsibilities in accordance with the Code.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.III. Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe financial statements of the current period. These matters were addressed in the context of our audit of thefinancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion onthese matters.
(i) Revenue recognition
1. Description of the matter
As stated in Note V (33) to the consolidated statement of your company, the main business income from display andinjection molded foam of 2020 recognized by your company was RMB 623,096,462.06, accounting for 90.08% ofoperating income. The revenue generated from the sale of products is recognized when the control of the producthas been transferred to the customer, for domestic sales, the income is confirmed by the other party’s receipt of theproduct, for export sales, the income is confirmed by the relevant customs declaration documents when theproduct has been shipped and the declaration formalities have been completed.Since income is one of your company’s key performance indicators, in order to prevent the inherent risks ofmanipulating the time point of income recognition for achieving specific goals or expectations, we identify theauthenticity of income recognition for displays and injection molded foam as key audit items.
2. Audit response
(1) We understand, evaluate, and test the design and implementation of key internal controls related to the revenuecycle, and test the effectiveness of internal controls;
(2) Select samples to inspect the sales contract or order, check the invoice, outbound order, receipt, customsdeclaration and freight bill of lading, identify the contract terms and conditions related to the risks and rewardtransfer of the ownership of the goods, and evaluate whether the time point of revenue recognition meets therequirements of Accounting Standards for Business Enterprises
(3) Enquire the business information of major customers to identify whether there is related relationship; conductterminal sales penetrating inspections on related transactions; check the rationality and fairness of the relatedtransactions;
(4) For the income transactions recorded before and after the balance sheet date, select samples, check theoutbound order, receipt, logistics records, bills of lading and other supporting documents to assess whether theincome is recorded in the appropriate accounting period;
(5) Send correspondence to significant customers to confirm the amount of current sales revenue and accountreceivable balance, and maintain controls over the correspondence during the sending process.(ii) Related transaction
1. Description of the matter
As stated in Note IX (4) to the consolidated statement of your company, your company purchased a total of 284million yuan of materials and finished products from the related parties, Hong Kong Yutian InternationalInvestment Co., Ltd. and Wuhan Hengsheng Photoelectric Industry Co., Ltd., and sold a total of 198 million yuanof goods to the related parties, Hong Kong Yutian International Investment Co., Ltd. and Wuhan HengshengPhotoelectric Industry Co., Ltd. As the related transactions involve a large amount of money, and for the samerelated party at the same time there are sales and purchase business, there is a risk of circular transactions, we
classify the related transaction as a key audit matter.
2. Audit response
(1) Understand, evaluate and test the internal control of your company’s related relationships and relatedtransactions;
(2) Obtain the related party relationship table compiled by your company, and conduct appropriate backgroundinvestigation to identify and verify related parties through Internet information inquiry;
(3) Obtain a list of related transactions of your company, understand the commercial reasons of relatedtransactions, check related contracts or agreements, invoices, customs declarations, etc. of related transactions,and conduct letter confirmation for the accrual and balance of major related transactions to verify whether theaccounting treatment is appropriate;
(4) Understand the authorization and approval procedures for related transactions of your company, check theprocurement and sales vouchers to third parties, compare the purchase and sales prices of related parties andnon-related parties, and verify whether the related transactions are fair;
(5) Obtain the related party’s final procurement and sales lists to the third party provided by your company, checkthe relevant contract agreements and bank slip of the procurement and sales of the related party to the third party,and verify the authenticity of the transaction and whether it constitutes a transaction cycle.(iii) Material arbitration
1. Description of the matter
As stated in Note XII (1) (2)to the consolidated statement, on August 16, 2017, the South China InternationalEconomic and Trade Arbitration Commission made a ruling of HNGZSC [2017] No. D376, ruled that yourcompany and Wuhan Zhongheng had to pay a total of 234 million yuan of liquidated damages and other cost.OnNovember 5, 2019, the South China International Economic and Trade Arbitration Commission issued the rulingHNGZSC [2019] No. D618 that your company and Wuhan Zhongheng Group should pay V&T Law Firm thelawyer fee of RMB 19,402,000 and the liquidated damages. Your company believed that case [2017] No. D376(Vanke arbitration case for short) had problems in the arbitration procedure and the determination of the so-calledbreach of contract facts, and the ruling results damaged the company’s legitimate rights and interests. Yourcompany believed that the liability for breach of contract in the Vanke arbitration case should be fully borne byWuhan Zhongheng Group and Wuhan Zhongheng promised to bear all arbitration losses in full. If the companypaid in advance due to the execution of the case, it will immediately request Wuhan Zhongheng to fulfill itscommitment and eliminate the impact.Your company believed that case [2019] No. D618 (referred to as the lawyer fee arbitration case) was caused bythe Vanke arbitration case, there’s a close causal relationship between the two cases, and Wuhan ZhonghengGroup issued a Commitment Letter to Shenzhen Hwafa in December 2016 that Wuhan Zhongheng Group shallbear the full amount if the arbitration determines that Vanke wins the lawsuit and the disputes caused by the
contract lead to arbitration losses. As the case has not yet been completed, and the uncertainty of the division ofliability for fault of internal performance the defaulting entity and the possibility of the transfer of interest inWuhan Zhongheng, the management needs to make significant judgments and estimates on whether the matter isrecognized as the estimated liability or the current profits or losses, so we recognize the major arbitration matteras a key audit matter.As stated in Note XII (3) to the consolidated statement, on April 17, 2020, Zhongheng Semiconductor sued yourcompany , demanding that your company transfer ownership pf the aforesaid two plots of land and compensateeconomic losses of 52 million yuan. Zhongheng Semiconductor has promised your company that its main appealis the transfer of land to its name. If it wins, it will waive its claim for financial compensation. Since the case hasnot yet been heard in court, the management needs to make significant judgments and estimates on whether thematter is recognized as an estimated liability or current profit and loss. Therefore, we recognize the significantarbitration matter as a key audit matter.
2. Audit response
(1) Understand the company’s policies and procedures for determining major issues by conducting inspections,consulting with management and corporate legal counsel;
(2) Collect your company’s asset replacement contracts, asset replacement and related transaction announcementsand old contracts, cooperation agreement between your company and Wuhan Zhongheng Group, and theArbitration Award HNGZSC [2017] No. D376. related to this major issue, your company’s application for repealof arbitration, the ruling of Shenzhen Intermediate People’s Court for rejection, the enforcement notice ofShenzhen Intermediate People’s Court, and the Arbitration Award HNGZSC [2019] No. D618, counsel's legalopinion and other documents and materials, and understand the supporting evidence for the management of yourcompany to make judgments on the important matters;
(3) Engage legal experts to make independent judgments on the matter, and make independent judgments on legalspecial opinions issued by legal experts;
(4) Sending a communication letter to company’s legal counsel to get an update on the progress of major litigationcases, and determine if there is a material impact on the company’s financial statements;
(5) Check whether the major arbitration matter is sufficiently and properly disclosed in the financial report.IV. Other informationThe management of the Company (the “Management”) is responsible for other information which includes theinformation covered in the Company’s 201X annual report excluding the financial statement and our audit report.The audit opinion issued by us for the financial statement has not covered other information, for which we do notissue any form of assurance opinions.Considering our audit on financial statements, we are liable to read other information, during which, we shallconsider whether other information differs materially from the financial statements or that we understand duringour audit, or whether there is any material misstatement.
Based on the works executed by us, we should report the fact if we find any material misstatement in otherinformation. In this regards, we have nothing to report.V. Responsibilities of management and those charged with governance for the financial statementsThe management is responsible for the preparation of the financial statements in accordance with the AccountingStandards for Enterprise to secure a fair presentation, and for the design, establishment and maintenance of theinternal control necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing matters (if applicable) related to going concern and using the goingconcern assumption unless the management either intends to liquidate the Company or to cease operations, or hasno realistic alternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI. Responsibilities of the auditor for the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that includes our audit opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith the CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of the financial statements.As part of an audit in accordance with the CAS, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for audit opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern assumption and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required by the CAS to draw users’ attention in audit report to the related disclosures inthe financial statements or, if such disclosures are inadequate, to modify audit opinion. Our conclusions are basedon the information obtained up to the date of audit report. However, future events or conditions may cause theCompany to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, and whether the financialstatements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Company to express audit opinion on the financial statements. We are responsible for thedirection, supervision and performance of the group audit. We remain solely responsible for audit opinion.We communicate with those charged with governance regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that weidentify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and where applicable, related safeguard measures.From the matters communicated with those charged with governance, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in the auditor’s report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in the auditor’s report because of the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.II. Financial Statement
Statement in Financial Notes are carried in RMB/CNY
1. Consolidated balance sheet
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD.
December 31, 2020
In RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary funds | 60,968,053.58 | 38,095,501.00 |
| Settlement provisions | ||
| Capital lent | ||
| Transaction financial assets |
| Derivative financial assets | ||
| Note receivable | 20,240,464.79 | |
| Account receivable | 128,063,911.79 | 138,755,691.43 |
| Receivable financing | 10,057,385.11 | 42,096,834.02 |
| Accounts paid in advance | 39,643,255.11 | 23,007,637.46 |
| Insurance receivable | ||
| Reinsurance receivables | ||
| Contract reserve of reinsurance receivable | ||
| Other account receivable | 4,466,949.96 | 6,351,361.16 |
| Including: Interest receivable | ||
| Dividend receivable | ||
| Buying back the sale of financial assets | ||
| Inventories | 70,166,013.49 | 66,971,551.96 |
| Contractual assets | ||
| Assets held for sale | ||
| Non-current asset due within one year | ||
| Other current assets | 4,255,643.19 | 1,395,071.36 |
| Total current assets | 338,198,437.05 | 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 | 47,224,662.27 | 48,952,992.57 |
| Fixed assets | 193,605,444.53 | 198,229,817.31 |
| Construction in progress | 740,000.00 | |
| Productive biological asset |
| Oil and gas asset | ||
| Right-of-use assets | ||
| Intangible assets | 40,820,657.80 | 42,968,600.44 |
| Expense on Research and Development | ||
| Goodwill | ||
| Long-term expenses to be apportioned | 77,445.31 | 309,781.15 |
| Deferred income tax asset | 7,383,734.13 | 6,803,360.00 |
| Other non-current asset | 66,000.00 | 225,700.00 |
| Total non-current asset | 289,917,944.04 | 297,490,251.47 |
| Total assets | 627,779,621.06 | 614,163,899.86 |
| Current liabilities: | ||
| Short-term loans | 12,527,808.00 | 24,633,898.20 |
| Loan from central bank | ||
| Capital borrowed | ||
| Trading financial liability | ||
| Derivative financial liability | ||
| Note payable | 37,416,381.20 | 16,761,590.51 |
| Account payable | 98,318,239.88 | 108,804,905.20 |
| Accounts received in advance | 356,446.21 | |
| Contractual liability | 287,140.66 | |
| Selling financial asset of repurchase | ||
| Absorbing deposit and interbank deposit | ||
| Security trading of agency | ||
| Security sales of agency | ||
| Wage payable | 5,737,366.59 | 5,877,341.25 |
| Taxes payable | 14,204,642.62 | 12,877,944.98 |
| Other account payable | 27,608,281.01 | 28,027,592.62 |
| Including: Interest payable | 26,335.66 | 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 | 18,322,972.81 | |
| Total current liabilities | 226,422,832.77 | 209,339,718.97 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term loans | 61,000,000.00 | 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 | 4,043,640.00 | 2,331,720.00 |
| Deferred income tax liabilities | ||
| Other non-current liabilities | ||
| Total non-current liabilities | 65,108,051.00 | 75,396,131.00 |
| Total liabilities | 291,530,883.77 | 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 | 146,577,771.50 | 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 | -170,881,854.46 | -177,712,041.86 |
| Total owner’ s equity attributable to parent company | 336,248,737.29 | 329,428,049.89 |
| Minority interests | ||
| Total owner’ s equity | 336,248,737.29 | 329,428,049.89 |
| Total liabilities and owner’ s equity | 627,779,621.06 | 614,163,899.86 |
Legal Representative: Li ZhongqiuPerson in charge of accounting works: Yang BinPerson in charge of accounting institute: Wu Aijie
2. Balance Sheet of Parent Company
In RMB
| Item | December 31, 2020 | December 31, 2019 |
| Current assets: | ||
| Monetary funds | 966,379.17 | 3,494,245.90 |
| Trading financial assets | ||
| Derivative financial assets | ||
| Note receivable | ||
| Account receivable | ||
| Receivable financing | ||
| Accounts paid in advance | 73,685.03 | |
| Other account receivable | 93,922,057.92 | 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 | 94,976,928.62 | 100,848,026.51 |
| Non-current assets: | ||
| Debt investment |
| Other debt investment | ||
| Long-term receivables | ||
| Long-term equity investments | 186,618,400.00 | 186,608,900.00 |
| Investment in other equity instrument | ||
| Other non-current financial assets | ||
| Investment real estate | 23,957,898.42 | 25,166,301.06 |
| Fixed assets | 96,674,476.52 | 98,410,024.38 |
| Construction in progress | 740,000.00 | |
| Productive biological assets | ||
| Oil and natural gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 4,408,763.52 | 4,553,709.24 |
| Research and development costs | ||
| Goodwill | ||
| Long-term deferred expenses | ||
| Deferred income tax assets | 7,443,826.11 | 7,367,646.35 |
| Other non-current assets | ||
| Total non-current assets | 319,843,364.57 | 322,106,581.03 |
| Total assets | 414,820,293.19 | 422,954,607.54 |
| Current liabilities | ||
| Short-term borrowings | ||
| Trading financial liability | ||
| Derivative financial liability | ||
| Notes payable | ||
| Account payable | 10,745,840.16 | 10,745,840.16 |
| Accounts received in advance | 57,266.01 | |
| Contractual liability | 79,195.32 | |
| Wage payable | 1,476,601.12 | 1,220,979.02 |
| Taxes payable | 7,892,878.33 | 8,489,130.72 |
| Other accounts payable | 21,304,919.43 | 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 | 3,959.77 | |
| Total current liabilities | 53,503,394.13 | 51,613,591.33 |
| Non-current liabilities: | ||
| Long-term loans | 61,000,000.00 | 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 | 61,064,411.00 | 73,064,411.00 |
| Total liabilities | 114,567,805.13 | 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 | -206,887,603.69 | -208,863,486.54 |
| Total owner’s equity | 300,252,488.06 | 298,276,605.21 |
| Total liabilities and owner’s equity | 414,820,293.19 | 422,954,607.54 |
3. Consolidated Profit Statement
In RMB
| Item | 2020 | 2019 |
| I. Total operating income | 691,742,269.12 | 721,557,440.51 |
| Including: Operating income | 691,742,269.12 | 721,557,440.51 |
| Interest income | ||
| Insurance gained | ||
| Commission charge and commission income | ||
| II. Total operating cost | 686,630,062.93 | 713,911,668.31 |
| Including: Operating cost | 613,228,694.51 | 634,502,127.35 |
| 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 | 3,575,851.98 | 3,900,270.42 |
| Sales expense | 15,417,760.60 | 20,879,256.97 |
| Administrative expense | 34,481,219.11 | 38,034,071.63 |
| R&D expense | 7,285,833.84 | 6,649,163.02 |
| Financial expense | 12,640,702.89 | 9,946,778.92 |
| Including: Interest expenses | 8,508,919.02 | 10,638,951.99 |
| Interest income | 838,314.39 | 631,958.95 |
| Add: other income | 2,264,506.66 | 259,080.00 |
| Investment income (Loss is listed with “-”) | 165,317.73 | 180,964.60 |
| 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 “-”) | 207,383.73 | 190,618.99 |
| Losses of devaluation of asset (Loss is listed with “-”) | 170,241.33 | -385,333.82 |
| Income from assets disposal (Loss is listed with “-”) | 817,533.49 | 9,298.34 |
| III. Operating profit (Loss is listed with “-”) | 8,737,189.13 | 7,900,400.31 |
| Add: Non-operating income | 488,657.30 | 334,950.66 |
| Less: Non-operating expense | 408,809.90 | 484,592.52 |
| IV. Total profit (Loss is listed with “-”) | 8,817,036.53 | 7,750,758.45 |
| Less: Income tax expense | 1,986,849.13 | 2,290,709.30 |
| V. Net profit (Net loss is listed with “-”) | 6,830,187.40 | 5,460,049.15 |
| (i) Classify by business continuity | ||
| 1.continuous operating net profit (net loss listed with ‘-”) | 6,830,187.40 | 5,460,049.15 |
| 2.termination of net profit (net loss listed with ‘-”) | ||
| (ii) Classify by ownership | ||
| 1.Net profit attributable to owner’s of parent company | 6,830,187.40 | 5,460,049.15 |
| 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 | 6,830,187.40 | 5,460,049.15 |
| Total comprehensive income | 6,830,187.40 | 5,460,049.15 |
| attributable to owners of parent Company | ||
| Total comprehensive income attributable to minority shareholders | ||
| VIII. Earnings per share: | ||
| (i) Basic earnings per share | 0.0241 | 0.0193 |
| (ii) Diluted earnings per share | 0.0241 | 0.0193 |
As for the enterprise combined under the same control, net profit of 0 Yuan achieved by the merged party before combination while 0Yuan achieved last period.Legal Representative: Li ZhongqiuPerson in charge of accounting works: Yang BinPerson in charge of accounting institute: Wu Aijie
4. Profit Statement of Parent Company
In RMB
| Item | 2020 | 2019 |
| I. Operating income | 37,262,114.01 | 38,216,680.42 |
| Less: Operating cost | 6,784,029.31 | 7,304,872.41 |
| Taxes and surcharge | 935,273.64 | 1,302,971.22 |
| Sales expenses | ||
| Administration expenses | 17,981,589.32 | 15,825,546.36 |
| R&D expenses | ||
| Financial expenses | 7,719,720.37 | 8,665,845.55 |
| Including: interest expenses | 7,717,101.68 | 8,631,842.66 |
| Interest income | 10,145.09 | 16,312.01 |
| Add: other income | 5,145.25 | |
| 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 “-”) | -304,719.05 | 557,038.21 |
| Losses of devaluation of asset (Loss is listed with “-”) | ||
| Income on disposal of assets (Loss is listed with “-”) | 910,907.16 | |
| II. Operating profit (Loss is listed with “-”) | 4,452,834.73 | 5,674,483.09 |
| Add: Non-operating income | 89,455.80 | 11,431.87 |
| Less: Non-operating expense | 433.38 | 440,391.48 |
| III. Total Profit (Loss is listed with “-”) | 4,541,857.15 | 5,245,523.48 |
| Less: Income tax | 2,565,974.30 | 2,253,579.61 |
| IV. Net profit (Net loss is listed with “-”) | 1,975,882.85 | 2,991,943.87 |
| (i) continuous operating net profit (net loss listed with ‘-”) | 1,975,882.85 | 2,991,943.87 |
| (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 | 1,975,882.85 | 2,991,943.87 |
| VII. Earnings per share: | ||
| (i) Basic earnings per share | ||
| (ii) Diluted earnings per share |
5. Consolidated Cash Flow Statement
In RMB
| Item | 2020 | 2019 |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 570,954,717.52 | 553,928,004.01 |
| 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 | 126,477.24 | |
| Other cash received concerning operating activities | 9,550,590.82 | 13,798,593.97 |
| Subtotal of cash inflow arising from operating activities | 580,631,785.58 | 567,726,597.98 |
| Cash paid for purchasing commodities and receiving labor service | 416,696,575.23 | 378,873,939.95 |
| 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 | 58,223,463.86 | 64,417,822.74 |
| Taxes paid | 11,877,060.89 | 12,372,419.54 |
| Other cash paid concerning | 34,115,416.00 | 37,598,708.74 |
| operating activities | ||
| Subtotal of cash outflow arising from operating activities | 520,912,515.98 | 493,262,890.97 |
| Net cash flows arising from operating activities | 59,719,269.60 | 74,463,707.01 |
| II. Cash flows arising from investing activities: | ||
| Cash received from recovering investment | ||
| Cash received from investment income | 147,502.66 | 180,964.60 |
| Net cash received from disposal of fixed, intangible and other long-term assets | 1,803,913.05 | 198,536.93 |
| Net cash received from disposal of subsidiaries and other units | ||
| Other cash received concerning investing activities | 55,000,000.00 | 75,000,000.00 |
| Subtotal of cash inflow from investing activities | 56,951,415.71 | 75,379,501.53 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 5,471,921.66 | 3,288,039.15 |
| Cash paid for investment | ||
| Net increase of mortgaged loans | ||
| Net cash received from subsidiaries and other units obtained | ||
| Other cash paid concerning investing activities | 55,000,000.00 | 75,000,000.00 |
| Subtotal of cash outflow from investing activities | 60,471,921.66 | 78,288,039.15 |
| Net cash flows arising from investing activities | -3,520,505.95 | -2,908,537.62 |
| 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 | 34,380,634.80 | 215,911,217.10 |
| Other cash received concerning financing activities | ||
| Subtotal of cash inflow from financing activities | 34,380,634.80 | 215,911,217.10 |
| Cash paid for settling debts | 56,765,100.20 | 267,928,436.03 |
| Cash paid for dividend and profit distributing or interest paying | 8,639,896.64 | 10,984,022.74 |
| Including: Dividend and profit of minority shareholder paid by subsidiaries | ||
| Other cash paid concerning financing activities | 30,688,367.17 | |
| Subtotal of cash outflow from financing activities | 96,093,364.01 | 278,912,458.77 |
| Net cash flows arising from financing activities | -61,712,729.21 | -63,001,241.67 |
| IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | -1,080,106.72 | 129,924.29 |
| V. Net increase of cash and cash equivalents | -6,594,072.28 | 8,683,852.01 |
| 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 | 30,050,989.33 | 36,645,061.61 |
6. Cash Flow Statement of Parent Company
In RMB
| Item | 2020 | 2019 |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 28,455,496.04 | 31,130,517.17 |
| Write-back of tax received | 4,854.01 | |
| Other cash received concerning operating activities | 12,618,059.59 | 126,052,122.79 |
| Subtotal of cash inflow arising from operating activities | 41,078,409.64 | 157,182,639.96 |
| Cash paid for purchasing commodities and receiving labor service | 1,580,720.38 | 5,137,335.48 |
| Cash paid to/for staff and workers | 1,943,628.52 | 3,853,129.50 |
| Taxes paid | 5,824,850.36 | 3,503,529.69 |
| Other cash paid concerning operating activities | 15,908,119.05 | 130,808,236.27 |
| Subtotal of cash outflow arising from operating activities | 25,257,318.31 | 143,302,230.94 |
| Net cash flows arising from operating activities | 15,821,091.33 | 13,880,409.02 |
| 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 | 1,590,000.00 | 1,000.00 |
| Net cash received from disposal of subsidiaries and other units | ||
| Other cash received concerning investing activities | ||
| Subtotal of cash inflow from investing activities | 1,590,000.00 | 1,000.00 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 228,914.40 | |
| 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 | 228,914.40 |
| Net cash flows arising from investing activities | 1,590,000.00 | -227,914.40 |
| III. Cash flows arising from financing activities | ||
| Cash received from absorbing investment | ||
| Cash received from loans | 1,000,000.00 | 90,000,000.00 |
| Other cash received concerning financing activities | ||
| Subtotal of cash inflow from financing activities | 1,000,000.00 | 90,000,000.00 |
| Cash paid for settling debts | 12,000,000.00 | 105,000,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 7,717,101.68 | 8,631,842.66 |
| Other cash paid concerning financing activities | ||
| Subtotal of cash outflow from financing activities | 19,717,101.68 | 113,631,842.66 |
| Net cash flows arising from financing activities | -18,717,101.68 | -23,631,842.66 |
| IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | -2,451.00 | 1,311.90 |
| V. Net increase of cash and cash equivalents | -1,308,461.35 | -9,978,036.14 |
| 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 | 737,682.09 | 2,046,143.44 |
7. Statement of Changes in Owners’ Equity (Consolidated)
Current period
In RMB
| Item | 2020 | ||||||||||||
| Owners’ equity attributable to the parent Company | Minority interests | Total owners’ | |||||||||||
| Share | Other equity instrument | Capital | Less: | Other | Reasonab | Surplus | Provision | Retained | Other | Subtotal | |||
| capital | Preferred stock | Perpetual capital securities | Other | reserve | Inventory shares | comprehensive income | le reserve | reserve | of general risk | profit | equity | ||||
| I. Balance at the end of the last 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 | |||||||||
| 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 “-”) | -9,500.00 | 6,830,187.40 | 6,820,687.40 | 6,820,687.40 | |||||||||||
| (i) Total comprehensive income | 6,830,187.40 | 6,830,187.40 | 6,830,187.40 |
| (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 | -9,500.00 | -9,500.00 | -9,500.00 | ||||||||||||
| IV. Balance at the end of the report period | 283,161,227.00 | 146,577,771.50 | 77,391,593.25 | -170,881,854.46 | 336,248,737.29 | 336,248,737.29 |
Last period
In RMB
| Item | 2019 | ||||||||||||||
| 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 the beginning of this year | 283,161,2 | 146,587,271. | 77,391,593.2 | -183,172,091. | 323,968,000. | 323,968,000.74 | |||||||||
| 27.00 | 50 | 5 | 01 | 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)
Current period
In RMB
| Item | 2020 | |||||||||||
| 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 “-”) | 1,975,882.85 | 1,975,882.85 | ||||||||||
| (i) Total comprehensive income | 1,975,882.85 | 1,975,882.85 | ||||||||||
| (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 | 283,161,22 | 146,587,271. | 77,391,593.2 | -206,887, | 300,252, |
| report period | 7.00 | 50 | 5 | 603.69 | 488.06 |
Last period
In RMB
| Item | 2019 | |||||||||||
| 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 address
Shenzhen Zhongheng HUAFA Company Limited (hereinafter referred to as Company or the Company),established on 8 December 1981. Uniform social credit code 91440300618830372G.Registered place and head office of the Company: 411 Bldg., Huafa (N) Road, Futian District, ShenzhenLegal representative: Li ZhongqiuRegistered capital: RMB 283,161,227.00
(2) The nature of the business and the main business activities. (for example, the industry in which thecompany operates, the main products or services it offers, the nature of its customers, its salesstrategy, nature of its regulatory environment etc.)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 thereofThe financial statement has been deliberated and approved by BOD on 15 April 2021. According to Article ofAssociation, the statement shall be submitted for deliberation in shareholders general meeting.
(4) Consolidation scope of the financial statement for the year
Consolidate scope in the Period: subsidiaries including Shenzhen HUAFA Property Lease Management Co., Ltd(no annual inspection in 2011, and business license revoke on 1 April 2014), Shenzhen Zhongheng HUAFAProperty Co., Ltd, Wuhan Hengfa Technology Co., Ltd., Shenzhen HUAFA Hengtian Co., Ltd. and ShenzhenHUAFA Hengtai Co., Ltd. More of subsidiaries found in “Note VII. 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 (hereinafter collectively referred to as Accounting Standards for Business Enterprise), the Companyprepared and formulate the financial statement lies on the followed important accounting policy and estimation.
2. Going concern
The Company expects that the production and sales will be in a virtuous cycle within 12 months from the end of
he reporting period, and there is no risk that affects the continued operations.
V. Important accounting policy and 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 EnterpriseThe 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 31
st
December 2020 and the operation results as well as cash flow for the 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 theremaining 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 balance
sheet are converted on the current rate on the balance sheet day; owners’ equity items besides the “retained profit”item, the other items are converted on the actual rate. Items of revenue and expenses in profit statement, 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 financialliability 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 retroactive
adjustments 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 tobe 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 fair
value, 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 aremeasured at amortized cost by using the effective interest method.
3. The Company’s methods for confirming the fair value of financial instrumentsIf 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 thevaluation 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 the
amount 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 thederecognition date; ②The sum of the consideration received in the derecognition part and the amountcorresponding 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).
(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
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 financial
instrument 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 the
general method, that is, the “third stage” model.
(3) Methods of measuring loss reserves for other financial assets
For financial assets other than the above, such as debt investment, other debt investment, other receivables,long-term receivables other than lease receivables, etc., the Company uses the general method, that is, thethree-stage model to measure loss reserves.When measuring the credit impairment of financial instruments, the Company considers the following factors inassessing whether the credit risk has increased significantly:
The Company divides other receivables into a number of portfolios based on the nature of the money, andcalculates the expected credit loss on the basis of the portfolio. The basis for determining the portfolio is asfollows:
Other receivables portfolio 1: A portfolio of unrelated parties with provision for impairment in accordance withthe expected loss rateOther receivables portfolio 2: A portfolio of related parties included in the scope of the consolidated statementFor other receivables classified into portfolio 1, the Company refers to historical credit loss experience, combineswith current conditions and forecasts of future economic conditions, compiles a comparison table of accountsreceivable aging and expected credit loss rate of the entire duration, and calculates the expected credit loss.For other receivables classified into portfolio 2, the Company refers to historical credit loss experience, combineswith current conditions and forecasts of future economic conditions, and calculates an expected credit loss of 0%through the default risk exposure and the expected credit loss rate of the entire duration .
(4)Accrual method of bad debt provision for those accrual by account age as the portfolio
| Account age | Expected credit loss rate of receivable (%) | Expected credit loss rate of other receivable (%) |
| Within one year (one year included) | 0 | 0 |
| 1-2 years | 5 | 5 |
| 2-3 years | 10 | 10 |
| Over 3 years | 30 | 30 |
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).
11. Account receivable
Same as 10. Note receivable
12.Receivable financing
Same as 10. Note receivable
13. Other account receivable
Determination and accounting treatment on the expected credit losses of other account receivable
Same as 10. Note receivable
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—Recognitionand 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 investeeJoint 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 method
Depreciation 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 | 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 | 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 |
N/A
(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 is
recognized 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. 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.
(2) Accounting policies for internal research and development expenditure
Specific criteria for the research phase and development phase of internal R&D projects, and specific criteria for
development phase expenditures to qualify for capitalization
Expenditures for internal research and development projects at the research phase shall be included in the 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. Contract liability
The company presents the obligation to transfer goods or provide services to customers for consideration receivedor receivable as a contract liability.
24. 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.
25. 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.
26. Revenue (income)
Accounting policy for recognition and measurement of revenue(income)The Company recognizes revenue based on the transaction price allocated to the performance obligations at thetime when it has fulfilled the performance obligations in the contract, that is, when the customer obtains controlrights of the relevant goods or services. Obtaining control rights of related goods means being able to lead the useof the goods and obtain almost all economic benefits from them. Performance obligations refer to the Company'scommitment to transfer clearly distinguishable goods to customers in the contract. The transaction price refers tothe amount of consideration that the Company expects to be entitled to receive due to the transfer of goods to thecustomer, not including the amount collected on behalf of a third party and the amount that the Company expectsto return to the customer.Whether the performance obligation is to be performed within a certain period of time or at a certain point of timedepends on the terms of the contract and relevant legal provisions. If the performance obligation is performedwithin a certain period of time, the Company recognizes revenue in accordance with the progress of theperformance. Otherwise, the Company recognizes revenue at a certain point when the customer obtains controlrights of the relevant assets.
The Company's specific revenue recognition methods:
The sales contract between the Company and the customer usually only contains the performance obligation forthe transferred goods. The Company’s performance obligation for the transfer of goods does not meet the threeconditions for performance within a certain period of time, therefore, the Company usually recognizes revenue atthe time-point of completion of the inspection of incoming on the basis of comprehensive consideration of thefollowing factors, i.e. for domestic sales, the revenue is recognized when the product has been sent out and theother party has signed for confirmation. For export sales, the revenue is recognized by the relevant customsdeclaration documents when the product has been shipped and customs declaration procedures have beencompleted.The house lease contract signed by the Company and the customer usually only contains the performanceobligation for the provision of lease and property services, the Company recognizes revenue according to theprogress of performance when a performance obligation is performed within a certain period of time, i.e. asagreed in the lease contract, revenue is recognized when related payments are received or evidence of collectionsis obtained.
Different business models of similar business resulted in different accounting policies for revenue recognitionN/A
27. 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 bereceived. 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.
28. 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 the
deductible temporary difference related to the investment of the subsidiary companies and associated enterprises,deferred income tax assets shall be recognized while the temporary differences are likely to be reversed in theexpected future and it is likely to acquire any amount of taxable income tax that may be used for making up thedeductible temporary differences.
29. 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.
30. Changes in important accounting policies and estimates
(1) Changes in important accounting policies
√ Applicable □ Not applicable
| Content and reason of changes in accounting policies | Approval procedure | Note |
1. Change in accounting policies and basis
The revised Accounting Standards for Business Enterprise No. 14- Revenue (hereinafter referred to as NewRevenue Standard) was released by the Ministry of Finance in 2017. the Company implemented the New RevenueStandards and Notice since 1 Jan. 2020. and relevant content of the accounting polices are adjusted.
The new revenue standards replaced the "Accounting Standards for Business Enterprises No. 14-Revenue" and"Accounting Standards for Business Enterprises No. 15-Construction Contracts" (collectively referred to as the"original revenue standards") promulgated by the Ministry of Finance in 2006. Under the original revenuestandards, the Company used the transfer of risk rewards as the judgment standard for the timing of revenuerecognition. The new revenue standards introduce the “five-step method” of revenue recognition andmeasurement, and provide more guidance for specific transactions or events. Under the new revenue standards,the Company uses the transfer of control as the judgment standard for revenue recognition. For the specific
accounting policies of revenue recognition and measurement, please refer to "Note III. (22) Revenue".The Company has adjusted relevant accounting policies in accordance with the specific provisions of the newrevenue standards on specific matters or transactions. According to the provisions of the new revenue standards,the contract assets or contract liabilities are listed in the balance sheet based on the relationship betweenperformance obligations and customer payments. At the same time, the Company provides more disclosures onincome-related information disclosure requirements in accordance with the new revenue standards, such asinformation related to important contracts or business and performance obligations and information related totransaction prices allocated to the remaining performance obligations, including the usual performance time ofperformance obligations, the important payment terms, the nature of the goods the company promises to transfer(including the explanation of whether the company is an agent), the company’s expected return to customers andother similar obligations, the expected refund to the customer assumed by the company and other similarobligations, the type of quality assurance and related obligations.The Company reviews revenue sources and customer contract procedures to assess the impact of the new revenuestandards on financial statements. The Company’s revenue is mainly derived from the sale of goods, and revenueis recognized when the goods are delivered or the service acceptance is completed. The adoption of the newrevenue standards has no significant impact on the Company except for the presentation of financial statements.The Company adjusts the amount of retained earnings and financial statements related items of January 1, 2020based on the cumulative influence number of the first implementation of the new revenue standards, and does notadjust the information for the comparable period. The Company only adjusts the cumulative influence number ofthe contract that has not been completed on the first implementation date.
2.Impact from the changes in accounting policies
Summary of impacts on items of consolidated balance sheet and parent company’s dated 1 Jan. 2020 whenimplemented the New Revenue Standard:
| Item of consolidated balance sheet | Balance before accounting policy changed (dated 31 December 2019) | Impact from new revenue standard | Balance after accounting policy changed (dated 1 Jan. 2020) |
| Liability: |
| Account received in advance | 356,446.21 | -356,446.21 | |
| Contract liability | 331,322.82 | 331,322.82 |
| Other current liability | 25,123.39 | 25,123.39 |
| Item of balance sheet of parent company’s | Balance before accounting policy changed (dated 31 December 2019) | Impact from new revenue standard | Balance after accounting policy changed (dated 1 Jan. 2020) |
| Liability: |
| Account received in advance | 57,266.01 | -57,266.01 |
| Contract liability | 54,539.06 | 54,539.06 |
| Other current liability | 2,726.95 | 2,726.95 |
(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 2020ApplicableWhether needs to adjust the balance sheet at the beginning of the year
√Yes □No
Consolidate balance sheet
In RMB
| Item | 2019-12-31 | 2020-01-01 | Adjustments |
| Current assets: | |||
| Monetary fund | 38,095,501.00 | 38,095,501.00 | |
| Settlement provisions | |||
| Capital lent | |||
| Trading financial assets | |||
| Derivative financial assets | |||
| Note receivable | |||
| Account receivable | 138,755,691.43 | 138,755,691.43 | |
| Receivable financing | 42,096,834.02 | 42,096,834.02 | |
| Accounts paid in advance | 23,007,637.46 | 23,007,637.46 | |
| Insurance receivable | |||
| Reinsurance receivables | |||
| Contract reserve of reinsurance receivable | |||
| Other account receivable | 6,351,361.16 | 6,351,361.16 |
| Including: Interest receivable | |||
| Dividend receivable | |||
| Buying back the sale of financial assets | |||
| Inventory | 66,971,551.96 | 66,971,551.96 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current asset due within one year | |||
| Other current assets | 1,395,071.36 | 1,395,071.36 | |
| Total current assets | 316,673,648.39 | 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 | 48,952,992.57 | 48,952,992.57 | |
| Fixed assets | 198,229,817.31 | 198,229,817.31 | |
| Construction in process | |||
| Productive biological asset | |||
| Oil and gas asset | |||
| Right-of-use assets | |||
| Intangible assets | 42,968,600.44 | 42,968,600.44 | |
| Expense on Research and Development |
| Goodwill | |||
| Long-term expenses to be apportioned | 309,781.15 | 309,781.15 | |
| Deferred income tax asset | 6,803,360.00 | 6,803,360.00 | |
| Other non-current asset | 225,700.00 | 225,700.00 | |
| Total non-current asset | 297,490,251.47 | 297,490,251.47 | |
| Total assets | 614,163,899.86 | 614,163,899.86 | |
| Current liabilities: | |||
| Short-term loans | 24,633,898.20 | 24,633,898.20 | |
| Loan from central bank | |||
| Capital borrowed | |||
| Trading financial liability | |||
| Derivative financial liability | |||
| Note payable | 16,761,590.51 | 16,761,590.51 | |
| Account payable | 108,804,905.20 | 108,804,905.20 | |
| Account received in advance | 356,446.21 | 0.00 | |
| Contract liability | 331,322.82 | 331,322.82 | |
| Selling financial asset of repurchase | |||
| Absorbing deposit and interbank deposit | |||
| Security trading of agency | |||
| Security sales of agency | |||
| Wage payable | 5,877,341.25 | 5,877,341.25 | |
| Taxes payable | 12,877,944.98 | 12,877,944.98 | |
| Other account payable | 28,027,592.62 | 28,027,592.62 | |
| Including: Interest payable | 89,365.28 | 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 liability | 25,123.39 | 25,123.39 | |
| Total current liabilities | 209,339,718.97 | 209,339,718.97 | |
| Non-current liabilities: | |||
| Insurance contract reserve | |||
| Long-term | 73,000,000.00 | 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 | 2,331,720.00 | 2,331,720.00 | |
| Deferred income tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 75,396,131.00 | 75,396,131.00 | |
| Total liabilities | 284,735,849.97 | 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 | -177,712,041.86 | -177,712,041.86 | |
| Total owner’ s equity attributable to parent company | 329,428,049.89 | ||
| Minority interests | |||
| Total owner’ s equity | 329,428,049.89 | 329,428,049.89 | |
| Total liabilities and owner’ s equity | 614,163,899.86 | 614,163,899.86 |
Explanation on adjustmentN/ABalance sheet of parent company
In RMB
| Item | 2019-12-31 | 2020-01-01 | Adjustments |
| Current assets: | |||
| Monetary fund | 3,494,245.90 | 3,494,245.90 | |
| Trading financial assets | |||
| Derivative financial assets | |||
| Note receivable | |||
| Account receivable | |||
| Receivable financing | |||
| Accounts paid in advance | |||
| Other account receivable | 97,165,023.85 | 97,165,023.85 | |
| Including: Interest receivable |
| Dividend receivable | |||
| Inventory | 14,806.50 | 14,806.50 | |
| Contract assets | |||
| Assets held for sale | |||
| Non-current asset due within one year | |||
| Other current assets | 173,950.26 | 173,950.26 | |
| Total current assets | 100,848,026.51 | 100,848,026.51 | |
| Non-current assets: | |||
| Debt investment | |||
| Other debt investment | |||
| Long-term account receivable | |||
| Long-term equity investment | 186,608,900.00 | 186,608,900.00 | |
| Investment in other equity instrument | |||
| Other non-current financial assets | |||
| Investment real estate | 25,166,301.06 | 25,166,301.06 | |
| Fixed assets | 98,410,024.38 | 98,410,024.38 | |
| Construction in process | |||
| Productive biological asset | |||
| Oil and gas asset | |||
| Right-of-use assets | |||
| Intangible assets | 4,553,709.24 | 4,553,709.24 | |
| Expense on Research and Development | |||
| Goodwill | |||
| Long-term expenses to be apportioned | |||
| Deferred income tax asset | 7,367,646.35 | 7,367,646.35 | |
| Other non-current |
| asset | |||
| Total non-current asset | 322,106,581.03 | 322,106,581.03 | |
| Total assets | 422,954,607.54 | 422,954,607.54 | |
| Current liabilities: | |||
| Short-term loans | |||
| Trading financial liability | |||
| Derivative financial liability | |||
| Note payable | |||
| Account payable | 10,745,840.16 | 10,745,840.16 | |
| Account received in advance | 57,266.01 | 0.00 | |
| Contract liability | 54,539.06 | 54,539.06 | |
| Wage payable | 1,220,979.02 | 1,220,979.02 | |
| Taxes payable | 8,489,130.72 | 8,489,130.72 | |
| Other account payable | 19,100,375.42 | 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 liability | 2,726.95 | 2,726.95 | |
| Total current liabilities | 51,613,591.33 | 51,613,591.33 | |
| Non-current liabilities: | |||
| Long-term | 73,000,000.00 | 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 | |||
| Deferred income tax liabilities | |||
| Other non-current liabilities | |||
| Total non-current liabilities | 73,064,411.00 | 73,064,411.00 | |
| Total liabilities | 124,678,002.33 | 124,678,002.33 | |
| 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 | |
| Retained profit | -208,863,486.54 | -208,863,486.54 | |
| Total owner’ s equity | 298,276,605.21 | 298,276,605.21 | |
| Total liabilities and owner’ s equity | 422,954,607.54 | 422,954,607.54 |
Explanation on adjustmentN/A
(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 | 13%, 9%, 6%, 5%, 3% |
| Consumption 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 | 70% 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 December 1, 2020, the certificate number is GR202042003237, which is valid for 3 years. Theapplicable corporate income tax rate of the subsidiary Wuhan Hengfa Technology Co., Ltd. for 2020 was 15%.
3. Other
NilVII. Notes to main items in consolidated financial statement
1. Monetary fund
In RMB
| Item | Closing balance | Opening balance |
| Cash on hand | 138,673.02 | 432,301.32 |
| Bank deposit | 30,141,013.39 | 37,660,862.75 |
| Other monetary fund | 30,688,367.17 | 2,336.93 |
| Total | 60,968,053.58 | 38,095,501.00 |
Other explanationNil
2. Note receivable
(1) Category
In RMB
| Item | Closing balance | Opening balance |
| Commercial acceptance bill | 20,240,464.79 | |
| Total | 20,240,464.79 |
In RMB
| 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 | |||
| Including: | ||||||||||
| Including: | ||||||||||
Accrual of bad debt provision on single basis:
In RMB
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
Accrual of bad debt provision on portfolio:
In RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrual ratio | |
Explanation on portfolio basis:
If the provision for bad debts of note receivable is made in accordance with the general model of expected credit losses, please refer tothe disclosure of other receivables to disclose related information about bad-debt provisions:
□ Applicable √Not applicable
(2) Notes endorsement or discount and undue on balance sheet date
In RMB
| Item | Amount derecognition at period-end | Amount not derecognition at period-end |
| Commercial acceptance bill | 18,309,336.77 |
| Total | 18,309,336.77 |
3. Account receivable
(1) Category
In RMB
| 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 | 9.31% | 13,146,290.18 | 100.00% | 0.00 | 13,146,290.18 | 8.65% | 13,146,290.18 | 100.00% | |
| Including: | ||||||||||
| Account receivable with bad debt provision accrual by combination | 128,073,805.57 | 90.69% | 9,893.78 | 0.01% | 128,063,911.79 | 138,759,879.49 | 91.35% | 4,188.06 | 0.00% | 138,755,691.43 |
| Including: | ||||||||||
| Combination 1: Take account ages of receivables as a combination of credit risk characteristics | 128,073,805.57 | 90.69% | 9,893.78 | 0.01% | 128,063,911.79 | 138,759,879.49 | 91.35% | 4,188.06 | 0.00% | 138,755,691.43 |
| Total | 141,220,095.75 | 100.00% | 13,156,183.96 | 9.32% | 128,063,911.79 | 151,906,169.67 | 100.00% | 13,150,478.24 | 8.66% | 138,755,691.43 |
Accrual of bad debt provision on single basis: 13146290.18
In RMB
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
| Shenzhen Portman Bowling Club Co., Ltd. | 2,555,374.75 | 2,555,374.75 | 100.00% | Uncollectible |
| 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 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 |
| Sky Worth – RGB | 133,485.83 | 133,485.83 | 100.00% | Uncollectible |
| Electronic Co., Ltd. | ||||
| Other | 2,039,896.72 | 2,039,896.72 | 100.00% | Uncollectible |
Accrual of bad debt provision on single basis:
In RMB
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
Accrual of bad debt provision on portfolio: 9893.78
In RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrual ratio | |
| Within one year | 127,954,502.85 | ||
| 1-2 years | 50,840.84 | 2,542.04 | 5.00% |
| 2-3 years | 65,934.11 | 6,593.41 | 10.00% |
| Over 3 years | 2,527.77 | 758.33 | 30.00% |
| 0.01% | |||
| Total | 128,073,805.57 | 9,893.78 | -- |
Explanation on portfolio basis:
Accrual of bad debt provision on portfolio:
In RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrual ratio | |
Explanation on portfolio basis:
NilAccrual of bad debt provision on portfolio:
In RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrual ratio | |
Explanation on portfolio basis:
NilAccrual of bad debt provision on portfolio:
In RMB
| 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
In RMB
| Account ages | Book balance |
| Within one year (one year included) | 127,954,502.85 |
| 127,954,502.85 | |
| 1-2 years | 50,840.84 |
| 2-3 years | 65,934.11 |
| Over 3 years | 13,148,817.95 |
| 3-4 years | 2,527.77 |
| Over 5 years | 13,146,290.18 |
| Total | 141,220,095.75 |
(2) Bad debt provision accrual, collected or reversal in the period
Bad debt provision accrual in the period:
In RMB
| 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 | 5,705.72 | 9,893.78 | |||
| Total | 4,188.06 | 5,705.72 | 9,893.78 | |||
Including major amount bad debt provision that collected or reversal in the period:
In RMB
| Company | Amount collected or reversal | Way of collection |
Nil
(3) Top 5 account receivables collected by arrears party at ending balance
In RMB
| Company | Closing balance of account receivable | Proportion in total account receivables at year-end | Closing balance of bad debt provision |
| Hong Kong Yutian International Investment | 41,513,718.58 | 29.40% |
| Co., Ltd. | |||
| Qingdao Haidayuan Purchasing Service Co., Ltd. | 41,499,152.56 | 29.39% | |
| Hefei Hangjia Display Technology Co., Ltd. | 8,224,775.00 | 5.82% | |
| ViewSonic Technology (China) Co., Ltd. | 5,925,987.00 | 4.20% | |
| Xiamen Edmond Electronic Technology Co., Ltd. | 5,510,646.01 | 3.90% | |
| Total | 102,674,279.15 | 72.71% |
4. Receivable financing
In RMB
| Item | Closing balance | Opening balance |
| Bank acceptance draft | 10,057,385.11 | 42,096,834.02 |
| Total | 10,057,385.11 | 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:
Nil
5. Accounts paid in advance
(1) By account age
In RMB
| Account ages | Closing balance | Opening balance | ||
| Amount | Proportion | Amount | Proportion | |
| Within one year | 39,454,164.61 | 99.52% | 22,879,096.29 | 99.44% |
| 1-2 years | 106,781.00 | 0.27% | 128,541.17 | 0.56% |
| 2-3 years | 82,309.50 | 0.21% | ||
| Total | 39,643,255.11 | -- | 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 | Closing balance | Proportion in total accounts paid in advance (%) |
| Hong Kong Yutian International Investment Co., Ltd. | 27,025,766.19 | 68.40 |
| Qingdao Haidacheng Purchasing Service Co., Ltd. | 3,942,243.48 | 9.87 |
| AU Optronics Co., Ltd. | 2,214,440.14 | 5.55 |
| Guangzhou Huitong Electronics Co., Ltd. | 1,818,784.80 | 4.55 |
| Haier Digital Technology (Qingdao) Co., Ltd. | 1,294,732.59 | 3.24 |
| Total | 36,295,967.20 | 91.62 |
Other explanation:
Nil
6. Other account receivable
In RMB
| Item | Closing balance | Opening balance |
| Other account receivable | 4,466,949.96 | 6,351,361.16 |
| Total | 4,466,949.96 | 6,351,361.16 |
(1) Other account receivable
1) Other account receivable by nature
In RMB
| Nature | Closing book balance | Opening book balance |
| Margin & deposit | 1,681,688.00 | 1,583,408.99 |
| Borrow money | 2,124,073.12 | 1,944,700.12 |
| Intercourse funds | 8,924,093.42 | 11,534,893.51 |
| Rental receivable | 6,224,167.48 | 5,847,389.48 |
| Other | 364,429.79 | 505,560.36 |
| Less: Bad debt provision | -14,851,501.85 | -15,064,591.30 |
| Total | 4,466,949.96 | 6,351,361.16 |
2) Accrual of bad debt provision
In RMB
| 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 on1 Jan. 2020 | 252,531.52 | 14,812,059.78 | 15,064,591.30 | |
| Balance of 1 Jan. 2020 in the period | —— | —— | —— | —— |
| Accrual in current period | -252,531.52 | 111.75 | 39,330.32 | -213,089.45 |
| Balance on Dec. 31, 2020 | 111.75 | 14,851,390.10 | 14,851,501.85 |
Change of book balance of loss provision with amount has major changes in the period
□ Applicable √Not applicable
By account age
In RMB
| Account ages | Book balance |
| Within one year (one year included) | 3,100,690.03 |
| 3,100,690.03 | |
| 1-2 years | 297,671.40 |
| 2-3 years | 312,212.44 |
| Over 3 years | 15,607,877.94 |
| 3-4 years | 1,446,706.00 |
| 4-5 years | 943,020.00 |
| Over 5 years | 13,218,151.94 |
| Total | 19,318,451.81 |
3) Bad debt provision accrual, collected or reversal in the period
Bad debt provision accrual in the period:
In RMB
| 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 | 0.00 | |||
| Phase II | 111.75 | 111.75 | ||||
| Phase III | 14,812,059.78 | 39,330.32 | 14,851,390.10 | |||
| Total | 15,064,591.30 | -213,089.45 | 14,851,501.85 |
Including the important amount collected or switches back in the period:
In RMB
| Company | Amount collected or switches back | Way of collection |
4) Top 5 other receivables collected by arrears party at ending balance
In RMB
| Company | Nature | Closing balance | Account ages | Proportion in total other receivables at period-end | Closing balance of bad debt provision |
| Portman | Rental receivable | 4,021,734.22 | Over 3 years | 20.82% | 4,021,734.22 |
| Shenzhen Jifang Investment Co., Ltd | Rental receivable | 1,380,608.00 | Over 3 years | 7.15% | 1,380,608.00 |
| Fujian Jielian Electronics Co., Ltd. | Margin & deposit | 800,000.00 | Over 3 years | 4.14% | 240,000.00 |
| Compensation for traffic accidents | Intercourse funds | 555,785.81 | Over 3 years | 2.88% | 555,785.81 |
| Hebei Botou Court | Intercourse funds | 520,021.00 | Over 3 years | 2.69% | 520,021.00 |
| Total | -- | 7,278,149.03 | -- | 37.67% | 6,718,149.03 |
7. Inventories
Whether companies need to comply with the disclosure requirements of the real estate industryNo
(1) Category
In RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Inventories fall provision or contract performance | Book value | Book balance | Inventories fall provision or contract performance | Book value | |
| costs impairment provision | costs impairment provision | |||||
| Raw materials | 39,735,101.27 | 1,691,320.92 | 38,043,780.35 | 33,817,180.23 | 2,844,484.06 | 30,972,696.17 |
| Inventory goods | 27,562,913.38 | 1,673,369.82 | 25,889,543.56 | 27,590,425.68 | 486,362.31 | 27,104,063.37 |
| Homemade semi-finished products | 6,213,029.56 | 29,363.73 | 6,183,665.83 | 8,775,225.16 | 232,090.00 | 8,543,135.16 |
| Low priced and easily worn articles | 159,646.13 | 110,622.38 | 49,023.75 | 463,639.07 | 111,981.81 | 351,657.26 |
| Total | 73,670,690.34 | 3,504,676.85 | 70,166,013.49 | 70,646,470.14 | 3,674,918.18 | 66,971,551.96 |
(2) Inventories fall provision or contract performance costs impairment provision
In RMB
| Item | Opening balance | Current increased | Current decreased | Closing balance | ||
| Accrual | Other | Reversal or write-off | Other | |||
| Raw materials | 2,844,484.06 | -1,153,163.14 | 1,691,320.92 | |||
| Inventory goods | 486,362.31 | 1,187,007.51 | 1,673,369.82 | |||
| Homemade semi-finished products | 232,090.00 | -202,726.27 | 29,363.73 | |||
| Low priced and easily worn articles | 111,981.81 | -1,359.43 | 110,622.38 | |||
| Total | 3,674,918.18 | -170,241.33 | 3,504,676.85 | |||
Nil
8. Other current assets
In RMB
| Item | Closing balance | Opening balance |
| Value-added tax to be deducted | 4,255,643.19 | 1,352,757.06 |
| Advance payment of income tax | 42,314.30 | |
| Total | 4,255,643.19 | 1,395,071.36 |
Other explanation:
Nil
9. Investment real estate
(1) Investment real estate measured at cost
√ Applicable □ Not applicable
In RMB
| 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 | 1,728,330.30 | 1,728,330.30 | ||
| (1) Accrual or amortization | 1,728,330.30 | 1,728,330.30 | ||
| 3. Current decreased | ||||
| (1) Disposal | ||||
| (2) Other transfer-out |
| 4. Closing balance | 86,437,024.67 | 86,437,024.67 | ||
| III. Impairment provision | ||||
| 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 | 47,224,662.27 | 47,224,662.27 | ||
| 2. Opening book value | 48,952,992.57 | 48,952,992.57 |
10. Fixed assets
In RMB
| Item | Closing balance | Opening balance |
| Fixed assets | 100,747,972.84 | 105,372,345.62 |
| Disposal of fixed assets | 92,857,471.69 | 92,857,471.69 |
| Total | 193,605,444.53 | 198,229,817.31 |
(1) Fixed asset
In RMB
| Item | House building | Machinery equipment | Means of transportation | Office equipment | Instrument equipment | Tool equipment | Mold equipment | Total |
| I. Original book value | ||||||||
| 1. Opening balance | 73,200,617.41 | 94,646,254.95 | 6,170,584.89 | 7,180,143.39 | 3,211,408.06 | 8,754,968.35 | 21,193,658.84 | 214,357,635.89 |
| 2. Current increased | 5,422,808.01 | 148,429.93 | 41,519.97 | 635,574.26 | 3,757,301.61 | 10,005,633.78 |
| (1) Purchasing | 5,422,808.01 | 148,429.93 | 41,519.97 | 635,574.26 | 3,757,301.61 | 10,005,633.78 | ||
| (2) Construction in process transfer-in | ||||||||
| (3) Increased by combination | ||||||||
| 3. Current decreased | 4,906,595.42 | 2,580,776.07 | 42,281.72 | 21,550.00 | 229,994.56 | 7,781,197.77 | ||
| (1) Disposal or scrapping | 4,906,595.42 | 2,580,776.07 | 42,281.72 | 21,550.00 | 229,994.56 | 7,781,197.77 | ||
| 4. Closing balance | 73,200,617.41 | 95,162,467.54 | 3,589,808.82 | 7,286,291.60 | 3,231,378.03 | 9,160,548.05 | 24,950,960.45 | 216,582,071.90 |
| II. Accumulative depreciation | ||||||||
| 1. Opening balance | 18,788,535.27 | 61,361,126.34 | 3,689,064.83 | 5,980,483.22 | 2,573,318.14 | 3,809,126.76 | 12,783,635.71 | 108,985,290.27 |
| 2. Current increased | 2,046,963.65 | 4,793,077.51 | 743,045.69 | 328,344.54 | 130,775.11 | 1,158,027.82 | 3,623,442.90 | 12,823,677.22 |
| (1) Accrual | 2,046,963.65 | 4,793,077.51 | 743,045.69 | 328,344.54 | 130,775.11 | 1,158,027.82 | 3,623,442.90 | 12,823,677.22 |
| 3. Current decreased | 3,839,103.69 | 1,901,876.31 | 38,053.55 | 19,395.00 | 176,439.88 | 5,974,868.43 | ||
| (1) Disposal or scrapping | 3,839,103.69 | 1,901,876.31 | 38,053.55 | 19,395.00 | 176,439.88 | 5,974,868.43 | ||
| 4. Closing balance | 20,835,498.92 | 62,315,100.16 | 2,530,234.21 | 6,270,774.21 | 2,684,698.25 | 4,790,714.70 | 16,407,078.61 | 115,834,099.06 |
| 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 | 52,365,118.49 | 32,847,367.38 | 1,059,574.61 | 1,015,517.39 | 546,679.78 | 4,369,833.35 | 8,543,881.84 | 100,747,972.84 |
| 2. Opening book value | 54,412,082.14 | 33,285,128.61 | 2,481,520.06 | 1,199,660.17 | 638,089.92 | 4,945,841.59 | 8,410,023.13 | 105,372,345.62 |
(2) Fixed assets leasing-out by operational lease
In RMB
| Item | Ending book value |
| House building | 800,418.77 |
(3) Disposal of fixed assets
In RMB
| 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 explanationNil
11. Construction in process
In RMB
| Item | Closing balance | Opening balance |
| Construction in process | 740,000.00 | |
| Total | 740,000.00 |
(1) Construction in process
In RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Huafa Building Reconstruction Project | 240,000.00 | 240,000.00 | ||||
| Gongming Electronic City Reconstruction Project | 500,000.00 | 500,000.00 | ||||
| Total | 740,000.00 | 740,000.00 | ||||
12. Intangible assets
(1) Intangible assets
In RMB
| Item | Land use right | Patent right | Non-patented technology | Computer software | Total |
| I. Original book value | |||||
| 1. Opening balance | 55,415,814.36 | 3,533,396.41 | 58,949,210.77 | ||
| 2. Current increased | |||||
| (1) Purchasing | |||||
| (2) Internal R&D |
| (3) Increased by combination | |||||
| 3. Current decreased | 420,000.00 | 420,000.00 | |||
| (1) Disposal | 420,000.00 | 420,000.00 | |||
| 4. Closing balance | 55,415,814.36 | 3,113,396.41 | 58,529,210.77 | ||
| II. Accumulated amortization | |||||
| 1. Opening balance | 15,205,546.53 | 665,635.90 | 15,871,182.43 | ||
| 2. Current increased | 1,445,488.89 | 282,453.75 | 1,727,942.64 | ||
| (1) Accrual | 1,445,488.89 | 282,453.75 | 1,727,942.64 | ||
| 3. Current decreased | |||||
| (1) Disposal | |||||
| 4. Closing balance | 16,651,035.42 | 948,089.65 | 17,599,125.07 | ||
| 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 | 38,764,778.94 | 2,055,878.86 | 40,820,657.80 |
| 2. Opening book value | 40,210,267.83 | 2,758,332.61 | 42,968,600.44 |
The proportion of intangible assets form by internal R&D in total book value of intangible assets at period-end 0.00%
13. Long-term deferred expenses
In RMB
| Item | Opening balance | Current increased | Amortized in Period | Other decreased | Closing balance |
| Amortization of cloud service fees | 309,781.15 | 232,335.84 | 77,445.31 | ||
| Total | 309,781.15 | 232,335.84 | 77,445.31 |
Other explanationNil
14. Deferred income tax assets/Deferred income tax liabilities
(1) Deferred income tax assets without offset
In RMB
| Item | Closing balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Provision for assets impairment | 28,458,252.74 | 6,761,085.38 | 28,835,877.80 | 6,787,257.25 |
| Accrual liability | 64,411.00 | 16,102.75 | 64,411.00 | 16,102.75 |
| Deferred income | 4,043,640.00 | 606,546.00 | ||
| Total | 32,566,303.74 | 7,383,734.13 | 28,900,288.80 | 6,803,360.00 |
(2) Amount of deferred income tax asset and deferred income tax liability after trade-off
In RMB
| 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 assets | 7,383,734.13 | 6,803,360.00 |
(3) Deferred income tax asset without recognized
In RMB
| Item | Closing balance | Opening balance |
| Deductible temporary differences | 3,163,837.81 | 3,163,837.81 |
| Deductible loss | 4,098,904.69 | |
| Total | 7,262,742.50 | 3,163,837.81 |
(4) Deductible losses of un-recognized deferred income tax assets expired on the followed year
In RMB
| Year | Ending amount | Opening amount | Note |
| 2021 | |||
| 2022 | 742,401.79 | ||
| 2023 | 404,207.57 | ||
| 2024 | 1,318,067.59 | ||
| 2025 | 1,634,227.74 | ||
| Total | 4,098,904.69 | -- |
Other explanation:
Nil
15. Other non-current assets
In RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Advance payment for equipment | 66,000.00 | 66,000.00 | 225,700.00 | 225,700.00 | ||
| Total | 66,000.00 | 66,000.00 | 225,700.00 | 225,700.00 | ||
Other explanation:
Nil
16. Short-term borrowings
(1) Category
In RMB
| Item | Closing balance | Opening balance |
| Loan in pledge | 12,000,000.00 | |
| Secured portfolio loan | 12,527,808.00 | 12,633,898.20 |
| Total | 12,527,808.00 | 24,633,898.20 |
Explanation on category of short-term loans:
Nil
17. Notes payable
In RMB
| Category | Closing balance | Opening balance |
| Bank acceptance draft | 37,416,381.20 | 16,761,590.51 |
| Total | 37,416,381.20 | 16,761,590.51 |
Totally 0 Yuan due note payable are paid at period-end
18. Account payable
(1) Account payable
In RMB
| Item | Closing balance | Opening balance |
| Within one year (one year included) | 85,862,573.31 | 95,647,603.05 |
| Over one year | 12,455,666.57 | 13,157,302.15 |
| Total | 98,318,239.88 | 108,804,905.20 |
(2) Major account payable over one year
In RMB
| 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 |
| Kunshan Zhongji Mould Co., Ltd. | 766,775.87 | Without settlement |
| Total | 5,531,929.34 | -- |
Other explanation:
Nil
19. Accounts received in advance
(1) Accounts received in advance
In RMB
| Item | Closing balance | Opening balance |
| Within one year (one year included) | 0.00 | |
| Over one year | 0.00 | |
| Total | 0.00 |
20. Contract liabilities
In RMB
| Item | Closing balance | Opening balance |
| Sales received in advance | 207,945.34 | 276,783.76 |
| Lease received in advance | 79,195.32 | 54,539.06 |
| Total | 287,140.66 | 331,322.82 |
Amount and reasons for significant changes in book value during the reporting period
In RMB
| Item | Change Amount | Reason for change |
21. Wage payable
(1) Wage payable
In RMB
| Item | Opening balance | Increase during the period | Decrease during the period | Closing balance |
| I. Short-term benefits | 5,848,652.79 | 56,261,292.45 | 56,405,128.71 | 5,704,816.53 |
| II. Post-employment benefits-defined contribution plans | 28,688.46 | 411,813.11 | 407,951.51 | 32,550.06 |
| III. Dismiss welfare | 466,848.37 | 466,848.37 | ||
| Total | 5,877,341.25 | 57,139,953.93 | 57,279,928.59 | 5,737,366.59 |
(2) Short-term benefits
In RMB
| Item | Opening balance | Increase during the | Decrease during the | Closing balance |
| period | period | |||
| 1. Wages , bonuses, allowances and subsidies | 4,854,064.03 | 49,082,761.05 | 49,227,170.16 | 4,709,654.92 |
| 2. Employee benefits | 754.00 | 4,958,298.97 | 4,958,298.97 | 754.00 |
| 3. Social insurance premium | 36,694.18 | 1,841,258.59 | 1,840,685.74 | 37,267.03 |
| Including: Medical insurance | 34,964.92 | 1,647,673.81 | 1,647,229.78 | 35,408.95 |
| Work injury insurance | 740.73 | 9,914.78 | 9,887.21 | 768.30 |
| Maternity insurance | 988.53 | 183,670.00 | 183,568.75 | 1,089.78 |
| 4. Housing accumulation fund | 24,310.00 | 373,870.44 | 373,870.44 | 24,310.00 |
| 5. Labor union expenditure and personnel education expense | 932,830.58 | 5,103.40 | 5,103.40 | 932,830.58 |
| Total | 5,848,652.79 | 56,261,292.45 | 56,405,128.71 | 5,704,816.53 |
(3) Defined contribution plans
In RMB
| Item | Opening balance | Increase during the period | Decrease during the period | Closing balance |
| 1. Basic endowment insurance | 27,561.59 | 394,973.41 | 391,173.41 | 31,361.59 |
| 2. Unemployment insurance | 1,126.87 | 16,839.70 | 16,778.10 | 1,188.47 |
| Total | 28,688.46 | 411,813.11 | 407,951.51 | 32,550.06 |
Other explanation:
Nil
22. Taxes payable
In RMB
| Item | Closing balance | Opening balance |
| VAT | 2,980,929.11 | 3,192,458.47 |
| Corporate income tax | 6,558,810.68 | 7,032,715.76 |
| Individual income tax | 25,195.14 | 30,265.20 |
| Urban maintenance and construction tax | 1,902,436.52 | 1,050,282.59 |
| Property tax | 318,681.51 | 310,683.11 |
| Land use tax | 33,280.48 | 25,424.98 |
| Educational surtax | 816,098.15 | 450,889.35 |
| Local educational surtax | 418,611.03 | 234,049.86 |
| Dike fee | 1,665.00 | 1,665.00 |
| Stamp tax | 28,895.00 | 39,940.66 |
| Disposal fund of waste electrical products | 1,120,040.00 | 509,570.00 |
| Total | 14,204,642.62 | 12,877,944.98 |
Other explanation:
Nil
23. Other accounts payable
In RMB
| Item | Closing balance | Opening balance |
| Interest payable | 26,335.66 | 89,365.28 |
| Other payable | 27,581,945.35 | 27,938,227.34 |
| Total | 27,608,281.01 | 28,027,592.62 |
(1) Interest payable
In RMB
| Item | Closing balance | Opening balance |
| Interest of short-term loans payable | 26,335.66 | 89,365.28 |
| Total | 26,335.66 | 89,365.28 |
Significant overdue and unpaid interest:
In RMB
| Loan unit | Overdue amount | Reason for overdue |
Other explanation:
Nil
(2) Other accounts payable
1) Other account payable by nature
In RMB
| Item | Closing balance | Opening balance |
| Margin & deposit | 11,523,316.67 | 10,354,134.67 |
| Lease management fee | 3,227,985.19 | 3,251,610.67 |
| Intercourse funds | 5,546,586.51 | 8,544,383.61 |
| After sale and repairment | 1,454,341.68 | 1,747,809.47 |
| Energy consumption (water, electricity and steam) | 1,443,603.28 | |
| Shipping | 902,242.26 | |
| Reserve fund | 1,346,345.00 | |
| Other | 2,137,524.76 | 4,040,288.92 |
| Total | 27,581,945.35 | 27,938,227.34 |
2) Significant other account payable with over one year age
In RMB
| 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 explanationNil
24. Non-current liabilities due within one year
In RMB
| Item | Closing balance | Opening balance |
| Long-term loans due within one year | 12,000,000.00 | 12,000,000.00 |
| Total | 12,000,000.00 | 12,000,000.00 |
Other explanation:
Nil
25. Other current liabilities
In RMB
| Item | Closing balance | Opening balance |
| Unterminated confirmation on note receivable | 18,309,336.77 | |
| Pending sales tax | 13,636.04 | 25,123.39 |
| Total | 18,322,972.81 | 25,123.39 |
Changes in short-term bonds payable:
In RMB
| Name of bond | Face value | Issue date | Bond maturity | Issue Amount | Opening balance | Current issue | Interest accrued at face value | Premium and discount amortization | Repayment in the current period | Closing balance |
Other explanation:
Nil
26. Long-term loans
(1) Category
In RMB
| Item | Closing balance | Opening balance |
| Mortgage loan | 61,000,000.00 | 73,000,000.00 |
| Total | 61,000,000.00 | 73,000,000.00 |
Description of Long-term loans classification:
NilOther explanation, including interest rate range:
Interest rate 9.5%
27. Accrual liability
In RMB
| 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:
Nil
28. Deferred income
In RMB
| Item | Opening balance | Increase during the period | Decrease during the period | Closing balance | Causes |
| Government subsidy | 2,331,720.00 | 2,190,000.00 | 478,080.00 | 4,043,640.00 | Industrial transformation subsidies |
| Total | 2,331,720.00 | 2,190,000.00 | 478,080.00 | 4,043,640.00 | -- |
Items involving Government subsidy:
In RMB
| 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 |
| Provincial special fund for transformation and upgrading of traditional industry for 2018 | 1,800,000.00 | 1,600,000.00 | Assets-related | |||||
| Incentive fund for Wuhan industrial intelligent transformation | 531,720.00 | 472,640.00 | Assets-related |
| demonstration project in 2019 | ||||||||
| Special funds for industrial investment and technological transformation and intelligent transformation in 2020 | 1,971,000.00 | Assets-related | ||||||
| Total | 2,331,720.00 | 2,190,000.00 | 478,080.00 | 4,043,640.00 | Assets-related |
Other explanation:
Nil
29. 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:
Nil
30. Capital public reserve
In RMB
| Item | Opening balance | Increase during the period | Decrease during the period | Closing balance |
| Capital premium | 96,501,903.02 | 96,501,903.02 |
| (equity premium) | ||||
| Other capital public reserve | 50,085,368.48 | 9,500.00 | 50,075,868.48 | |
| Total | 146,587,271.50 | 9,500.00 | 146,577,771.50 |
Other explanation, including changes and reasons of changes:
The decrease in other capital reserves in the current period was caused by the merger of enterprises under the same control.
31. Surplus public reserve
In RMB
| Item | Opening balance | Increase during the period | Decrease during the 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
32. Retained profit
In RMB
| Item | Current period | Last period |
| Retained profit at the end of the previous period before adjustment | -177,712,041.86 | -183,172,091.01 |
| 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 | 6,830,187.40 | 5,460,049.15 |
| Retained profit at period-end | -170,881,854.46 | -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
33. Operating revenue and cost
In RMB
| Item | Current Period | Last Period | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 617,385,012.51 | 575,728,898.74 | 646,532,884.16 | 596,169,654.97 |
| Other business | 74,357,256.61 | 37,499,795.77 | 75,024,556.35 | 38,332,472.38 |
| Total | 691,742,269.12 | 613,228,694.51 | 721,557,440.51 | 634,502,127.35 |
Whether the lower of the audited net profit before and after deduction of non-recurring gains and losses is negative
□Yes √No
Information relating to revenue:
In RMB
| 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 explanationNil
34. Tax and surcharges
In RMB
| Item | Current Period | Last Period |
| Urban maintenance and construction tax | 1,016,287.94 | 804,287.45 |
| Educational surtax | 435,551.94 | 344,694.60 |
| Property tax | 1,037,125.69 | 1,521,853.12 |
| Land use tax | 434,724.29 | 579,168.99 |
| Vehicle use tax | 360.00 | 24,828.58 |
| Stamp tax | 421,993.80 | 443,943.26 |
| Local education development fee | 229,808.32 | 181,494.42 |
| Total | 3,575,851.98 | 3,900,270.42 |
Other explanation:
35. Sales expense
In RMB
| Item | Current Period | Last Period |
| Employee compensation | 3,181,384.76 | 4,301,179.20 |
| Freight | 6,467,421.32 | |
| Commodity inspection fee | 2,648,430.44 | 876,706.96 |
| Customs fee | 90,913.66 | 143,589.91 |
| Commodity loss | 4,869,738.37 | 3,797,231.43 |
| After-sales service fee | 3,815,389.24 | 4,383,391.47 |
| Business entertainment expense | 198,137.01 | 184,161.63 |
| Other | 613,767.12 | 725,575.05 |
| Total | 15,417,760.60 | 20,879,256.97 |
Other explanation:
Nil
36. Administrative expense
In RMB
| Item | Current Period | Last Period |
| Salary | 9,921,865.34 | 10,633,657.05 |
| Depreciation charge | 2,208,645.49 | 2,092,560.37 |
| Social insurance premium | 799,110.40 | 2,361,102.10 |
| Business entertainment expense | 5,592,000.14 | 4,726,829.54 |
| Employee benefits | 790,303.01 | 925,014.07 |
| Travel expenses | 1,449,073.69 | 1,012,373.74 |
| Depreciation and amortization cost | 1,605,138.91 | 1,678,449.61 |
| Traffic expenses | 572,727.46 | 757,169.92 |
| Intermediary agency service fee | 1,919,335.23 | 1,832,218.55 |
| Security fee | 2,098,103.57 | 1,111,784.83 |
| Repair cost | 2,991,269.94 | 2,266,890.44 |
| Office expenses | 1,095,896.50 | 723,894.04 |
| Communication fee | 150,322.79 | 209,777.84 |
| Amortization of low cost and short lived articles | 271,997.21 | 183,182.49 |
| Securities information disclosure fee | 283,386.75 | 344,524.44 |
| Litigation fee | 150,400.00 | 53,050.00 |
| Lease fee | 1,048,880.52 | 4,395,032.42 |
| Staff education and labor union funds | 14,603.40 | 117,653.63 |
| Water and electricity | 152,374.57 | 646,754.82 |
| Other expenses | 1,365,784.19 | 1,962,151.73 |
| Total | 34,481,219.11 | 38,034,071.63 |
Other explanation:
Nil
37. R& D expenses
In RMB
| Item | Current Period | Last Period |
| Employee compensation | 4,791,827.59 | 4,804,190.42 |
| Direct material input | 1,644,898.53 | 390,914.57 |
| Depreciation and amortization | 593,756.40 | 650,145.58 |
| Power and manufacturing cost | 120,699.24 | 698,061.22 |
| Other | 134,652.08 | 105,851.23 |
| Total | 7,285,833.84 | 6,649,163.02 |
Other explanation:
Nil
38. Financial expense
In RMB
| Item | Current Period | Last Period |
| Interest costs | 8,508,919.02 | 10,638,951.99 |
| Less: Interest income | 838,314.39 | 631,958.95 |
| Exchange loss | 8,048,826.28 | 4,801,837.04 |
| Less: exchange gains | 3,248,154.95 | 5,145,385.72 |
| Handing expense | 167,866.93 | 281,574.56 |
| Other expense | 1,560.00 | 1,760.00 |
| Total | 12,640,702.89 | 9,946,778.92 |
Other explanation:
Nil
39. Other income
In RMB
| Sources | Current Period | Last Period |
| Three-agency handling fee for individual tax | 6,113.66 | |
| Provincial special fund for transformation and upgrading of traditional industry for 2018 | 59,080.00 | 59,080.00 |
| Incentive fund for Wuhan industrial intelligent transformation demonstration project in 2019 | 200,000.00 | 200,000.00 |
| Special funds for industrial investment and technological transformation and intelligent transformation in 2020 | 219,000.00 | |
| Enterprise stabilization subsidy refund | 232,313.00 | |
| Subsidies for training on behalf of workers | 1,016,000.00 | |
| 2020 Caidian District Patent Award Fund | 12,000.00 | |
| 2020 Municipal Manufacturing and Internet Integration Development Special Fund | 520,000.00 | |
| Total | 2,264,506.66 | 259,080.00 |
40. Investment income
In RMB
| Item | Current Period | Last Period |
| Investment income from financial products | 165,317.73 | 180,964.60 |
| Total | 165,317.73 | 180,964.60 |
Other explanation:
Nil
41. Credit impairment loss
In RMB
| Item | Current Period | Last Period |
| Bad debt loss of other account receivable | 213,089.45 | 196,278.74 |
| Credit impairment loss of account receivable | -5,705.72 | -5,659.75 |
| Total | 207,383.73 | 190,618.99 |
Other explanation:
Nil
42. Losses on assets impairment
In RMB
| Item | Current Period | Last Period |
| II. Inventory falling price loss and impairment loss of contract performance cost | 170,241.33 | -275,905.92 |
| X. Impairment loss of Intangible assets | -109,427.90 | |
| Total | 170,241.33 | -385,333.82 |
Other explanation:
Nil
43. Asset disposal income
In RMB
| Source of asset disposal income | Current Period | Last Period |
| Disposal gains arising from the disposal of not held for sale fixed assets \intangible assets | 817,533.49 | 9,298.34 |
44. Non-operating income
In RMB
| Item | Current Period | Last Period | Amount included in current non-recurring profits or losses |
| Government subsidy | 465,079.80 | 275,300.00 | 465,079.80 |
| Fine income | 40,702.97 | ||
| Other | 23,577.50 | 18,947.69 | 23,577.50 |
| Total | 488,657.30 | 334,950.66 | 488,657.30 |
Government subsidy reckoned into current gains/losses:
In RMB
| 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 |
| 2019 Central Foreign Economic and Trade Development Special Fund Processing Trade Matters | Wuhan Municipal Bureau of Commerce | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 210,900.00 | Income-related | |
| Steady growth in foreign trade of the audited foreign economic and trade development special funds in 2019 | Wuhan Municipal Bureau of Commerce | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 90,400.00 | Income-related | |
| 2020 Provincial Special Funds for Foreign Economic and Trade Development | Wuhan Municipal Bureau of Commerce | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to | Y | N | 36,100.00 | Income-related |
| encourage investment | ||||||||
| 2020 Municipal Foreign Economic and Trade Development Special Fund | Bureau of Commerce in Wuhan Caidian District | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 41,500.00 | Income-related | |
| Government subsidies for epidemic prevention | Futian District Government | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 10,000.00 | Income-related | |
| Sewage fee refund | Shenzhen Water Co., Ltd. | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 15,778.80 | Income-related | |
| Electricity subsidy | Shenzhen Power Supply Bureau | Subsidy | Subsidy obtained for conforms with the | Y | N | 60,401.00 | Income-related |
| local support policy for investment incentive to encourage investment | ||||||||
| 2018 Municipal Foreign Economic and Trade Funds | Ministry of Finance of Wuhan | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 50,000.00 | Income-related | |
| Job search and entrepreneurship subsidy received for injection molding | Labor and employment administration bureau of Wuhan Caidian District | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 6,000.00 | Income-related | |
| Award for excellent enterprises in 2018 | Financial branch of Economic Development Zone of Wuhan Caidian | Award | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 200,000.00 | Income-related |
| Foreign trade funds at provincial level in 2018 | Zero balance special account of Wuhan Finance Bureau | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 17,300.00 | Income-related | |
| Provincial foreign economic and trade development project | Department of Commerce of Hubei Province | Subsidy | Subsidy obtained for conforms with the local support policy for investment incentive to encourage investment | Y | N | 2,000.00 | Income-related |
Other explanation:
Nil
45. Non-operating expenditure
In RMB
| Item | Current Period | Last Period | Amount included in current non-recurring profits or losses |
| Penalties and liquidated damages | 7,302.38 | 484,592.52 | 7,302.38 |
| Tax overdue fine | 362,411.75 | 362,411.75 | |
| Other expenses | 39,095.77 | 39,095.77 | |
| Total | 408,809.90 | 484,592.52 |
Other explanation:
Nil
46. Income tax expense
(1) Statement of income tax expense
In RMB
| Item | Current Period | Last Period |
| Current income tax expense | 2,550,845.51 | 2,264,212.71 |
| Deferred income tax expense | -580,374.13 | 26,496.59 |
| Other | 16,377.75 | |
| Total | 1,986,849.13 | 2,290,709.30 |
(2) Adjustment on accounting profit and income tax expenses
In RMB
| Item | Current Period |
| Total profit | 8,817,036.53 |
| Income tax based on statutory/applicable rate | 2,204,259.13 |
| Impact by different tax rate applied by subsidies | -227,859.48 |
| Effect of adjusting the income tax in previous period | 16,377.75 |
| Impact on cost, expenses and losses that unable to deducted | 1,257,662.83 |
| Impact of deductible loss of un-recognized deferred income tax assets in the prior period of use | -311,960.12 |
| The deductible temporary differences or deductible losses of the un-recognized deferred income tax assets in the Period | -118,532.18 |
| Other (additional deduction for R&D expenses) | -833,098.80 |
| Income tax expense | 1,986,849.13 |
Other explanationNil
47. Annotation of cash flow statement
(1) Cash received with other operating activities concerned
In RMB
| Item | Current Period | Last Period |
| Unit intercourse account | 3,566,766.97 | 2,484,797.74 |
| Collection management fee and utilities etc. | 148,431.32 | 2,977,706.16 |
| Repayment from employees | 129,319.77 | 160,311.00 |
| Margin, deposit | 296,101.74 | 3,289,643.20 |
| Interest income | 13,328.40 | 689,183.43 |
| Refunds | 8,175.34 | 597,038.28 |
| Claim deduction etc. | 756,526.93 | 722,943.15 |
| Government subsidy | 4,477,329.40 | 2,866,100.00 |
| Other | 154,610.95 | 10,871.01 |
| Total | 9,550,590.82 | 13,798,593.97 |
Note of cash received with other operating activities concerned:
Nil
(2) Cash paid with other operating activities concerned
In RMB
| Item | Current Period | Last Period |
| Unit intercourse account | 2,613,872.25 | 1,975,618.44 |
| Borrowings paid by employees | 2,384,958.00 | 879,995.14 |
| Shipping fee | 6,995,192.43 | 5,104,276.56 |
| Communication fee | 1,580,667.08 | 4,471,380.81 |
| Utility bill | 2,697,056.69 | 1,493,292.41 |
| Transportation expenses | 454,078.69 | 870,970.33 |
| Repair cost | 3,396,243.22 | 2,153,601.68 |
| Financial institution fee | 59,840.09 | 120,224.97 |
| Other | 1,582,172.00 | 1,607,835.54 |
| Courier fee | 1,086,119.77 | |
| After-sales service fee | 700,744.50 | 1,055,553.88 |
| Inspection fee | 693,871.75 | 310,390.97 |
| Office expenses | 1,286,080.79 | 724,155.68 |
| Margin | 2,244,276.97 | 8,161,965.07 |
| Travel expenses | 4,424,533.42 | 1,117,219.86 |
| Audit consulting fee | 377,867.92 | 3,008,697.45 |
| Rental fees | 193,840.43 | 3,386,329.51 |
| Securities Information Disclosure Fee | 283,386.75 | 344,524.44 |
| Security fee | 1,060,613.25 | 812,676.00 |
| Total | 34,115,416.00 | 37,598,708.74 |
Note of cash paid with other operating activities concerned:
Nil
(3) Cash received with other investment activities concerned
In RMB
| Item | Current Period | Last Period |
| Redemption of principal of financial products | 55,000,000.00 | 75,000,000.00 |
| Total | 55,000,000.00 | 75,000,000.00 |
Note of cash received with other investment activities concerned:
Nil
(4) Cash paid related with investment activities
In RMB
| Item | Current Period | Last Period |
| Purchasing financial products | 55,000,000.00 | 75,000,000.00 |
| Total | 55,000,000.00 | 75,000,000.00 |
Note of cash paid related with investment activities:
Nil
(5) Cash paid related with financing activities
In RMB
| Item | Current Period | Last Period |
| Bill margin | 30,688,367.17 | |
| Total | 30,688,367.17 |
Note of cash paid related with financing activities:
Nil
48. Supplementary information to statement of cash flow
(1) Supplementary information to statement of cash flow
In RMB
| Supplementary information | This Period | Last Period |
| 1. Net profit adjusted to cash flow of operation activities: | -- | -- |
| Net profit | 6,830,187.40 | 5,460,049.15 |
| Add: Assets impairment provision | -377,625.06 | -194,714.83 |
| Depreciation of fixed assets, consumption of oil assets and depreciation of productive biology assets | 14,552,007.52 | 11,730,115.29 |
| Depreciation of right-of-use assets | ||
| Amortization of intangible assets | 1,727,942.64 | 1,772,198.84 |
| Amortization of long-term deferred expenses | 232,335.84 | 232,335.84 |
| Loss from disposal of fixed assets, intangible assets and other long-term assets (gain is listed with “-”) | -817,533.49 | -9,298.34 |
| Losses on scrapping of fixed assets (gain is listed with “-”) | ||
| Gain/loss of fair value changes (gain is listed with “-”) | ||
| Financial expenses (gain is listed with “-”) | 13,309,590.35 | 10,295,403.31 |
| Investment loss (gain is listed with “-”) | -165,317.73 | -180,964.60 |
| Decrease of deferred income tax asset ((increase is listed with “-”) | -529,860.13 | 26,496.59 |
| Increase of deferred income tax liability (decrease is listed with “-”) | ||
| Decrease of inventory (increase is listed with “-”) | -3,024,220.20 | -4,273,548.50 |
| Decrease of operating receivable accounts (increase is listed with “-”) | 4,984,706.25 | 18,484,235.02 |
| Increase of operating payable accounts (decrease is listed with “-”) | 21,335,650.21 | 31,121,399.24 |
| Other | 1,711,920.00 | |
| Net cash flows arising from operating activities | 59,719,269.60 | 74,463,707.01 |
| 2. Material investment and financing not involved in cash flow | -- | -- |
| Conversion of debt into capital | ||
| Switching Company bonds due within one year |
| Financing lease of fixed assets | ||
| 3. Net change of cash and cash equivalents: | -- | -- |
| Balance of cash at period end | 30,050,989.33 | 36,645,061.61 |
| Less: Balance of cash equivalent at year-begin | 36,645,061.61 | 27,961,209.60 |
| Add: Balance at year-end of cash equivalents | ||
| Less: Balance at year-begin of cash equivalents | ||
| Net increase of cash and cash equivalents | -6,594,072.28 | 8,683,852.01 |
(2) Constitution of cash and cash equivalent
In RMB
| Item | Closing balance | Opening balance |
| I. Cash | 30,050,989.33 | 36,645,061.61 |
| Including: Cash on hand | 138,673.02 | 432,301.32 |
| Bank deposit available for payment at any time | 29,912,316.31 | 36,212,760.29 |
| III. Balance of cash and cash equivalent at period-end | 30,050,989.33 | 36,645,061.61 |
Other explanation:
Nil
49. Assets with ownership or use right restricted
In RMB
| Item | Ending book value | Reason for restriction |
| Monetary funds | 30,917,064.25 | Bill deposit, judicial freeze |
| Fixed assets | 12,577,333.12 | Loan mortgage |
| Intangible assets | 6,799,575.98 | Loan mortgage |
| Receivable financing | 6,752,967.68 | Bill pledge |
| Investment real estate | 35,526,155.89 | Loan mortgage |
| Disposal of fixed assets | 92,857,471.69 | Court closure |
| Total | 185,430,568.61 | -- |
Other explanation:
Nil
50. Item of foreign currency
(1) Item of foreign currency
In RMB
| Item | Closing balance of foreign currency | Rate of conversion | Ending RMB balance converted |
| Monetary funds | -- | -- | 9,763,489.57 |
| Including: USD | 1,496,338.96 | 6.5249 | 9,763,462.08 |
| Euro | |||
| HKD | 32.66 | 0.8417 | 27.49 |
| Account receivable | -- | -- | 52,507,767.40 |
| Including: USD | 8,047,290.55 | 6.5249 | 52,507,767.40 |
| Euro | |||
| HKD | |||
| Long-term loans | -- | -- | |
| Including: USD | |||
| Euro | |||
| HKD | |||
| Account paid in advance | 30,287,750.94 | ||
| Including: USD | 4,641,872.05 | 6.5249 | 30,287,750.94 |
| Accounts payable | 23,508.43 | ||
| Including: USD | 3,602.88 | 6.5249 | 23,508.43 |
| Account received in advance | 133,512.50 | ||
| Including: USD | 20,462.00 | 6.5249 | 133,512.50 |
| Short-term borrowings | 12,527,808.00 | ||
| Including: USD | 1,920,000.00 | 6.5249 | 12,527,808.00 |
Other explanation:
Nil
(2) Explanation on foreign operational entity, including as for the major foreign operational entity,disclosed main operation place, book-keeping currency and basis for selection; if the book-keepingcurrency changed, explain reasons
□ Applicable √Not applicable
51. Government subsidy
(1) Government subsidy
In RMB
| Category | Amount | Item for presentation | Amount reckoned into current gains/losses |
| 2019 Central Foreign Economic and Trade Development Special Fund Processing Trade Matters | 210,900.00 | Non-operating income | 210,900.00 |
| Steady growth in foreign trade of the audited foreign economic and trade development special funds in 2019 | 90,400.00 | Non-operating income | 90,400.00 |
| 2020 Provincial Special Funds for Foreign Economic and Trade Development | 36,100.00 | Non-operating income | 36,100.00 |
| 2020 Municipal Foreign Economic and Trade Development Special Fund | 41,500.00 | Non-operating income | 41,500.00 |
| Government subsidies for epidemic prevention | 10,000.00 | Non-operating income | 10,000.00 |
| Sewage fee refund | 15,778.80 | Non-operating income | 15,778.80 |
| Electricity subsidy | 60,401.00 | Non-operating income | 60,401.00 |
| Three-agency handling fee for individual tax | 6,113.66 | Other income | 6,113.66 |
| Special funds for industrial investment and technological transformation and intelligent transformation in 2020 | 2,190,000.00 | Deferred income | 219,000.00 |
| Enterprise stabilization subsidy refund | 232,313.00 | Other income | 232,313.00 |
| Subsidies for training on | 1,016,000.00 | Other income | 1,016,000.00 |
| behalf of workers | |||
| 2020 Caidian District Patent Award Fund | 12,000.00 | Other income | 12,000.00 |
| 2020 Municipal Manufacturing and Internet Integration Development Special Fund | 520,000.00 | Other income | 520,000.00 |
| Total | 4,441,506.46 | 2,470,506.46 |
(2) Government grants rebate
□ Applicable √Not applicable
Other explanation:
NilVIII. Changes of consolidation scope
1. Enterprise combination under the same control
(1) Enterprise combination under the same control in Period
In RMB
| Combined party | Percentage of equity acquired in enterprise combination | Constitute the basis for the enterprise combination under the same control | Combining date | Basis for determining the date of combination | Income of the combined party from the beginning of the period of combination to the date of combination | Net profit of the combined party from the beginning of the period of combination to the date of combination | Income of the combined party during the comparison period | Net profit of the combined party during the comparison period |
| Ruth Co., Ltd. | 100.00% | 2020.11.10 | Equity Transfer Agreement |
Other explanation:
Nil
(2) Consolidation cost
In RMB
| Consolidation cost | |
| --cash | 9,500.00 |
Contingent explanation of the consideration and its changes:
NilOther explanation:
Nil
(3) Book value of the assets/liabilities from combined party at date of combination
In RMB
| Combination date | At the end of the previous period | |
Contingent liabilities of the combined party assumed in the enterprise combination:
Ruth Co., Ltd was established in Hong Kong dated 25 October 2020 with registered capital of HK$ 10,000.00, no actual capitalcontributed and has not yet commenced production and operation activities.
Other explanation:
NilIX. Equity in other subjects
1. Equity in subsidiary
(1) Constitute of enterprise group
| Subsidiary | Main operation place | Registration place | Business nature | Share-holding ratio | Acquired way | |
| Directly | Indirectly | |||||
| Shenzhen HUAFA Property Lease Management Co., Ltd | Shenzhen | Shenzhen | Property management | 60.00% | Investment establishment | |
| Shenzhen Zhongheng HUAFA Property Co., Ltd | Shenzhen | Shenzhen | Property management | 100.00% | Investment establishment | |
| Wuhan Hengfa Technology Co., Ltd. | Wuhan | Wuhan | Production & sales | 100.00% | Investment establishment | |
| Shenzhen HUAFA Hengtian Co., | Shenzhen | Shenzhen | Property management | 100.00% | Investment establishment | |
| Ltd. | ||||||
| Shenzhen HUAFA Hengtai Co., Ltd. | Shenzhen | Shenzhen | Property management | 100.00% | Investment establishment | |
| Ruth Co., Ltd. | Hong Kong | Hong Kong | -- | 100.00% | Equity acquisition |
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 consolidates statement:
NilBasis of termination of agent or consignor:
NilOther explanationNilX. The risk associated with financial instrumentsThe Group's main financial instruments include loans, receivables, payable, tradable financial assets, tradingfinancial liabilities, etc., please refer to the details of each financial instrument in Note V. The risks associatedwith these financial instruments and the risk management policies adopted by the Group to reduce these risks aredescribed below. The management of the Group manages and monitors these risk exposures to ensure that theabove risks are controlled within the limits.
1. Various risk management objectives and policies
The 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 andother price risk.
1) Exchange rate 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 December 31, 2020, except for the US
dollar balance of assets and liabilities in below table and the sporadic Hong Kong dollar balance, the Group'sassets and liabilities are all RMB balance. The exchange rate risk arising from the assets and liabilities of the USdollar, Hong Kong dollar balance may have an impact on the Group's operating results.
| Item | December 31, 2020 (RMB conversion) | December 31, 2019 (RMB conversion) |
| Monetary funds-USD | 9,763,462.08 | 1,687,939.31 |
| Monetary funds-HKD | 27.49 | 89,609.26 |
| Account receivable-USD | 52,507,767.40 | 40,658,907.54 |
| Account paid in advance- USD | 30,287,750.94 | 15,930,428.80 |
| Accounts payable-USD | 23,508.43 |
| Account received in advance-USD | 133,512.50 | |
| Short-term borrowings-USD | 12,527,808.00 | 12,633,898.20 |
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 December 31, 2020, the Group's interest-bearing debtwas mainly the fixed rate and floating interest rate loan contract denominated in Renminbi and US dollars,amounting to RMB 12,527,808.00 (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 December 31, 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 overduecredit. 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 that
the 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: 102,674,279.15 Yuan.
(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 follows:
Amount on December 31, 2020
| Item | Within one year | 1-2years | 2-3years | Over 3 years | Total |
| Financial assets | |||||
| Monetary funds | 60,968,053.58 | 60,968,053.58 |
| Receivable financing | 10,057,385.11 | 10,057,385.11 |
| Account receivable | 127,954,502.85 | 50,840.84 | 65,934.11 | 13,148,817.95 | 141,220,095.75 |
| Other account receivable | 3,100,690.03 | 297,671.40 | 312,212.44 | 15,607,877.94 | 19,318,451.81 |
| Account paid in advance | 39,743,291.88 | 106,781.00 | 82,309.50 | 39,932,382.38 |
| Financial liabilities | |||||
| Short-term borrowings | 12,527,808.00 | 12,527,808.00 |
| Notes payable | 37,416,381.20 | 37,416,381.20 |
| Account payable | 86,151,700.58 | 12,455,666.57 | 98,607,367.15 | ||
| Other accounts payable | 27,245,869.26 | 27,245,869.26 | |||
| Contract liabilities | 287,140.66 | 287,140.66 |
| Wage payable | 5,737,366.59 | 5,737,366.59 |
2. Sensitivity analysis
The Group uses the sensitivity analysis technique to analyze the possible impacts of the reasonable and possible
changes 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 cashflow hedges are highly effective.On the basis of the above assumptions, in case that other variable doesn’t change, the after-tax effect of thepossible and reasonable changes in the exchange rate on the current profits and losses are as follows:
| Item | Exchange rate fluctuation | 2020 | 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 | 3,993,707.59 | 3,993,707.59 | -2,281,529.08 | -2,281,529.08 |
| All foreign currency | 5% devaluation of the RMB | -3,993,707.59 | -3,993,707.59 | 2,281,529.08 | 2,281,529.08 |
XI. 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 | 138000000 | 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 IX. Equity in other entity in the Note
3. Other Related party
| Other related party | Relationship with the Enterprise |
| Shenzhen Zhongheng Semiconductor 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 |
| Wuhan Optical Valley Display System 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 |
| 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 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
In RMB
| 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 | 152,365,734.55 | 166,382,370.00 | N | 122,172,251.41 |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Purchasing | 92,522,296.13 | 139,524,000.00 | N | 110,747,651.72 |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Purchasing | 39,519,517.75 | 167,428,800.00 | N | 28,387,151.42 |
Goods sold/labor service providing
In RMB
| Related party | Content | Current Period | Last Period |
| Hong Kong Yutian International Investment Co., Ltd. | Sales of display | 153,256,701.17 | 107,934,645.13 |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Sales of display | 41,056,775.49 | 13,253,190.28 |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Sales of materials | 2,900,164.83 | 8,305,534.66 |
| Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | Sales of foam parts | 90,175.49 | |
| Wuhan Zhongheng Yutian | Sales of display | 58,479.76 |
Explanation on goods purchasing, labor service providing and receivingNil
(2) Related guarantee
As the guarantor
In RMB
Trading Co., Ltd.
Secured party
| Secured party | Amount guarantee | Start | End | Completed or not (Y/N) |
| Hengfa Technology Company | 36,000,000.00 | April 20, 2018 | April 20, 2022 | N |
As the secured party
In RMB
| Guarantor | Amount guarantee | Start | End | Completed or not (Y/N) |
| Li Zhongqiu | 90,000,000.00 | July 01, 2019 | July 01, 2022 | N |
Explanation on related guaranteeNil
(3) Remuneration of key manager
In RMB
| Item | Current Period | Last Period |
| Total | 1,403,000.40 | 1,443,000.00 |
5. Receivable/payable items of related parties
(1) Receivable
In RMB
| ItemName | 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. | 41,513,718.58 | 25,582,267.94 | ||
| Account receivable | Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | 12,676.70 | 350,779.63 | ||
| Account receivable | Wuhan Zhongheng Yutian Trading Co., Ltd. | 58,479.76 | |||
| Accounts paid in advance | Hong Kong Yutian International Investment Co., Ltd. | 27,025,766.19 | 13,902,631.23 | ||
| Total | 68,552,161.47 | 39,894,158.56 |
(2) Payable
In RMB
| ItemName | Related party | Closing book balance | Opening book balance |
| Account payable | Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | 6,795,240.85 | 3,186,713.37 |
| Notes payable | Wuhan Hengsheng Photo-electricity Industry Co., Ltd. | 138,355.71 | |
| Total | 6,795,240.85 | 3,325,069.08 |
XII. Commitment or contingency
1. Contingency
2. Other
As of the date of this report, the company has no undisclosed commitments or contingencies that should bedisclosed.
XIII. Events after the balance sheet date
1. Explanation on other events after the balance sheet date
As of the date of this report, the company has no undisclosed after the balance sheet events that should bedisclosed.XIV. Other important events
1. Other
1. Matters of adjudication of Southern International Arbitration Shen [2017] No. D376 from Southern ChinaInternational Economic & Trade Arbitration Commission
(1) Arbitration
In August 2015, Shenzhen Zhongheng Huafa Co., Ltd. (hereinafter referred to as “Shenzhen HUAFA”) andWuhan Zhongheng New Technology Industry Group Co., Ltd. (hereinafter referred to as “Wuhan Zhongheng”)signed the “Cooperation Agreement on Urban Renewal Project of Update Units at Huafa Industrial Park,Gongming Street, Guangming New District, Shenzhen”. As Shenzhen HUAFA and Wuhan Zhongheng planned tocooperate with Shenzhen Vanke Real Estate CO., Ltd. (hereinafter referred to as “Shenzhen Vanke”) on the Huafaurban renewal project (hereinafter referred to as “Huafa Renovation Project) at Gongming Street, GuangmingNew District, Shenzhen, both parties appointed that Shenzhen HUAFA entrusted Wuhan Zhongheng to representit in this cooperation, and established project company - Shenzhen Vanke Guangming Real Estate Co., Ltd.(hereinafter referred to as “Vanke Guangming”) as the subject of project implementation with Shenzhen Vanke;Vanke Guangming signed “Demolition Compensation Agreement” with Shenzhen HUAFA and WuhanZhongheng, 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 contractdisputes should be fully assumed by our company. In the above contingent losses, if the judicial decision ruled
your company to pay the compensation in advance, our company promised to pay your company in cash 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 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;
② The first respondent and the second respondent pay the lawyer fees of RMB 1.4 million to the applicant due tothe case;
③ The first respondent and the second respondent pay the property preservation fees of RMB 10,000 to theapplicant;
④ The 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;
⑥ Reject the arbitration counterclaims of the first respondent and the second respondent.In summary, Wuhan Zhongheng and Shenzhen Huafa should pay liquidated damages, interest, lawyer fees,property preservation fees, and arbitration fees for this request to Vanke and pay actual expenses of the arbitrators
in this case and pay the actual expenses incurred by the arbitrators in this case to South China 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.The Company and Wuhan Zhongheng Group received an enforcement decision in 2020, terminate the executionprocess and wait for the conditions for continuation to be fulfilled before restarting.
(3) The response of the company’s management and the identification of the eventThe 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, and WuhanZhongheng received the full amount of 600 million yuan paid by Vanke Guangming. Therefore, WuhanZhongheng should bear all responsibilities for faults in response to the breach of contract. Wuhan Zhonghengissued the Commitment Letter in December 2016, pledged that if the arbitration judged Vanke to win the case,Wuhan Zhongheng should bear all arbitration losses caused by the contract dispute; after the award came intoeffect, Wuhan Zhongheng issued the Confirmation Letter again on November 23, 2017 to divide the duty ofperformance of the award; the independent directors of the company issued independent opinions after carefulstudy and judgment that Wuhan Zhongheng should bear all liability for satisfaction on the Award HNGZSC [2017]D376.
2. Arbitration case of legal service contract dispute with V&T (Shenzhen) Law 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.Guangdong Haibu Attorneys-at-Law engaged by the company made verification opinion on the legalresponsibility assumed for the performance of the arbitration result and believed that this case was caused by theVanke arbitration case No. SHEN DP20160334, and the net land was not handed over on time due to WuhanZhongheng, and Wuhan Zhongheng Heng received 600 million yuan paid by Vanke Guangming in full, so thecompany is not liable for compensation under the judgment of the Vanke case. The nature of the attorney fees of
V&T Law Firm is deduction of royalties. V&T Law Firm's deduction for the company is 0, and V&T Law Firm'sattorney fees paid by the company is 0. In addition, Wuhan Zhongheng Group has issued a "Letter ofCommitment" to Shenzhen Huafa in December 2016, if the arbitration decides that Vanke wins the lawsuit,Wuhan Zhongheng Group will bear the full amount of the arbitration losses caused by the contract disputes.Wuhan Zhongheng Group, as the beneficiary of the "Entrusted Agency Contract", shall bear all the paymentresponsibilities for the “Award” HNGZSC [2019] No. D618, and the company shall not be liable for the losses inthis case.On November 17, 2020, the court enforced the attorney fees that Wuhan Zhongheng Group should assume. As ajoint defendant, the company was forced to enforce partial payment of 1,564,767.46 yuan, Wuhan ZhonghengGroup returned this partial payment to the listed company on the 24th of that month.
3. Dispute with Shenzhen Zhongheng Semiconductor Co., Ltd. (formerly known as "Shenzhen Zhongheng HuafaTechnology Co., Ltd.") concerning land transfer
(1) Cause of the case
On April 29, 2009, the company signed an Asset Replacement Contract with Wuhan Zhongheng Group.According to the contract, the company would use the the land use rights of two plots of land located at 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 Semiconductor Co., Ltd. (former Zhongheng HuafaTechnology Co., Ltd., hereinafter referred to as "Zhongheng Semiconductor") and transfer ownership toZhongheng Semiconductor, Wuhan Zhongheng Group replaced the company's 100% equity in ZhonghengSemiconductor with its 56% equity in Wuhan Hengfa Technology Co., Ltd. For the main content of theabove-mentioned Asset Replacement Contract, please refer to the Announcement on Related Transactions of AssetReplacement with Controlling Shareholders published by the company on Juchao Website dated April 30, 2009,with the announcement number 2009-17. After Wuhan Zhongheng Group fulfilled its obligations under the AssetReplacement Contract, the company transferred 100% of its equity in Zhongheng Semiconductor to WuhanZhongheng Group on December 21, 2009; the company also handed over the above two plots of land toZhongheng Semiconductor for possession, management, and use, but the land use right has not been transferred toZhongheng Semiconductor.
(2) Case progress
On April 17, 2020, the company received the "Notice of Response" (2020) Yue 03 Min Chu No. 17 and otherrelated materials delivered by the Shenzhen Intermediate People’s Court of Guangdong Province. ZhonghengSemiconductor sued the company and required the company and the third party (Wuhan Zhongheng Group) tocontinue to perform the contract, and transfer ownership of the above two plots of land and compensate foreconomic losses of 52 million yuan. The Shenzhen Intermediate People's Court has filed a case with the casenumber (2020) Yue 03 Min Chu No. 17.Since Zhongheng Semiconductor's main appeal is the transfer of land to its name, the company is reaching asettlement with Zhongheng Semiconductor. The company promises to actively cooperate with the land transfer.Zhongheng Semiconductor has issued a letter of commitment to the company promising to abandon the demand
for economic compensation. As of the disclosure date of this report, the case has been heard in court and no resultshave yet been issued.
XV. Principle notes of financial statements of parent company
1. Account receivable
(1) Category of account receivable
In RMB
| 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 | 10,293,424.29 | 100.00% | 10,293,424.29 | 100.00% | 0.00 | 10,293,424.29 | 100.00% | 10,293,424.29 | 100.00% | 0.00 |
| Including: | ||||||||||
| Including: | ||||||||||
| Total | 10,293,424.29 | 10,293,424.29 | 10,293,424.29 | 10,293,424.29 | ||||||
Accrual of bad debt provision on single basis: 10,293,424.29
In RMB
| 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 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 |
| 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 | 10,293,424.29 | 10,293,424.29 | -- | -- |
Accrual of bad debt provision on single basis:
In RMB
| Name | Closing balance | |||
| Book balance | Bad debt provision | Accrual ratio | Accrual causes | |
Accrual of bad debt provision on portfolio:
In RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrual ratio | |
Explanation on portfolio basis:
NilAccrual of bad debt provision on portfolio:
In RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrual ratio | |
Explanation on portfolio basis:
NilAccrual of bad debt provision on portfolio:
In RMB
| Name | Closing balance | ||
| Book balance | Bad debt provision | Accrual ratio | |
Explanation on portfolio basis:
NilAccrual of bad debt provision on portfolio:
In RMB
| 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
In RMB
| Account ages | Book balance |
| Within one year (one year included) | 0.00 |
| 1-2 years | 0.00 |
| 2-3 years | 0.00 |
| Over 3 years | 10,293,424.29 |
| 3-4 years | 0.00 |
| 4-5 years | 0.00 |
| Over 5 years | 10,293,424.29 |
| Total | 10,293,424.29 |
(2) Top 5 account receivables collected by arrears party at ending balance
In RMB
| 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% | 1,870,887.18 |
| TCL ACE ELECTRIC APPLIANCE (HUIZHOU) CO., LTD. | 1,325,431.75 | 12.88% | 1,325,431.75 |
| Qingdao Haier Parts Procurement Co., Ltd. | 1,225,326.15 | 11.90% | 1,225,326.15 |
| SKYWORTH Multimedia (Shenzhen) Co., Ltd. | 579,343.89 | 5.63% | 579,343.89 |
| Shenzhen Huixin Video Technology Co., Ltd. | 381,168.96 | 3.70% | 381,168.96 |
| Total | 5,382,157.93 | 52.29% |
2、Other account receivable
In RMB
| Item | Closing balance | Opening balance |
| Other account receivable | 93,922,057.92 | 97,165,023.85 |
| Total | 93,922,057.92 | 97,165,023.85 |
(1) Other account receivable
1) Other account receivable by nature
In RMB
| Nature | Closing book balance | Opening book balance |
| Margin & deposit | 304,608.00 | 304,608.00 |
| Borrow money | 2,089,073.12 | 1,869,073.12 |
| Intercourse funds | 103,959,672.35 | 107,488,541.28 |
| Rental receivable | 6,224,167.48 | 5,847,389.48 |
| Other | 162,006.14 | 168,162.09 |
| Less: Bad debt provision | -18,817,469.17 | -18,512,750.12 |
| Total | 93,922,057.92 | 97,165,023.85 |
2) Accrual of bad debt provision
In RMB
| 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 on1 Jan. 2020 | 0.30 | 18,512,749.82 | 18,512,750.12 | |
| Balance of 1 Jan. 2020 in the period | —— | —— | —— | —— |
| Accrual in current period | -0.30 | 111.75 | 304,607.70 | 304,719.15 |
| Balance on Dec. 31, 2020 | 0.00 | 111.75 | 18,817,357.42 | 18,817,469.17 |
Change of book balance of loss provision with amount has major changes in the period
□ Applicable √Not applicable
By account age
In RMB
| Account ages | Book balance |
| Within one year (one year included) | 14,726,087.85 |
| Within one year | 14,726,087.85 |
| 1-2 years | 79,196,078.82 |
| 2-3 years | 312,212.44 |
| Over 3 years | 18,505,147.98 |
| Over 5 years | 18,505,147.98 |
| Total | 112,739,527.09 |
3) Top 5 other receivables collected by arrears party at ending balance
In RMB
| Company | Nature | Closing balance | Account ages | Proportion in total other receivables at year-end | Closing balance of bad debt provision |
| Wuhan Hengfa Technology Co., Ltd. | Intercourse funds | 84,133,311.06 | Within one year; 1-2 years | 74.63% | |
| Shenzhen Zhongheng HUAFA | Intercourse funds | 8,958,256.81 | Within one year | 7.95% |
| Property Co., Ltd | |||||
| Shenzhen HUAFA Property Leasing Co., Ltd. | Rental fee receivable | 4,558,859.15 | Over 3 years | 4.04% | 4,558,859.15 |
| Portman | Intercourse funds | 4,021,734.22 | Over 3 years | 3.57% | 4,021,734.22 |
| Shenzhen Jifang Investment Co., Ltd | Rental fee receivable | 1,071,160.00 | Over 3 years | 0.95% | 1,071,160.00 |
| Total | -- | 102,743,321.24 | -- | 9,651,753.37 |
3. Long-term equity investments
In RMB
| Item | Closing balance | Opening balance | ||||
| Book balance | Impairment provision | Book value | Book balance | Impairment provision | Book value | |
| Investment for subsidiary | 187,218,400.00 | 600,000.00 | 186,618,400.00 | 187,208,900.00 | 600,000.00 | 186,608,900.00 |
| Total | 187,218,400.00 | 600,000.00 | 186,618,400.00 | 187,208,900.00 | 600,000.00 | 186,608,900.00 |
(1) Investment for subsidiary
In RMB
| The invested entity | Opening balance (Book value) | Changes in the period | Closing balance (Book value) | Closing balance of impairment provision | |||
| Additional investment | Reduce investment | Accrual of impairment provision | Other | ||||
| Shenzhen Huafa Property Leasing Co., Ltd. | 0.00 | 600,000.00 | |||||
| Shenzhen Zhongheng HUAFA Property Co., Ltd | 1,000,000.00 | 1,000,000.00 | |||||
| Wuhan Hengfa Technology Co., Ltd. | 183,608,900.00 | 183,608,900.00 | |||||
| Shenzhen HUAFA Hengtian Co., Ltd. | 1,000,000.00 | 1,000,000.00 | |||||
| Shenzhen HUAFA Hengtai Co., Ltd. | 1,000,000.00 | 1,000,000.00 | |||||
| Ruth Co., Ltd. | 9,500.00 | 9,500.00 | |||||
| Total | 186,608,900.00 | 9,500.00 | 186,618,400.00 | 600,000.00 |
4. Operating revenue and cost
In RMB
| Item | Current Period | Last Period | ||
| Revenue | Cost | Revenue | Cost | |
| Main business | 37,262,114.01 | 6,784,029.31 | 38,216,680.42 | 7,304,872.41 |
| Total | 37,262,114.01 | 6,784,029.31 | 38,216,680.42 | 7,304,872.41 |
Information relating to revenue:
In RMB
| 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:
Nil
XVI. Supplementary Information
1. Current non-recurring gains/losses
√ Applicable □ Not applicable
In RMB
| Item | Amount | Note |
| Gains/losses from the disposal of non-current asset | 817,533.49 | |
| Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) | 2,728,618.05 | |
| Gain/loss of entrusted investment or assets management | 165,317.73 | |
| Other non-operating income and expenditure except for the aforementioned items | -385,232.40 | |
| Loss on assignment of claims | ||
| Less: Impact on income tax | 599,443.02 | |
| Total | 2,726,793.85 | -- |
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 | 2.05% | 0.0241 | 0.0241 |
| Net profits belong to common stock stockholders of the Company after deducting nonrecurring gains and losses | 1.23% | 0.0145 | 0.0145 |
Section XIII. Documents available for referenceI. 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.