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深华发A(000020)公告正文

深华发B:2019年半年度报告(英文版)

公告日期 2019-08-27
股票简称:深华发A 股票代码:000020
                                 SEMI-ANNUAL REPORT 2019




SHENZHEN ZHONGHENG HUAFA CO., LTD.

       SEMI-ANNUAL REPORT 2019




              August 2019




                   1
                                                                           SEMI-ANNUAL REPORT 2019




              Section I. Important Notice, Contents and Paraphrase

Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of Shenzhen Zhongheng Huafa Co., Ltd. (hereinafter referred to as
the Company) hereby confirm that there are no any fictitious statements,
misleading statements, or important omissions carried in this report, and shall
take all responsibilities, individual and/or joint, for the reality, accuracy and
completion of the whole contents.


Li Zhongqiu, Principal of the Company, Yang Bin, person in charger of
accounting works and Wu Aijie, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of 2019
Semi-Annual Report is authentic, accurate and complete.


Other directors attending the Meeting for semi-annual report deliberation
except for the followed
Name     of    director
                          Title for absent director   Reasons for absent   Attorney
absent
Gao Jianbai               director                    personal reason      Li Zhongqiu
Xu Jinwen                 independent director        personal reason      Zhang Zhaoguo



Concerning the forward-looking statements with future planning involved in the
Report, they do not constitute a substantial commitment for investors. Majority
investors are advised to exercise caution of investment risks.


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




                                                      2
                                                                                                     SEMI-ANNUAL REPORT 2019




                                                         Contents




Semi-annual Report 2019 ............................................................................................................ 1

Section I Important Notice and Paraphrase ................................................................................ 2

Section II Company Profile and Main Financial Indexes ............................................................ 5

Section III Summary of Company Business................................................................................. 8

Section IV Discussion and Analysis of Operation ........................................................................ 9

Section V Important Events ........................................................................................................ 15

Section VI Changes in shares and particular about shareholders ........................................... 32

Section VII Preferred Stock ........................................................................................................ 37

Section VIII Particulars about Directors, Supervisors and Senior Executives ....................... 38

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

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

Section XI Documents Available for Reference ...................................................................... 147




                                                                  3
                                                                                SEMI-ANNUAL REPORT 2019




                                  Paraphrase


                    Items    Refers to                               Contents

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

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

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

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

Huafa Trade                  Refers to   Wuhan Zhongheng Huafa Trade Co., Ltd.

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

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

Hengsheng Photoelectricity   Refers to   Wuhan Hengsheng Photoelectricity Industry Co., Ltd.

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

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

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

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

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

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




                                            4
                                                                                                    SEMI-ANNUAL REPORT 2019




                Section II. Company Profile and Main Financial Indexes

I. Company profile

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

 Short form of the stock after
                                   N/A
 changed (if applicable)

 Stock exchange for listing        Shenzhen Stock Exchange

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

 Short form of the Company
                                   深华发
 (in Chinese)

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

 Abbr. of the foreign name
                                   N/A
 (if applicable)

 Legal representative              Li Zhongqiu


II. Person/Way to contact

                                                          Secretary of the Board                  Rep. of security affairs

 Name                                            Yang Bin                                Niu Zhuo

                                                 33/F, No. 2 Building of Dachong         33/F, No. 2 Building of Dachong
 Contact add.                                    Business Center, Nanshan District,      Business Center, Nanshan District,
                                                 Shenzhen                                Shenzhen

 Tel.                                            0755-86360201                           0755-86360201

 Fax.                                            0755-86360206                           0755-86360206

 E-mail                                          hwafainvestor@126.com.cn                hwafainvestor@126.com.cn


III. Others

1. Way of contact

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

Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period,
found more details in Annual Report 2018.

                                                                     5
                                                                                                       SEMI-ANNUAL REPORT 2019


2. Information disclosure and preparation place

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

The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation
place for semi-annual report have no change in reporting period, found more details in Annual Report 2018


IV. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data or not
□Yes √No

                                                                                                          Changes over last year (+,
                                                   Current period            Same period last year
                                                                                                                      -)

 Operating income (RMB)                                 339,190,174.05                340,984,843.24                          -0.53%

 Net profit attributable to shareholders of
                                                           2,580,411.13                    2,793,133.60                       -7.62%
 the listed company (RMB)

 Net profit attributable to shareholders of
 the listed company after deducting                        2,197,912.06                    2,053,467.02                        7.03%
 non-recurring gains and losses (RMB)

 Net cash flow arising from operating
                                                         45,194,220.56                -26,671,325.63
 activities (RMB)

 Basic earnings per share (RMB/Share)                             0.0091                        0.0099                        -8.08%

 Diluted earnings per share (RMB/Share)                           0.0091                        0.0099                        -8.08%

 Weighted average ROE                                             0.79%                          0.87%                        -0.08%

                                                                                                          Changes over period-end
                                                     Period-end              Period-end of last year
                                                                                                              of last year (+, -)

 Total assets (RMB)                                     623,980,175.29                617,090,153.46                           1.12%

 Net assets attributable to shareholder of
                                                        326,548,411.87                323,968,000.74                           0.80%
 listed company (RMB)


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

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

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




                                                                  6
                                                                                                       SEMI-ANNUAL REPORT 2019


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

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


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

√Applicable □ Not applicable
                                                                                                                                In RMB

                                 Item                                           Amount                             Note

 Gains/losses from the disposal of non-current asset (including
                                                                                       129,039.57
 the write-off that accrued for impairment of assets)

 Governmental subsidy reckoned into current gains/losses (not
 including the subsidy enjoyed in quota or ration according to
                                                                                       223,300.00
 national standards, which are closely relevant to enterprise’s
 business)

 Gains/losses from entrusted investment or assets management                            74,936.14

 Other non-operating income and expenditure except for the
                                                                                          9,458.00
 aforementioned items

 Less: Impact on income tax                                                             54,234.64

 Total                                                                                 382,499.07                    --

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




                                                                    7
                                                                                                  SEMI-ANNUAL REPORT 2019




                          Section III. Summary of Company Business

I. Main businesses of the company in the reporting period

Whether the company needs to comply with the disclosure requirements of the particular industry
No
After years of development, the company has gradually formed two main businesses in industry and property
management. Among them, the industrial business mainly includes injection molding, POLYLON (light-weight
packaging materials), and complete machine production and sales of liquid crystal display, property management
business is mainly the lease of its own property.

II. Major changes in main assets

1. Major changes in main assets


                 Major assets                                             Note of major changes


 Equity assets                            N/A

 Fixed assets                             N/A

 Intangible assets                        N/A

 Construction in progress                 N/A


2. Main overseas assets

□ Applicable √ Not applicable


III. Core competitiveness analysis

Whether the company needs to comply with the disclosure requirements of the particular industry
No
All industrial lands of the Company located in Shenzhen were taken into the first batch of plan under 2010 Shenzhen urban upgrade
planning. In the future, development and operation of self-owned land resources would become the income source of the Company
on a long-term and stable basis.




                                                                8
                                                                                                  SEMI-ANNUAL REPORT 2019




                        Section IV. Discussion and Analysis of Operation

I. Introduction

After years of development, the company has gradually formed two main businesses of industrial business and
property management business. Among them, the industrial business is the production and sales of
injection-molded parts, Styrofoam (lightweight material packaging), and liquid crystal display. The property
management business is mainly for the rental of self-owned properties.


In the first half of 2019, the company achieved operation revenue of 339.19 million yuan, with a y-o-y declined of
0.53%; operating profit of 295 million yuan, with a y-o-y growth of 16.15%; net profit of 2.58 million yuan, with
a y-o-y declined of 7.62%; operation revenue from industry production has 318.76 million yuan in the first half of
the year, with a y-o-y declined of 1.43%, operating profit of 1.69 million yuan, with a y-o-y declined of 68.15%;
net profit of 1.6358 million yuan, with a y-o-y declined of 68.24%; the revenue earns from property leasing in first
half year comes to 18.91 million yuan, an increase of 21.20% over the same period last year, and the operating
profit was 1.26 million yuan, with a y-o-y growth of 3.93 million yuan (from the same period last year to (2.67)
million yuan); the net profit was 94.58 million yuan, and from the same period last year to (1.72) million yuan.


II. Main business analysis

See the “I-Introduction” in “Discussion and Analysis of Operation”
Change of main financial data on a y-o-y basis
                                                                                                                        In RMB

                                 Current period          Same period last year    y-o-y changes              Reasons

 Operating revenue                   339,190,174.05              340,984,843.24             -0.53%

 Operating cost                      297,580,208.34              302,582,979.44             -1.65%

 Sales expenses                         9,130,380.22               8,433,363.31              8.26%

 Administrative
                                      19,616,991.39               20,400,985.42             -3.84%
  expenses

 Financial expenses                     5,068,371.24               5,447,070.22             -6.95%

                                                                                                      Increase in property
 Income tax expenses                      603,910.08                 463,831.41             30.20%
                                                                                                      rental income

 Net cash flow from                                                                                   Note receivable are
                                      45,194,220.56              -26,671,325.63
 operating activities                                                                                 collected at maturity

                                                                                                      Last period, invest in
 Net cash flow from
                                       -3,964,794.99              -6,545,541.50                       new workshop and
 investment activities
                                                                                                      replace old production


                                                                    9
                                                                                                    SEMI-ANNUAL REPORT 2019


                                                                                                           equipment

                                                                                                           Short-term borrowing
 Net cash flow from
                                         -32,459,238.76        -21,012,832.62                              decreased in the
 financing activities
                                                                                                           current period

 Net increase of cash                                                                                      Note receivable are
                                          8,869,836.86         -54,379,579.55
 and cash equivalent                                                                                       collected at maturity

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

                                                                                                                  Increase/decrea
                                                                              Increase/decrea   Increase/decrea
                          Operating                          Gross profit                                            se of gross
                                            Operating cost                    se of operating   se of operating
                           revenue                              ratio                                                profit ratio
                                                                                revenue y-o-y     cost y-o-y
                                                                                                                        y-o-y

 According to industries

 Display                164,964,344.94      156,855,763.07          4.92%             32.94%           34.97%                 -1.42%

 Plastic
 injection              111,142,622.51       97,350,242.91         12.41%            -27.04%           -30.76%                4.70%
 hardware

 Styrofoam               34,292,527.88       31,279,310.58          8.79%            -17.96%           -18.19%                0.26%

 According to products

 Display                164,964,344.94      156,855,763.07          4.92%             32.94%           34.97%                 -1.42%

 Plastic
 injection              111,142,622.51       97,350,242.91         12.41%            -27.04%           -30.76%                4.70%
 hardware

 Styrofoam               34,292,527.88       31,279,310.58          8.79%            -17.96%           -18.19%                0.26%

 According to region

 Hong Kong and
                         63,962,270.03       60,275,954.47          5.76%            -17.18%           -18.18%                1.15%
 Taiwan

 Central China          158,337,367.02      140,986,540.09         10.96%            -20.17%           -22.39%                2.55%

 East China              88,099,858.28       84,222,822.00          4.40%            106.63%          112.14%                 -2.48%


III. Analysis of the non-main business

□Applicable √ Not applicable




                                                                  10
                                                                                                             SEMI-ANNUAL REPORT 2019


IV. Assets and liability

1. Major changes of assets composition

                                                                                                                                      In RMB

                             Period-end                  Period-end last year
                                                                                           Ratio
                                        Ratio in                            Ratio in                         Notes of major changes
                         Amount                         Amount                            changes
                                       total assets                        total assets

                      47,981,541.6                    65,403,374.3
 Monetary fund                              7.69%                             10.55%      -2.86%
                                  1                              0

 Account              149,540,866.                    182,542,130.
                                          23.97%                              29.45%      -5.48%
 receivable                       46                             75

                      86,709,541.7                    37,519,314.3
 Inventory                                13.90%                                6.05%      7.85%
                                  6                              4

 Investment real      49,817,157.7                    29,404,574.4
                                            7.98%                               4.74%      3.24%
 estate                           2                              4

 Long-term
 equity                                     0.00%                               0.00%      0.00%
 investment

                      185,008,101.                    108,018,926.
 Fix assets                               29.65%                              17.43%      12.22%
                                  52                             67

 Construction in
                      7,552,776.46          1.21%      654,356.00               0.11%      1.10%
 process

 Short-term           134,676,280.                    85,012,392.0
                                          21.58%                              13.72%       7.86%
 loans                            00                             0


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

                                                                                Bank acceptance deposit and frozen by court
Monetary Fund
                                                           11,150,495.15

Notes receivable                                                                                    Pledge
                                                            3,866,647.92
Accounts receivable
                                                                                                    Pledge
                                                           14,609,128.53

Investment real estate                                                                       Bank loan secured
                                                           37,728,701.12

                                                                      11
                                                                                       SEMI-ANNUAL REPORT 2019



Fixed assets                                                              Bank loan secured
                                                          42,487,962.49
                                                                            Court closure
Liquidation of fixed assets
                                                          92,857,471.69

Intangible assets                                                         Bank loan secured
                                                          36,306,830.17
                                                                                 --
            Total
                                                       239,007,237.07


V. Investment analysis

1. Overall situation

□ Applicable √Not applicable


2. The major equity investment obtained in the reporting period

□ Applicable √Not applicable


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

□ Applicable √ Not applicable


4. Financial assets investment

(1) Securities investment

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


(2) Derivative investment

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


VI. Sales of major assets and equity

1. Sales of major assets

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




                                                                12
                                                                                                         SEMI-ANNUAL REPORT 2019


2. Sales of major equity

□ Applicable √Not applicable


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

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

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

                                 R&D,
                                 production
                                 and sales
                                 of the
 Hengfa
                                 products as    181,643,11     472,002,52       222,311,68    318,755,72    1,694,08
 Technolog      Subsidiary                                                                                             1,635,779.35
                                 well as        1.00                   1.79           5.87          6.11        8.29
 y Company
                                 import &
                                 export
                                 business
                                 etc.

                                 Leasing
 Huafa                           and
                                                1,000,000.     18,582,268       -1,921,466.   2,393,312.    400,723.
 Property       Subsidiary       manageme                                                                               300,542.58
                                                00                        .84           74           63           44
 Company                         nt of own
                                 property

                                 Leasing
 Huafa                           and
                                                1,000,000.     1,900,692.       -5,026,990.
 Lease          Subsidiary       manageme                                                           0.00        0.00           0.00
                                                00                        20            71
 Company                         nt of own
                                 property

                                 Leasing
 Huafa                           and
                                                1,000,000.
 Hengtian       Subsidiary       manageme                      995,680.41       995,680.41          0.00     -701.25        -701.25
                                                00
 Company                         nt of own
                                 property

                                 Leasing
 Huafa                           and
                                                1,000,000.
 Hengtai        Subsidiary       manageme                      996,716.29       996,716.29          0.00     -396.39        -396.39
                                                00
 Company                         nt of own
                                 property

Particular about subsidiaries obtained or disposed in report period


                                                                  13
                                                                                                   SEMI-ANNUAL REPORT 2019


□Applicable    √ Not applicable
Explanation of main holding company and stock-jointly companies
Nil


VIII. Structured vehicle controlled by the Company

□ Applicable √Not applicable


IX. Prediction of business performance from January – September 2019

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable


X. Risks and countermeasures

1. Operational risks of industrial business: industrial restructuring, fluctuations in raw material prices, decline in
market demand, and frustration of new product promotion.
Countermeasures: continue to open up the market, maintain the existing customers, positively develop new
customers, and continue to improve production efficiency;
2. Financial risks: large demands for funds, substantial increase or decrease in financial costs caused by exchange
rate fluctuations, and bank credit constraints caused by changes in financial costs and so on.
Countermeasures: pay close attention to macroeconomic policy trends, actively expand the financing channels,
establish a virtuous circle mechanism for funds, improve the service efficiency, and use financial instruments to
avoid exchange rate risks.




                                                                14
                                                                                                   SEMI-ANNUAL REPORT 2019




                                        Section V. Important Events

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

1. Annual Shareholders’ General Meeting in the report period


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

                                                                                                              http://www.cninfo.
                                                                                                              com.cn/new/disclo
                                                                                                              sure/detail?plate=s
 Annual General                                                                                               zse&stockCode=0
                        AGM                            48.02%        2019-05-21         2019-05-22
 Meeting of 2017                                                                                              00020&announce
                                                                                                              mentId=12062889
                                                                                                              41&announcement
                                                                                                              Time=2019-05-22


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


□ Applicable   √Not applicable


II. Profit distribution plan in the period and capitalizing of common reserves plan

□ Applicable √Not applicable
The Company plans not to distribute cash dividend and bonus for the semi-annual, and no capitalizing of common reserves either.


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

√Applicable □ Not applicable

                                                         Type of
                                                                          Content of
                                                                                       Commitmen     Commitmen       Implementa
            Commitments                   Promise      commitmen         commitmen
                                                                                         t date        t term           tion
                                                                             ts
                                                               ts

 Commitments for share reform

 Commitments in report of
 acquisition or equity change

 Commitments in assets



                                                                    15
                                                                                             SEMI-ANNUAL REPORT 2019


 reorganization

 Commitments make in initial public
 offering or re-financing

 Equity incentive commitment

                                                              Promise to
                                                              increasing
                                                              shares       of
                                                              holding      as
                                                              2.83 million
                                                                                              In 6 months
                                        Wuhan                 shares       of
                                                                                              since the      Performanc
                                        Zhongheng             B-stock      of   2017-11-20
                                                                                              date of        e Finished
                                        Group                 the
                                                                                              notification
                                                              Company in
                                                              6        months
                                                              since       the
                                                              letter
 Other commitments for medium
                                                              delivery
 and small shareholders
                                                              Promise to
                                                              increasing
                                                              shares       of
                                                              holding      as
                                                              2.8 million                     In 6 months
                                        Wuhan
                                                              shares       of                 since the      Performanc
                                        Zhongheng                               2017-11-28
                                                              A-stock      at                 date of        e Finished
                                        Group
                                                              least in 6                      notification
                                                              months
                                                              since       the
                                                              letter
                                                              delivery

 Completed on time(Y/N)                 Yes

 If the commitments are not fulfilled
 on time, shall explain the specify     Not applicable
 reason and the next work plan


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


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




                                                         16
                                                                                                        SEMI-ANNUAL REPORT 2019


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

□ Applicable √Not applicable


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

□ Applicable √Not applicable


VII. Bankruptcy reorganization

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


VIII. Lawsuits

Significant lawsuits and arbitration
√Applicable         □Not applicable
                         Amount of                     Advances
     The basic                                                           The results and
                           money         Predicted           in                            Execution of
    situation of                                                            effects of                      Disclosure   Disclosur
                        involved (in     liabilities   litigation                          the litigation
      litigation                                                            litigation                         date       e index
                        10 thousand          (Y/N)     (Arbitrati                          (Arbitration)
   (Arbitration)                                                          (Arbitration)
                           Yuan)                             on)

                                                                                                                         http://ww
                                                       Ruling on
 In September                                                                                                            w.cninfo.
                                                       16 August
 2016, Wuhan                                                                                                             com.cn/c
                                                       2017; put
 Zhongheng                                                                                                               ninfo-new
                                                       forward
 Group Co., Ltd.                                                                                                         /disclosur
                                                       the
 and the                                                                                                                 e/szse_ma
                                                       applicatio
 Company and                                                                                                             in/bulletin
                                                       n for
 Shenzhen Vanke                                                                                                          _detail/tru
                                                       dismantli
 were applied for                                                                                                        e/120440
                                                       ng by the
 arbitration due to                                                      Found more in                                   6606?ann
                                                       Company
 the dispute case            46,460     No                               announcement      Implementing     2018-02-09   ounceTim
                                                       and
 of “Contract for                                                       of the Company                                  e=2018-0
                                                       controllin
 the Cooperative                                                                                                         2-09 ;
                                                       g
 Operation of the                                                                                                        http://ww
                                                       sharehold
 Old Projects at                                                                                                         w.cninfo.
                                                       er, the
 Huafa Industrial                                                                                                        com.cn/n
                                                       applicatio
 Park, Gongming                                                                                                          ew/disclo
                                                       n was
 Street,                                                                                                                 sure/detai
                                                       rejected
 Guangming New                                                                                                           l?plate=sz
                                                       by the
 District”.                                                                                                             se&stock
                                                       court
                                                                                                                         Code=00


                                                                    17
                                                                         SEMI-ANNUAL REPORT 2019


                                                                                         0020&an
                                                                                         nounceme
                                                                                         ntId=120
                                                                                         5326846
                                                                                         &announ
                                                                                         cementTi
                                                                                         me=2018
                                                                                         -08-25

In March 2016,
the Company
and HUAFA
Science &
Technology suit
against the
follow
companies,
including
Shenzhen
Huayongxing
                                                                                         http://ww
Environmental
                                                                                         w.cninfo.
Technology Co.,                      The
                                                                                         com.cn/c
Ltd., Shenzhen                       judgment
                                                                                         ninfo-new
Guangyong                            of 2nd trial
                                                                                         /disclosur
Breadboard Co.,                      has been
                                                                                         e/szse_ma
Ltd., Shenzhen                       issued,
                                                                                         in/bulletin
Mingyi               1,964.92   No   and has             Ended   Ended      2016-09-14
                                                                                         _detail/tru
Electronic Co.,                      applied
                                                                                         e/120270
Ltd., Shenzhen                       for
                                                                                         2423?ann
Ouruilai                             compulso
                                                                                         ounceTim
Technology Co.,                      ry
                                                                                         e=2016-0
Ltd and                              execution
                                                                                         9-14
Shenzhen
                                                                                         07:41
Kangzhengxin
Technology Co.,
Ltd., for arrears
of rent. and
refuse to move
the site, forcibly
occupied switch
board room and
other power unit
under the name
of the Company



                                                    18
                                                                                                    SEMI-ANNUAL REPORT 2019


 In March 2016,
                                                     The
 the Company                                                                                                        http://ww
                                                     second
 and HUAFA                                                                                                          w.cninfo.
                                                     trial
 Property suit                                                                                                      com.cn/c
                                                     decides
 against Shenzhen                                                                                                   ninfo-new
                                                     the
 Huayongxing                                                                                                        /disclosur
                                                     Company
 Environmental                                                                                                      e/szse_ma
                                                     wins the
 Technology Co.,                                                                                                    in/bulletin
                           947.26    No              lawsuit on        Implementing   Implementing     2016-09-14
 Ltd., and                                                                                                          _detail/tru
                                                     15 March
 Shenzhen                                                                                                           e/120270
                                                     2018, and
 Yidaxin                                                                                                            2423?ann
                                                     has
 Technology Co.,                                                                                                    ounceTim
                                                     applied
 Ltd. for contract                                                                                                  e=2016-0
                                                     for
 violation and                                                                                                      9-14
                                                     enforcem
 refuse to move                                                                                                     07:41
                                                     ent
 the site

                                                                                                                    http://ww
                                                                                                                    w.cninfo.
 Application for
                                                                                                                    com.cn/n
 arbitration in
                                                                                                                    ew/disclo
 case of contract
                                                                                                                    sure/detai
 dispute between
                                                     Arbitratio                                                     l?plate=sz
 the V&T
                                                     n has                                                          se&stock
 (Shenzhen) Law
                                                     been              To be          To be                         Code=00
 Firm and                  1,940.2   No                                                                2018-11-14
                                                     heard for         adjudicated    adjudicated                   0020&an
 Shenzhen
                                                     adjudicati                                                     nounceme
 Zhongheng
                                                     on                                                             ntId=120
 Huafa Co., Ltd.
                                                                                                                    5602053
 and Wuhan
                                                                                                                    &announ
 Zhongheng
                                                                                                                    cementTi
 Group
                                                                                                                    me=2018
                                                                                                                    -11-14

Other lawsuits
□Applicable √ Not applicable


IX. Penalty and rectification

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


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

□ Applicable √Not applicable


                                                                  19
                                                                                                       SEMI-ANNUAL REPORT 2019


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

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


XII. Major related transaction

1. Related transaction with routine operation concerned

√Applicable □ Not applicable
                                                                                         Whet
                                                                                Tradi
                                                                                          her
                                                            Relate               ng
                                                               d                         over     Cleari   Availa
                                                                       Propo    limit                                         Inde
                      Type       Conte                      transa                        the       ng      ble      Date
                                                   Relate               rtion
                        of        nt of   Pricin             ction              appro              form                       x of
 Relate    Relati                                     d                   in             appro             simila      of
                     relate      relate     g                amou                                   for
   d       onshi                                   transa              simila    ved                                          discl
                        d           d     princi             nt (in                       ved     relate      r      disclo
 party       p                                      ction                  r
                     transa      transa    ple                10                (in 10               d                        osur
                                                    price              transa            limite            marke      sure
                      ction       ction                     thousa                                transa
                                                                       ctions   thousa                                          e
                                                              nd                         d or      ction   t price
                                                            Yuan)                nd
                                                                                          not
                                                                                Yuan)
                                                                                         (Y/N)

                                                                                                                              http:
                                                                                                                              //w
                                                                                                                              ww.
                                                                                                                              cnin
                                                                                                                              fo.c
                                                                                                                              om.c
                                                                                                                              n/ne
                                                                                                                              w/di
           Sharin                                                                                                             sclo
                                          Synch
           g the                 Purch                                                                                        sure/
                                          ronize                                                  Telegr
           same                  asing                                                                                        detai
 HK                 Purch                 d with   5,531.   5,531.     35.26    16,77             aphic              2019-
           contro                LCD                                                     N                 ——               l?pla
 Yutian             ase                   the      49           49         %      8.09            transf             04-30
           lling                 monit                                                                                        te=
                                          marke                                                   er
           shareh                ors                                                                                          &or
                                          t
           older                                                                                                              gId=
                                                                                                                              gssz
                                                                                                                              000
                                                                                                                              002
                                                                                                                              0&st
                                                                                                                              ock
                                                                                                                              Cod
                                                                                                                              e=0
                                                                                                                              000


                                                                  20
                                                                                        SEMI-ANNUAL REPORT 2019


                                                                                                              20&
                                                                                                              anno
                                                                                                              unce
                                                                                                              men
                                                                                                              tId=
                                                                                                              120
                                                                                                              615
                                                                                                              798
                                                                                                              4&a
                                                                                                              nno
                                                                                                              unce
                                                                                                              men
                                                                                                              tTim
                                                                                                              e=2
                                                                                                              019-
                                                                                                              04-3
                                                                                                              0

                                                                                            The               http:
                                                                                            avera             //w
                                                                                            ge                ww.
                                   Confir
                                                                                            marke             cnin
                                   med
                                                                                            t price           fo.c
                                   with
                                                                                            refers            om.c
                                   1% of
                                                                                            to the            n/ne
                                   curren
                                                                                            price             w/di
                                   t
                                                                                            of                sclo
                                   marke
                                                                                            same              sure/
                                   t
          Sharin                                                                            specif            detai
                                   avera
Hengs     g the            Purch                                                            icatio            l?pla
                                   ge                                              Telegr
heng      same             asing                                                            ns                te=
                   Purch           price    4,735.   4,735.    30.19   12,32       aphic              2019-
Photo     contro           LCD                                                 N            which             &or
                   ase             in       80           8        %     6.76       transf             04-30
electri   lling            monit                                                            is                gId=
                                   princi                                          er
city      shareh           ors                                                              search            gssz
                                   ple,
          older                                                                             ed                000
                                   and
                                                                                            from              002
                                   refer
                                                                                            throug            0&st
                                   to
                                                                                            h the             ock
                                   both
                                                                                            world             Cod
                                   their
                                                                                            famou             e=0
                                   bargai
                                                                                            s                 000
                                   ning
                                                                                            profes            20&
                                   power
                                                                                            sional            anno
                                                                                            marke             unce
                                                                                            t                 men


                                                          21
                                                                                         SEMI-ANNUAL REPORT 2019


                                                                                             surve             tId=
                                                                                             y                 120
                                                                                             comp              615
                                                                                             any               798
                                                                                             websit            4&a
                                                                                             e                 nno
                                                                                             http://           unce
                                                                                             www.              men
                                                                                             witsvi            tTim
                                                                                             ew.co             e=2
                                                                                             m                 019-
                                                                                             recog             04-3
                                                                                             nized             0
                                                                                             author
                                                                                             ity in
                                                                                             the
                                                                                             indust
                                                                                             ry and
                                                                                             LCD
                                                                                             profes
                                                                                             sional
                                                                                             marke
                                                                                             t
                                                                                             surve
                                                                                             y
                                                                                             comp
                                                                                             any
                                                                                             websit
                                                                                             e
                                                                                             http://
                                                                                             www.
                                                                                             witsvi
                                                                                             ew.co
                                                                                             m

                                   Accor                                                                       http:
                                   ding                                                                        //w
          Sharin
                                   to the                                                                      ww.
Hengs     g the            Purch
                                   order                                            Telegr                     cnin
heng      same             asing
                   Purch           price,   1,037.   1,037.            8,217.       aphic              2019-   fo.c
Photo     contro           LCD                                 6.61%            N            ——
                   ase             deduc    41          41                84        transf             04-30   om.c
electri   lling            monit
                                   ted 1                                            er                         n/ne
city      shareh           ors
                                   Yuan                                                                        w/di
          older
                                   each                                                                        sclo
                                   for                                                                         sure/

                                                          22
                                                                                        SEMI-ANNUAL REPORT 2019


                                   operat                                                                  detai
                                   ion                                                                     l?pla
                                   charge                                                                  te=
                                                                                                           &or
                                                                                                           gId=
                                                                                                           gssz
                                                                                                           000
                                                                                                           002
                                                                                                           0&st
                                                                                                           ock
                                                                                                           Cod
                                                                                                           e=0
                                                                                                           000
                                                                                                           20&
                                                                                                           anno
                                                                                                           unce
                                                                                                           men
                                                                                                           tId=
                                                                                                           120
                                                                                                           615
                                                                                                           798
                                                                                                           4&a
                                                                                                           nno
                                                                                                           unce
                                                                                                           men
                                                                                                           tTim
                                                                                                           e=2
                                                                                                           019-
                                                                                                           04-3
                                                                                                           0

                                                                                                           http:
                                                                                                           //w
                                                                                                           ww.
                                   Accor
                          Sales                                                                            cnin
         Sharin                    ding
                          LCD                                                                              fo.c
         g the                     to the
                          overal                                                   Telegr                  om.c
         same                      custo
HK                        l                 6,413.   6,413.    38.87   23,96       aphic           2019-   n/ne
         contro   Sales            mer                                         N            ——
Yutian                    monit             62          62        %      8.7       transf          04-30   w/di
         lling                     sales
                          or                                                       er                      sclo
         shareh                    order
                          machi                                                                            sure/
         older                     price
                          ne set                                                                           detai
                                   sure
                                                                                                           l?pla
                                                                                                           te=
                                                                                                           &or


                                                          23
                                                                                          SEMI-ANNUAL REPORT 2019


                                                                                                             gId=
                                                                                                             gssz
                                                                                                             000
                                                                                                             002
                                                                                                             0&st
                                                                                                             ock
                                                                                                             Cod
                                                                                                             e=0
                                                                                                             000
                                                                                                             20&
                                                                                                             anno
                                                                                                             unce
                                                                                                             men
                                                                                                             tId=
                                                                                                             120
                                                                                                             615
                                                                                                             798
                                                                                                             4&a
                                                                                                             nno
                                                                                                             unce
                                                                                                             men
                                                                                                             tTim
                                                                                                             e=2
                                                                                                             019-
                                                                                                             04-3
                                                                                                             0

                                                                                                             http:
                                                                                                             //w
                                                                                                             ww.
                                                                                                             cnin
                                                                                                             fo.c
                                    Accor
                                                                                                             om.c
          Sharin                    ding
                                                                                                             n/ne
Hengs     g the            LCD      to the
                                                                                     Telegr                  w/di
heng      same             displa   custo
                                             1,218.   1,218.            3,971.       aphic           2019-   sclo
Photo     contro   Sales   y        mer                         7.77%            N            ——
                                             41          41                96        transf          04-30   sure/
electri   lling            screen   sales
                                                                                     er                      detai
city      shareh           /LCD     order
                                                                                                             l?pla
          older                     price
                                                                                                             te=
                                    sure
                                                                                                             &or
                                                                                                             gId=
                                                                                                             gssz
                                                                                                             000
                                                                                                             002


                                                           24
                                                                                                 SEMI-ANNUAL REPORT 2019


                                                                                                                          0&st
                                                                                                                          ock
                                                                                                                          Cod
                                                                                                                          e=0
                                                                                                                          000
                                                                                                                          20&
                                                                                                                          anno
                                                                                                                          unce
                                                                                                                          men
                                                                                                                          tId=
                                                                                                                          120
                                                                                                                          615
                                                                                                                          798
                                                                                                                          4&a
                                                                                                                          nno
                                                                                                                          unce
                                                                                                                          men
                                                                                                                          tTim
                                                                                                                          e=2
                                                                                                                          019-
                                                                                                                          04-3
                                                                                                                          0

                                                         18,93              65,26
 Total                                 --        --                 --                --        --       --        --         --
                                                          6.73               3.35
 Detail of sales return with major
                                     N/A
 amount involved

                                     In the reporting, Hengfa Technology purchased LCD display screen from HK Yutian with
                                     US$ 8.1662 million approximately, 33.33% of the annual amount predicted at the
                                     beginning of the year; purchased LCD display screen from Hengsheng Photoelectricity
 Report the actual implementation
                                     with US $ 6.8918 million approximately, 38.29% of the annual amount predicted at the
 of the daily related transactions
                                     beginning of the year; purchasing LCD from Hengsheng Photoelectricity with about US
 which were projected about their
                                     $ 1.5097 million, 12.58% of the annual amount predicted at the beginning of the year; sold
 total amount by types during the
                                     LCD whole machine to HK Yutian with US $ 9.4896 million approximately, 27.11% of the
 reporting period (if applicable)
                                     annual amount predicted at the beginning of the year. Sold LCD (display screen) to
                                     Hengsheng Photoelectricity with US $ 1.7731 million approximately, 30.57% of the annual
                                     amount predicted at the beginning of the year.

 Reasons for major differences
 between trading price and market    Not applicable
 reference price (if applicable)


2. Related transactions by assets acquisition and sold

□Applicable    √ Not applicable



                                                              25
                                                                                                    SEMI-ANNUAL REPORT 2019


No above-mentioned transactions occurred


3. Main related transactions of mutual investment outside

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


4. Contact of related credit and debt

□ Applicable    √Not applicable
No contact of related credit and debt in the period


5. Other related transactions


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


XIII. 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.


XIV. 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

                                                                 26
                                                                                                     SEMI-ANNUAL REPORT 2019


(1) Guarantees

                                                                                                                 In 10 thousand Yuan

                   Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)
                       Related                   Actual date of                                                           Guaran
   Name of the        Announc                      happening            Actual                                  Implem     tee for
                                   Guarante                                          Guarantee     Guarantee
    Company             ement                       (Date of         guarantee                                    ented    related
                                     e limit                                             type         term
    guaranteed        disclosur                     signing               limit                                  (Y/N)     party
                        e date                    agreement)                                                               (Y/N)

                                           Guarantee of the Company and the subsidiaries
                       Related                   Actual date of                                                           Guaran
   Name of the        Announc                      happening            Actual                                  Implem     tee for
                                   Guarante                                          Guarantee     Guarantee
    Company             ement                       (Date of         guarantee                                    ented    related
                                     e limit                                             type         term
    guaranteed        disclosur                     signing               limit                                  (Y/N)     party
                        e date                    agreement)                                                               (Y/N)

 Wuhan Hengfa                                                                        Joint
                      2019-08-
 Technology Co.,                      30,000                              2,267.63   liability     One year     N         Y
                      27
 Ltd.                                                                                guarantee
                                                                   Total amount of actual
 Total amount of approving
                                                                   occurred guarantee for
 guarantee for subsidiaries in                          30,000                                                            5,926.83
                                                                   subsidiaries in report period
 report period (B1)
                                                                   (B2)
 Total amount of approved                                          Total balance of actual
 guarantee for subsidiaries at                                     guarantee for subsidiaries at
                                                        30,000                                                            2,267.63
 the end of reporting period                                       the end of reporting period
 (B3)                                                              (B4)

                                           Guarantee of the subsidiaries for the subsidiaries
                       Related                   Actual date of                                                           Guaran
   Name of the        Announc                      happening            Actual                                  Implem     tee for
                                   Guarante                                          Guarantee     Guarantee
    Company             ement                       (Date of         guarantee                                    ented    related
                                     e limit                                             type         term
    guaranteed        disclosur                     signing               limit                                  (Y/N)     party
                        e date                    agreement)                                                               (Y/N)

 Total amount of guarantee of the Company (total of three abovementioned guarantee)
 Total amount of approving                                         Total amount of actual
 guarantee in report period                              30,000    occurred guarantee in report                           5,926.83
 (A1+B1+C1)                                                        period (A2+B2+C3)
 Total amount of approved                                          Total balance of actual
 guarantee at the end of report                          30,000    guarantee at the end of                                2,267.63
 period (A3+B3+C2)                                                 report period (A4+B4+C4)

 The proportion of the total amount of actually guarantee in
                                                                                                                            6.94%
 the net assets of the Company (that is A4+ B4+C4)



                                                                   27
                                                                                                 SEMI-ANNUAL REPORT 2019


 Including:
 Explanations on possibly bearing joint and several
 liquidating responsibilities for undue guarantees (if             N/A
 applicable)
 Explanations on external guarantee against regulated
                                                                   N/A
 procedures (if applicable)

Explanation on compound guarantee
Nil


(2) Guarantee outside against the regulation


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


3. Other material contracts

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


XV. Social responsibility

1. Material environmental protection

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

Not applicable
Listed companies and their subsidiaries do not belong to key pollutant discharge units announced by environmental protection
departments.


2.Execution of social responsibility of targeted poverty alleviation

(1) targeted poverty alleviation

(2) Summary of targeted poverty alleviation

(3) Performance of the targeted poverty alleviation


                                                                             Unit of
                                    Index                                                       Quantity /implementation
                                                                             measure

 I. Overall condition                                                         ——                        ——

 II. Poverty alleviation by items                                             ——                        ——

      1.Industry development                                                  ——                        ——



                                                                   28
                                                                                      SEMI-ANNUAL REPORT 2019


   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

XVI Explanation on other significant events

√Applicable □ Not applicable
(i) The Company signed Asset Exchange Contract with Wuhan Zhongheng Group on 29 April 2009 (details were
referred to in the announcement dated 30 April 2009), and pursuant to the contract, since part of the assets of the
Company (namely two parcel of industrial lands located at Huafa road, Gongming town, Guangming new district,
Shenzhen (the property certificate No. were SFDZ No.7226760 and SFDZ No.7226763, No. of parcels were
A627-005 andA627-007, and the aggregate area was 48,200 sq.m) were the lands listed in the first batch of plan
for 2010 Shenzhen urbanization unit planning preparation plan. For promotion of such urbanization project and
joint cooperation, the Company has not completed the transfer procedures in respect of the aforesaid land.
The Company convoked the first extraordinary meeting of the Board in 2015 on February 16, 2015 and the first
extraordinary general meeting of the Board in 2015 on March 4, 2015, which considered and approved the
“Motion on promoting and implementing the urban renewal project for the renewal units of Huafa area at
Gongming street, Guangming new district, Shenzhen”, specified that the Company and Wuhan Zhongheng Group
shall obtain the corresponding compensatory consideration for removal from the respectively owned project plots
and the respectively contributed and constructed above-ground buildings before the land development, it is
estimated that the compensatory consideration obtained by the Company accounts for 50.5% of the total
consideration and Wuhan Zhongheng Group accounts for 49.5% by calculation.
The sixth extraordinary meeting of the board of directors in 2015 and the third extraordinary general meeting held
on September 11, 2015 have considered and adopted the “Proposal on the project promotion and implementation
of urban renewal and the progress of related transactions of ‘the updated units at Huafa Area, Gong Ming Street,
Guangming New District, Shenzhen’”, the company has signed the “Agreement on the cooperation of urban
renewal project of the updated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”,
“Contract for the cooperative venture of reconstruction project for Huafa Industrial Park, Gong Ming Street,
Guangming New District” and “Agreement on housing acquisition and removal compensation and resettlement”
with Wuhan Zhongheng New Technology Industry Group Co., Ltd. (hereinafter referred to as “Wuhan

                                                        29
                                                                                       SEMI-ANNUAL REPORT 2019


Zhongheng Group”), Shenzhen Vanke Real Estate Co., Ltd. (hereinafter referred to as “Shenzhen Vanke”), and
Shenzhen Vanke Guangming Real Estate Development Co., Ltd. (hereinafter referred to as “Vanke Guangming”).
On 12 September 2016, the Company received a “Notice of Arbitration No.: SHEN DP20160334” from SCIA,
Shenzhen Vanke applied for arbitration in respect of “Agreement on the cooperation of urban renewal project of
the updated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen” against the Company
and Wuhan Zhongheng Group. The arbitration court holds hearings on 12 November 2016 and 13 May 2017.
Shenzhen Court of International Arbitration (SCIA) has given a ruling in August 2017, although most of the
arbitration claims proposed by Shenzhen Vanke are rejected by arbitration court, the arbitration procedures and
so-called cognizance of fact of contract breach still has problems in arbitration. The results have damaged the
legitimate rights and interest of the Company, and we have putting forward the application for dismantling in
February 2018 to the Shenzhen Intermediate People’s Court. The Court has accepted the case formally. Progress
of the case found more in the Notices released on Juchao website (www.cninfo.com.cn) dated 14 Sept. 2016, 1
Nov. 2016, 16 Nov. 2016, on 18 Feb. 2017, 24 March 2017, 25 April 2017, 1 July 2017, 18 August 2017 and 9
Feb. 2018 respectively.
(ii) Major shareholders’ commitment to increase holdings
On November 20 and 28, 2017, the controlling shareholders made a commitment to increase the holding of 2.83
million shares of the company's B shares and not less than 2.8 million shares of the A shares, the commitment period
was within 6 months, and it has been completed in May 2019 after two times of postponement.
(iii) On 31 December 2015, the 88,750,047 shares held by Wuhan Zhongheng Group, are pledge to China
Merchants Securities Assets Co., Ltd. with due date of 31 December 2016. Wuhan Zhongheng Group deferred the
repurchase business day to 30 June 2017. on 1 Feb. 2016, Wuhan Zhongheng Group pledge the 27,349,953 shares
held to China Merchants Securities Assets Co., Ltd. with due date of 31 December 2016. The above-mentioned
pledged shares are deferred by Wuhan Zhongheng Group; pledge expired on 31 December 2017. The trading day
for repurchase put off to the date when pledge actually removed. Till end of this period released, controlling
shareholder still not removed the pledge and the Company has apply by letter, relevant Notice of Presentment on
Stock Pledge from Controlling Shareholder was released. Found more in notice released on Juchao website
(www.cninfo.com.cn) date 2 Feb. 2018.
(iv) The controlling shareholder Wuhan Zhongheng Group holds 119,289,894 shares of the Company’ stock,
accounting for 42.13% of the total share capital of the Company, of which 116,489,894 shares were judicially frozen
on September 27, 2016, and the frozen period was until September 13, 2021, which were frozen again by the
Shenzhen Intermediate People's Court on December 14, 2018, with a frozen period of 36 months, the remaining
2,800,000 shares were frozen by the Shenzhen Intermediate People's Court on May 29, 2019, and were frozen again
by the Higher People’s Court of Guangdong Province on July 5, 2019. For details, please refer to the company’s
announcements published on www.cninfo.com.cn on October 27, 2016, January 11, 2019, May 31, 2019 and
August 7, 2019.




                                                        30
                                                       SEMI-ANNUAL REPORT 2019


XVII. Significant event of subsidiary of the Company

□ Applicable √Not applicable




                                             31
                                                                                                         SEMI-ANNUAL REPORT 2019




    Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in Share Capital

1. Changes in Share Capital

                                                                                                                           In Share
                                  Before the Change             Increase/Decrease in the Change (+, -)           After the Change
                                                                               Capitali
                                                        New                     zation
                                            Proporti                Bonus                                                  Proporti
                              Amount                   shares                     of       Others    Subtotal    Amount
                                               on                   shares                                                    on
                                                       issued                   public
                                                                               reserve
 I. Restricted shares                   0    0.00%          0             0           0          0           0        0     0.00%

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

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

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

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

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 common
shareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable




                                                                   32
                                                                                                        SEMI-ANNUAL REPORT 2019


2. Changes of restricted shares

□ Applicable √Not applicable


II. Securities issuance and listing

□ Applicable    √Not applicable


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

                                                                                                                                   In Share

                                                                    Total preference shareholders
 Total common stock
                                                                    with voting rights recovered at
 shareholders in reporting                              23,417                                                                         0
                                                                    end of reporting period (if
 period-end
                                                                    applicable) (found in note8)

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

                                                  Total                                                          Number of share
                                                 commo                       Amount       Amount                 pledged/frozen
                                                    n                           of           of
                                     Proportio   shareho         Changes     restricte    un-restric
  Full name of        Nature of        n of
                                                 lders at        in report       d           ted
  Shareholders       shareholder      shares
                                                                                                         State of
                                       held      the end          period      commo       common                           Amount
                                                                                                          share
                                                    of                       n shares      shares
                                                  report                       held         held
                                                  period

 Wuhan             Domestic                                                                             Pledged            116,100,000
                                                 119,289                                  119,289,8
 Zhongheng         non-state-owned     42.13%                 2608800                 0
                                                     ,894                                          94   Frozen             119,289,894
 Group             legal person

 SEG (HONG                                                                                              Pledged                        0
                   Overseas legal                 16,569,                                 16,569,56
 KONG) CO.,                             5.85%                 0                       0
                   person                            560                                            0   Frozen                         0
 LTD.

 GOOD                                                                                                   Pledged                        0
 HOPE
                   Overseas legal                 12,700,                                 12,700,00
 CORNER                                 4.49%                 0                       0
                   person                            000                                            0   Frozen                         0
 INVESTME
 NTS LTD

 Changjiang                                                                                             Pledged                        0
 Securities
                   Overseas legal                 5,355,2
 Brokerage                              1.89%                 0                       0   5,355,249
                   person                                49                                             Frozen                         0
 (Hong Kong)
 Co., Ltd.

 Guoyuan           Overseas legal       1.36%     3,845,1     0                       0   3,845,117     Pledged                        0


                                                                  33
                                                                                                     SEMI-ANNUAL REPORT 2019


Securities        person                                  17
Brokerage
                                                                                                     Frozen                        0
(Hong Kong)
Co., Ltd.

                  Overseas nature                    2,830,0                                         Pledged                       0
Li Zhongqiu                               1.00%                  2,830,000         0    2,830,000
                  person                                  00                                         Frozen                        0

Zhong             Domestic nature                    1,277,4                                         Pledged                       0
                                          0.45%                                         1,277,494
Jiachao           person                                  94                                         Frozen                        0

                  Domestic nature                                                                    Pledged                       0
Li Senzhuang                              0.35%     986,550                               986,550
                  person                                                                             Frozen                        0

LI SHERYN         Overseas nature                                                                    Pledged                       0
                                          0.35%     980,100                               980,100
ZHAN MING         person                                                                             Frozen                        0

                  Domestic nature                                                                    Pledged                       0
Han Yaming                                0.30%     864,200                               864,200
                  person                                                                             Frozen                        0

Strategy investors or general
corporation comes top 10
                                       N/A
shareholders due to rights issue (if
applicable) (see note 3)

                                       Among the top ten shareholders, Wuhan Zhongheng Group neither bears associated
                                       relationship with other shareholders, nor belongs to the consistent actor that are prescribed
Explanation on associated              in Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed
relationship among the aforesaid       Companies. The Company neither knew whether there exists associated relationship among
shareholders                           the other tradable shareholders, nor they belong to consistent actors that are prescribed in
                                       Measures for the Administration of Disclosure of Shareholder Equity Changes of Listed
                                       Companies.

                              Particular about top ten shareholders with un-restrict common shares held

                                           Amount of un-restrict common shares held at                     Type of shares
        Shareholders’ name
                                                               Period-end                               Type           Amount

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

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

                                                                                                Domestically
GOOD HOPE CORNER
                                                                                 12,700,000     listed foreign          12,700,000
INVESTMENTS LTD
                                                                                                shares

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

                                                                   34
                                                                                                          SEMI-ANNUAL REPORT 2019


                                                                                                     Domestically
 Guoyuan Securities Brokerage
                                                                                        3,845,117    listed foreign            3,845,117
 (Hong Kong) Co., Ltd.
                                                                                                     shares

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

                                                                                                     RMB common
 Zhong Jiachao                                                                          1,277,494                              1,277,494
                                                                                                     share

                                                                                                     Domestically
 Li Senzhuang                                                                             986,550    listed foreign             986,550
                                                                                                     shares

                                                                                                     Domestically
 LI SHERYN ZHAN MING                                                                      980,100    listed foreign             980,100
                                                                                                     shares

                                                                                                     Domestically
 Han Yaming                                                                               864,200    listed foreign             864,200
                                                                                                     shares

 Expiation           on        associated    Among the top ten unrestricted shareholders, the Company neither knew whether there
 relationship or consistent actors           exists associated relationship among the other tradable shareholders, nor they belong to
 within the top 10 un-restrict               consistent actors that are prescribed in Measures for the Administration of Disclosure of
 common         shareholders          and    Shareholder Equity Changes of Listed Companies. Among the top ten shareholders, Wuhan
 between       top        10   un-restrict   Zhongheng Group neither bears associated relationship with other shareholders, nor belongs
 common shareholders and top 10              to the consistent actor that are prescribed in Measures for the Administration of Disclosure
 shareholders                                of Shareholder Equity Changes of Listed Companies.

 Explanation on top 10 common
                                             Among the top ten shareholders, Zhong Jiachao holds 1,277,494 shares of the Company, of
 shareholders involving margin
                                             which, 743,494 shares held by normal account, and 534,000 shares held through credit
 business (if applicable) (see note
                                             security account
 4)

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


IV. Change of controlling shareholder or actual controller

Changes of controlling shareholders in reporting period
□ Applicable √Not applicable
The Company had no changes of controlling shareholders in reporting period

Changes of actual controller in reporting period
□ Applicable √Not applicable

                                                                       35
                                                                        SEMI-ANNUAL REPORT 2019


No changes of actual controllers for the Company in reporting period.




                                                                36
                                                                     SEMI-ANNUAL REPORT 2019




                                      Section VII. Preferred Stock

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




                                                    37
                                                                                                   SEMI-ANNUAL REPORT 2019



      Section VIII. Particulars about Directors, Supervisors and Senior
                                                         Executives

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

√ Applicable □ Not applicable

                                                                                                    Amount of
                                                                                                                      Amount of
                                                                                     Shares held        shares
                                                              Start                                                     shares
                          Working                                        End date         at        increased
                                       Sex                   dated of
                  Title                            Age                   of office                                    decreased in
     Name                   status    (M/F)                   office                 period-begi        in this
                                                                           term
                                                              term                                                    this period
                                                                                      n (Share)         period
                                                                                                                        (Share)
                                                                                                        (Share)

             Chairma
 Li                       Currentl
             n/Gener                              2,830,00               2,830,00
 Zhongqi                  y in                0                      0                         0                  0                  0
             al                                          0                       0
 u                        office
             Manager

                                                  2,830,00               2,830,00
 Total             --         --              0                      0                         0                  0                  0
                                                         0                       0


II. Changes of directors, supervisors and senior executives

□ Applicable √ Not applicable
No changes of directors, supervisors and senior executives, found more details in Annual Report 2018.




                                                                38
                                                                                                SEMI-ANNUAL REPORT 2019




                                         Section IX. Corporate Bond

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when
semi-annual report approved for released or fail to cash in full on due
No




                                                                   39
深圳中恒华发股份有限公司 2019 年半年度报告全文




                                          Section X. Financial Report

I. Audit report

Whether the semi-annual report was audited or not
□ Yes √ No
The financial report of this semi-annual report was unaudited


II. Financial statement

Currency used in note of financial statement is RMB (Yuan)



1. Consolidated Balance Sheet

Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
                                                             2019-08-27
                                                                                                            In RMB

                     Item                                 2019-6-30                    2018-12-31

 Current assets:

      Monetary funds                                                   47,981,541.61                 34,108,330.27

      Settlement provisions

      Capital lent

      Tradable financial assets

      Financial assets measured by fair
 value and with variation reckoned
 into current gains/losses

      Derivative financial assets

      Note receivable                                                  10,427,934.87                 69,185,516.71

      Account receivable                                              149,540,866.46                116,797,834.51

      Receivable financing

      Accounts paid in advance                                         28,418,600.46                 31,348,429.54

      Insurance receivable

      Reinsurance receivables

      Contract reserve of reinsurance
 receivable

      Other account receivable                                          5,781,851.15                  5,777,179.08



                                                                40
深圳中恒华发股份有限公司 2019 年半年度报告全文


           Including: Interest receivable

                   Dividend receivable

        Buying back the sale of financial
 assets

        Inventories                                    86,709,541.76    62,973,909.38

          Contractual assets

        Assets held for sale

        Non-current asset due within one
 year

        Other current assets                            1,218,695.38        59,370.18

 Total current assets                                 330,079,031.69   320,250,569.67

 Non-current assets:

        Loans and payments on behalf

        Debt investment

        Finance asset available for sales

        Other debt investment

        Held-to-maturity investment

        Long-term account receivable

        Long-term equity investment

        Investment in other equity
 instrument

        Other non-current financial
 assets

        Investment real estate                         49,817,157.72    50,681,322.86

        Fixed assets                                  185,008,101.52   188,083,873.38

        Construction in progress                        7,552,776.46     5,727,760.23

        Productive biological asset

        Oil and gas asset

          Right-of-use assets

        Intangible assets                              43,977,752.24    41,815,689.74

        Expense on Research and
 Development

        Goodwill

        Long-term expenses to be
                                                         425,949.07       542,116.99
 apportioned

        Deferred income tax asset                       6,829,856.59     6,829,856.59

                                                 41
深圳中恒华发股份有限公司 2019 年半年度报告全文


      Other non-current asset                            289,550.00      3,158,964.00

 Total non-current asset                              293,901,143.60   296,839,583.79

 Total assets                                         623,980,175.29   617,090,153.46

 Current liabilities:

      Short-term loans                                134,676,280.00   161,568,657.88

      Loan from central bank

      Capital borrowed

      Transactional financial liability

      Financial liability measured by
 fair value and with variation reckoned
 into current gains/losses

      Derivative financial liability

      Note payable                                     13,804,210.29    27,642,356.66

      Account payable                                 102,035,210.28    60,975,306.43

      Accounts received in advance                       156,232.44       159,528.60

      Selling financial asset of
 repurchase

      Absorbing deposit and interbank
 deposit

      Security trading of agency

      Security sales of agency

      Wage payable                                      4,045,824.29     4,700,208.36

      Taxes payable                                    11,609,232.63    11,232,819.87

      Other account payable                            31,040,362.49    26,778,863.92

           Including: Interest payable                     54,347.32      439,558.70

                        Dividend payable

      Commission charge and
 commission payable

      Reinsurance payable

       Contractual liability

      Liability held for sale

      Non-current liabilities due
 within one year

      Other current liabilities

 Total current liabilities                            297,367,352.42   293,057,741.72

 Non-current liabilities:

                                                 42
深圳中恒华发股份有限公司 2019 年半年度报告全文


      Insurance contract reserve

      Long-term loans

      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                             64,411.00         64,411.00

 Total liabilities                                    297,431,763.42    293,122,152.72

 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                                 -180,591,679.88   -183,172,091.01

 Total owner’ s equity attributable to
                                                      326,548,411.87    323,968,000.74
 parent company

      Minority interests

 Total owner’ s equity                               326,548,411.87    323,968,000.74

 Total liabilities and owner’ s equity               623,980,175.29    617,090,153.46


Legal representative: Li Zhongqiu



                                                 43
深圳中恒华发股份有限公司 2019 年半年度报告全文


Person in charge of accounting works: Yang Bin


Person in charge of accounting institution: Wu Aijie


2. Balance Sheet of Parent Company

                                                                                                         In RMB

                    Item                               2019-6-30                    2018-12-31

 Current assets:

      Monetary funds                                                 1,793,275.01                 13,234,774.97

      Transactional financial assets

      Financial assets measured by fair
 value and with variation reckoned
 into current gains/losses

      Derivative financial assets

      Note receivable

      Account receivable

      Receivable financing

      Accounts paid in advance                                         53,050.00                    153,050.00

      Other account receivable                                     111,782,724.70                 99,155,253.08

          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                                                                           17,055.88

 Total current assets                                              113,643,856.21                112,574,940.43

 Non-current assets:

      Debt investment

      Available-for-sale financial
 assets

      Other debt investment

      Held-to-maturity investments

      Long-term receivables


                                                            44
深圳中恒华发股份有限公司 2019 年半年度报告全文


      Long-term equity investments                    186,608,900.00   186,608,900.00

      Investment in other equity
 instrument

      Other non-current financial
 assets

      Investment real estate                           25,770,502.38    26,374,703.70

      Fixed assets                                     98,675,129.84    99,227,872.22

      Construction in progress

      Productive biological assets

      Oil and natural gas assets

      Right-of-use assets

          Intangible assets                             4,626,182.10     4,698,654.96

      Research and development costs

      Goodwill

      Long-term deferred expenses

      Deferred income tax assets                        7,506,905.90     7,506,905.90

      Other non-current assets

 Total non-current assets                             323,187,620.22   324,417,036.78

 Total assets                                         436,831,476.43   436,991,977.21

 Current liabilities

      Short-term borrowings                           100,000,000.00   100,000,000.00

      Transactional financial liability

      Financial liability measured by
 fair value and with variation reckoned
 into current gains/losses

      Derivative financial liability

      Notes payable

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

      Accounts received in advance                         41,605.01        41,937.00

      Contractual liability

      Wage payable                                       820,979.02      1,020,979.02

      Taxes payable                                     7,423,067.53     7,161,707.15

      Other accounts payable                           22,811,198.36    22,672,441.54

           Including: Interest payable

                  Dividend payable



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深圳中恒华发股份有限公司 2019 年半年度报告全文


      Liability held for sale

      Non-current liabilities due
 within one year

      Other current liabilities

 Total current liabilities                            140,837,217.25    141,642,904.87

 Non-current liabilities:

      Long-term loans

      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                             64,411.00         64,411.00

 Total liabilities                                    140,901,628.25    141,707,315.87

 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                                 -211,210,243.57   -211,855,430.41

 Total owner’s equity                                295,929,848.18    295,284,661.34

 Total liabilities and owner’s equity                436,831,476.43    436,991,977.21



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深圳中恒华发股份有限公司 2019 年半年度报告全文


3. Consolidated Profit Statement

                                                                                                    In RMB

                        Item                Semi-annual of 2019               Semi-annual of 2018

 I. Total operating income                                 339,190,174.05                   340,984,843.24

       Including: Operating income                         339,190,174.05                   340,984,843.24

               Interest income

               Insurance gained

               Commission charge and
 commission income

 II. Total operating cost                                  336,433,054.05                   338,576,691.78

       Including: Operating cost                           297,580,208.34                   302,582,979.44

               Interest expense

               Commission charge and
 commission expense

      Cash surrender value

      Net amount of expense of
 compensation

      Net amount of withdrawal of
 insurance contract reserve

      Bonus expense of guarantee slip

               Reinsurance expense

               Tax and extras                                1,310,110.00                     1,712,293.39

               Sales expense                                 9,130,380.22                     8,433,363.31

               Administrative expense                       19,616,991.39                    20,400,985.42

               R&D expense                                   3,726,992.86

               Financial expense                             5,068,371.24                     5,447,070.22

                      Including: Interest
                                                             5,355,676.92                     5,989,883.31
 expenses

                                 Interest
                                                              -419,336.28                      -349,858.59
 income

       Add: other income

             Investment income (Loss is
                                                                  74,936.14                     245,679.10
 listed with “-”)

             Including: Investment
 income on affiliated company and joint
 venture


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深圳中恒华发股份有限公司 2019 年半年度报告全文


                      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
                                                         -8,432.50
 (Loss is listed with “-”)
               Losses of devaluation of
                                                                        -5,941.50
 asset (Loss is listed with “-”)

               Income from assets disposal
                                                       129,039.57    -105,779.36
 (Loss is listed with “-”)

 III. Operating profit (Loss is listed with
                                                      2,952,663.21   2,542,109.70
 “-”)

          Add: Non-operating income                    232,758.00     887,662.07

          Less: Non-operating expense                     1,100.00    172,806.76

 IV. Total profit (Loss is listed with “-”)         3,184,321.21   3,256,965.01

          Less: Income tax expense                     603,910.08     463,831.41

 V. Net profit (Net loss is listed with
                                                      2,580,411.13   2,793,133.60
 “-”)

    (i) Classify by business continuity

          1.continuous operating net profit
                                                      2,580,411.13   2,793,133.60
 (net loss listed with ‘-”)

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

    (ii) Classify by ownership

          1.Net profit attributable to
                                                      2,580,411.13   2,793,133.60
 owner’s of parent company

          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


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深圳中恒华发股份有限公司 2019 年半年度报告全文


      (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.gain/loss of fair value
 changes for available-for-sale financial
 assets

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

               5.Gain/loss of
 held-to-maturity investments that
 re-classify to available-for-sale
 financial asset

               6.Credit impairment
 provision for other debt investment

               7.Cash flow hedging
 reserve

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

               9.Other



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深圳中恒华发股份有限公司 2019 年半年度报告全文


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

 VII. Total comprehensive income                                        2,580,411.13                             2,793,133.60

          Total comprehensive income
 attributable to owners of parent                                       2,580,411.13                             2,793,133.60
 Company

       Total comprehensive income
 attributable to minority shareholders

 VIII. Earnings per share:

        (i) Basic earnings per share                                           0.0091                                   0.0099

      (ii) Diluted earnings per share                                          0.0091                                   0.0099

Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and
realized 0 Yuan at last period for combined party


Legal representative: Li Zhongqiu


Person in charge of accounting works: Yang Bin


Person in charge of accounting institution: Wu Aijie


4. Profit Statement of Parent Company

                                                                                                                         In RMB

                       Item                            Semi-annual of 2019                     Semi-annual of 2018

 I. Operating income                                                  18,041,135.31                             16,961,088.74

       Less: Operating cost                                            3,172,031.59                              2,510,518.82

             Taxes and surcharge                                         562,061.05                                585,014.62

             Sales expenses

             Administration expenses                                   9,024,394.50                             11,134,855.37

             R&D expenses

             Financial expenses                                        4,423,699.05                              4,888,654.05

                      Including: interest
                                                                       4,398,333.30                              4,903,025.04
 expenses

                              Interest income                                -9,938.10                               -22,022.66

       Add: other income

             Investment income (Loss is
 listed with “-”)



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深圳中恒华发股份有限公司 2019 年半年度报告全文


               Including: Investment
 income on affiliated Company and
 joint venture
                     The termination of
 income recognition for financial
 assets measured by amortized cost
 (Loss is listed with “-”)

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

               Changing income of fair
 value (Loss is listed with “-”)
               Loss of credit impairment
 (Loss is listed with “-”)
               Losses of devaluation of
 asset (Loss is listed with “-”)

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

 II. Operating profit (Loss is listed
                                                      858,949.12   -2,157,954.12
 with “-”)

          Add: Non-operating income                     1,300.00

          Less: Non-operating expense                                131,247.82

 III. Total Profit (Loss is listed with
                                                      860,249.12   -2,289,201.94
 “-”)

          Less: Income tax                            215,062.28    -444,975.63

 IV. Net profit (Net loss is listed with
                                                      645,186.84   -1,844,226.31
 “-”)

          (i)continuous operating net
                                                      645,186.84   -1,844,226.31
          profit (net loss listed with ‘-”)

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

 V. Net after-tax of other
 comprehensive income

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

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

                  2.Other comprehensive
 income under equity method that



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深圳中恒华发股份有限公司 2019 年半年度报告全文


 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.gain/loss of fair value
 changes for available-for-sale
 financial assets

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

               5.Gain/loss of
 held-to-maturity investments that
 re-classify to available-for-sale
 financial asset

               6.Credit impairment
 provision for other debt investment

               7.Cash flow hedging
 reserve

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

               9.Other

 VI. Total comprehensive income                       645,186.84   -1,844,226.31

 VII. Earnings per share:

         (i) Basic earnings per share                    0.0023         -0.0065

        (ii) Diluted earnings per share                  0.0023         -0.0065




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深圳中恒华发股份有限公司 2019 年半年度报告全文


5. Consolidated Cash Flow Statement

                                                                                                  In RMB

                  Item                     Semi-annual of 2019             Semi-annual of 2018

 I. Cash flows arising from operating
 activities:

      Cash received from selling
 commodities and providing labor                          283,565,570.88                 195,284,689.59
 services

      Net increase of customer deposit
 and interbank deposit

        Net increase of loan from
 central bank

      Net increase of capital borrowed
 from other financial institution

      Cash received from original
 insurance contract fee

      Net cash received from
 reinsurance business

      Net increase of insured savings
 and investment

      Cash received from interest,
 commission charge and commission

      Net increase of capital borrowed

      Net increase of returned business
 capital

      Net cash received by agents in
 sale and purchase of securities

      Write-back of tax received

      Other cash received concerning
                                                            3,403,272.55                    3,010,278.37
 operating activities

 Subtotal of cash inflow arising from
                                                          286,968,843.43                 198,294,967.96
 operating activities

      Cash paid for purchasing
 commodities and receiving labor                          182,811,441.04                 158,655,192.45
 service

      Net increase of customer loans
 and advances

      Net increase of deposits in

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深圳中恒华发股份有限公司 2019 年半年度报告全文


 central bank and interbank

      Cash paid for original insurance
 contract compensation

      Net increase of financial assets
 held for transaction purposes

      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
                                                       33,770,584.01    35,688,181.95
 workers

      Taxes paid                                        4,582,072.62    12,954,614.98

      Other cash paid concerning
                                                       20,610,525.20    17,668,304.21
 operating activities

 Subtotal of cash outflow arising from
                                                      241,774,622.87   224,966,293.59
 operating activities

 Net cash flows arising from operating
                                                       45,194,220.56   -26,671,325.63
 activities

 II. Cash flows arising from investing
 activities:

      Cash received from recovering
 investment

      Cash received from investment
                                                           74,936.14      253,638.00
 income

      Net cash received from disposal
 of fixed, intangible and other                          320,500.00       737,982.00
 long-term assets

      Net cash received from disposal
 of subsidiaries and other units

      Other cash received concerning
                                                       49,000,000.00    80,000,000.00
 investing activities

 Subtotal of cash inflow from
                                                       49,395,436.14    80,991,620.00
 investing activities

      Cash paid for purchasing fixed,
                                                        4,360,231.13     7,537,161.50
 intangible and other long-term assets

      Cash paid for investment

      Net increase of mortgaged loans



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深圳中恒华发股份有限公司 2019 年半年度报告全文


      Net cash received from
 subsidiaries and other units obtained

      Other cash paid concerning
                                                      49,000,000.00     80,000,000.00
 investing activities

 Subtotal of cash outflow from
                                                      53,360,231.13     87,537,161.50
 investing activities

 Net cash flows arising from investing
                                                       -3,964,794.99    -6,545,541.50
 activities

 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                        61,315,748.80    156,361,250.00

      Cash received from issuing
 bonds

      Other cash received concerning
 financing activities

 Subtotal of cash inflow from
                                                      61,315,748.80    156,361,250.00
 financing activities

      Cash paid for settling debts                    88,051,864.63    172,529,301.86

      Cash paid for dividend and
                                                       5,723,122.93      4,844,780.76
 profit distributing or interest paying

      Including: Dividend and profit
 of minority shareholder paid by
 subsidiaries

      Other cash paid concerning
 financing activities

 Subtotal of cash outflow from
                                                      93,774,987.56    177,374,082.62
 financing activities

 Net cash flows arising from financing
                                                      -32,459,238.76   -21,012,832.62
 activities

 IV. Influence on cash and cash
 equivalents due to fluctuation in                        99,650.05       -149,879.80
 exchange rate

 V. Net increase of cash and cash
                                                       8,869,836.86    -54,379,579.55
 equivalents


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深圳中恒华发股份有限公司 2019 年半年度报告全文


      Add: Balance of cash and cash
                                                          27,961,209.60                   81,474,974.30
 equivalents at the period -begin

 VI. Balance of cash and cash
                                                          36,831,046.46                   27,095,394.75
 equivalents at the period -end


6. Cash Flow Statement of Parent Company

                                                                                                  In RMB

                   Item                    Semi-annual of 2019             Semi-annual of 2018

 I. Cash flows arising from operating
 activities:

      Cash received from selling
 commodities and providing labor                          16,386,026.55                   11,824,697.08
 services

      Write-back of tax received

      Other cash received concerning
                                                            4,240,814.47                 107,677,057.73
 operating activities

 Subtotal of cash inflow arising from
                                                          20,626,841.02                  119,501,754.81
 operating activities

      Cash paid for purchasing
 commodities and receiving labor
 service

      Cash paid to/for staff and
                                                            1,551,291.30                    1,812,043.81
 workers

      Taxes paid                                             791,510.74                     3,627,519.72

      Other cash paid concerning
                                                          25,327,205.64                  116,155,663.65
 operating activities

 Subtotal of cash outflow arising from
                                                          27,670,007.68                  121,595,227.18
 operating activities

 Net cash flows arising from operating
                                                           -7,043,166.66                   -2,093,472.37
 activities

 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


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深圳中恒华发股份有限公司 2019 年半年度报告全文


 long-term assets

      Net cash received from disposal
 of subsidiaries and other units

      Other cash received concerning
 investing activities

 Subtotal of cash inflow from
 investing activities

      Cash paid for purchasing fixed,
                                                                        1,696,400.00
 intangible and other long-term assets

      Cash paid for investment

      Net cash received from
 subsidiaries and other units obtained

      Other cash paid concerning
 investing activities

 Subtotal of cash outflow from
                                                                        1,696,400.00
 investing activities

 Net cash flows arising from investing
                                                                       -1,696,400.00
 activities

 III. Cash flows arising from financing
 activities

      Cash received from absorbing
 investment

      Cash received from loans                                        100,000,000.00

      Cash received from issuing
 bonds

      Other cash received concerning
 financing activities

 Subtotal of cash inflow from
                                                                      100,000,000.00
 financing activities

      Cash paid for settling debts                                    116,054,041.68

      Cash paid for dividend and
                                                      4,398,333.30      3,884,001.07
 profit distributing or interest paying

      Other cash paid concerning
 financing activities

 Subtotal of cash outflow from
                                                      4,398,333.30    119,938,042.75
 financing activities

 Net cash flows arising from financing
                                                      -4,398,333.30   -19,938,042.75
 activities



                                                 57
深圳中恒华发股份有限公司 2019 年半年度报告全文


 IV. Influence on cash and cash
 equivalents due to fluctuation in                                                                                              424.56
 exchange rate

 V. Net increase of cash and cash
                                                                       -11,441,499.96                                 -23,727,490.56
 equivalents

      Add: Balance of cash and cash
                                                                        12,024,179.58                                 25,181,764.87
 equivalents at the period -begin

 VI. Balance of cash and cash
                                                                           582,679.62                                  1,454,274.31
 equivalents at the period -end


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

Current Period
                                                                                                                                In RMB
                                                                 Semi-annual of 2019
                                           Owners’ equity attributable to the parent Company
                               Other
                              equity
                                                              Othe
                            instrument                 Less                                                                      Tota
                                                                r                       Prov
                                  Per                    :             Reas                                             Min        l
      Item         Sha                         Capi           com              Surp     ision   Reta
                                  pet                  Inve            onab                                             ority    own
                    re    Pre                   tal           preh              lus       of    ined    Othe   Subt
                                  ual                  ntor              le                                             inter     ers’
                   cap    fer                  reser          ensi             reser    gene    profi    r     otal
                                  cap    Ot              y             reser                                             ests    equit
                   ital   red                   ve             ve               ve        ral     t
                                  ital   her           shar             ve                                                         y
                          sto                                 inco                       risk
                                  sec                   es
                          ck                                   me
                                  urit
                                  ies
                   283
                                               146,                            77,3             -183           323,               323,
 I. Balance at     ,16
                                               587,                            91,5             ,172,          968,               968,
 the end of the    1,2
                                               271.                            93.2             091.           000.               000.
 last year         27.
                                                 50                               5               01             74                 74
                    00
          Add:
 Changes of
 accounting
 policy

 Error
 correction of
 the last period

  Enterprise
  combine
  under     the
  same control
        Other


                                                                  58
深圳中恒华发股份有限公司 2019 年半年度报告全文


                   283
                                     146,             77,3   -183    323,   323,
 II. Balance at    ,16
                                     587,             91,5   ,172,   968,   968,
 the beginning     1,2
                                     271.             93.2   091.    000.   000.
 of this year      27.
                                       50               5      01     74     74
                    00
 III. Increase/
 Decrease in                                                 2,58    2,58   2,58
 this      year
                                                             0,41    0,41   0,41
 (Decrease is
 listed    with                                              1.13    1.13   1.13
 “-”)

  (i)     Total                                              2,58    2,58   2,58
 comprehensiv                                                0,41    0,41   0,41
 e income                                                    1.13    1.13   1.13
  (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


                                                 59
深圳中恒华发股份有限公司 2019 年半年度报告全文


 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
 comprehensiv
 e income
 6. Other
 (V)
 Reasonable
 reserve
 1. Withdrawal
 in the report
 period

 2. Usage in
 the        report
 period

 (VI)Others

                     283
                                     146,             77,3   -180    326,   326,
 IV. Balance at      ,16
                                     587,             91,5   ,591,   548,   548,
 the end of the      1,2
                                     271.             93.2   679.    411.    411.
 report period       27.
                                       50               5      88     87      87
                      00

Last Period
                                                                            In RMB

                                                 60
深圳中恒华发股份有限公司 2019 年半年度报告全文


                                                              Semi-annual of 2018
                                        Owners’ equity attributable to the parent Company
                               Other
                              equity
                            instrument
                                Pe                           Othe
                                                    Less
                                rpe                            r                     Prov                                Total
                                                      :              Reas                                       Mino
                  Sha           tua       Capi               com              Surp ision Reta                            owne
     Item                Pr                         Inve             onab                                        rity
                   re             l        tal               preh              lus    of   ined   Othe   Subt             rs’
                         efe                        ntor               le                                       intere
                  cap            ca       reser              ensi             reser gene profi     r     otal            equit
                         rre         Oth              y              reser                                        sts
                  ital          pit        ve                 ve               ve     ral    t                             y
                          d           er            shar               ve
                                 al                          inco                    risk
                         sto                         es
                                sec                           me
                         ck
                                uri
                                tie
                                  s
                  283
                                            146,                           77,3           -186           320,
 I. Balance at    ,16                                                                                                    320,6
                                            587,                           91,5           ,467,          672,
 the end of the   1,2                                                                                                    72,97
                                            271.                           93.2            113.          978.
 last year        27.                                                                                                     8.02
                                              50                              5             73            02
                   00
         Add:
 Changes of
 accounting
 policy

 Error
 correction of
 the       last
 period

  Enterprise
  combine
  under    the
  same
  control
        Other

                  283
                                            146,                           77,3           -186           320,
 II. Balance at   ,16                                                                                                    320,6
                                            587,                           91,5           ,467,          672,
 the beginning    1,2                                                                                                    72,97
                                            271.                           93.2            113.          978.
 of this year     27.                                                                                                     8.02
                                              50                              5             73            02
                   00
 III. Increase/
 Decrease in                                                                              2,79           2,79            2,793
 this      year
                                                                                          3,13           3,13            ,133.
 (Decrease is
 listed    with                                                                           3.60           3.60               60
 “-”)
   (i)    Total
                                                                                          2,79           2,79            2,793
 comprehensi

                                                                61
深圳中恒华发股份有限公司 2019 年半年度报告全文


 ve income                                            3,13   3,13   ,133.
                                                      3.60   3.60     60
  (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


                                                 62
深圳中恒华发股份有限公司 2019 年半年度报告全文


 conversed to
 capital (share
 capital)
 3.
 Remedying
 loss      with
 surplus
 reserve
 4.Carry-over
    retained
    earnings
    from the
    defined
    benefit
    plans
 5.Carry-over
 retained
 earnings
 from other
 comprehensi
 ve income
 6. Other
 (V)
 Reasonable
 reserve
 1.
 Withdrawal
 in the report
 period

 2. Usage in
 the      report
 period

 (VI)Others

                   283
                                          146,                        77,3            -183          323,
 IV. Balance       ,16                                                                                             323,4
 at the end of                            587,                        91,5            ,673,         466,
                   1,2                                                                                             66,11
 the     report                           271.                        93.2            980.          111.
 period            27.                                                                                               1.62
                                            50                           5              13              62
                    00


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

Current period
                                                                                                                   In RMB
                                                            Semi-annual of 2019
                                 Other equity     Capita    Less:   Other    Reaso     Surplu   Retai
                    Share                                                                                          Total
       Item                       instrument         l     Invent   compr    nable        s     ned
                    capit                                                                                Other   owners’
                            Prefe Perp Othe       public     ory    ehensi   reserv    reserv   profi
                     al                                                                                           equity
                            rred     etual    r   reserv   shares     ve        e         e       t

                                                            63
深圳中恒华发股份有限公司 2019 年半年度报告全文


                              stock   capit      e             incom
                                         al                       e
                                      secur
                                       ities
                                                                                -211,
 I. Balance at        283,1                    146,58                  77,391
                                                                                855,    295,284,
 the end of the       61,22                    7,271.                  ,593.2
                                                                                430.     661.34
 last year             7.00                          50                    5
                                                                                  41
          Add:
 Changes    of
 accounting
 policy

 Error
 correction of
 the last period
         Other

                                                                                -211,
 II. Balance at       283,1                    146,58                  77,391
                                                                                855,    295,284,
 the beginning        61,22                    7,271.                  ,593.2
                                                                                430.     661.34
 of this year          7.00                          50                    5
                                                                                  41
 III. Increase/
 Decrease       in                                                              645,
                                                                                        645,186.
 this        year                                                               186.
                                                                                             84
 (Decrease is                                                                     84
 listed with “-”)

  (i)    Total                                                                  645,
                                                                                        645,186.
 comprehensive                                                                  186.
                                                                                             84
 income                                                                           84
  (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

                                                          64
深圳中恒华发股份有限公司 2019 年半年度报告全文


 (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                                                            295,929,
                    283,1                  146,58         77,391   -211,
 the end of the
                    61,22                   7,271.        ,593.2   210,     848.18
 report period


                                                     65
深圳中恒华发股份有限公司 2019 年半年度报告全文


                     7.00                                   50                                     5    243.
                                                                                                          57

Last period
                                                                                                                          In RMB
                                                                 Semi-annual of 2018
                                Other equity
                                 instrument
                                                                       Other
                                    Perp           Capit
                   Shar                                       Less:    compr              Surpl
                            Pref etual               al                         Reason                                   Total
      Item           e                                       Invent    ehensi               us     Retaine
                            erre capit             public                         able                         Other   owners’
                   capit                    Othe               ory       ve               reserv   d profit
                             d        al           reserv                       reserve                                 equity
                    al                       r               shares    incom                 e
                            stoc secu                 e
                                                                          e
                             k       ritie
                                       s
                   283,
 I. Balance at                                     146,5                                  77,39    -210,55
                   161,                                                                                                296,587,
 the end of the                                    87,27                                  1,593    2,845.9
                   227.                                                                                                  245.80
 last year                                          1.50                                    .25          5
                     00
         Add:
 Changes of
 accounting
 policy

 Error
 correction of
 the       last
 period
        Other

                   283,
 II. Balance at                                    146,5                                  77,39    -210,55
                   161,                                                                                                296,587,
 the beginning                                     87,27                                  1,593    2,845.9
                   227.                                                                                                  245.80
 of this year                                       1.50                                    .25          5
                     00
 III. Increase/
 Decrease in
 this      year                                                                                    -1,844,             -1,844,22
 (Decrease is                                                                                       226.31                 6.31
 listed    with
 “-”)
   (i)    Total
                                                                                                   -1,844,             -1,844,22
 comprehensiv
                                                                                                    226.31                 6.31
 e income
   (ii) Owners’
 devoted and
 decreased
 capital
 1.Common
 shares
 invested by


                                                                  66
深圳中恒华发股份有限公司 2019 年半年度报告全文


 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


                                                 67
深圳中恒华发股份有限公司 2019 年半年度报告全文


 other
 comprehensiv
 e income
 6. Other
 (V)
 Reasonable
 reserve
 1.
 Withdrawal
 in the report
 period

 2. Usage in
 the      report
 period

 (VI)Others

                   283,
 IV. Balance at                              146,5                             77,39    -212,39
                   161,                                                                                 294,743,
 the end of the                              87,27                             1,593    7,072.2
                   227.                                                                                  019.49
 report period                                1.50                                .25        6
                    00


III. Company profile

(i) The registration place of the enterprise, the form of organization and the headquarters address


Shenzhen Zhongheng HUAFA Company Limited (hereinafter referred to as Company or the Company),
established on 8 December 1981. Uniform social credit code 91440300618830372G.
Registered place and head office of the Company: 411 Bldg., Huafa (N) Road, Futian District, Shenzhen
Legal representative: Li Zhongqiu
Registered capital: RMB 283,161,227


(ii) The nature of the business and the main business activities
The Company belongs to the computer, telecommunication and manufacturing of other electronic equipment.
Business scope: producing and sales of vary color TV set, liquid crystal display, LCD (operates in branch),
radio-recorder, sound equipment, electronic watch, electronic game and computers, the printed wiring board,
precision injection parts, light packaging material (operates in Wuhan) and hardware (including tool and mould)
for various electronic products and supporting parts, plating and surface treatment and tin wire, development and
operation of real estate (Shen Fang Di Zi No.: 7226760) and property management. Funded affiliated companies
in Wuhan and Jilin. Setting up branches in capital of the province (Lhasa City excluded) in China and
municipality directly under the central government.


(iii) Relevant party offering approval reporting of financial statements and date thereof

                                                         68
深圳中恒华发股份有限公司 2019 年半年度报告全文


The financial statement has been deliberated and approved by BOD on 23 August 2019. According to Article of
Association, the statement shall be submitted for deliberation in shareholders general meeting.


Consolidate scope in the Period including: parent company – Shenzhen Zhongheng HUAFA Company Limited,
subsidiary including Shenzhen HUAFA Property Leasing Management Co., Ltd. (no annual inspection in 2011,
and business license revoke on 1 April 2014), Shenzhen Zhongheng HUAFA property Co., Ltd., Wuhan Hengfa
Technology Co., Ltd., Shenzhen HUAFA Hengtian Co., Ltd. and Shenzhen HUAFA Hengtai Co., Ltd. more of
subsidiaries found in “Note IX. Equity in other subjects”.



IV. Preparation basis of Financial Statements

1. Preparation basis


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


2. Going concern


The Company estimated that the production and sales of the Company, in 12 months since end of the period, will
in a virtuous cycle. We have good management and continuous operation ability, and there is no risk of continuing
operations.



V. Important accounting policy and estimation

Notes on specific accounting policies and accounting estimation:
According to actual operation characteristic, the Group formulate specific accounting policy and accounting
estimation, including trade cycle, reorganization and measurement on account bad debt provision of receivables,
inventory measurement, classification and depreciation method of fixed assets, intangible assets amortization and
reorganization and measurement of revenue etc.



1. Declaration of obedience to Accounting Standards for Business Enterprise


The Financial Statements of the Company are up to requirements of Accounting Standards for Business Enterprise
and also a true and thorough reflection to the relevant information as the Company’s financial position dated 30 th
June 2019 and the operation results as well as cash flow for the first half year of 2019.

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2. Accounting period


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



3. Business cycle


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


4. Bookkeeping standard currency


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


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


1. Consolidation of enterprises under the same control
Where the Company for long term equity investment arising from business combination under common control
satisfies the combination consideration by payment of cash, transfer of non-cash assets or assumption of debt, the
carrying value of the net assets of the acquire in combined financial statement of the ultimate controller shared by
the Company as at the combination date shall be deemed as the initial investment cost of such long term equity
investment. If the equity instrument issued by combining party are consider as the combination consideration,
than the total value of the issuing shares are consider as the share capital. The difference between the initial cost of
long-term equity investment and book value of consideration (or total face value of the shares issued) paid, capital
surplus adjusted; if the capital surplus not enough to written down, than retained earning adjusted.
2. Business combination not under common control
As for business combination not under common control, combination costs refer to the sum of the fair value of the
assets paid, liabilities occurred or assumed as well as equity securities issued by the acquirer to obtain control over
the acquire as at the acquisition date. As for acquiree that obtained by consolidation not under the same control,
the qualified confirmation of identified assets, liability and contingency liabilities should calculated by fair value
on day of purchased. If the consolidation cost larger than the fair value amount of identified net assets from
acquiree’s, the differences should be recognized as goodwill. If the consolidation cost less than the fair value
amount of identified net assets from acquiree’s, the differences should reckoned into current non-operating
income.




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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) into
consolidated financial statement, including companies controlled by the Company, non-integral part of the
investees 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, the
necessary adjustment is made on the subsidiaries’ financial statements in the preparation of the consolidated
financial statements according to the Company’s accounting policies and periods.


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


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 financial
statements from the      beginning      of the financial   year       in which the    combination took       place. When
preparing    the    consolidated     financial statements,      for      the subsidiaries     acquired    from    business
combination not involving entities under common control, the identifiable net assets of the subsidiaries are
adjusted on the basis of their fair values on the date of acquisition.



7. Classification of joint arrangements and accounting treatment of joint operation


1. Classification of joint arrangements
Joint arrangements are divided into joint operations and joint ventures. Joint arrangements achieved not through
separate entities are classified as joint operations. Separate entities refer to the entities with separate identifiable
financial architecture including separate legal entities and legally recognized entities without the qualification of
legal entity. Joint arrangements achieved through separate entities are generally classified as joint ventures. In
case of changes in rights entitled to and obligations undertaken by the parties of joint venture under a joint
arrangement due to the changes in relevant facts and circumstances, the parties of joint venture will re-assess the

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classification of joint arrangements.
2. Accounting treatment for joint operations
The parties of joint operation should recognize the following items in relation to their share of interest in joint
operation, and proceed with accounting in accordance with the relevant provisions under the Accounting
Standards for Business Enterprises: to recognize their separate assets or liabilities held, and recognize the assets or
liabilities jointly held according to their respective shares; to recognize the income from the disposal of their
output share under joint operation; to recognize the income from the disposal of output under joint operation
according to their respective shares; to recognize the expenses incurred separately, and recognize the expenses
incurred under joint operation according to their respective shares.
For the parties of a joint operation not under common control, if they are entitled to relevant assets and undertake
relevant liabilities of the joint operation, accounting will be carried out with reference to the provisions of the
parties of joint operation; otherwise, it should be subject to relevant Accounting Standards for Business
Enterprises.
3. Accounting treatment for joint ventures
The parties of a joint venture should perform accounting for investments by the joint venture in accordance with
the Accounting Standards for Business Enterprises No. 2 – Long-term Equity Investments. The parties not under
common control should carry out accounting depending on their influence on the joint venture.


8. Determination criteria of cash and cash equivalent


The cash recognized in the preparation of the cash flow statements, is the Company’s storage cash and deposits
available for payment anytime. The cash equivalents recognized in the preparation of the cash flow statements
refers to the investment held by the Company with characteristic of short-term, strong mobility, easy transfer to
known sum cash and has slim risk from value changes.



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


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

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


10. Financial instrument


Financial asset or financial liability is recognized when the Company becomes a party to financial instrument
contract.
(1) Classification, recognition and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics of
financial assets, the Company classifies the financial assets into the financial assets measured at amortized cost,
the financial assets measured at fair value and whose changes are included in other comprehensive income, and
the financial assets measured at fair value and whose changes are included in current profit or loss.
Financial assets are measured at fair value on initial recognition. For financial assets measured at fair value and
whose changes are included in current profit or loss, the related transaction expenses are directly included in
current profit or loss. For other types of financial assets, the related transaction costs are included in the initial
recognition amount. For the accounts receivable or notes receivable arising from the sale of products or the
provision of labor services that do not contain or consider the significant financing components, the Company
uses the consideration amount that is expected to be received as the initial recognition amount.
①Financial assets measured at amortized cost
The Company's business model for managing financial assets measured at amortized cost is to collect contractual
cash flows, and the contractual cash flow characteristics of such financial assets are consistent with the basic
borrowing and lending arrangements, i.e. the cash flows generated on a specific date are only the payment for the
principal and the interest based on the outstanding principal amount. The Company adopts effective interest
method for this type of financial assets which are subsequently measured at amortized cost, the gains or losses
arising from amortization or impairment are included in current profit or loss.
② Financial assets measured at fair value and whose changes are included in other comprehensive income
The Company's business model for managing such financial assets is to target at both the collection of contractual

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cash flows and the sale, and the contractual cash flow characteristics of such financial assets are consistent with
the basic borrowing and lending arrangements. The Company adopts the fair value measurement for such
financial assets and whose changes are included in the current profit and loss, but the impairment losses or gains,
exchange gains and losses and interest income calculated by using the effective interest method are included in
current profit or loss.
In addition, the Company designates part of non-trading equity instrument investments as financial assets
measured at fair value and whose changes are included in other comprehensive income. The Company's related
dividend income of such financial assets is included in the current profit and loss, and the changes in fair value are
included in other comprehensive income. When the financial assets are derecognized, the accumulated gains or
losses previously included in other comprehensive income are transferred from other comprehensive income to
retained earnings, which are not included in current profit or loss.
③Financial assets carried at fair value through profit or loss for the current period
The Company classifies the financial assets except the above financial assets measured at amortized cost and the
above financial assets measured at fair value and whose changes are included in other comprehensive income into
the financial assets measured at fair value and whose changes are included in current profit or loss. In addition, at
the time of initial recognition, the Company designates part of financial assets as financial assets measured at fair
value and whose changes are included in current profit or loss in order to eliminate or significantly reduce
accounting mismatch. For such financial assets, the Company adopts fair value for subsequent measurement, and
changes in fair value are included in current profit and loss.
(2) Classification, recognition and measurement of financial liabilities
At initial recognition, financial liabilities are classified into financial liabilities measured by fair value with
changes counted into current gains/losses and other financial liabilities. For financial liabilities classified as fair
value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For
financial liabilities classified as other categories, relevant transaction costs are included in the amount initially
recognized.
① Financial liabilities at fair value through profit or loss for the period
Financial liabilities measured at fair value and whose changes are included in current profits or losses include the
trading financial liabilities (including derivatives belong to financial liabilities) and the financial liabilities that are
designated as fair value in the initial recognition and whose changes are included in current profit or loss.
Trading financial liabilities (including derivatives belong to financial liabilities) are subsequently measured at fair
value, in addition to those related to hedge accounting, the changes in fair value are included in current profit or
loss.
A financial liability designated to be measured at fair value and whose changes are included in current profit or
loss, and of which the changes in fair value arising from changes in the Company's own credit risk are included in
other comprehensive income, when the liability is derecognized, its accumulated amount of changes in fair value
included in other comprehensive income and the changes arising from its own credit risk are transferred to
retained earnings. The remaining changes in fair value are included in the current profit and loss. If the effects of


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changes in the own credit risk of these financial liabilities are handled as described above, but the handling causes
or expands the accounting mismatch in the profit or loss, the Company will include all gains or losses of the
financial liabilities (including the amount affected by changes in the credit risk of the enterprise itself) in the
current profit and loss.
② Other financial liabilities
Other financial liabilities, except for the financial liabilities whose transfer of financial assets doesn’t fit the
derecognition condition or continue to be involved in the transferred financial assets, and the financial guarantee
contract, are classified as financial liabilities measured at amortized cost, which takes follow-up measurement by
amortized cost, the gains or losses arising from derecognition or amortization are included in current profit or loss.
(3) Recognition basis and measurement method for transfer of financial assets
As for the financial assets up to the following conditions, the recognition termination is available: ①Termination
of the contract right to take the cash flow of the financial assets; ② transferred to the transferring-in part nearly all
risk and compensation; ③ all risk and compensation neither transferred nor retained, and with the give-up of the
control over the financial assets.
As for financial assets of almost all risk and compensation neither transferred nor retained, and without the
give-up of the control over the financial assets, it was recognized according to the extension of the continual entry
into the transferred financial assets and relevant liabilities are correspondingly recognized. The continual entry
into the transferred financial assets is risk level which the enterprise faces up to due to the assets changes.
As for the whole transfer of the financial assets up to the recognition termination conditions, the book value of the
transferred assets, together with the difference between the consideration value and the accumulative total of the
fair value change of the other consolidated income, is reckoned into the current gain/loss.
As for the partial transfer of the financial assets up to the recognition termination conditions, the book value of the
transferred assets is diluted on the relative fair value between the terminated part and the un-terminated part; and
reckoned into the current loss/gain is the difference between the sum of the consideration value and the
accumulative sum of the valuation change ought to be diluted into the recognition termination part but into the
other consolidated income, and the above diluted book value, is reckoned into the current loss/gain.
For financial assets that are transferred with recourse or endorsement, the Group needs to determine whether the
risk and rewards of ownership of the financial asset have been substantially transferred. If the risk and rewards of
ownership of the financial asset have been substantially transferred, the financial assets shall be derecognized. If
the risk and rewards of ownership of the financial asset have been retained, the financial assets shall not be
derecognized. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the
financial asset, the Group shall assess whether the control over the financial asset is retained, and the financial
assets shall be accounted for according to the above paragraphs.
(4) Termination recognition of financial liabilities
Only is released the whole (or part) of the current duties, the termination of the liabilities (or part of it) is available.
The Group (the debtor) signed the agreement with the lender: the original liabilities are replaced by the bearing of
the new liabilities; and the contract terms are fundamentally different of the new liabilities and the original ones;


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the termination of the recognition of the original ones is available; and the recognition of new ones is available. If
the Company makes substantial changes to the contractual terms of the original financial liabilities (or a part
thereof), derecognize the original financial liabilities, and recognize a new financial liability in accordance with
the revised terms.
If the financial liability (or a part thereof) is derecognized, the Company includes the difference between the book
value and the consideration paid (including the transferred non-cash assets or liabilities assumed) in current profit
or loss.
(5) Balance-out between the financial assets and liabilities
As the Group has the legal right to balance out the financial liabilities by the net or liquidation of the financial
assets, the balance-out sum between the financial assets and liabilities is listed in the balance sheet. In addition,
the financial assets and liabilities are listed in the balance sheet without being balanced out.
(6) Method for determining the fair value of financial assets and financial liabilities
Fair value refers to the price that a market participant can get by selling an asset or has to pay for transferring a
liability in an orderly transaction that occurs on the measurement date. For a financial instrument having an active
market, the Company uses the quoted prices in the active market to determine its fair value. Quotations in an
active market refer to prices that are readily available from exchanges, brokers, industry associations, pricing
services, etc., and represent the prices of market transactions that actually occur in an arm's length transaction. If
there is no active market for a financial instrument, the Company uses valuation techniques to determine its fair
value. Valuation techniques include reference to prices used in recent market transactions by parties familiar with
the situation and through voluntary trade, and reference to current fair values of other financial instruments that
are substantially identical, discounted cash flow methods, and option pricing models. At the time of valuation, the
company adopts valuation techniques that are applicable in the current circumstances and that are sufficiently
supported by data and other information, selects the input value with characteristics consistent with the
characteristics of assets or liabilities to be considered in the transactions of the relevant assets or liabilities of the
market participants, and uses the relevant observable input values as much as possible. Use unallowable input
values if the relevant observable input values are not available or are not practicable.
(7) Impairment of financial assets
The financial assets that the Company needs to recognize impairment loss are financial assets measured at
amortized cost, debt instruments investment that are measured at fair value and whose changes are included in
other comprehensive income, and lease receivables, mainly including bills receivable, account receivables, other
receivables, debt investment, other debt investments, long-term receivables, etc. In addition, for contract assets
and some financial guarantee contracts, the impairment provision is also made and credit impairment losses are
recognized in accordance with the accounting policies described in this section.
①Confirmation method of impairment provision
On the basis of expected credit losses, the Company makes provision for impairment and confirms credit
impairment losses for each of the above items in accordance with its applicable expected credit loss measurement
method (general method or simplified method).


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Credit loss refers to the difference between all contractual cash flows that the Company discounts at the original
actual interest rate and are receivable in accordance with contract and all cash flows expected to be received, that
is, the present value of all cash shortages. Among them, for the purchase or source of financial assets that have
suffered credit impairment, the Company discounts the financial assets at the actual interest rate adjusted by
credit.


The general method for measuring the estimated credit loss is that the Company assesses whether the credit risk of
the financial assets (including other applicable items such as contract assets, the same below) has been
significantly increased since the initial recognition on each balance sheet date, if the credit risk has increased
significantly after the initial recognition, the Company shall measure the loss preparation according to the amount
of expected credit loss in the whole duration; if the credit risk has not increased significantly since the initial
recognition, the Company shall measure the loss preparation according to the amount equivalent to the expected
credit loss in the next 12 months. The Company considers all reasonable and evidenced information, including
forward-looking information, when evaluating expected credit losses.
For the financial instrument with lower credit risk on the balance sheet date, the Company assumes that its credit
risk has not increased significantly since the initial recognition, and measures the loss provisions according to the
expected credit losses in the next 12 months.


② Judging criteria for whether credit risk has increased significantly since initial recognition
If the probability of default of a financial asset within the estimated duration recognized on the balance sheet is
significantly higher than the probability of default within the estimated duration decided at the initial recognition,
it indicates that the credit risk of the financial asset is significantly increased. Except for special circumstances,
the Company uses the change in default risk occurring within the next 12 months as a reasonable estimate of the
change in default risk throughout the duration to determine whether the credit risk has increased significantly
since the initial recognition.
③A combined approach to assessing expected credit risk on a portfolio basis
The Company evaluates credit risk individually for financial assets with significantly different credit risks. Such
as receivables from related parties; receivables that are in dispute with the other party or involve litigation or
arbitration; receivables have clear indications that the debtor is likely to be unable to fulfill the repayment
obligations.
In addition to financial assets that assess credit risk individually, the Company classifies financial assets into
different groups based on common risk characteristics and evaluates credit risk on a portfolio basis.


④Accounting treatment of financial assets impairment
At the end of the period, the Company calculates the estimated credit losses of various financial assets. If the
estimated credit loss is greater than the carrying amount of its current impairment provision, the difference is


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recognized as the impairment loss; if it is less than the carrying amount of the current impairment provision, the
difference is recognized as an impairment gain.



11.Note receivable

Found more in 10.(7)-Impairment of financial assets


12. Account receivable, account receivable


For receivables that do not contain significant financing components, the Company measures the loss provision
based on the amount of expected credit losses equivalent to the entire duration of the period.
For receivables that contain significant financing components, the Company measures the loss provision always
based on the amount of expected credit losses equivalent to the entire duration of the period.


In addition to accounts receivable whose credit risk is assessed individually, they are classified into different
combinations based on their credit risk characteristics:




                 Item                                                               Basis

Account age                            Take the account age of receivable as the credit risk characteristics

Related party                          The related parties in consolidate scope


(8) Determination and accounting treatment on the expected credit losses of account receivable found more in
10(7)Impairment of financial assets above mentioned




13. Receivable financing


Including the note receivable and account receivable that measured on fair value and with its variation reckoned
into other comprehensive income on balance sheet date.



14. Other account receivable

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

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The Company measures the impairment loss based on the amount of expected credit losses in the next 12 months
or the entire duration based on whether the credit risk of other receivables has increased significantly since the
initial recognition.


15. Inventory


Whether the company needs to comply with the disclosure requirements of the particular industry
No

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



16. 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 the
same control, take the share of the combine party obtained in the book value of the net assets in the consolidated
financial statements of the ultimate controlling party on the combination date as the initial investment cost; in the
case of the consolidation of enterprises not under the same control, recognized as the initial cost is the recognized
consolidation cost on the purchase day. As for the long term equity investment obtained by cash payment, the
initial investment cost is the actual purchase payment. As for the long term equity investment obtained by the
equity securities offering, the initial investment cost is the fair value of the equity securities. As for the long-term
equity investment obtained by debt reorganization, initial investment cost of such investment should determine by


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relevant regulation of the “Accounting Standards for Business Enterprise No.12- Debt Reorganization”; as for the
long term equity investment obtained by the exchange of the non-monetary assets, the initial investment cost is
recognized on the relevant rules in the “Accounting Standards for Business Enterprise No. 7- Exchange of
Non-Monetary Assets”


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


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



17. Investment real estate

Measurement for investment real estate
Cost method
Depreciation or amortization method



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


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

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the investment property and the land use rights to be transferred after appreciation adopt straight-line amortization,
specific accounting policy are same as part of the intangible assets.



18. Fixed assets


(1) Recognition


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


(2) Depreciation method


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

                            Straight-line
 House building                                        20-50                      10.00                      1.80-4.50
                            depreciation

                            Straight-line
 Machinery equipment                                   10                         10.00                      9.00
                            depreciation

                            Straight-line
 Mold equipment                                        3                          10.00                      30.00
                            depreciation

 Transportation             Straight-line
                                                       5                          10.00                      18.00
 equipment                  depreciation

                            Straight-line
 Instrument equipment                                  5                          10.00                      18.00
                            depreciation

                            Straight-line
 Tool equipment                                        5                          10.00                      18.00
                            depreciation

                            Straight-line
 Office equipment                                      5                          10.00                      18.00
                            depreciation
The fixed assets of the Company mainly include buildings, machinery equipment, electronic equipment, transportation equipment,
etc.; the method of depreciation is based on the straight-line method. Determine the useful life and estimated net residual value of
fixed assets according to the nature and use of various types of fixed assets. At the end of the year, review the useful life, estimated
net residual value, and depreciation method of fixed assets, if there is a difference from the original estimate, make corresponding
adjustments. Except for the fixed assets that have been fully depreciated and continue to be used and the land that is separately
accounted for, the Company calculates and depreciates all fixed assets.




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


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


19. Construction in process


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


20. 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 is
capitalized and reckoned into the relevant assets cost; as for other borrowing expenses, it is recognized on the
actual sum and reckoned into the current loss/gain. The assets up to the capitalization are assets as the capital
assets, investment real estate, and inventory reaching the expectant availability or sale ability.
2. Calculation of the capitalization
Capitalization term: the period from the time starts to capitalization to the time the capitalization ends. The period
of capitalization suspended is not included. The capitalization of borrowing expenses should be suspended while
the abnormal interrupt, which surpass three months continuously, in the middle of acquisition or construction or
production.
As for the borrowing of the specific borrowing,         the capitalization sum is recognized on the current actual
interest expenses less the interest income of the borrowing capital not utilized but deposited in the bank or the
return of the temporary investment; As for the appropriation of the general borrowing, the capitalization sum is
recognized on the weighted average of, the accumulative assets expenditure above the specific borrowing, and
times the capitalization rate of the appropriation; As for the discount or premium of the borrowing, the discount or
premium to be diluted in every accounting period is recognized in the actual rate method.
The effective interest method is the method for the measurement of the diluted discount or premium or interest


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expenses on the actual interest rate; and the actual interest rate is the interest rate used in the discount of the future
cash flow in the expectant duration period as the current book value of the borrowing.




21. Intangible assets


(1) Accounting method, service life and impairment test


1. Accounting method of intangible assets
The Company’s intangible assets are measured initially on cost. The intangible assets purchased in are taken as the
actual cost on the actual payment and relevant expenditure. As for the intangible assets invested in by the
investors, the actual cost is recognized on the value stipulated in the contract or agreement; however, if what is
stipulated in the contract or agreement is not fair value, the actual cost is recognized on fair value. As for the
self-developed intangible assets, their cost is the actual total expenditure before reaching the expectant purpose.


The follow-up measurements of the Company’s intangible assets respectively are: the line amortization method is
taken on the intangible assets of finite service life, and at the yea-end, the check is taken on the service life and
dilution of the intangible assets, and the corresponding adjustment is made if there is inconsistency with the
previous expected ones. As for the intangible assets of uncertain service life, it is not diluted, however, the service
life is checked at year-end; If there is solid evidence to its finite service life, its service life is estimated and
diluted in straight line method.


2. Judgment basis for uncertain service life
The Company will not be able to foresee the time limit within which the asset brings economic benefits to the
company, or the intangible assets with uncertain useful life identified as intangible assets with uncertain useful life.
The basis for judging the uncertainty of useful life is from the contractual rights or other legal rights, but the
contract stipulates or the law rules there is no definite useful life; combining the same industry case and or the
relevant expert argumentation, it is still incapable of judging the time limit within which the intangible assets
bring economic benefits to the company.
At the end of each year, review the useful life of intangible assets with indefinite useful life by mainly adopting
the bottom-up method, the relevant departments of intangible assets take the basic review and evaluate whether
there is any change in the judgment basis for indefinite useful life.


(2) Accounting policies for internal research and development expenditure


Expenditures for internal research and development projects at the research phase shall be included in the current
profit or loss when incurred; expenditures incurred at the development phase and recognized as intangible assets
shall be transferred to intangible assets accounting.


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22. Long-term assets impairment


Long-term equity investments, investment properties measured at cost and long-term assets such as fixed assets,
construction in progress, productive biological assets at cost method, oil and gas assets, intangible assets and
goodwill are tested for impairment if there is any indication that an asset may be impaired at the balance date. If
the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount,
a provision for impairment and an impairment loss are recognized for the amount by which the asset’s carrying
amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future
cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on
the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the
recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest
group of assets that is able to generate independent cash inflows.
Goodwill arising from a business combination is tested for impairment at least at each year end, irrespective of
whether there is any indication that the asset may be impaired. For the purpose of impairment testing, the carrying
amount of goodwill acquired in a business combination is allocated from the acquisition date on a reasonable
basis to each of the related asset groups; if it is impossible to allocate to the related asset groups, it is allocated to
each of the related set of asset groups. If the carrying amount of the asset group or set of asset groups is higher
than its recoverable amount, the amount of the impairment loss first reduced by the carrying amount of the
goodwill allocated to the asset group or set of asset groups, and then the carrying amount of other assets (other
than the goodwill) within the asset group or set of asset groups, pro rata based on the carrying amount of each
asset.
Once the impairment loss of such assets is recognized, it is not be reversed in any subsequent period.



23. Long-term deferred expenditure


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



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 profit

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



(2) Accounting for post-employment benefits


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



(3) Accounting for termination benefits


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


(4) Accounting for other long-term employee benefits


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



25. Accrual liability


The obligation related to contingencies is the current obligation assumed by the company, and performing this
obligation may result in an outflow of economic benefits, and this obligation can be determined as the estimated
liabilities when the amount can be reliably measured. The Company makes initial measurement in accordance
with the best estimate for performing the related current obligation, if the expenditure as needed has a continuous

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range, and the likelihood of occurrence of various results in this range is the same, the best estimate is determined
by the median value within the range; if a number of items are involved, the best estimate is determined by the
calculation of various possible outcomes and related probabilities.
At the balance sheet date, the book value of estimated liabilities should be rechecked, if there is conclusive
evidence indicates that this book value cannot truly reflect the current best estimate, and then the book value
should be adjusted in accordance with the current best estimate.



26. Revenue


Whether the company needs to comply with the disclosure requirements of the particular industry
No
Whether implemented the new revenue standards
□Yes √No

1. Sales of goods
The Company shall ascertain the revenue incurred by selling goods in accordance with the received or receivable
price stipulated in the contract or agreement signed between the enterprise and the buyer unless the following
conditions are met simultaneously: ① the significant risks and rewards of ownership of the goods have been
transferred to the buyer by the enterprise; ② the enterprise retains neither continuous management right that
usually keeps relation with the ownership nor effective control over the sold goods; ③the relevant amount of
revenue can be measured in a reliable way; ④ relevant economic benefits may flow into the enterprise and ⑤ the
relevant costs incurred or to be incurred can be measured in a reliable way.
Money collection for the contract or agreement use the mode of deferred, actually has the financing features. The
revenue of commodity sales is recognized by the fair value of the money receivable on contract or agreement.


2. Labor service providing
If an enterprise can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the
labor services it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion         method.     The      enterprise     can    ascertain     the     schedule   of   completion
(percentage-of-completion) under the transaction concerning the providing of labor services based on calculation
of completed works.
If an enterprise cannot, on the date of the balance sheet, measure the result of a transaction concerning the
providing of labor service in a reliable way, it shall be conducted in accordance with the following circumstances,
respectively: ①if the cost of labor services incurred is expected to be compensated, the revenue from the
providing of labor services shall be recognized in accordance with the amount of the cost of labor services
incurred, and the cost of labor services shall be carried forward at the same amount; ②if the cost of labor services
incurred is not expected to compensate, the cost incurred should be included in the current profits and losses, and
no revenue from the providing of labor services may be recognized.
3. Transition of asset use right

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When economic benefits relating to transition of asset use right is likely to inflow into the Company and the
relevant income can be measured reliably, the Company shall recognize such income from transition of asset use
right.
The Company’s specific income recognition method: it is recognized as income when the product has been sent
out and signed for receipt by the other party for domestic sales; it is recognized as income when the product has
been shipped and its customs procedures have been completed with the relevant declaration documents for export
sales. Income from house leases and property management is recognized according to the lease contract
agreement, receipt of relevant payments, or relevant collection proof.


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 government
for free (excluding the capital invested by government as an owner). If the government grants are monetary assets,
it shall be measured according to the amount received or receivable. If the government grants are non-monetary
assets, it shall be measured at fair value; if the fair value cannot be obtained reliably, it shall be measured at the
nominal amount.


Government grants related to daily activities are included in other income in accordance with the economic
business. Government grants not related to daily activities are included in the non-operating income and
expenditure.
Government grants that the government documents clearly stipulate to be used for the purchase and establishment
or forming long-term assets in other way are recognized as government grants related to assets. For the
government grants that the government documents do not clearly specify the subsidy target and can form
long-term assets, the part corresponding to the asset value is recognized as the government grants related to the
assets, and the rest is recognized as the government grants related to the income. For the government grants which
are difficult to be distinguished, recognize the whole as the government grants related to the income. Government
grants related to assets are recognized as deferred income. The amount recognized as deferred income is included
in the current profit and loss in a reasonable and systematic manner within the useful life of the relevant asset.
Government grants other than government grants related to assets are recognized as government grants related to
income. If the government grants related to the income are used to compensate the related expenses or losses of
the enterprise in the future period, recognize them as deferred income and include them in the current profit and
loss during the period of recognizing the related expenses. The government grants used to compensate the relevant
expenses or losses incurred by the enterprise are directly included in the current profit and loss.
The Company obtained the policy preferential loan interest subsidy, and the finance allocated the interest subsidy
funds to the loan bank, and the loan bank provides loans to the Company at a preferential interest rate, take the
actual amount of the loan received as the entry value of the loan, and calculate the relevant borrowing costs
according to the loan principal the policy preferential interest rate. If the finance directly appropriates the interest

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



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 item
that has not been recognized as an asset or liability, if its tax base can be determined in light of the tax law, the tax
base shall recognized as the difference) the deferred income tax and deferred income tax liabilities shall be
determined according to the applicable tax rate in period of assets expected to recover or liability expected to pay
off.
2. The deferred income tax assets shall be recognized to the extent of the amount of the taxable income which it is
most likely to obtain and which can be deducted from the deductible temporary difference. On balance sheet date,
if there have concrete evidence of obtaining, in future period, enough taxable amounts to deduct the deductible
temporary difference, the un-confirmed deferred income tax assets in previous accounting period shall be
recognized. If there has no enough taxable amounts, obtained in future period, to deducted the deferred income tax
assets, book value of the deferred income tax assets shall be kept in decreased.
3. The taxable temporary differences related to the investments of subsidiary companies and associated enterprises
shall recognized as deferred income tax liability, unless the Company can control the time of the reverse of
temporary differences and the temporary differences are unlikely to be reversed in the expected future. As for the
deductible temporary difference related to the investment of the subsidiary companies and associated enterprises,
deferred income tax assets shall be recognized while the temporary differences are likely to be reversed in the
expected future and it is likely to acquire any amount of taxable income tax that may be used for making up the
deductible temporary differences.



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 either
included in the cost of related asset or charged to profit or loss for the period.



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(2) Accounting treatment for finance lease


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


30. Changes in important accounting policies and estimates


(1)Changes in important accounting policies


√ Applicable □Not applicable

      Content and reason of changes in
                                                           Approval procedure            Note
            accounting policies

The Ministry of Finance issued the
Accounting     Standards    for        Business
Enterprise No. 22- Recognition and
Measurement of Financial Instruments,
Accounting     Standards    for        Business
Enterprise No. 23- Transfer of Financial
Assets,     Accounting     Standards        for
Business Enterprise No. 24- Hedge
Accounting and Accounting Standards               Change of the accounting policy has
for    Business     Enterprise     No.     37-    deliberated and approved by the 11th
Presentation of Financial Instruments             session of 9th BOD
after revised in 2017 ( these four items
are collectively referred to as the new
financial    instrument     standards).The
Company       implemented        the     above
mentioned new standards after revision
since 1st January 2019, and relevant
content      with     accounting         policy
concerned are been adjusted.
In April 2019, the Ministry of Finance
issued the Notice on Revision and
Issuance of 2019 Financial Statement
Format for General Corporate (Cai Kuai            Change of the accounting policy has
                                                  deliberated and approved by the 11th
[2019] No.6) (hereinafter referred to as
Financial Statement Format), in terms of          session of 9th BOD

the financial statement of mid-term
2019, the annual financial statement and



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later period’s financial statement are
required to preparing in line with the
Accounting      Standards     for   Business
Enterprise   and    Financial       Statement
Format.

The Company will implement the relevant regulation of Cai Kuai (2019) No.6 issued by Ministry of Finance, relevant financial
statements are been adjusted. Items and amount has major influence on 31st December 2018 in balance sheet are as:
                       Item                                                     Consolidate balance sheet
                                                   Before adjustment                               After adjustment
Note receivable and account receivable                       185,983,351.22
Note receivable                                                                                         69,185,516.71
Account receivable                                                                                    116,797,834.51
Note payable and account payable                               88,617,663.09
Note payable                                                                                            27,642,356.66
Account payable                                                                                         60,975,306.43




(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 financial
instrument standards, new revenue standards and new leasing standards

□ Applicable √Not applicable


(4)Retrospective adjustment of early comparison data description when initially implemented the new
financial instrument standards and new leasing standards

□ Applicable √Not applicable


VI. Taxes

1. Major tax and tax rate

                    Taxes                                    Taxation basis                                 Tax rate

 VAT                                            Domestic sales revenue                     16%, 13% 6%, 5%, 3%

 Urban maintenance and construction tax         Turnover tax payable                       7%

 Corporate income tax                           Taxable income                             15%, 25%

 Educational surtax                             Turnover tax payable                       3%

 Local educational surtax                       Turnover tax payable                       2%, 1.5%

 Property tax                                   0% of original value of the property       1.2%


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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 enterprise
application, expert review, and public announcement and other procedures, the Company’s wholly-owned
subsidiary, Wuhan Hengfa Technology Co., Ltd., has been identified as a high-tech enterprise, and obtained the
“High-tech Enterprise Certificate” jointly issued by the Science and Technology Department of Hubei Province,
Hubei Provincial Finance Department, Hubei Provincial Office, SAT, and Local Taxation Bureau of Hubei
Province on November 28, 2017, the certificate number is GR201742001840, which is valid for 3 years. The
applicable corporate income tax rate of the subsidiary Wuhan Hengfa Technology Co., Ltd. for 2018 was 15%.



VII. Notes to main items in consolidated financial statement

1. Monetary fund

                                                                                                                         RMB/CNY

                    Item                                    Closing balance                           Opening balance

 Cash on hand                                                                 426,742.83                                236,354.29

 Bank deposit                                                               37,614,899.02                          28,935,450.70

 Other monetary fund                                                         9,939,899.76                           4,936,525.28

 Total                                                                      47,981,541.61                          34,108,330.27

Other explanation
Other monetary funds are bank acceptance deposits.


2. Note receivable

(1)Category

                                                                                                                         RMB/CNY

                    Item                                    Closing balance                           Opening balance

 Bank acceptance bill                                                        4,773,726.59                          56,817,845.23

 Commercial acceptance bill                                                  5,654,208.28                          12,367,671.48

 Total                                                                      10,427,934.87                          69,185,516.71

                                                                                                                         RMB/CNY


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                                               Closing balance                                           Opening balance

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

    Including:

    Including:

Accrual of bad debt provision on single basis:
                                                                                                                                    RMB/CNY

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

Accrual of bad debt provision on portfolio:
                                                                                                                                    RMB/CNY

                                                                                    Closing balance
              Name
                                                Book balance                       Bad debt provision                   Accrual ratio

Explanation on portfolio basis:
If the provision for bad debts of note receivable is made in accordance with the general model of expected credit losses, please refer to
the disclosure of other receivables to disclose related information about bad-debt provisions:



□ Applicable √Not applicable


(2)Note receivable that pledged at period-end

                                                                                                                                    RMB/CNY

                                  Item                                                        Amount pledged at period-end

 Bank acceptance bill                                                                                                           3,866,647.92

 Total                                                                                                                          3,866,647.92


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

                                                                                                                                    RMB/CNY

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

 Bank acceptance bill                                                          21,094,964.31

 Commercial acceptance bill                                                    48,107,418.75

 Total                                                                         69,202,383.06




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3. Account receivable

(1)Category

                                                                                                                                   RMB/CNY

                                          Closing balance                                             Opening balance

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

 Account receivable
 with bad debt         13,144,                13,144,      100.00                13,144,                 13,144,      100.00
                                   8.08%                                  0.00                 8.08%                                   0.00
 provision accrual      007.21                007.21             %                  007.21                007.21           %
 on a single basis

 Including:

 Account receivable
 with single
 significant amount    7,556,3                7,556,3      100.00                7,556,3                 7,556,3      100.00
                                   4.64%                                  0.00                 4.64%                                   0.00
 and withdrawal          63.72                 63.72             %                   63.72                 63.72           %
 bad debt provision
 on single basis

 Account receivable
 with single minor
 amount but with       5,587,6                5,587,6      100.00                5,587,6                 5,587,6      100.00
                                   3.43%                                  0.00                 3.43%                                   0.00
 bad debts provision     43.49                 43.49             %                   43.49                 43.49           %
 accrued on a single
 basis

 Account receivable
                        149,54                                         149,54       116,79
 with bad debt                      91.92                                                                                          116,797,8
                       1,677.7                811.28        0.00%     0,866.4    8,645.7      91.88%      811.28      0.01%
 provision accrual                        %                                                                                           34.51
                               4                                            6             9
 on portfolio

 Including:

                        162,68                                         149,54       129,94
                                              13,144,                                                    13,144,                   116,797,8
 Total                 5,684.9                                        0,866.4    2,653.0
                                              818.49                                                      818.49                      34.51
                               5                                            6             0

Accrual of bad debt provision on single basis: 7,556,363.72 Yuan
                                                                                                                                   RMB/CNY

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

 Shenzhen Portman                     2,555,374.75                   2,555,374.75                     100.00%      Uncollectible


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 Bowling Club Co.,
 Ltd.

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

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

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

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

 Total                               7,556,363.72              7,556,363.72      --                        --

Accrual of bad debt provision on single basis: 5,587,643.49 Yuan
                                                                                                                           RMB/CNY

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

 Shenzhen Huixin
 Video Technology Co.,                 381,168.96                   381,168.96                   100.00%   Uncollectible
 Ltd.
 Shenzhen       Wandelai
 Digital     Technology                351,813.70                   351,813.70                   100.00%   Uncollectible
 Co., Ltd.
 Shenzhen          Dalong
                                       344,700.00                   344,700.00                   100.00%   Uncollectible
 Electronic Co., Ltd.

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

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

 China Galaxy
 Electronics (Hong                     288,261.17                   288,261.17                   100.00%   Uncollectible
 Kong) Co., Ltd.

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

 Chuangjing                            247,811.87                   247,811.87                   100.00%   Uncollectible

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



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

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

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

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

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

 Other                                 2,037,613.75                2,037,613.75                    100.00%       Uncollectible

 Total                                 5,587,643.49                5,587,643.49    --                            --

Accrual of bad debt provision on single basis:
                                                                                                                                  RMB/CNY

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

Accrual of bad debt provision on portfolio: 811.28 Yuan
                                                                                                                                  RMB/CNY

                                                                             Closing balance
             Name
                                            Book balance                   Bad debt provision                         Accrual ratio

 Account age                                      149,541,677.74                               811.28

 Total                                            149,541,677.74                               811.28     --

Explanation on portfolio basis:
Accrual of bad debt provision on portfolio:
                                                                                                                                  RMB/CNY

                                                                             Closing balance
             Name
                                            Book balance                   Bad debt provision                         Accrual ratio

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

                           Account age                                                         Closing balance

 Within one year(One year included)                                                                                        149,536,867.00

                                                                                                                           149,536,867.00

 1-2 years                                                                                                                        2,527.77

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 Over 3 years                                                                                                                     2,282.97

    3-4 years                                                                                                                     2,282.97

 Total                                                                                                                   149,541,677.74


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

Bad debt provision accrual in the period:
                                                                                                                               RMB/CNY

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

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

                   Enterprise                             Amount collected or reversal                        Collection by


(3)Account receivable actually written-off in the period

                                                                                                                               RMB/CNY

                                  Item                                                       Amount written-off

Including major account receivable written-off :
                                                                                                                               RMB/CNY

                                                                                                                       Amount arising
                          Nature of account            Amount                 Causes of            Procedures of
      Enterprise                                                                                                         from related
                                receivable            written-off             written-off           written-off
                                                                                                                      transactions (Y/N)

Explanation on account receivable written-off:


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

Total period-end balance of top five receivables by arrears party amounting to 138,920,788.78 Yuan, takes 85.39 percent of the total
account receivable at period-end, bad debt provision accrual correspondingly at year-end amounting as 0 Yuan.


4. Account paid in advance

(1) By account age

                                                                                                                               RMB/CNY

                                                  Closing balance                                      Opening balance
         Account age