SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 SHENZHEN ZHONGHENG HUAFA CO., LTD.
ANNUAL REPORT 2015
April 2016
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 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 2015 Annual Report is authentic, accurate and complete.
All directors are attended the Board Meeting for report deliberation.
Concerning the forward-looking statements with future planning involved in the Report, they do not constitute a substantial commitment for investors. Majority investors are advised to exercise caution of investment risks.
The Company has no plan of cash dividends carried out, bonus issued and capitalizing of common reserves either.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Contents
Section I Important Notice, Contents and Paraphrase ................................................................. 2 Section II Company Profile and Main Finnaical Indexes ............................................................. 9 Section III Summary of Company Business .................................................................................. 9 Section IV Discussion and Analysis by the Management Team ................................................. 11 Section V Important Events .......................................................................................................... 27 Section VI Changes in shares and particular about shareholders ............................................... 34 Section VII PreferredStock……………………………………………………………………….47 Section VIII Particulars about Directors, Supervisors,Senior Executives and Employees ...... 35 Section IX Corporate Governance ................................................................................................. 56 Section X Financial Report ............................................................................................................. 51 Section XI Documents available for reference .............................................................................. 51
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 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 Co.,|
|Wuhan Zhongheng Group|Refers to||
|||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 ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section II Company Profile and Main Finnaical Indexes
I. Company information
|||||
|-|-|-|-|
|Short form of the stock|SHEN HUAFA-A, SHEN HUAFA- B|Stock code|000020 200020|
|Stock exchange for listing|Shenzhen Stock Exchange|||
|Name of the Company (in|深圳中恒华发股份有限公司|||
|Chinese)||||
|Short form of the Company||||
||深华发|||
|(in Chinese)||||
|Foreign name of the Company||||
||SHENZHEN ZHONGHENG HUAFA CO., LTD.|||
|(if applicable)||||
|Legal representative|Li Zhongqiu|||
|Registrations add.|411 Bldg., Huafa (N) Road, Futian District, Shenzhen|||
|Code for registrations add|518031|||
|Offices add.|33/F, No. 2 Building of Dachong Business Center, Nanshan District, Shenzhen|||
|Codes for office add.|518057|||
|Company’s Internet Web Site|http://www.hwafa.com.cn|||
|E-mail|hwafainvestor@126.com.cn|||

II. Person/Way to contact
||||
|-|-|-|
||Secretary of the Board|Rep. of security affairs|
|Name|Yang Bin|Niu Yuxiang|
||33/F, No. 2 Building of Dachong Business|33/F, No. 2 Building of Dachong Business|
|Contact add.|||
||Center, Nanshan District, Shenzhen|Center, Nanshan District, Shenzhen|
|Tel.|0755-86360220|0755-86360201|
|Fax.|0755-86360206|0755-86360206|
|E-mail|hwafainvestor@126.com.cn|hwafainvestor@126.com.cn|

III. Information disclosure and preparation place
|||
|-|-|
|Newspaper appointed for information disclosure|China Securities Journal; Securities Times; Hong Kong Commercial Daily|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||
|-|-|
|Website for annual report publish appointed by CSRC|h ttp://www.cninfo.com.cn|
|Preparation place for annual report|Office of the Board of SHENZHEN ZHONGHENG HUAFA CO., LTD.|

 IV. Registration changes of the Company
|||
|-|-|
|Organization code|61883037-2|
||Before the change of controlling shareholders: the main business was production and|
||sales of color TV, printed circuit board and injection molded parts etc. After the change|
|Changes of main business since listing (if||
||of controlling shareholders: the main business gradually adjusted to production and|
|applicable)||
||sales of injection molded parts, foam part (light packaging materials) and LCD whole|
||machine.|
||The Company’s predecessor was Shenzhen Huafa Electronic Co., LTD, which was|
||founded in 1981, initiated and established by three legal persons-- Shenzhen|
||Electronics Group Co., LTD, China Zhenhua Electronic Group Co., LTD and Hong|
||Kong Luks Industrial Co., LTD. In June 2005, Wuhan Zhongheng Group transferred|
|Previous changes for controlling|the 44.12% equity of company, held by original first and second largest shareholder of|
|shareholders (if applicable)|the Company Shenzhen Electronics Group Co., LTD and China Zhenhua Electronic|
||Group Co., LTD, and equity transfer formalities completed in April 2007; Wuhan|
||Zhongheng Group became the controlling shareholder of the Company. In September|
||2007, the company officially changed its name to “Shenzhen Zhongheng Huafa Co.,|
||Ltd”.|

V. Other relevant information
CPA engaged by the Company
|||
|-|-|
|Name of CPA|Shinewing Certified Public Accountants LLC|
||9/F, Block A, Fu Hua Mansion No.8 Chaoyang Men, Bei da jie, Dong Cheng District, Beijing,|
|Offices add. for CPA||
||P.R.China|
|Signing Accountants|Zhang Weijian, Gu Fanqiu|

Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable√ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable√ Not applicable
VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting
error correction or not
□ Yes√ No
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
||2015|2014|Changes over last year|2013|
|Operating income (RMB)|499,455,781.11|694,839,760.10|-28.12%|626,821,044.64|
|Net profit attributable to|-6,731,513.11|7,687,620.27|||
|shareholders of the listed|||-187.56%|-6,517,401.44|
|company(RMB)|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||-31,741,774.80|2,322,082.33|-1,466.95%|-5,934,309.10|
|after deducting non-recurring gains|||||
|and losses(RMB)|||||
|Net cash flow arising from|173,486,015.99|119,492,159.01|||
||||45.19%|-69,353,440.38|
|operating activities(RMB)|||||
|Basic earnings per share|-0.0238|0.0271|||
||||-187.82%|-0.0230|
|(RMB/Share)|||||
|Diluted earnings per share|-0.0238|0.0271|||
||||-187.82%|-0.0230|
|(RMB/Share)|||||
|Return on Equity|-2.27%|2.77%|-5.04%|-2.35%|
||||Changes over end of||
||End of 2015|End of 2014||End of 2013|
||||last year||
|Total assets (RMB)|1,155,089,236.67|1,162,740,984.93|-0.66%|731,348,499.86|
|Net assets attributable to|311,406,562.20|281,351,269.74|||
|shareholder of listed company|||10.68%|273,663,649.47|
|(RMB)|||||

VII. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable√ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable√ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or
Chinese GAAP (Generally Accepted Accounting Principles) in the period.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 VIII. Quarterly main financial index
In RMB
||||||
|-|-|-|-|-|
||First quarter|Second quarter|Third quarter|Fourth quarter|
|Operating income|117,513,081.51|131,221,548.35|140,688,910.96|110,032,240.29|
|Net profit attributable to|||||
||511,851.85|13,665,459.18|5,817,241.98|-26,726,066.12|
|shareholders of the listed company|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||174,494.55|-8,415,206.76|-16,478,039.21|-7,023,023.38|
|after deducting non-recurring gains|||||
|and losses|||||
|Net cash flow arising from|||||
||-2,165,279.32|19,193,873.05|31,031,444.53|125,425,977.73|
|operating activities|||||

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial index disclosed in thecompany’s quarterly report and semi-annual report
□Yes√ No
IX. Items and amounts of extraordinary profit (gains)/loss
√Applicable□ Not applicable
In RMB
||||||
|-|-|-|-|-|
|Item|2015|2014|2013|Note|
|Gains/losses from the disposal of|449,051.44||||
|non-current asset (including the write-off||1,587,819.80|104,043.85||
|that accrued for impairment of assets)|||||
|Governmental subsidy reckoned into current|1,691,800.00||||
|gains/losses (not including the subsidy|||||
|enjoyed in quota or ration according to||4,159,795.00|1,652,600.00||
|national standards, which are closely|||||
|relevant to enterprise’s business)|||||
|Other non-operating income and expenditure|690,149.43||||
|||149,500.69|-1,736,569.94||
|except for the aforementioned items|||||
|Other gain/loss items satisfying the|25,247,171.27||||
|||983,612.12|||
|definition of nonrecurring gain/loss account|||||
|Less: Impact on income tax|3,067,910.45|1,515,189.67|603,166.25||
|Total|25,010,261.69|5,365,537.94|-583,092.34|--|

Concerning the extraordinary profit (gain)/loss defined byQ&A Announcement No.1 on Information Disclosure for Companies
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 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 inQ&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 inQ&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section III Summary of Company Business
I. Main businesses of the company in the reporting period
After years of development, the company has gradually formed two main businesses in industry and property management. Among them, the industrial business mainly includes injection molding, foam pieces (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.
The company's industrial business mainly provides auxiliary products and services for the home appliance industry. With the acceleration of new urbanization process in China and upgrading and updating of household appliance consumption, the home appliance industry will continue to maintain a relatively fast growth; the development of home appliances and other downstream industries provides broad markets for the upstream auxiliary products. By virtue of years of industry resources and technology accumulation, the company conforms to the market demand and optimizes the product structure and performance, and the company's products and services have accepted by the downstream manufacturers such as Gree, Haier, TCL, etc. and possess certain competitiveness in the industry. But it also should be noted that the current injection molding, foam pieces and liquid crystal display business are facing fierce market competition and cost pressures, thecompany’s profitability in industrial business is weaker than expectation, the company needs to further enhance the level of research and development, develop new products, expand downstream channels and cultivate its own brand so as to further enhance the profitability in industrial business. The transformation and upgrading of industrial business requires a lot of financial supports.
On the other hand, the transformation and upgrading and profitability of industrial business are weaker than expectation in recent years, under this circumstance, the company has actively developed the property management business, liquidized the remnant assets, and carried out the decoration and investment promotion of its own property Huafa Building, the property management business has made good profits for the company and became an important strategic business of the company. In order to enhance the profitability, the company intends to further strengthen the professionalism of the company's property business, explore diversified property management model, and timely expand the scale of property lease.
II. Major changes in main assets
1. Major changes in main assets
|||
|-|-|
|Major assets|Note of major changes|
|Equity assets|N/A|
||Transferred assets from the reconstruction of old buildings in Gongming are classified as|
|Fixed assets||
||available for sale assets, the fixed assets in current period have decreased|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||
|-|-|
|Intangible assets|No major change|
||Transferred assets from the reconstruction of Gongming Electronic City are classified as|
|Construction in progress||
||available for sale assets, the constructions in process in current period have decreased|
||Transferred assets from the reconstruction of old buildings in Gongming and Gongming|
|Classified as assets held for sale|Electronic City, the assets classified as available for sale assets in current period have|
||increased|

2. Main overseas assets
□ Applicable√ Not applicable
III. Core Competitiveness Analysis
1. 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.
2. The Company has three plants in Wuhan economic technology park with an area of nearly 90,000 square meters where various famous enterprises are located in this area. Benefiting from radiation radius requirements for processing matching services, the Company enjoys superior and stable customer resources and has established a good long-term cooperative relationship; in particular, its injection molding business and polystyrene businesses have been operated for many years with steady management group and abundant production experiences, which makes the Company enjoying high recognition and annual production capacity and scale in the forefront of Central China.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section IV Discussion and Analysis by the Management Team 1. Introduction
In 2015, the world economy was still in a phase of deep adjustment, the overall growth in emerging market economies slowed, some economic entities had negative growth. China's economy has entered a "new normal", China's economic growth has slowed down, the periodic and structural problems of economy have brought new challenges to China's economic, and the differentiation of regional and industrial economy has become more obvious. In 2015, the home appliance industry has continued the downturn, the traditional demand-driven engine in the industry has flamed out, the new demand-driven engine has not been mature yet, the sales volume of refrigerators, washing machines, air conditioners, television sets and other home appliances has still been weak, and some categories even had negative growth. As an industrial manufacturing enterprise providing supporting products and services for home appliance industry, the Company has actively adapted to the new normal, tackled the toughness, positively responded, and withstood market pressures, thecompany’s overall industrial business has slightly declined in 2015, but the company's overall operating results have significantly increased compared with the same period of last year, which mainly relied on the earnings generated by financial products. In 2015, the company has achieved operating income of 499,455,800 yuan, a decrease of28.12% compared with the same period of last year; operating profits of 33,960,300 yuan, an increase of615.48% compared with the same period of last year, net profits of 33,529,200 yuan, an increase of336.14% compared with the same period of last year.● Injection molding business has realized an annual operation revenue of 192,872,400 yuan, a decrease of 30.01% compared with the same period of last year, when the overall market has a poor performance, the injection molding division has withstood the demand sluggish, policy walk-off, price cuts and other market pressures in home appliance industry, timely taken measures, decisively adjusted the product structure, and introduced the advanced production equipments, implemented automation improvements and process optimization progress, reduced human input and waste of production materials, and improved production efficiency; at the same time, strengthened the fine management, improved product quality, developed effective quality corrective and preventive measures, overcome thecustomers’ demanding quality standards, and won a good reputation from customers; strengthened internal management, introduced competition mechanism, focused on staff training, practically completed the employees logistics services, fully mobilized thestaff’s enthusiasm, improved the staff quality, and strengthened theemployees’ sense of belonging.
● Polystyrene business has realized an annual operation revenue of 61,245,900 yuan, a decrease of18.64% compared with the same period of last year. In the severe challenges of continuous sluggish of home appliances, more intense market competition, constantly rising production costs, and substantial reduce of profit margins, polystyrene division takes market requirement as the guide, actively cooperates with customers to improve the product mix, continues to innovate, focuses on product quality, and forms its own unique competitive advantages. But last year, the horizontal competition was more intense, some colleagues seized some market shares with new equipments and low prices, therefore, thecompany’s performance has declined to some extent. In the future, the company will further improve the product quality, reduce the loss of raw materials, lower the production costs, and ensure its own advantages and market shares through innovative design and product optimization.
● LCD display machine business has realized an annual operation revenue of 186,838,000 yuan, a decrease of29.26% compared with the same period of last year. In the premise of ensuring basic production, the video
division will the video division will focus more energy on the design and development of new products, increase
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 new LCD display series with more sizes and cost advantages and realize mass production, develop the single product size to multiple-series and multi-size production lines, meanwhile, the video division will pay attention to product innovation, and the company now owns LIF series and G series products that the company completely and independently designs and opens the tooling. In the second half of 2015, the video division has successfully reached a cooperation agreement with the international brand “ViewSonic International”, the company is developing from a single customer to diversified customers, which again lays a solid foundation for thecompany’s long-term development.
● Property leasing business has realized an annual operation revenue of 48,600,900 yuan, a decrease of2.68% compared with the same period of last year. Most sites of thecompany’s own property Huafa Building have signed the lease, shops have opened one after another, the sites in idle have substantially reduced, and the average rental price has increased in some extent than the past, but the company's own property Gongming Huafa Electronic City has entered the demolition stage of updating and reconstruction, lessees have continued to remove and the rental income has relatively reduced, therefore, thecompany’s overall rental income of 2015 is at the similar level as the previous years.
II. Main business analysis
1. Introduction
See the “I-Introduction” in “Discussion and Analysis by the Management Team”
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
|||||||
|-|-|-|-|-|-|
||2015||2014|||
||||||Increase/decrease|
|||Ratio in operation||Ratio in operation||
||Amount||Amount||y-o-y|
|||revenue||revenue||
|Total of operation|499,455,781.11||694,839,760.10|||
|||100%||100%|-28.12%|
|revenue||||||
|According to industries||||||
|Display|186,838,010.48|37.41%|264,125,902.82|38.01%|-29.26%|
|Plastic injection||||||
||192,872,402.89|38.62%|275,568,139.15|39.66%|-30.01%|
|hardware||||||
|Foam|61,245,929.61|12.26%|75,274,165.11|10.83%|-18.64%|
|Property leasing|48,600,894.50|9.73%|49,938,626.08|7.19%|-2.68%|
|Scrap income|605,216.55|0.12%|2,649,761.48|0.38%|-77.16%|
|Utilities and other|9,293,327.08|1.86%|27,283,165.46|3.93%|-65.94%|
|According to products||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|Display|186,838,010.48|37.41%|264,125,902.82|38.01%|-29.26%|
|Plastic injection||||||
||192,872,402.89|38.62%|275,568,139.15|39.66%|-30.01%|
|hardware||||||
|Foam|61,245,929.61|12.26%|75,274,165.11|10.83%|-18.64%|
|Property leasing|48,600,894.50|9.73%|49,938,626.08|7.19%|-2.68%|
|Scrap income|605,216.55|0.12%|2,649,761.48|0.38%|-77.16%|
|Utilities and other|9,293,327.08|1.86%|27,283,165.46|3.93%|-65.94%|
|According to region||||||
|Hong Kong|174,132,782.70|34.86%|264,125,902.82|38.01%|-34.07%|
|Central China|269,008,886.38|53.86%|371,258,402.81|53.43%|-27.54%|
|South China|56,314,112.03|11.28%|59,455,454.47|8.56%|-5.28%|

 (2) About the industries, products, or regions accounting for over10% of thecompany’s operating income or operating profit
√Applicable□ Not applicable
In RMB
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease|Increase/decrease|Increase/decrease|
||Operating||||||
|||Operating cost|Gross profit ratio|of operating|of operating cost|of gross profit|
||revenue||||||
|||||revenue y-o-y|y-o-y|ratio y-o-y|
|According to industries|||||||
|Display|186,838,010.48|175,126,608.78|6.27%|-29.26%|-29.04%|-0.30%|
|Plastic injection|||||||
||192,872,402.89|177,046,690.61|8.21%|-30.01%|-29.35%|-0.86%|
|hardware|||||||
|Foam|61,245,929.61|55,230,894.39|9.82%|-18.64%|-17.65%|-1.08%|
|According to products|||||||
|Display|186,838,010.48|175,126,608.78|6.27%|-29.26%|-29.04%|-0.30%|
|Plastic injection|||||||
||192,872,402.89|177,046,690.61|8.21%|-30.01%|-29.35%|-0.86%|
|hardware|||||||
|Foam|61,245,929.61|55,230,894.39|9.82%|-18.64%|-17.65%|-1.08%|
|According to region|||||||
|Hong Kong|174,132,782.70|169,828,679.23|2.47%|-34.07%|-31.18%|-4.09%|
|Central China|269,008,886.38|239,408,026.58|11.00%|-27.54%|-28.95%|1.77%|
|South China|56,314,112.03|8,764,361.27|84.44%|-5.28%|-14.38%|1.65%|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest oneyear’s scope of period-end
□ Applicable√ Not applicable
(3) Income from physical sales larger than income from labors
√ Yes□ No
|||||||
|-|-|-|-|-|-|
||||||Increase/decrease|
|Industries|Item|Unit|2015|2014||
||||||y-o-y|
||Sales volume|Set|427,752|536,764|-20.31%|
|Display|Output|Set|433,807|546,253|-20.58%|
||Storage|Set|27,270|21,215|28.54%|
||Sales volume|Ton|10,572|13,187|-19.83%|
|Plastic injection||||||
||Output|Ton|10,412|13,331|-21.89%|
|hardware||||||
||Storage|Ton|402|562|-28.41%|
||Sales volume|Ton|3,221|3,647|-11.69%|
|Foam|Output|Ton|3,126|3,789|-17.50%|
||Storage|Ton|284|379|-25.02%|

 Reasons for y-o-y relevant data with over30% changes
□ Applicable√ Not applicable
(4) Fulfillment of thecompany’s signed significant sales contracts up to this reporting period
□ Applicable√ Not applicable
(5) Constitute of operation cost
Classification of products
Classification of products
In RMB
||||||||
|-|-|-|-|-|-|-|
|||2015||2014|||
|||||||Increase/decrease|
|Industries|Item||Ratio in operation||Ratio in operation||
|||Amount||Amount||y-o-y|
||||cost||cost||
|Display|Raw materials|166,905,693.27|95.31%|238,361,408.90|96.59%|-1.28%|
|Display|Labor wages|4,676,548.70|2.67%|4,277,251.56|1.73%|0.94%|
|Display|Depreciation|1,028,419.25|0.59%|1,228,205.02|0.50%|0.09%|
|Plastic injection|Raw materials|152,630,151.77|86.21%|212,169,010.71|84.66%|1.54%|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||
|-|-|-|-|-|-|-|
|hardware|||||||
|Plastic injection|||||||
||Labor wages|11,370,871.26|6.42%|14,220,363.10|5.67%|0.75%|
|hardware|||||||
|Plastic injection|||||||
||Depreciation|5,150,439.15|2.91%|5,275,408.51|2.11%|0.80%|
|hardware|||||||
|Foam|Raw materials|32,237,281.52|58.37%|44,025,375.89|65.64%|-7.27%|
|Foam|Labor wages|7,477,324.02|13.54%|4,224,487.03|6.30%|7.24%|
|Foam|Depreciation|1,687,918.28|3.06%|1,858,016.51|2.77%|0.29%|
|Foam|Energy|6,561,685.46|11.88%|7,144,911.48|10.65%|1.23%|

 Explanation
The Company's main business cost is RMB 407,404,193.78, including RMB 175,126,608.78Yuan for displays,RMB177,046,690.61 Yuan for injection-molded parts, and RMB55,230,894.39Yuan forfoam parts.
(6) Whether the changes in the scope of consolidation in Reporting Period
√ Yes□ No
Compared with the previous year, the sale was reduced byYutianHengHuaCompany this year.
(7) Major changes or adjustment in business, product or service of the Company in Reporting Period□ Applicable√ Not applicable
(8) Major sales and main suppliers
Major sales client of the Company
|||
|-|-|
|Total top five clients in sales (RMB)|400,840,147.45|
|Proportion in total annual sales volume for top five clients|80.26%|

 Information of top five clients of the Company
|||||
|-|-|-|-|
|Serial|Name|Sales (RMB)|Proportion in total annual sales|
|1|NO.1|163,903,060.99|32.82%|
|2|NO.2|150,355,798.58|30.10%|
|3|NO.3|35,293,606.47|7.07%|
|4|NO.4|27,737,318.67|5.55%|
|5|NO.5|23,550,362.74|4.72%|
|Total|--|400,840,147.45|80.26%|

Other situation of main clients
□ Applicable√ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Main suppliers of the Company
|||
|-|-|
|Total purchase amount from top five suppliers (RMB)|241,822,342.22|
|Proportion in total annual purchase amount for top five||
||79.52%|
|suppliers||

Information of top five suppliers of the Company
|||||
|-|-|-|-|
|Serial|Name|Purchase (RMB)|Proportion in total purchase|
|1|NO.1|129,770,684.32|42.67%|
|2|NO.2|73,789,241.50|24.27%|
|3|NO.3|16,987,480.19|5.59%|
|4|NO.4|13,922,820.51|4.58%|
|5|NO.5|7,352,115.70|2.42%|
|Total|--|241,822,342.22|79.52%|

 Other notes of main suppliers
□ Applicable√ Not applicable
3. Expenses
In RMB
||||||
|-|-|-|-|-|
||||Increase/decrease||
||2015|2014||Note of major changes|
||||y-o-y||
|Sales expense|11,427,705.20|11,512,229.16|-0.73%||
|Management expense|42,591,764.80|39,200,279.02|8.65%||
|Financial expense|48,393,716.52|39,784,553.27|21.64%||

4.R&D investment
□ Applicable√ Not applicable
5. Cash flow
In RMB
|||||
|-|-|-|-|
|Item|2015|2014|Y-o-y changes|
|Subtotal of cash in-flow from|809,852,026.90|559,888,802.08||
||||44.65%|
|operation activity||||
|Subtotal of cash out-flow from|636,366,010.91|440,396,643.07||
||||44.50%|
|operation activity||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||
|-|-|-|-|
|Net cash flow from operation|173,486,015.99|119,492,159.01||
||||45.19%|
|activity||||
|Subtotal of cash in-flow from|899,643.49|1,925,000.00||
||||-53.27%|
|investment activity||||
|Subtotal of cash out-flow from|28,607,045.58|6,526,605.58||
||||338.31%|
|investment activity||||
|Net cash flow from investment|-27,707,402.09|-4,601,605.58||
||||-502.12%|
|activity||||
|Subtotal of cash in-flow from|1,392,607,137.79|971,853,411.47||
||||43.29%|
|financing activity||||
|Subtotal of cash out-flow from|932,953,458.09|1,117,002,557.02||
||||-16.48%|
|financing activity||||
|Net cash flow from financing|459,653,679.70|-145,149,145.55||
||||416.68%|
|activity||||
|Net increased amount of cash|610,454,809.04|-28,312,172.74||
||||2,256.16%|
|and cash equivalent||||

Main reasons for y-o-y major changes in aspect of relevant data
√Applicable□ Not applicable
The reason why cash inflow from operating activities has increased compared with the same period of last year is because the foreign exchange verification and payments paid for another need to be taken back and then returned.
The reason why cash outflow from operating activities has increased compared with the same period of last year is because the foreign exchange verification and payments paid for another need to be taken back and then returned.
The reason for increase in net cash flow generated from business activities compared to the last year: earlyrecovery of part ofthe accounts receivable.
The reason why cash inflow from investing activities has increased compared with the same period of last year is because of the redemption of financial products in current period.
The reason why net cash flow from investing activities has increased compared with the same period of last year is because of the redemption of financial products in current period.
The reason why cash inflow from financing activities has decreased compared with the same period of last year is because long-term loans was borrowed in the same period of last year.
The reason for decrease in net cash flow generated from financing activities compared tothe last year: repayment of part of the bank loans.
The reason for net increase in cash and cash equivalents compared to the same period last year: increase in cash flowgeneratedfrom business activities compared to the last year.
Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
□ Applicable√ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 III. Analysis of the non-main business
√Applicable□Not applicable
In RMB
||||||
|-|-|-|-|-|
||Amount|Ratio in total profit|Note|Whether be sustainable|
||||Mainly due to financial||
||||products to generate||
|Investment income|25,247,171.27|-727.71%||No|
||||investment and financial||
||||gains||
||||Mainly due to current||
|Asset impairment|1,346,128.24|-38.80%|accrued account receivable|No|
||||bad debt losses||
|Non-operating|||Mainly due to government||
||3,163,848.99|-91.19%||No|
|income|||grants||
|Non-operating|||Mainly due to fixed assets||
||332,848.12|-9.59%||No|
|expense|||disposal losses||

IV. Assets and liability
1. Major changes of assets composition
In RMB
||||||||
|-|-|-|-|-|-|-|
||End of 2015||End of 2014||||
|||||Ratio in|Ratio||
|||Ratio in||||Notes of major changes|
||Amount||Amount|total|changes||
|||total assets|||||
|||||assets|||
||662,115,464.19||28,819,357.68|||This period of redemption of financial|
|Monetary fund||57.32%||2.48%|54.84%|products, currency funds withdrawn|
|||||||from circulation|
|Account|109,965,992.14||112,425,468.57||||
|||9.52%||9.67%|-0.15%||
|receivable|||||||
|Inventory|27,132,125.91|2.35%|30,880,050.55|2.66%|-0.31%||
|Investment|30,019,906.66||31,274,663.74||||
|||2.60%||2.69%|-0.09%||
|property|||||||
|Long-term equity|||||||
|||0.00%||0.00%|0.00%||
|investment|||||||
|Fix assets|110,607,425.50|9.58%|186,438,814.34|16.03%|-6.45%||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|Construction in|654,356.00||2,853,356.00|||
|||0.06%||0.25%|-0.19%|
|process||||||
|Short-term loans|119,479,107.41|10.34%|138,114,376.32|11.88%|-1.54%|
|Long-term loans|554,700,000.00|48.02%|585,300,000.00|50.34%|-2.32%|

2. Assets and liability measured by fair value
□ Applicable√ Not applicable
V. Investment
1. Overall situation
□ Applicable√ Not applicable
2. The major equity investment obtained in the reporting period
□ Applicable√ Not applicable
3. The major non-equity investment doing in the reporting period
□ Applicable√ Not applicable
4. Financial assets investment
(1) Securities investment
□ Applicable√ Not applicable
The Company has no securities investment in the Period.
(2) Derivative investment
□ Applicable√ Not applicable
The Company has no derivatives investment in the Period.
5. Application of raised proceeds
□ Applicable√ Not applicable
The Company has no application of raised proceeds in the Period.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable√ Not applicable
The Company had no sales of major assets in the reporting period.
2. Sales of major equity
□ Applicable√ Not applicable
VII. Analysis of main holding company and stock-jointly companies
√Applicable□ Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over10%
In RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Company||Main||||Operating|Operating||
||Type||Register capital|Total assets|Net Assets|||Net profit|
|name||business||||revenue|profit||
|Hengfa|||||||||
|||Production|||||||
|Technology|Subsidiary||181,643,111.00|485,573,519.05|204,144,182.78|443,141,669.08|1,063,514.54|2,275,925.11|
|||sales|||||||
|company|||||||||
|Huafa|||||||||
|||Property|||||||
|Property|Subsidiary||1,000,000.00|448,655.20|-84,539.27|2,258,944.00|434,709.63|434,275.79|
|||management|||||||
|Company|||||||||
|Huafa Lease||Property|||||||
||Subsidiary||1,000,000.00|1,900,692.20|-5,026,990.71||||
|Company||management|||||||
|Huafa|||||||||
|||Property|||||||
|Hengtian|Subsidiary||1,000,000.00|999,103.80|999,103.80||-836.20|-836.20|
|||management|||||||
|Company|||||||||
|Huafa|||||||||
|||Property|||||||
|Hengtai|Subsidiary||1,000,000.00|999,829.55|999,829.55||-110.45|-110.45|
|||management|||||||
|Company|||||||||

Particular about subsidiaries obtained or disposed in report period
√Applicable□Not applicable
||||
|-|-|-|
||The way of getting and treating subsidiary|Influence on overall product and|
|Name of company|||
||in the reporting|performance|
|Yutian Henghua Company|Sales|No significant impact|

Notes of holding and shareholding companies
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 VIII. Structured vehicle controlled by the Company
□ Applicable√ Not applicable
IX. Future Development Prospects
(I) Industry development and market analysis
In 2016, the global economy is still in a slow recovery phase, China's economic growth transforms from high speed to medium and high speed and steps in a new normal of economic development, external demand weakness will continue, investment growth will return to normal, and the overall consumption will remain stable. The intelligent manufacturing, internet, big data, cloud computing, internet of things, and new materials shall profoundly changeChina’s manufacturing industry as the representative of a new round of technological revolution and industrial revolution; at the same time, personalized and diversified consumption era has come, high-end, intelligent and energy-saving household appliances have become a “new trend” of home appliance industry. At the beginning of the year, the central government has regarded the “de-stocking of real estate” as one of the five tasks in 2016 and unveiled various supporting policies, in this context, the home appliance industry is expected to further grow because decorating new home can bring new demands for home appliances. The Company's industrial production and processing businesses are labor-intensive, technology-intensive, and semi-automatic production mode, orders mainly rely on a large number of domestic renowned large-scale home appliance manufacturers, the scale is large, and the business is stable. As a traditional industry with intense market competition, the core of solving the developing dilemma is to upgrade technology, enhance the added value of technology, and improve the profitability. Under the background of downstream consumer demand upgrade, it will be one of the strategic targets of thecompany’s industrial business development to further consolidate the industry position by adjusting and improving the product structure, increasing the development efforts to the new products, improving the production processes, enhancing the productivity, expanding the downstream channels, cultivating its own brands, and actively seeking for the transformation and upgrading.
Over the years, the Company has focused on both manufacturing and property management, except for producing and selling the LCD monitors, injection molding, and foam parts, the property leasing has always been the key pillar of business, the own property is the company's core assets, the operating profits of property leasing business has always been greater than the industrial business profits. It is thecompany’s long-term strategic goal to make full use of the existing property and land assets to continue to expand and upgrade the operation, leasing and service businesses of the commercial real estate, and further become the long-term and stable source of incomes for the company step by step.
(II) The new annual business plan
◆Continue to promote the urban renewal project
The renewal unit project for Huafa Area, Gong Ming Street, Guangming New District, Shenzhen shall accelerate and promote the schedule of project removal and reconstruction, strengthen the communication with cooperation developers such as Shenzhen Vanke, Vanke Guangming and Wuhan Zhongheng Group, and accelerate the handling of various procedures for the project; the renewal project of Huafa building at Huaqiang Bei street, Futian district, Shenzhen shall continue to coordinate with some small owners to finish the compensation and resettlement of removal, and strive to make achievements for the subject declaration at an early date.
◆Promote strategic cooperation and enhance the own brand influence
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 In 2016, the company will strengthen and promote the cooperation depth with existing customers, make full use of the advantages of internal coordination, optimize the cooperation model with distributors, and comprehensively promote the company's own brand HSO; improve thedistributors’ degree of adaptability by optimizing the cooperation mechanism and mode, and ultimately achieve a win-win goal of the company and the customer sales.◆Continue to steadily develop the industrial business
Firstly, ensure the stability of the existing customers, continue to maintain the existing order quotas from Haier, Gree, AOC, and TCL, comprehensively continue and introduce the customer to make more orders for the newly developed products, strive for more market shares; secondly, seek for the new business growth points, entirely expand the scope of business, actively develop the markets, and selectively and targetedly carry on and develop the new OEM businesses in order to achieve the annual tasks based on the rich OEM experience over the years, the current resources for industrial production, the superior geographic position of central China, and the study and attempts in 2014.
◆Continue to focus on the production management
Carry the energy-saving and cost-reducing through to the end, accelerate the technical transformation progress of production equipment, further carry out the automated management, improve the production processes, reduce the energy consumption, and cut the payroll to improve efficiency so as to reduce the production costs, enhance the productivity, improve the product quality, and ensure the product quality, costs and delivery can better meet thecustomers’ requirements; In the market environment that the demands for end products are upgrading, focus on the development and promotion of new products, enlarge the product categories and product lines, enhance the product diversification as needed, utilize the factory cost advantage and internet channel of e-commerce, and comprehensively promote its own brand in the market expansion and marketing.
◆Positively reinforce the property business
In the situation that the industrial business is transforming and upgrading and the profitability weaker than expected in recent years, the company actively develops the property business, revitalizes the stock assets, refits its own property– Huafa building, and attracts the investment, the property business contributes good profits to the company and becomes thecompany’s important strategic business. In order to enhance the profitability, the company will further promote the specialty of property business, explore the diversified property management modes, and timely enlarge the property leasing scale.
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√Applicable□ Not applicable
||||||
|-|-|-|-|-|
|Time|Way||Type|Basic situation index of investigation|
|2015-01-01|Telephone communication||Individual|N/A|
|Reception (times)||0|||
|Number of hospitality||0|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||
|-|-|
|Number of individual reception|0|
|Number of other reception|0|
|Disclosed, released or let out major undisclosed||
||No|
|information||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section V. Iimportant Events
I. Profit distribution plan of common stock and capitalizing of common reserves plan
Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during the Reporting Period
□ Applicable√ Not applicable
Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years (including the reporting period)
In recent three years the Company accumulated retained net profit is negative and it did not have the conditions for profit distribution, so the Company did not undertake profit allocation in recent years and no capital reserve shall be converted into share capital either. Cash dividend of common stock in latest three years (including the reporting period)
In RMB
|||||||
|-|-|-|-|-|-|
|||Net profit|Ratio in net profit|||
|||attributable to|attributable to|||
|||common stock|common stock|||
|Year for bonus|Amount for cash|shareholders of|shareholders of|Amount for cash|Proportion for cash|
|shares|bonus (tax included)|listed company in|listed company|bonus by other ways|bonus by other ways|
|||consolidation|contained in|||
|||statement for bonus|consolidation|||
|||year|statement|||
|2015|0.00|-6,731,513.11|0.00%|0.00|0.00%|
|2014|0.00|7,687,620.27|0.00%|0.00|0.00%|
|2013|0.00|-6,517,401.44|0.00%|0.00|0.00%|

 The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is positive but no plan of cash dividend proposed of common stock
□ Applicable√ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
□ Applicable√ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the year.
III. Implementation of commitment
1. Commitments that the company, shareholders, actual controller, offeror, directors, supervisors, senior
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 management or other related parties have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period
√Applicable□ Not applicable
||||||||
|-|-|-|-|-|-|-|
|||Type of|||||
|||||Commitmen|Commitmen||
|Commitments|Promise||Content of commitments|||Implementation|
|||commitments||t date|t term||
|Commitments for|||||||
|share reform|||||||
||||Within 1 year after transferred of||From April||
||||this equity acquisition: 1. Injected||12, 2007 to||
||Wuhan||relevant capital of plastic injection||April 11,||
||Zhongheng||business into the Company;|2007-03-29|2008; From|Implemented|
||Group||2.70% equity of the Hengsheng||May 13,||
||||Photoelectricity will inject into||2014 to May||
||||the Company.||12, 2015||
||||The enterprise and its subsidiaries||||
||||will not participate directly or||||
||||indirectly in operation of the||||
||||business with competitive of Shen||Implement||
||Wuhan||Huafa and its controlling||since 12||
||Zhongheng||subsidiary concerned, and not to|2007-03-29|April 2007|Implementing|
||Group||damage the interest of the Shen||throughout||
|Commitments in|||Huafa and its controlling||the year||
|report of|||subsidiary by making use of the||||
|acquisition or equity|||potential controlling-ship of the||||
|change|||Shen Huafa either||||
||||The enterprise and its subordinate||||
||||enterprise shall avoid a related||||
||||transaction as far as possible with||||
||||Shen Huafa and its controlling||||
||||subsidiary, as for the related||||
||||||Implement||
||||dealings occurred inevitable or||||
||Wuhan||||since 12||
||||have reasonable cause, the||||
||Zhongheng|||2007-03-29|April 2007|Implementing|
||||enterprise promise to follow the||||
||Group||||throughout||
||||principle of fair-ness, justice and||||
||||||the year||
||||open-ness, signed the agreement||||
||||in line with the laws, perform||||
||||legal program, fulfill information||||
||||disclosure obligation and relevant||||
||||approval procedures according to||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|||the relevant laws, regulations and||||
|||“Listing Rules” of the Shenzhen||||
|||Stock Exchange, guarantee not to||||
|||damage the legal interest of Shen||||
|||Huafa and its shareholders||||
|||through related transactions||||
|||After acquisition and assets||||
|||restructuring, guarantee to have an||Implement||
||Wuhan|independent staff, owns||since 12||
||Zhongheng|independent and completed assets,|2007-03-29|April 2007|Implementing|
||Group|and independent in aspect of||throughout||
|||business, financial and institution||the year||
|||from Shen Huafa||||
|Commitments in||||||
|assets reorganization||||||
|Commitments make||||||
|in initial public||||||
|offering or||||||
|re-financing||||||
|Equity incentive||||||
|commitment||||||
|Other commitments||||||
|for medium and||||||
|small shareholders||||||
|Completed on||||||
||Y|||||
|time(Y/N)||||||

2. Concerning assts or project of the Company, which has profit forecast, and reporting period still in forecasting period, explain reasons of reaching the original profit forecast
□ Applicable√ Not applicable
IV. Non-operational fund occupation from controlling shareholders and its related party□ Applicable√ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors (if applicable) for “Qualified Opinion” that issued by CPA
√ Applicable□Not applicable
1、Opinions ofthe Board of Directors
On the basis of relevant information, based on the principle of strictness and cautiousness,ShineWing Certified Public
Accountants (Special Ordinary Partnership)issued the report indicating inability to express audit opinion. The Board of Directors
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 expressed the understanding hereto.The Report conforms to theAuditing Standards ofCertified Public Accountants of the People's Republic of China and other relevant laws and regulations, and cautiously reflects the Company's financial situation.The Board of Directors will take effective measures to eliminate the influence of the abovementioned uncertainty on the Company as soon as possible.
2、Opinions of the Board of Supervisors
The report indicating inability to express audit opinion, issued by ShineWing Certified Public Accountants (Special Ordinary Partnership), fully reveals the Company's financial risks.We recognize the matters for which the Audit Reportis unable to express opinions, and at the same time also agree on the special explanation made by the Board of Directors of the Company relating to these. We hope the Board of Directors and management to take effective measures as soon as possible, to eliminate and improve the content mentioned in thepassages for those matters unable to express opinions and to safeguard the interests of the vast investorsin a timely manner.
3、Opinions of the Independent Directors
The explanation made by the Board of Directors of the Company on the matters related to the audit opinions is objective and true, and in accordance with the Company's actual situation.Independent directorsagree with the special explanation made by the Board of Directors of the Company on the matters related to the audit report indicating inability to express audit opinion issued by ShineWing Certified Public Accountants (Special Ordinary Partnership); Independent directors hope the Board of Directors and management toeliminate and improve the matters unable to express opinionsin an active, effective and steady manner according to the relevant solutionset by the Board of Directorsand management, timelyperform the information disclosure according to clearing situation, and take necessary measures to make the Company maintain sustainable, stable and healthy development, and safeguard the interests of the company and the vast investors.
VI. Particulars about the changes in aspect of accounting policy, estimates and calculation method compared with the financial report of last year
□ Applicable√ Not applicable
No particulars about the changes in aspect of accounting policy, estimates or calculation method in Period.
VII. Major accounting errors within reporting period that needs retrospective restatement□ Applicable√ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
VIII. Compare with lastyear’s financial report; explain changes in consolidationstatement’s scope
√Applicable□ Not applicable
Compared with last year, the Company sold Yutian Henghua Company in the period.
IX. Appointment and non-reappointment (dismissal) of CPA
Accounting firm appointed
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||
|-|-|
|Name of domestic accounting firm|Shine Wing Certified Public Accountants LLC|
|Remuneration for domestic accounting firm (in 10||
||48|
|thousand Yuan)||
|Continuous life of auditing service for domestic||
||10 years|
|accounting firm||
|Name of domestic CPA|Zhang Weijian, Gu Fanqiu|
|Name of foreign accounting firm (if applicable)|N/A|
|Continuous life of auditing service for foreign||
||N/A|
|accounting firm (if applicable)||
|Name of foreign CPA|N/A|

Re-appointed accounting firms in this period
□Yes√No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable□ Not applicable
In 2015, the Company employed Shine Wing Certified Public Accountants LLC as internal control audit institutions and the expense of internal control audit was RMB 14.
X. Particular about suspended and delisting after annual report disclosed
□ Applicable√ Not applicable
XI. Bankruptcy reorganization
□ Applicable√ Not applicable
No bankruptcy reorganization for the Company in reporting period
XII. Significant lawsuits and arbitrations of the Company
□Applicable √Not applicable
No significant lawsuits and arbitrations occurred in the reporting period.
XIII. Penalty and rectification
√Applicable□Not applicable
||||||||
|-|-|-|-|-|-|-|
||||Type of||||
|||||Conclusion (if||Index of|
|Name|Type|Reason|investigation and||Date of disclosure||
|||||applicable)||disclosure|
||||punishment||||
|Shenzhen|The Company|Suspected of|Investigated or|N/A|2016-01-19|http://www.cninf|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||
|-|-|-|-|
|Zhongheng Huafa|being involved in g|ot administrativeunishment fromChina SecuritiesRegulatoryCommission|o.com.cn/cninfo-|
|Co., Ltd.|illegal disclosure p||new/disclosure/sz|
||of information||se_main/bulletin_|
||||detail/true/12019|
||||23299?announce|
||||Time=2016-01-1|
||||9|

XIV. Integrity of the company and its controlling shareholders and actual controllers
□ Applicable√ Not applicable
XV. Implementation of thecompany’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. XVI. Major related transaction
1. Related transaction with routine operation concerned
√Applicable□Not applicable
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Whethe|||||
|||||||||Trading|r over|||||
|||||||Relatedtransacti|||||Availabl|||
|||||||||limit|the|Clearin|||Index|
|||Type of|Content||||Proporti|||g form|e|Date of||
||||of|Pricing|Related|on|on in|approve|approve||||of|
|Related|Relation|related|related|principl|transacti|amount|similar|||for|similar|disclosu||
|party|ship|transacti||||||d (in 10|d|related|||disclos|
|||on|transacti|e|on price|(in 10|transacti|||transacti|market|re||
||||on|||thousand Yuan)|ons|thousan|limited||||ure|
|||||||||||on|price|||
|||||||||d Yuan)|or not|||||
||||||||||(Y/N)|||||
||||||||||||||http://w|
||||||||||||||ww.cni|
||Sharing||||||||||||nfo.co|
||the||||||||||||m.cn/cn|
|||||Synchro||||||||||
||same||Purchasi|||||||Telegra|||info-ne|
|HK||Purchas||nized||||||||2015-04||
||controlli||ng LCD||12,796|12,796|77.42%|50,001|No|phic|——||w/discl|
|Yutian||e||with the||||||||-28||
||ng||monitors|||||||transfer|||osure/s|
|||||market||||||||||
||sharehol||||||||||||zse_ma|
||der||||||||||||in/bulle|
||||||||||||||tin_deta|
||||||||||||||il/true/1|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||||200920|
||||||||||||||930?an|
||||||||||||||nounce|
||||||||||||||Time=2|
||||||||||||||015-04-|
||||||||||||||28|
||||||||||||The|||
||||||||||||average|||
||||||||||||market|||
||||||||||||price|||
||||||||||||refers to|||
||||||||||||the|||
||||||||||||price of|||
||||||||||||same|||
||||||||||||specific|||
||||||||||||ations|||
|||||Confirm|||||||which is|||
|||||ed with|||||||searche|||
|||||1% of|||||||d from|||
|||||current|||||||through|||
||Sharing|||market|||||||the|||
||the|||average|||||||world|||
|Hengshen||||||||||||||
||same||Purchasi|price in||||||Telegra|famous||Same|
|g||Purchas||||||||||2015-04||
||controlli||ng LCD|principl|273|273|1.65%|9,740|No|phic|professi||as|
|Photoelec||e||||||||||-28||
||ng||monitors|e, and||||||transfer|onal||above|
|tricity||||||||||||||
||sharehol|||refer to|||||||market|||
||der|||both|||||||survey|||
|||||their|||||||compan|||
|||||bargaini|||||||y|||
|||||ng|||||||website|||
|||||power|||||||http://w|||
||||||||||||ww.wits|||
||||||||||||view.co|||
||||||||||||m|||
||||||||||||recogni|||
||||||||||||zed|||
||||||||||||authorit|||
||||||||||||y in the|||
||||||||||||industry|||
||||||||||||and|||
||||||||||||LCD|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||professi|||
||||||||||||onal|||
||||||||||||market|||
||||||||||||survey|||
||||||||||||compan|||
||||||||||||y|||
||||||||||||website|||
||||||||||||http://w|||
||||||||||||ww.wits|||
||||||||||||view.co|||
||||||||||||m|||
|||||Accordi||||||||||
||Sharing|||||||||||||
||||Sales|ng to||||||||||
||the|||||||||||||
||||LCD|the||||||||||
||same|||||||||Telegra|||Same|
|HK|||overall|custome||||||||2015-04||
||controlli|Sales|||16,390|16,390|87.72%|38,052|No|phic|——||as|
|Yutian|||monitor|r sales||||||||-28||
||ng|||||||||transfer|||above|
||||machine|order||||||||||
||sharehol|||||||||||||
||||set|price||||||||||
||der|||||||||||||
|||||sure||||||||||
|Total||||--|--|29,459|--|97,793|--|--|--|--|--|
|Detail of sales return with major||||||||||||||
|||||N/A||||||||||
|amount involved||||||||||||||
|||||In the reporting, Hengfa Technology purchased LCD from HK Yutian with $ 20,580,000||||||||||
|Report the actual implementation of||||||||||||||
|||||approximately, 26.73% of the annual amount predicted at the beginning of the year;||||||||||
|the daily related transactions which||||||||||||||
|||||purchased LCD from Hengsheng Photoelectricity with $ 420,000 approximately, 2.8% of||||||||||
|were projected about their total||||||||||||||
|||||the annual amount predicted at the beginning of the year; sold LCD whole machine to HK||||||||||
|amount by types during the reporting||||||||||||||
|||||Yutian with $ 26,270,000 approximately, 44.83% of the annual amount predicted at the||||||||||
|period(if applicable)||||||||||||||
|||||beginning of the year.||||||||||
|Reasons for major differences||||||||||||||
|between trading price and market||||N/A||||||||||
|reference price||||||||||||||

2. Related transactions by assets acquisition and sold
√Applicable□Not applicable
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||||Book|Appraisal|||Transacti|||
||||||||Transfer|Related||||
|||Related||||||||||
||||||value of|value of|||on|||
|Related|Related||Related||||price (in|transactio||||
|||transactio||Pricing|the assets|the assets|||gains/loss|Date of|Index of|
|transactio|relationsh||transactio||||10|n||||
|||n||principal|transferre|transferre|||es (in 10|disclosure|disclosure|
|n parties|ip||n content||||thousand|settlement||||
|||type|||d (in 10|d (in 10|||thousand|||
||||||||Yuan)|mode||||
||||||thousand|thousand|||Yuan)|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||||Yuan)|Yuan)||||||
||||||||||||http://ww|
||||||||||||w.cninfo.|
||Control||||||||||com.cn/c|
|Wuhan|by same|||Determin|||||||ninfo-ne|
|New|controllin|||e by two|||||||w/disclos|
|Oriental|g|Assets|Shop|parties|||||||ure/szse_|
|||||||||||2015-03-||
|Property|sharehold|acquisiti|purchasin|based on|1,307|2,565|2,500|In cash|0||main/bull|
|||||||||||19||
|Develop|er and|on|g|the|||||||etin_detai|
|ment Co.,|ultimate|||market|||||||l/true/120|
|Ltd.|controllin|||price|||||||0714860?|
||g party||||||||||announce|
||||||||||||Time=20|
||||||||||||15-03-19|
|Reasons of major difference of the transfer||||||||||||
|price and book value or the appraisal value||||Not applicable||||||||
|(if applicable)||||||||||||
|Impact on Company’s operation results and||||This transaction is an asset acquisition transaction, a form of assets increase, another||||||||
|financial status||||form of assets decrease, which does not affect operating results.||||||||
|If related transactions involving the||||||||||||
|performance of the contract, the||||||||||||
|||||Not applicable||||||||
|performance implementation in the||||||||||||
|reporting period||||||||||||

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
Whether has non-operating contact of related credit and debt or not
□ Yes√ No
The Company has no non-operating 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.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 XVII. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable√ Not applicable
No trusteeship for the Company in reporting period
(2) Contract
□ Applicable√ Not applicable
No contract for the Company in reporting period
(3) Leasing
□ Applicable√ Not applicable
No leasing for the Company in reporting period
2. Major guarantees
√Applicable□ Not applicable
(1) Guarantees
In 10 thousand Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)|||||||||
|||||||||Guarante|
||Related||||||||
||||Actual date of|||||e for|
||||||||Implemen||
|Name of the Company|Announcement|Guarantee|happening (Date|Actualguarantee|Guarantee|Guarantee||related|
|guaranteed||limit|of signing||type|term|ted (Y/N)||
||disclosure||agreement)|limit||||party|
||date||||||||
|||||||||(Y/N)|
|N/A|||||||||
|Guarantee of the Company and the subsidiaries|||||||||
|||||||||Guarante|
||Related||||||||
||||Actual date of|||||e for|
||||||||Implemen||
|Name of the Company|Announcement|Guarantee|happening (Date|Actualguarantee|Guarantee|Guarantee||related|
|guaranteed||limit|of signing||type|term|ted (Y/N)||
||disclosure||agreement)|limit||||party|
||date||||||||
|||||||||(Y/N)|
|Wuhan Hengfa|||||Joint liability||||
||2015-04-28|30,000||7,887.91||1 year|No|No|
|Technology Co., Ltd.|||||guarantee||||
|Guarantee of the subsidiaries for the subsidiaries|||||||||
|||||||||Guarante|
||Related||||||||
||||Actual date of||||||
|Name of the Company|Announce|Guarantee|happening (Date|Actual|Guarantee|Guarantee|Implemen|e for|
||ment|||guarantee|||||
|guaranteed||limit|of signing||type|term|ted (Y/N)|related|
||disclosure|||limit|||||
||||agreement)||||||
||date|||||||party|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|||||(Y/N)|
|||Total amount of actual|||
|Total amount of approving|||||
||30,000|occurred guarantee for|20,926.27||
|guarantee for subsidiaries in report|||||
|||subsidiaries in report period|||
|period (C1)|||||
|||(C2)|||
|||Total balance of actual|||
|Total amount of approved|||||
||30,000|guarantee for subsidiaries at|7,887.91||
|guarantee for subsidiaries at the|||||
|||the end of reporting period|||
|end of reporting period (C3)|||||
|||(C4)|||
|Total amount of guarantee of the Company( total of three abovementioned guarantee)|||||
|Total amount of approving||Total amount of actual|||
||30,000||20,926.27||
|guarantee in report period||occurred guarantee in report|||
|(A1+B1+C1)||period (A2+B2+C2)|||
|Total amount of approved||Total balance of actual|||
||30,000||7,887.91||
|guarantee at the end of report||guarantee at the end of|||
|period (A3+B3+C3)||report period (A4+B4+C4)|||
|The proportion of the total amount of actually guarantee in the net|||||
|||25.05%|||
|assets of the Company (that is A4+ B4+C4)|||||
|Including:|||||
|Amount of guarantee for shareholders, actual controller and its||0|||
|related parties(D)|||||
|The debts guarantee amount provided for the guaranteed parties||0|||
|whose assets-liability ratio exceed 70% directly or indirectly(E)|||||
|Proportion of total amount of guarantee in net assets of the||0|||
|Company exceed 50%(F)|||||
|Total amount of the aforesaid three guarantees(D+E+F)||0|||
|Explanations on possibly bearing joint and several liquidating|||||
|||N/A|||
|responsibilities for undue guarantees (if applicable)|||||
|Explanations on external guarantee against regulated procedures|||||
|||N/A|||
|(if applicable)|||||

Explanation on guarantee with composite way
(2) Guarantee outside against the regulation
□Applicable√Not applicable
No guarantee outside against the regulation in Period.
3. Entrust others to cash asset management
(1) Trust financing
√Applicable□Not applicable
In 10 thousand Yuan
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Amount||||
|||||||||of reserve|||Actual|
||||||||Principal|for|||collect|
||Whether|||||||||Actual||
||||Trust|||Criteria|actually|devaluati|||ed|
||related||||||||Anticipat|gains/loss||
|Name||Type|financing|Start date|End date|for fixing|collected|on of|||gains/l|
||trade or||||||||ed income|es in||
||||amount|||reward|in the|withdrawi|||osses|
||not|||||||||period||
||||||||Period|ng (if|||in|
|||||||||applicable|||period|
|||||||||)||||
|||Trust||2014-12-|2015-09-|Accordin||||||
|CITIC|No||10,000||||10,000||0|856.67|856.67|
|||financial||||g to the||||||
|Trust||||26|08|||||||
|||products||||contract||||||
|||Trust||2014-12-|2015-09-|Accordin||||||
|CITIC|No||10,000||||10,000||0|856.67|856.67|
|||financial||||g to the||||||
|Trust||||26|08|||||||
|||products||||contract||||||
|||Trust||2014-12-|2015-09-|Accordin||||||
|CITIC|No||10,000||||10,000||0|856.67|856.67|
|||financial||||g to the||||||
|Trust||||26|08|||||||
|||products||||contract||||||
|||Trust||2014-12-|2015-09-|Accordin||||||
|CITIC|No||10,000||||10,000||0|856.66|856.66|
|||financial||||g to the||||||
|Trust||||26|08|||||||
|||products||||contract||||||
|||Trust||2014-12-|2015-09-|Accordin||||||
|CITIC|No||10,000||||10,000||0|856.66|856.66|
|||financial||||g to the||||||
|Trust||||26|08|||||||
|||products||||contract||||||
|Total|||50,000|--|--|--|50,000||0|4,283.33|--|
|Capital resource|||Self-owned capital|||||||||
|Principal uncollected for overdue||||||||||||
||||0|||||||||
|and accumulated earnings||||||||||||
|Lawsuit involved (if applicable)|||N/A|||||||||
|Disclosure date for approval||||||||||||
|from the Board for trust|||2014-07-22|||||||||
|financing (if applicable)||||||||||||
|Disclosure date for approval||||||||||||
|from board of shareholders for|||2014-08-09|||||||||
|trust financing (if applicable)||||||||||||
|Whether has trust financing plan||||||||||||
||||N/A|||||||||
|in future||||||||||||

(2) Entrusted loans
□ Applicable√ Not applicable
The company had no entrusted loans in the reporting period.
4. Other material contracts
□ Applicable√ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 No other material contracts for the Company in reporting period.
XVIII. 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 for50.5% of the total consideration and Wuhan Zhongheng Group accounts for49.5% by calculation.
The fifth extraordinary meeting of the board of directors in 2015 and the third extraordinary general meeting held on July 2, 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’” and “Proposal on submitting stockholders' meeting to authorize the board of directors to fully handle the matters related to the project promotion and implementation of urban renewal of Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”. The company has signed the “Agreement on the cooperation framework of urban renewal project of the updated units at Huafa Area, Gong Ming Street, Guangming New District, Shenzhen”, “Agreement on the cooperation framework of reconstruction project at Huafa, Gongming”, “Agreement on the removal compensation for urban renewal project at Huafa, Gong Ming Street, Guangming New District” and “Cooperation agreement on urban renewal project at Huafa, Gongming” with Shenzhen Qianhai Zhongzheng Urban Development Management Co., Ltd. (hereinafter referred to as “Qianhai Zhongzheng”), Shenzhen Zhongzheng Yutian Land Co., Ltd. (hereinafter referred to as “Zhongzheng Yutian”) and Wuhan Zhongheng Group. Thecompany’s seventh meeting of the eighth board of directors has considered and adopted the “Proposal on terminating the contract on urban renewal project at‘Huafa Area, Gong Ming Street, Guangming New District,Shenzhen’ of Shenzhen Qianhai Zhongzheng Urban Development Management Co., Ltd.”, the company has signed “Agreement on terminating the contract on urban renewal project at Huafa, Gongming” with Qianhai Zhongzheng, Zhongzheng Yutian and Wuhan Zhongheng Group, the
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 relevant agreements signed at earlier stage are no longer legally binding to any party.
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 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”). Due to the official effection and implementation of the above agreements, the Company would be granted with relocation compensation of RMB500 million in cash and compensated commercial properties with GFA not less than 100,000 square meter. It is predicted for the Company to obtain corresponding income in the coming four years, which will enable it to improve its income and assets scale and ensure steady development in a long term. (II) With purpose of further optimize the capital structure, improve financial status of the Company and providing necessary capital condition and liquidity for the upgrade of industry business transformation, specialization of the property operation and development of large-scale, the Company plans to private offering A-share. Controlling shareholder - Wuhan Zhongheng New Technology Industry Group Co., Ltd. subscribe 87.6 million shares at most in cash, fund raised no more than 599.184 million Yuan (issuance cost included) in total, the fund are raised for debt payment and supplement current capital in order to laying a solid foundation of the sustainable development of the Company. Relevant private placement of A-share has been deliberated and approved by third extraordinary meeting of 2015 of the Board and Annual General Meeting 2014, found more in notice published on Juchao Website (www.cninfo.com.cn) dated 20 March and 20 May 2015.
It shall submit for approval and implement after verify by CSRC.
(III) Our controlling shareholder Wuhan Zhongheng Group holds 116,489,894 shares of the Company, accounting for41.14% of our total share capital. Because related companies of Wuhan Zhongheng Group were involved in debt dispute and the creditors applied for property preservation, the above shares were judicially sealed on 14 October 2014. During the reporting period, the seal has been released. Details are set out in the announcement published at Juchao information website (www.cninfo.com.cn) on 8 May 2015.
(IV) On December 29, 2015, Wuhan Zhongheng Group has completed the procedures to relieved the registration of pledge in China Securities Depository and Clearing Corporation Limited Shenzhen Branch for theCompany’s non-restricted circulating shares of 116,489,894 shares (accounting for100% of its holding of theCompany’s shares, and41.14% of thecompany’s general capital) that have been pledged to China CITIC Bank Corporation Limited Wuhan Branch, and handled the procedures for the registration of pledge in China Merchants Securities
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Co. Ltd. for 116,100,000 shares (accounting for41% of thecompany’s general capital) of them in twice on December 31, 2015 and February 1, 2016, please see detailed on the announcement released on www.cninfo.com.cn on January 13, 2016 and February 19.
XIX. Significant event of subsidiary of the Company
□ Applicable√ Not applicable
XX. Social responsibility
□ Applicable√ Not applicable
XXI. Issuance of corporate bonds
Whether the company has corporate bonds that have been publicly issued and listed on the stock exchange, and not yet due or due but not fully cashed on the approval date of annual report
No
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 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||
||||||Capitalizat|||||
||||New|||||||
|||Proporti||Bonus|ion of||||Proportio|
||Amount||shares|||Others|Subtotal|Amount||
|||on|issued|shares|public||||n|
||||||reserve|||||
|I. Restricted shares|116,489,894|41.14%|0|0|0|-116,489,894|-116,489,894|0|0.00%|
|3. Other domestic||||||||||
||116,489,894|41.14%|0|0|0|-116,489,894|-116,489,894|0|0.00%|
|shares||||||||||
|Including: Domestic||||||||||
||116,489,894|41.14%|0|0|0|-116,489,894|-116,489,894|0|0.00%|
|corporate shares||||||||||
|II. Unrestricted||||||||||
||166,671,333|58.86%|0|0|0|116,489,894|116,489,894|283,161,227|100.00%|
|shares||||||||||
|1. RMB Ordinary||||||||||
||64,675,497|22.84%||||116,489,894|116,489,894|181,165,391|63.98%|
|shares||||||||||
|2. Domestically||||||||||
||101,995,836|36.02%||||0|0|101,995,836|36.02%|
|listed foreign shares||||||||||
|III. Total shares|283,161,227|100.00%||||||283,161,227|100.00%|

 Reasons for share changed
√ Applicable□ Not applicable
The restricted stock of 116,489,894 shares held by the controlling shareholder Wuhan Zhongheng Group has been lifted the restrictions and have started the official listing and circulating on December 29, 2015.
Approval of share changed
□ Applicable√ Not applicable
Ownership transfer of share changed
□ 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
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 2. Changes of restricted shares
√ Applicable□ Not applicable
In Share
||||||||
|-|-|-|-|-|-|-|
||||Restricted||||
||||Shares||||
||Opening|Shares||Ending|||
||||Increased||||
|Shareholders|shares|released in||shares|Restricted reasons|Date for released|
||||In||||
||restricted|Period||restricted|||
||||the||||
||||Period||||
||||||In view of all 116,489,894 shares of||
||||||the Company are in the pledged||
||||||state and haven’t been lifted the||
|Wuhan Zhongheng|||||restrictions in time, Wuhan||
||116,489,894|116,489,894|0|0||2015-12-29|
|Group|||||Zhongheng Group have applied to||
||||||Shenzhen Stock Exchange for||
||||||lifting the restrictions on above||
||||||shares up to December 2015.||
|Total|116,489,894|116,489,894|0|0|--|--|

 II. Securities issuance and listing
1. Security offering (without preferred stock) in Reporting Period
□ Applicable√ Not applicable
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and liability structure
□ Applicable√ Not applicable
3. Existing internal staff shares
□ Applicable√ Not applicable
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
In Share
|||||||||
|-|-|-|-|-|-|-|-|
|Total common||Total common||Total preference||Total preference||
|stock|36,044|stock|36,06|1 shareholders with|0|shareholders|0|
|shareholders in||shareholders at||voting rights||with voting||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|reporting||end of last month||||recovered at end of||||rights recovered||
|period-end||before annual||||reporting period (if||||at end of last||
|||report disclosed||||applicable) (found||||month before||
|||||||in note8)||||annual report||
|||||||||||disclosed (if||
|||||||||||applicable)||
|||||||||||(found in note8)||
|Particulars about shares held above 5% by shareholders or top ten shareholders||||||||||||
|||||Total|||||Number of share pledged/frozen|||
|||||||||Amount of||||
||||Proporti|shareholders|Changes||Amount of|||||
|||||||||un-restricte||||
|Full name of|Nature of||on of|at the end|in report||restricted|||||
|Shareholders|shareholder||shares|||||d shares|State of share||Amount|
||||held|of report|period||shares held|||||
|||||||||held||||
|||||period||||||||
|Wuhan ZhonghengGroup|Domesticnon-state-owned legalperson||41.14%|116,489,894|0||116,489,894|0|Pledged||116,489,894|
||||||||||Frozen||0|
|SEG (HONGKONG) CO., LTD.|Overseaslegal person||5.85%|16,569,560|0||0|16,569,560|Pledged||0|
||||||||||Frozen||0|
|GOOD HOPECORNERINVESTMENTSLTD|Overseaslegal person||4.91%|13,900,000|0||0|13,900,000|Pledged||0|
||||||||||Frozen||0|
|ChangjiangSecuritiesBrokerage(Hongkong) Co.,Ltd.|Overseaslegal person||1.04%|2,942,449||||2,942,449|Pledged||0|
||||||||||Frozen||0|
|Xu Dongdong|Domesticnature person||0.60%|1,690,307||||1,690,307|Pledged||0|
||||||||||Frozen|||
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|Overseaslegal person||0.33%|934,974||||934,974|Pledged||0|
||||||||||Frozen||0|
|BINGHUA LIU|Overseasnature person||0.30%|839,013||||839,013|Pledged||0|
||||||||||Frozen||0|
|Wang Jianxin|Domestic||0.23%|660,000||||660,000|Pledged||0|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||||
|-|-|-|-|-|-|-|-|-|
||nature person||||||Frozen|0|
|ShenwanHongyuanSecurities(Hongkong) Co.,Ltd.|Overseaslegal person|0.22%||633,888||633,888|Pledged|0|
||||||||Frozen|0|
|Zhu Ming|Domesticnature person|0.22%||611,348||611,348|Pledged|0|
||||||||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 in Measures for|||||||
|Explanation on associated|||||||||
|||the Administration of Disclosure of Shareholder Equity Changes of Listed Companies. The|||||||
|relationship among the aforesaid|||||||||
|||Company neither knew whether there exists associated relationship among the other tradable|||||||
|shareholders|||||||||
|||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 shares held|||||||||
||||Amount of un-restrict shares held at||Type of shares||||
|Shareholders’ name|||||||||
||||Period-end||Type|||Amount|
|SEG (HONG KONG) CO., LTD.|||16,569,560||Domestically listed foreign||||
|||||||||16,569,560|
||||||shares||||
|GOOD HOPE CORNERINVESTMENTS LTD|||13,900,000||Domestically listed foreign||||
|||||||||13,900,000|
||||||shares||||
|Changjiang Securities Brokerage(Hongkong) Co., Ltd.|||2,942,449||||||
||||||RMB common share|||2,942,449|
|Xu Dongdong|||1,690,307||RMB common share|||1,690,307|
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|||934,974||||||
||||||Domestically listed foreign||||
|||||||||934,974|
||||||shares||||
|BINGHUA LIU|||839,013||Domestically listed foreign||||
|||||||||839,013|
||||||shares||||
|Wang Jianxin|||660,000||RMB common share|||660,000|
|Shenwan Hongyuan Securities(Hongkong) Co., Ltd.|||633,888||Domestically listed foreign||||
|||||||||633,888|
||||||shares||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||
|-|-|-|-|
|Zhu Ming|611,348|Domestically listed foreign||
||||611,348|
|||shares||
|Tan Dongshan|564,600|Domestically listed foreign||
||||564,600|
|||shares||
||Among the top ten unrestricted shareholders, the Company neither knew whether there|||
|Expiation on associated relationship or|exists associated relationship among the other tradable shareholders, nor they belong to|||
|consistent actors within the top 10|consistent actors that are prescribed in Measures for the Administration of Disclosure of|||
|un-restrict shareholders and between|Shareholder Equity Changes of Listed Companies. Among the top ten shareholders, Wuhan|||
|top 10 un-restrict shareholders and top|Zhongheng Group neither bears associated relationship with other shareholders, nor|||
|10 shareholders|belongs to the consistent actor that are prescribed in Measures for the Administration of|||
||Disclosure of Shareholder Equity Changes of Listed Companies.|||
|Explanation on top 10 shareholders||||
|involving margin business (if|N/A|||
|applicable) (see note 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.
2. Controlling shareholder of the Company
Nature of controlling shareholders: natural person holding
Type of controlling shareholders: legal person
||||||
|-|-|-|-|-|
||Legal||||
||person/person in|Date of|Organizatio||
|Controlling shareholders||||Main operation business|
||charge of the|foundation|n code||
||unit||||
|||||Production, sales of computers, TV set, display, other|
|||||hardware and computer software; development of|
|||||internal data communication network, building of|
|||||packing materials and light weight building material for|
|||||packaging; management of exports business for the own|
|||||products and technologies for the Company and member|
|Wuhan Zhongheng Group|Li Zhongqiu|1996-03-21|71195460-1||
|||||enterprise; management of export business on raw|
|||||material, apparatus and instrument, machinery|
|||||equipments, spare parts and technologies (not including|
|||||goods and technologies that import and export are|
|||||national restricted or prohibited ); dry clean and steam|
|||||iron service; copy & print; business information|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|||consulting; house tenancy; property management;|
|||wholesale and retails of the hardware metal products,|
|||plastic products, audio electronic products, electronic|
|||equipment, textile, toys, clothing & shoes, luggage,|
|||bedding article, general merchandise, curtain, household|
|||appliances and building materials; development of|
|||real-estate and sales of commercial housings (projects|
|||with special provision of the state can be operation after|
|||approval)|
|Equity of other|||
|domestic/oversea listed|||
|company control by|||
||Not applicable||
|controlling shareholder as|||
|well as stock-joint in report|||
|period|||

Changes of controlling shareholders in reporting period
□ Applicable√ Not applicable
The Company had no changes of controlling shareholders in reporting period
3. Actual controller of the Company
Nature of actual controller: domestic natural person
Type of actual controller: natural person
||||
|-|-|-|
|||Enjoy the residence rights in the other country or area|
|Actual controller’s name|Nationality||
|||(Y/N)|
|Li Zhongqiu|P.R.C|N|
||He serves as the Chairman for Wuhan Zhongheng Group since 1996 and serves as||
|Main occupation in position|||
||Chairman and GM of the Company since 2007.||
|Listed companies in and out of China that|||
||N/A||
|controlled in last 10 years|||

Changes of actual controller in reporting period
□ Applicable√ Not applicable
No changes of actual controllers for the Company in reporting period.
Property right and controlling relationship between the actual controller and the Company is as follow:
Li Zhongqiu
99%
Wuhan Zhongheng New Science& Technology Industrial Group Co., Ltd
45
41.14%
Shenzhen Zhongheng Huafa Co., Ltd.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Actual controller controlling the Company by entrust or other assets management
□ Applicable√ Not applicable
4. Particulars about other legal person shareholders with over10% shares held
□ Applicable√ Not applicable
5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers, restructuring side and other commitment subjects
□ Applicable√ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section VII. Preferred Stock
□ Applicable√ Not applicable
The Company had no preferred stock in the Period.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section VIII. Particulars about Directors, Supervisors, Senior Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Amount|Amount|||
||||||||Shares||||Shares|
|||||||||of shares|of shares|||
||||||||held at|||Other|held at|
|||W o r k i n g|||Start dated|||increased|decreased|||
|||||||End date of||||||
||Title||Sex|Age|of office||period-b|||changes|period-en|
|Name||status||||office term||in this|in this|||
||||||term||egin|||(share)|d|
|||||||||period|period|||
||||||||(Share)||||(Share)|
|||||||||(Share)|(Share)|||
|Li||Currently||||||||||
||Chairman||M|53|2007-07-18|2016-08-22|0|0|0|0|0|
|Zhongqiu||in office||||||||||
|Li|Vice|Currently||||||||||
||||M|58|2013-08-23|2016-08-22|0|0|0|0|0|
|Yongping|chairman|in office||||||||||
|Chen||Leave the||||||||||
||Director||M|42|2007-07-18|2015-04-22|0|0|0|0|0|
|Zhigang||office||||||||||
|Wang||Leave the||||||||||
||Director||M|63|2013-08-23|2016-02-15|0|0|0|0|0|
|Feng||office||||||||||
||Independ|||||||||||
|Li||Currently||||||||||
||ent||M|49|2010-08-11|2016-08-22|0|0|0|0|0|
|Xiaodong||in office||||||||||
||director|||||||||||
||Independ|||||||||||
|Qiu||Currently||||||||||
||ent||M|49|2014-05-23|2016-08-22|0|0|0|0|0|
|Daliang||in office||||||||||
||director|||||||||||
||Independ|||||||||||
|Zhang||Currently||||||||||
||ent||M|60|2014-05-23|2016-08-22|0|0|0|0|0|
|Zhaoguo||in office||||||||||
||director|||||||||||
||Director,|||||||||||
||Secretary|||||||||||
|||Currently||||||||||
|Yang Bin|of the||M||2015-11-06|2016-08-22|0|0|0|0|0|
|||in office||||||||||
||Board,|||||||||||
||CFO|||||||||||
||Chairman|||||||||||
|Huang||Currently||||||||||
||of the||F|53|2012-01-16|2016-08-22|0|0|0|0|0|
|Yanbo||in office||||||||||
||Superviso|||||||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||ry|||||||||||
||Staff|||||||||||
|||Currently||||||||||
|Geng Qu|Superviso||F|46|2012-04-09|2016-08-22|0|0|0|0|0|
|||in office||||||||||
||r|||||||||||
|Zhao||||||||||||
||Superviso|Leave the||||||||||
|Xiangfen|||M|42|2013-08-23|2015-11-05|0|0|0|0|0|
||r|office||||||||||
|g||||||||||||
||Superviso|Currently||||||||||
|Chen Qin|||F||2015-11-06|2016-08-22|0|0|0|0|0|
||r|in office||||||||||
|Tang|Deputy|Currently||||||||||
||||F|38|2013-08-23|2016-08-22|0|0|0|0|0|
|Ganyu|GM|in office||||||||||
||Secretary|||||||||||
|Weng||Leave the||||||||||
||of the||F|35|2012-04-11|2015-05-10|0|0|0|0|0|
|Xiaojue||office||||||||||
||Board|||||||||||
|||Leave the||||||||||
|Cao Li|CFO||F|45|2013-08-23|2015-11-05|0|0|0|0|0|
|||office||||||||||
||Secretary|||||||||||
|||Leave the||||||||||
|Zhong Ke|of the||M|30|2015-05-11|2015-10-14|0|0|0|0|0|
|||office||||||||||
||Board|||||||||||
|Total|--|--|--|--|--|--|0|0|0|0|0|

 II. Changes of directors, supervisors and senior executives
||||||
|-|-|-|-|-|
|Name|Title|Type|Date|Reasons|
|Chen Zhigang|Director|Leave the office|2015-04-22|For personal physical reasons|
||Director,||||
|||Appointed and|||
|Yang Bin|Secretary of the||2015-11-06|Elected and appointed|
|||removed|||
||Board, CFO||||
|Zhao Xiangfeng|Supervisor|Leave the office|2015-11-05|For personal reasons|
|||Appointed and|||
|Chen Qin|Supervisor||2015-11-06|Elected|
|||removed|||
||Secretary of the||||
|Weng Xiaojue||Leave the office|2015-05-10|For personal reasons|
||Board||||
|Cao Li|CFO|Leave the office|2015-11-06|For personal reasons|
||Secretary of the|Appointed and|||
|Zhong Ke|||2015-05-11|Appointed|
||Board|removed|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
||Secretary of the||||
|Zhong Ke||Leave the office|2015-10-14|For personal physical reasons|
||Board||||

III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors, supervisors and senior executive
Li Zhongqiu: Male, was born in 1962 with Master of Engineering. He is representative to the tenth session of NPC of Hubei Province, May the first of labor medalist of Wuhan. He serves as Chairman of Wuhan Zhongheng New Science& Technology Industrial Group Co., Ltd. since 1996. And he serves as Chairman and the General Manager of the Company since July 2007.
Li Yongping: Male, born in 1957, member of the CPC, a vice researcher. He served as director and vice director in industry& traffic office of Hubei Statistics Bureau from December 1978 to May 1984; head of comprehensive group of worker office of Hubei Province from May 1984 to September 1988; vice director of scientific research institute of Hubei Statistics Bureau from September 1988 to July 1992; took post of standing deputy editor of Reform Horizontal magazine of Hubei Commission for Economic Restructuring from July 1992 to September 1994; served as research assistant in comprehensive office of Shenzhen Economic Restructuring Office from September 1994 to September 1999, investigator of Shenzhen Economic Restructuring Office from September 1999 to January 2001; served as secretary of research society of Shenzhen Economic Restructuring Office from January 2001 to December 2002; and a head of policy group of Shenzhen Enterprise Reform and Development Office from January 2003 to June 2004; investigator of assessment office of Shenzhen SASAC Statistics from June 2004 to December 2004; director of Inspection Office of Shenzhen SASAC from December 2004 to June 2006; he also served as deputy GM of Shenzhen Dachanwan Port Investment& Development Co., Ltd. from July 2006 to December 2010, and he serves as deputy Gm and member of Party Committee of Shenzhen Electronics Group Co., Ltd. since January 2011 and a deputy chairman of the Company since August 2013.
Yang Bin, male, born in April 1972, master's degree, graduated as a business administration major from Xi'an Jiaotong University. Worked in Industrial and Commercial Bank of China, Xi'an Branch, High-Tech Development Zone Branch from July 1994 to March 2001; served as deputy general manager in business department of China Minsheng Banking Corp., Xi'an Branch from March 2001 to November 2004; served as international market branch leader in Shenzhen Mindray Medical International Limited from November 2004 to November 2007; served as director and vice president in Shenzhen TERS Environmental Investment Co., Ltd. from November 2007 to March 2010; served as executive vice president and secretary of the board in Shenzhen CAU Technology Co., Ltd. from March 2010 to August 2015; served as an independent director in Livzon Pharmaceutical Group Co., Ltd. from June 2009 to June 30, 2015. Serves as an independent director in Centre Testing International Group Co., Ltd. since January 2010, and serves as director, secretary of the board and chief financial officer of the
Company since November 2015.
Li Xiaodong: male, born in 1967, MBA and economist title. He graduated from Beihang University and then
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 worked in China Commercial and Industrial BankXi’an North Avenue Branch as deputy director in north branch office of the bank; in Oct. of 1998, he was called in China Commercial BankXi’an Branch; in 2003 he joined Shenzhen Walkers Technology Co., Ltd. (short code: 002351) and worked as assistant of general manager, vice general manager in succession. And presently he serves as vice general manager and secretary of the board of Shenzhen Walkers Technology Holding Co., Ltd. he serves as independent director of the Company since August 2010.
Qiu Daliang: Male, born in 1966, a legum magister and graduated from Northwest Institute of Politics. He respectively worked in Shenzhen Special Economic Zone Branch ofPeople’s Bank of China, Shenzhen Securities Management Office and Shenzhen Regulatory Authority(Shenzhen Inspection Department) of CSRC from July 1992 to September 2007; he successively worked as audit staff of the share issuance, chief of regulatory section of the listed company, deputy chief of the inspection office, director of the information research department etc.; acts as deputy president of Zhongshan Securities Co., Ltd. since December 2008; serves as executive director and GM of Beichun Qiuchu Chicken Ecological Farm Co., Ltd. since October 2011. He served as members of fiscal& taxation finacne committee of the first and second session of Shenzhen Advisory Committee for Policy Decision; now he serves as independent directors of ShenzhenHan’s Laser Polytron Technologies Inc. (stock code 002008), Shenzhen Sunlord Electronics Co., Ltd. and Shenzhen the Great Wall Development Polytron Technologies Inc. (stock code 000021). He serves as independent director of the Company since May 2014.
Zhang Zhaoguo, male, born in 1956, a professor (secondary) and doctoral supervisor. He worked as chief of the accounting teaching& research section of Yichang Finance& Trading School from August 1978 to November 1993, served as deputy head of financial department of Wuhan University Business College from December 1993 to August 2004; worked in Huazhong University of Science and Technology since September 2004 and served as director of the accounting department. Now served as independent director of the four listed companies as HRTN, Eastern Gold Jade, Kaidi Ecological and Shen Huafa. Served as chief editor of magazine of “ Finance and accounting communications”, Vice president of Hubei provincial Accounting Association and Vice president of the Central Enterprises Accounting Association of Hubei province.
Huang Yanbo: female, born in 1962, a university background and a senior accountant. She served as financial director of Wuhan Zhongda Shopping Mall since 1985 to 1998; and worked as financial manager of Wuhan Zhongheng New Science& Technology Industrial Group Co., Ltd. from 1998 to 2007 and GM assistant in charge of auditing supervise from 2007 to 2011; she serves as CFO of the Company since 2012; she serves as supervisor of the Company since January 2012, and she serves as chairman of the Supervisory of the Company since August 2013.
Geng Qu: female, born in 1969, is graduated from Beihang University, the first quality engineer, a real estate economist, a human resources economist and an engineer. She worked for the Company since 1990 and
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 successively served as director of quality standard, director of comprehensive management department and deputy chief of office of the Company. She serves as employee supervisory of the Company since April 2012.
Chen Qin: Female, born in 1986, bachelor degree, human resources professional. Worked on administrative work in Merida Bicycle (China) Co., Ltd. from July 2002 to July 2003, engaged in purchasing work in Hui Pu Electronics (Shenzhen) Co., Ltd. from August 2003 to September 2004, and served as the administration manager in Huake United Technology (Shenzhen) Co., Ltd. from September 2004 to 2005 October; works in the Company since October 2005.
Tang Ganyu: Female, born in 1977, college degree. Served as assistant of factory director in Wuhan Hengsheng Optoelectronics Industry Co., Ltd. from August 2003 to July 2005, engineering manager from August 2005 to July 2006, project manager and production manager from August 2006 to December 2011; served as the supervisor of the Company from July 2007 to January 2012 and general manager assistant of the Company from January 2012 to August 2013, and serves as deputy general manager of the Company since August 2013.
Post-holding inshareholder’s unit
√Applicable□ Not applicable
|||||||
|-|-|-|-|-|-|
||||||Received|
|||Position in||||
||||||remuneration from|
|Name|Name of shareholder’s unit|shareholder’s|Start dated of|End date of||
||||office term|office term|shareholder’s unit|
|||unit n||||
||||||(Y/N)|
|Li Zhongqiu|Wuhan Zhongheng Group|Chairman|1996-03-21||No|
|||Deputy GM,||||
|Li Yongping|Shenzhen SEG Group Co., Ltd.|party|2011-01-03||Yes|
|||committee||||
|Huang Yanbo|Wuhan Zhongheng Group|CFO|2012-05-16||Yes|
|Statement of||||||
|post-holding in||||||
||N/A|||||
|shareholder’s||||||
|unit||||||

Post-holding in other unit
√Applicable□ Not applicable
|||||||
|-|-|-|-|-|-|
||||||Receivedremuneration|
|||Position inother unit n||||
|Name|Name of other units||Start dated of|End date of office||
||||office term|term|from other unit(Y/N)|
|||Director&Deputy GM||||
|Li Xiaodong|Shenzhen Walkers Technology Co., Ltd.|||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|||& Secretary|
|||of the Board|
||Beichun Qiuchu Chicken Ecological Farm||
|Qiu Daliang||Chairman|
||Co., Ltd.||
||Shenzhen Han’s Laser Polytron|Independent|
|Qiu Daliang|||
||Technologies Inc.|director|
|||Independent|
|Qiu Daliang|Shenzhen Sunlord Electronics Co., Ltd.||
|||director|
||Shenzhen the Great Wall Development|Independent|
|Qiu Daliang|||
||Polytron Technologies Inc.|director|
||Huazhong University of Science and||
|Zhang Zhaoguo||Professor|
||Technology||
||"Finance and accounting communications"||
|Zhang Zhaoguo||Chief editor|
||magazine||
|||Vice|
|Zhang Zhaoguo|Accounting Society of Hubei Province||
|||chairman|
||Central Enterprises Accounting Association|Vice|
|Zhang Zhaoguo|||
||of Hubei province|chairman|
||Kaidi Ecological Environment Polytron|Independent|
|Zhang Zhaoguo|||
||Technologies Inc|director|
|||Independent|
|Zhang Zhaoguo|Eastern Gold Jade Co., Ltd.||
|||director|
||Hubei Radio and Television Information|Independent|
|Zhang Zhaoguo|||
||Network Co., Ltd.|director|

Punishment of securities regulatory authority in recent three years to thecompany’s current and outgoing directors, supervisors and senior management during the reporting period
□ Applicable√ Not applicable
IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives
Remuneration of directors and supervisors are determined by general meeting, and the allowance standard for each independent director is RMB60, 000 per year (tax included).
Remuneration of senior management is determined by the board based on the unified remuneration management system and actual completion of operational targets, and the “Proposal of Basic Remuneration for High-ranking Managers of the Company” was
deliberated and approved in 2nd extraordinary meeting of the Board for year of 2012.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
||||||||
|-|-|-|-|-|-|-|
||||||Total remuneration|Whether|
||||||obtained from the|remuneration obtained|
|Name|Title|Sex|Age|Post-holding status|||
||||||Company (before|from related party of|
||||||taxes)|the Company|
|Li Zhongqiu|Chairman& GM|M|51|Currently in office|48|No|
|Li Yongping|Vice chairman|M|57|Currently in office|0|Yes|
|Chen Zhigang|Director|M|41|Currently in office|0|No|
|Wang Feng|Director|M|62|Currently in office|20.9|No|
||Director,||||||
|Yang Bin|Secretary of the|M|43|Currently in office|7.5|No|
||Board, CFO||||||
||Independent||||||
|Li Xiaodong||M|48|Currently in office|6|No|
||director||||||
||Independent||||||
|Qiu Daliang||M|48|Currently in office|6|No|
||director||||||
||Independent||||||
|Zhang Zhaoguo||M|59|Currently in office|6|No|
||director||||||
|Huang Yanbo|Supervisory|F|52|Currently in office|0|Yes|
|Geng Qu|Supervisory|F|45|Currently in office|8.9|No|
|Zhao Xiangfeng|Supervisory|M|41|Leave the office|6.3|No|
|Chen Qin|Supervisory|F|29|Currently in office|8.7|No|
|Tang Ganyu|Deputy GM|F|37|Currently in office|26.36|No|
||Secretary of the||||||
|Weng Xiaojue||F|34|Leave the office|20.9|No|
||Board||||||
|Cao Li|CFO|F|44|Leave the office|20.9|No|
||Secretary of the||||||
|Zhong Ke||M|30|Leave the office|8.7|No|
||Board||||||
|Total|--|--|--|--|195.16|--|

Delegated equity incentive for directors, supervisors and senior executives in reporting period
□ Applicable√ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 V. Particulars of workforce
1. Number of Employees, Professional composition, Education background
|||
|-|-|
|Employee in-post of the parent Company (people)|30|
|Employee in-post of main Subsidiaries (people)|791|
|The total number of current employees (people)|821|
|The total number of current employees to receive pay (people)|821|
|Retired employee’ s expenses borne by the parent Company and||
||0|
|main Subsidiaries (people)||
|Professional composition||
|Category of professional composition|Numbers of professional composition (people)|
|Production personnel|707|
|Sales personnel|28|
|Technical personnel|50|
|Financial personnel|11|
|Administrative personnel|25|
|Total|821|
|Education background||
|Category of education background|Numbers (people)|
|Undergraduate and above|35|
|Junior college|89|
|Other|697|
|Total|821|

 2. Remuneration Policy
Thecompany’s directors (excluding independent directors), supervisors and senior management personnel are monthly paid by basic pay and performance pay, and the annual remunerations are paid after annual assessment; thecompany’s independent directors are paid 60,000 yuan per person per year as allowances (including tax), the travel expenses for attending the board meeting and stockholders' meeting and the necessary expenses generated by exercising their powers in accordance with relevant laws and regulations can be applied for reimbursement according to thecompany’s regulations; the remuneration ordinary employees are decided by the positions, including probationary period salary regular employee salary, and the company pays social security and public
accumulated funds for them in accordance with the national regulations.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 3. Training programs
(1) The directors, supervisors and senior management personnel actively participate in the relevant training and assessment organized by the regulatory agencies, such as Shenzhen Stock Exchange, Shenzhen Securities Regulatory Bureau, etc.
(2) The company regularly or irregularly organizes professional trainings for employees according to the departments and division of labor, including internal trainings and external trainings, thereinto, internal trainings are provided by specialized personnel in the company; external trainings are provided by organizing employees to participate in the trade associations and the training organized by supervision department.
(3) Organize staff in all positions to actively participate in the learning and assessment of technical professional qualifications required by different positions.
4. Labor outsourcing
□Applicable√ Not applicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section IX. Corporate Governance
I. Corporate governance of the Company
During the reporting period, in accordance with the laws and regulations of the "Company Law", "Securities Law", and "Governance Norms of Listed Companies", and the relevant rules and requirements promulgated by the China Securities Regulatory Commission, the company has constantly improved the corporate governance structure, established a sound internal control system, enhanced the level of standard operation, strictly followed the provisions of the production and management control and the financial management and control and the information disclosure and control, carried out the work on the basis of the "Articles of Association", "Rules of Procedure of the Board of Directors”, "Rules of Procedure of the Board of Supervisors”, “Working System of the Independent Directors”, and “Working Rules of the General Manager”, and ensured that the shareholders' meeting, the board of directors and the board of supervisors can perform their duties and responsibilities normally. The company's governance meets the requirements on the documents of governance norms of listed companies issued by China Securities Regulatory Commission.
During the reporting period, in order to safeguard the legitimate rights and interests of the company, the shareholders and the creditors and regulate the organization and behavior of the company, the company has revised the “Constitution of Shenzhen Zhongheng Huafa Co., Ltd.” according to the “Company Law of the People's Republic of China”, “Securities Law of the People's Republic of China” and the “Guidelines for the Articles of Association of Listed Companies (2014 Revision)” issued by China Securities Regulatory Commission
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC?
□Yes√ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC.
II. Independency of the Company relative to controllingshareholders’ in aspect of businesses, personnel, assets, organization and finance
During the reporting period, thecompany’s controlling shareholder - Wuhan Zhongheng Group has separated the business, personnel, assets, organization and finance from the controlling shareholders in accordance with the laws and regulations of the "Company Law" and "Articles of Association", and had the independent and complete business system and the capabilities of independent management. 1. Personnel: The company fully and independently operates in the labor, personnel and salary management systems and has established the independent management system, all of the company's senior executives are working in the Company and receive the salaries, no senior executive has held a post in both the Company and the controllingshareholder’s company, and no financial staff has held a post in two or more of the related companies.
2. Assets: The company has the clear property rights with the controlling shareholders and the capabilities of independent management, possesses the full rights to control the production system, supporting facilities and land use rights, no major shareholder has occupied or dominated the assets.
3. Finance: The company has established the independent, complete, standardized financial accounting system and financial management system, and the corresponding internal control system and internal audit system in accordance with the requirements of the "Accounting Standards for Business Enterprises" to make the independent financial decisions.
4. Organization: the board of directors, the board of supervisors, and other internal organizations are sound and operate independently, the organization is completely separated from the controlling shareholders, all organizations of the company are set up based on the
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 norms and requirements of the listed company and thecompany’s actual business features which have the independent office addresses and there is no mixed operation or co-working, and the controlling shareholders legally exercise theinvestors’ rights and undertake the corresponding obligations.
5. Business: the company has the completely independent business operation system, the capabilities of independent management, the independent purchasing system, production system and marketing system,doesn’t depend on the controlling shareholders to gain profits or have the horizontal competition relationship with the controlling shareholders or the subsidiaries.
III. Horizontal competition
□ Applicable√ Not applicable
IV. In the report period, the Company held annualshareholders’ general meeting and extraordinaryshareholders’ general meeting
1. AnnualShareholders’ General Meeting in the report period
|||||||
|-|-|-|-|-|-|
|||Ratio of||||
|Session of meeting|Type|investor|Date|Date of disclosure|Index of disclosure|
|||participation||||
||||||http://www.cninfo.com.cn/cninfo|
||||||-new/disclosure/szse_main/bullet|
|AGM of 2014|AGM||2015-05-19|2015-05-20||
||||||in_detail/true/1201037271?anno|
||||||unceTime=2015-05-20|
|The first|||||http://www.cninfo.com.cn/cninfo|
||Extraordinary|||||
|extraordinary|||||-new/disclosure/szse_main/bullet|
||shareholders’ general||2015-03-04|2015-03-05||
|shareholders’ general|||||in_detail/true/1200671041?anno|
||meeting|||||
|meeting 2015|||||unceTime=2015-03-05|
|The second|||||http://www.cninfo.com.cn/cninfo|
||Extraordinary|||||
|extraordinary|||||-new/disclosure/szse_main/bullet|
||shareholders’ general||2015-07-02|2015-07-03||
|shareholders’ general|||||in_detail/true/1201232611?anno|
||meeting|||||
|meeting 2015|||||unceTime=2015-07-03|
|The third|||||http://www.cninfo.com.cn/cninfo|
||Extraordinary|||||
|extraordinary|||||-new/disclosure/szse_main/bullet|
||shareholders’ general||2015-09-11|2015-09-12||
|shareholders’ general|||||in_detail/true/1201582908?anno|
||meeting|||||
|meeting 2015|||||unceTime=2015-09-12|
|The fourth|||||http://www.cninfo.com.cn/cninfo|
||Extraordinary|||||
|extraordinary|||||-new/disclosure/szse_main/bullet|
||shareholders’ general||2015-11-24|2015-11-25||
|shareholders’ general|||||in_detail/true/1201787200?anno|
||meeting|||||
|meeting 2015|||||unceTime=2015-11-25|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore□ Applicable√ Not applicable
V. Responsibility performance of independent directors
1. The attending of independent directors to Board meetings and general meeting
||||||||
|-|-|-|-|-|-|-|
|The attending of independent directors to Board Meeting|||||||
||Times of Board||||||
|||||||Absent the|
||meeting||Times of|Times of|||
|Name of independent||Times of|||Times of|Meeting for the|
||supposed to||attending by|entrusted|||
|director||Presence|||Absence|second time in a|
||attend in the||communication|presence|||
|||||||row (Y/N)|
||report period||||||
|Li Xiaodong|10|4|5|1|0||
|Qiu Daliang|10|5|5|0|0||
|Zhang Zhaoguo|10|5|5|0|0||
|Times for attending general meeting|||||||
|||5|||||
|from independent directors|||||||

Explanation of absent the Board Meeting for the second time in a row
Nil
2. Objection for relevant events from independent directors
Independent directors come up with objection aboutCompany’s relevant matters
□Yes√No
Independent directors has no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directors
The opinions from independent directors have been adopted
√ Yes□ No
Explanation on advice that accepted/not accepted from independent directors
Advices about the Company from independent directors are all accepted in the reporting period.
VI. Duty performance of the special committees under the board during the reporting period 1. Duty performance of the audit committee
During the reporting period, the work carried out by the audit committee mainly included: listening to the company's annual operating, financial and internal audit work, continuing to concern and guide thecompany’s financial affairs and internal audit supervision, carrying forward the audit work to thecompany’s annual financial report, sending a letter to urge the audit report to be submitted on time, communicating with the certified public accountants time after time during the annual audit, objectively evaluating the annual
audit work of the accounting firm, and making the resolution to agree to re-appoint the accounting firm.
2. Remuneration& appraisal committee
During the reporting period, the remuneration& appraisal committee has audited 2013 annual remuneration of thecompany’s
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 directors, supervisors and senior management which was considered to be consistent with the actual situation and in line with the provisions of relevant laws and the regulations of remuneration and appraisal system.
3. The nominations committee
During the reporting period, the nominations committee has investigated the proposal for the supplement of independent directors, and made the decision to agree to submit to the board of directors for consideration.
VII. Works from Supervisory Committee
The Company has risks in reporting period that found in supervisory activity from supervisory committee
□ Yes√ No
Supervisory committee has no objection about supervision events in reporting period
VIII. Examination and incentives of senior management
During the reporting period, in order to enable the senior management to better perform their duties and maintain the interests of the company and its shareholders, the company has floatingly paid the remuneration to urge the company's management to work more diligently and ensure the realization of the company's development strategy and operation target accordingly to the “Staff rank and basic salary system” and the performance assessment and combining with the company's actual operating conditions.
IX. Internal Control
1. Details of major defects in IC appraisal report that found in reporting period
√Yes□ No
||
|-|
|Specific Situation of the Major Defects inInternal ControlDuring the Reporting Period|
|1. The Company prepaid the contract amount in full in accordance with the Contract to the related party, Wuhan|
|HangshengPhotovoltaic Industry Co., LTD. In 2015, the Company paid the product purchase amount, a total of RMB 103.95|
|million Yuan in advance to the related party, Wuhan HangshengPhotovoltaic Industry Co., LTD. (The Company's controlling|
|shareholder, Wuhan Zhongheng NewTechnology Industry Group Co., LTD., indirectly holds 100% of its equity). But due to the|
|volatile market, the Companydid not complete allof such procurementin 2015. As of December 31, 2015, the Company had|
|performed a total of RMB 2.5191 million Yuan of purchase transactions and recovered the principal of RMB 10.14309Yuan;2.|
|Correction of the released 2014 annual financial statements 3. The Company was registered and investigated by the China|
|Securities Regulatory Commissionin connection with violationof information disclosure. But by the date of issuing the Audit|
|Report, the investigation was still in progress, and the Company had not received any conclusive opinions for such registration and|
|investigation.|

2. Appraisal Report of Internal Control
|||
|-|-|
|Disclosure date of full internal control||
||2016-04-22|
|evaluation report||
|Disclosure index of full internal control||
||The designated website: Juchao Website|
|evaluation report||
|The ratio of the total assets of units|100.00%|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|included in the scope of evaluation|||
|accounting for the total assets on the|||
|company's consolidated financial|||
|statements|||
|The ratio of the operating income of units|||
|included in the scope of evaluation|||
|accounting for the operating income on the|100.00%||
|company's consolidated financial|||
|statements|||
|Defects Evaluation Standards|||
|Category|Financial Reports|Non-financial Reports|
|||1. General deficiencies: when facing|
||1. General deficiencies: the amount of direct|low-risk matters in the process of|
||property loss is between 50,000 and 150,000|business operation, the unit being|
||yuan, penalized by the district-level|inspected didn’t take corresponding|
||(including district-level) government sector|internal control measures and respond|
||but not having a negative impact on the|effectively;|
||company’s regular disclosure; 2. Important|2. Important deficiencies: when facing|
||deficiencies: the amount of direct property|matters at a moderate risk level in the|
||loss is between 150,000 and 450,000 yuan,|process of business operation, the unit|
|Qualitative criteria|||
||penalized by the provincial level (including|being inspected didn’t take|
||provincial level) government sector but not|corresponding internal control measures|
||having a negative impact on the company’s|and respond effectively;|
||regular disclosure; 3. Major deficiencies: the|3. Major deficiencies: when facing|
||amount of direct property loss is more than|high-risk matters in the process of|
||450,000 yuan, penalized by the government|business operation, the unit being|
||sector and having a negative impact on the|inspected didn’t take corresponding|
||company’s regular disclosure;|internal control measures and respond|
|||effectively.|
||1. It belongs to important deficiency if the||
||misstatement of the company’s cash on hand,||
|||General deficiencies: misstatement index|
||bank deposits, notes receivable, and notes||
|||1 ≥0.5‰, and misstatement index 2 <|
||payable caused by internal control||
|||0.5‰;|
||deficiencies is less than RMB 1000 yuan; it||
|Quantitative standard||Important deficiencies: 0.5‰ ≤|
||belongs to major deficiency if the||
|||misstatement index 2 < 1‰;|
||misstatement caused by internal control||
|||Major deficiencies: misstatement index|
||deficiencies is greater than or equal to RMB||
|||2≥1‰|
||1000 yuan.||
||2. Other deficiencies in internal controls:||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||
|-|-|
||general deficiencies: misstatement index 1 ≥|
||0.5 ‰, and misstatement index 2 < 0.5 ‰;|
||important deficiencies: 0.5 ‰ ≤|
||misstatement index 2 <1 ‰; major|
||deficiencies: misstatement index 2 ≥ 1 ‰|
|Amount of significant defects in financial||
||3|
|reports||
|Amount of significant defects in||
||0|
|non-financial reports||
|Amount of important defects in financial||
||0|
|reports||
|Amount of important defects in||
||0|
|non-financial reports||

X. Auditing report of internal control
√Applicable□ Not applicable
|||
|-|-|
|Deliberations in Internal Control Audit Report||
|ZhonghengHuafa Co., LTD. did not maintain effective internal control related to the financial statements in all major aspects on||
|December 31, 2015according to theBasic Norms for Enterprise Internal Control and related regulations.||
|Disclosure details of audit report of||
||Disclosed|
|internal control||
|Disclosure date of audit report of||
||2016-04-30|
|internal control (full-text)||
|Index of audit report of internal||
||The designated website: Juchao Website|
|control (full-text)||
|Opinion type of auditing report of||
||Adverse opinions|
|IC||
|Whether the non-financial report||
||No|
|had major defects||

Carried out modified opinion for internal control audit report from CPA
√ Yes□ No
The Accounting Firm issued the explanation on issuance of the by the internal controlaudit report with non-standard opinions. Major defects refer to a control defect orcombination of multiple control defectsexisting in the internal control, possibly leading to
failure to prevent or discover and correct significant misstatement in the financial statements in a timely manner.
The following issuesexist in ZhonghengHuafa Co., LTD.:
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015（1）ZhonghengHuafa Co., LTD.recognized prepaid the contract amount in full in accordance with the Contract to the related party, Wuhan HangshengPhotovoltaic Industry Co., LTD.;
（2）ZhonghengHuafa Co., LTD.recognizedthe investmentincome of RMB 42.8333million Yuan without verifying the specific investment project and its profit and loss situation for RMB 500 million Yuan of T2 Class Priority Unit for "CITICQianjing - Collective Trust Plan for Green Star City Investment Fund", initiatedand established byCITICTrust LLC. according to the provisions of the Trust Contract. The recognizing basis is inadequate;
（3）ZhonghengHuafa Co., LTD.paidthe capital of RMB 500 million Yuan to Shenzhen Vanke Financial ConsultingCo., LTD. on September 8, 2015,and recognized the financing income of RMB 19.2 million Yuanwithout concluding a contract in writing. The recognizing basis is inadequate;
（4）ZhonghengHuafa Co., LTD. was registered and investigated by the China Securities Regulatory Commissionin connection with violation of information disclosure.
ZhonghengHuafa Co., LTD.'s internal control execution related to financial reporting fails, and major defects exist in internal control. Effective internal control can provide reasonable assurance for true and complete financial reports and related information, but the abovementioned major defects causedZhonghengHuafa Co., LTD.'sinternal control to losethis function.
The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board
√ Yes□ No
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section X. Financial Report
I. Audit report
|||
|-|-|
|Type of audit opinion|unqualified audit opinion|
|Signing date of audit report|2016-04-28|
|Name of audit institute|Shine Wing Certified Public Accountants (LLP)|
|The audit report number|XYZH/2016SZA20347|
|Name of CPA|Zhang Weijian, Gu Fanqiu|

Auditor’s Report
To all shareholders of Shenzhen Zhongheng Huafa Co., Ltd.:
We have audited the companying consolidated and parentCompany’s financial statements of Shenzhen Zhongheng Huafa Co., Ltd (“Zhongheng Huafa Company”), including balance sheet of 31 December 2015, and profit statement, and cash flow statement, and statement on changes ofshareholders’ equity for the year ended, and notes to the financial statements for the year ended.
I.Management’s responsibility for the financial statements
Management of the Company is responsible for prepare and present financial statement of the Company, which including: (1) Prepare financial statements with fair presentation in line with Accounting Standards for Business Enterprises; (2) Designing, executed and maintaining necessary internal control in order to prevent fundamental miscarrying in financial statement from fraudulent or errors.
II. Auditor's responsibility
Our responsibility is toexpress audit opinions on financial statementsin accordance with the provisions of theAuditing Standards of Chinese CPAs and on the basis of the audit work.But as a result of the matters mentioned in the passage "III. Matters Causing Inability to ExpressOpinions", we were unable to obtain sufficient and appropriate audit evidence that and thus to provide the basis for expressing audit opinions.
III. Matters Causing Inability to ExpressOpinions
1. ZhonghengHuafa Co., LTD. paid the product purchase amounts of RMB 3.7 million Yuan, RMB 100 million Yuan and RMB
250,000 Yuan, a total of RMB 103.95 million Yuan in advance to the related party, Wuhan HangshengPhotovoltaic Industry Co.,
LTD.in February, April and June, 2015 respectively. As of December 31, 2015, the Company had performed a total of RMB 2.5191
million Yuan of purchase transactions and recovered the principal of RMB 10.14309Yuan. Due to the limited scope of audit and
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 inability to implement alternative audit procedures for obtaining sufficient appropriate audit evidence for the economic substance of procurement business of the related party, we cannot make sure whether it is necessary to make adjustment for prepayments and other items in the financial statements, nor determine the amount to adjust.
2. As stated in Item 35 of NOTE VI. in the Notes to 2015 Financial Statement of ZhonghengHuafa Co., LTD., the Company subscribed the investment project of RMB 500 million Yuan of T2 Class Priority Unit for "CITICQianjing - Collective Trust Plan for Green Star City Investment Fund", initiatedand established byCITICTrust LLC. (Hereinafter referred to as the "T2 Class Trust Plan") on December 26, 2014 and received the principal of RMB 500 million Yuan on September 8, 2015. As of December 31, 2015, the Companyhas received the financing income of RMB 42.8333 million Yuan. According to the contract agreement of T2 Class Trust Plan, the trustee,CITICTrust LLC.will carry out investmentin specific projects as agreed on in the "Trust Order Letter"issued by the trusterZhonghengHuafa Co., LTD. and ZhonghengHuafa Co., LTD.will assume full responsibility and risks. Due to the limited scope of audit and inability to implement alternative audit procedures for obtaining sufficient appropriate audit evidence forthe investment income of RMB 42.8333million Yuan recognized by ZhonghengHuafa Co., LTD. via verifying the specific investment project and its profit and loss situation for RMB 500 million Yuanfor T2 Class Trust Plan; at the same time, ZhonghengHuafa Co., LTD. did not recognize the fixed trust compensation payable according to the principal of RMB 500 million Yuanagreed on in the Contract of T2 Class Trust Plan T2 and charge ratio.Therefore, we cannotmake sure whether it is necessary to make adjustment for prepayments and other items in the financial statements, nor determine the amount to adjust.
3. As stated in Item 35 of NOTE VI. in the Notes to 2015 Financial Statement of ZhonghengHuafa Co., LTD., the Companypaidthe capital of RMB 500 million Yuan to Shenzhen Vanke Financial ConsultingCo., LTD. on September 8, 2015, and recovered the capital of RMB 520 million Yuanand also recognized the financing income of RMB 19.2 million Yuan on December 31, 2015. Wefailed to get the related business contract signed between ZhonghengHuafa Co., LTD. and Shenzhen Vanke Financial ConsultingCo., LTD., settlement documents and other audit evidence to measure and confirm the investment income, nor implement alternative audit procedures.Therefore, we cannotmake sure whether it is necessary to make adjustment for prepayments and other items in the financial statements, nor determine the amount to adjust.
IV. Inability to Express Audit Opinions
As a result of the matters mentioned in the passage "III. Matters Causing Inability to ExpressOpinions", we were unable to obtain sufficient and appropriate audit evidence that and thus to provide the basis for expressing audit opinions. So, we do not express auditopinions on the financial statements prepared by ZhonghengHuafa Co., LTD..
II．Financial statement
Currency used in note of financial statement is RMB (Yuan)
1. Consolidated Balance Sheet
Prepared by SHENZHEN ZHONGHENG HUAFA CO., LTD
2015-12-31
In RMB
||||
|-|-|-|
|Item|Closing balance|Opening balance|
|Current assets:|||
|Monetary funds|662,115,464.19|28,819,357.68|
|Settlement provisions|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Capital lent|||
|Financial liability measured by fair|||
|value and with variation reckoned into|||
|current gains/losses|||
|Derivative financial liability|||
||54,346,509.74|100,821,063.85|
|Notes receivable|||
||109,965,992.14|112,425,468.57|
|Accounts receivable|||
|Accounts paid in advance|3,092,021.10|5,669,119.87|
|Insurance receivable|||
|Reinsurance receivables|||
|Contract reserve of reinsurance|||
|receivable|||
|Interest receivable|1,838,752.40||
|Dividend receivable|||
|Other receivables|9,411,791.40|609,094,812.29|
|Purchase restituted finance asset|||
|Inventories|27,132,125.91|30,880,050.55|
|Divided into assets held for sale|92,857,471.69||
|Non-current asset due within one|||
|year|||
|Other current assets|||
|Total current assets|960,760,128.57|887,709,872.81|
|Non-current assets:|||
|Loans and payments on behalf|||
|Finance asset available for sales|||
|Held-to-maturity investment|||
|Long-term account receivable|||
|Long-term equity investment|||
|Investment property|30,019,906.66|31,274,663.74|
|Fixed assets|110,607,425.50|186,438,814.34|
|Construction in progress|654,356.00|2,853,356.00|
|Engineering material|||
|Disposal of fixed asset|||
|Productive biological asset|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Oil and gas asset|||
|Intangible assets|46,372,390.49|47,866,685.21|
|Expense on Research and|||
|Development|||
|Goodwill|||
|Long-term expenses to be|274,758.16|345,658.24|
|apportioned|||
|Deferred income tax asset|6,400,271.29|6,251,934.59|
|Other non-current asset|||
|Total non-current asset|194,329,108.10|275,031,112.12|
|Total assets|1,155,089,236.67|1,162,740,984.93|
|Current liabilities:|||
|Short-term loans|119,479,107.41|138,114,376.32|
|Loan from central bank|||
|Absorbing deposit and interbank|||
|deposit|||
|Capital borrowed|||
|Financial liability measured by fair|||
|value and with variation reckoned into|||
|current gains/losses|||
|Derivative financial liability|||
|Notes payable|53,614,420.20|39,994,397.62|
|Accounts payable|54,241,655.86|65,547,836.32|
|Accounts received in advance|1,147,469.52|727,331.06|
|Selling financial asset of|||
|repurchase|||
|Commission charge and|||
|commission payable|||
|Wage payable|4,731,615.47|6,208,793.90|
|Taxes payable|20,498,295.88|18,552,046.85|
|Interest payable|||
|Dividend payable|||
|Other accounts payable|32,665,698.32|24,179,349.31|
|Reinsurance payables|||
|Insurance contract reserve|||
|Security trading of agency|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Security sales of agency|||
|Divided into liability held for sale|||
|Non-current liabilities due within 1|||
|year|||
|Other current liabilities|||
|Total current liabilities|286,378,262.66|293,324,131.38|
|Non-current liabilities:|||
|Long-term loans|554,700,000.00|585,300,000.00|
|Bonds payable|||
|Including: preferred stock|||
|Perpetual capital|||
|securities|||
|Long-term account payable|||
|Long-term wages payable|||
|Special accounts payable|||
|Projected liabilities|2,604,411.81|2,765,583.81|
|Deferred income|||
|Deferred income tax liabilities|||
|Other non-current liabilities|||
|Total non-current liabilities|557,304,411.81|588,065,583.81|
|Total liabilities|843,682,674.47|881,389,715.19|
|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|146,283,642.90|109,496,837.33|
|Less: Inventory shares|||
|Other comprehensive income|||
|Reasonable reserve|||
|Surplus public reserve|77,391,593.25|77,391,593.25|
|Provision of general risk|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Retained profit|-195,429,900.95|-188,698,387.84|
|Total owner’s equity attributable to|311,406,562.20|281,351,269.74|
|parent company|||
|Minority interests|||
|Total owner’s equity|311,406,562.20|281,351,269.74|
|Total liabilities and owner’s equity|1,155,089,236.67|1,162,740,984.93|

 Legal representative: Li Zhongqiu 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|Closing balance|Opening balance|
|Current assets:|||
||524,937,734.32|14,802,258.59|
|Monetary funds|||
|Financial liability measured by fair|||
|value and with variation reckoned into|||
|current gains/losses|||
|Derivative financial liability|||
|Notes receivable|||
|Accounts receivable|322,194.43|1,857,222.07|
|Account paid in advance|1,005,472.83|1,005,472.83|
|Interest receivable|||
|Dividends receivable|||
|Other receivables|76,212,908.56|606,214,702.41|
|Inventories|14,806.50|14,806.50|
|Divided into assets held for sale|92,857,471.69||
|Non-current assets maturing within|||
|one year|||
|Other current assets|||
|Total current assets|695,350,588.33|623,894,462.40|
|Non-current assets:|||
|Available-for-sale financial assets|||
|Held-to-maturity investments|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Long-term receivables|||
|Long-term equity investments|186,608,900.00|187,608,900.00|
|Investment property|30,019,906.66|31,274,663.74|
|Fixed assets|4,726,034.98|100,029,320.14|
|Construction in progress|654,356.00|2,853,356.00|
|Project materials|||
|Disposal of fixed assets|||
|Productive biological assets|||
|Oil and natural gas assets|||
|Intangible assets|5,133,492.12|5,278,437.84|
|Research and development costs|||
|Goodwill|||
|Long-term deferred expenses|241,666.63|291,666.67|
|Deferred income tax assets|7,204,895.54|7,056,901.94|
|Other non-current assets|||
|Total non-current assets|234,589,251.93|334,393,246.33|
|Total assets|929,939,840.26|958,287,708.73|
|Current liabilities:|||
|Short-term borrowings|19,600,000.00|20,000,000.00|
|Financial liability measured by fair|||
|value and with variation reckoned into|||
|current gains/losses|||
|Derivative financial liability|||
|Notes payable|||
|Accounts payable|10,745,840.16|10,745,840.16|
|Accounts received in advance|735,382.00|420,611.24|
|Wage payable|788,575.28|724,418.36|
|Taxes payable|16,934,546.28|11,286,781.44|
|Interest payable|||
|Dividend payable|||
|Other accounts payable|26,415,353.86|56,873,489.93|
|Divided into liability held for sale|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Non-current liabilities due within 1|||
|year|||
|Other current liabilities|||
|Total current liabilities|75,219,697.58|100,051,141.13|
|Non-current liabilities:|||
|Long-term loans|554,700,000.00|585,300,000.00|
|Bonds payable|||
|Including: preferred stock|||
|Perpetual capital|||
|securities|||
|Long-term account payable|||
|Long-term wages payable|||
|Special accounts payable|||
|Projected liabilities|2,604,411.81|2,765,583.81|
|Deferred income|||
|Deferred income tax liabilities|||
|Other non-current liabilities|||
|Total non-current liabilities|557,304,411.81|588,065,583.81|
|Total liabilities|632,524,109.39|688,116,724.94|
|Owners’ equity:|||
|Share capita|283,161,227.00|283,161,227.00|
|Other equity instrument|||
|Including: preferred stock|||
|Perpetual capital|||
|securities|||
|Capital public reserve|146,283,642.90|109,496,837.33|
|Less: Inventory shares|||
|Other comprehensive income|||
|Reasonable reserve|||
|Surplus reserve|77,391,593.25|77,391,593.25|
|Retained profit|-209,420,732.28|-199,878,673.79|
|Total owner’s equity|297,415,730.87|270,170,983.79|
|Total liabilities and owner’s equity|929,939,840.26|958,287,708.73|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 3. Consolidated Profit Statement
In RMB
||||
|-|-|-|
|Item|Current Period|Last Period|
|I. Total operating income|499,455,781.11|694,839,760.10|
|Including: Operating income|499,455,781.11|694,839,760.10|
|Interest income|||
|Insurance gained|||
|Commission charge and commission|||
|income|||
|II. Total operating cost|531,003,343.27|691,076,836.44|
|Including: Operating cost|418,001,067.08|593,998,799.18|
|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|||
|Operating tax and extras|9,242,961.43|5,655,209.84|
|Sales expenses|11,427,705.20|11,512,229.16|
|Administration expenses|42,591,764.80|39,200,279.02|
|Financial expenses|48,393,716.52|39,784,553.27|
|Losses of devaluation of asset|1,346,128.24|925,765.97|
|Add: Changing income of fair|||
|value(Loss is listed with “-”)|||
|Investment income (Loss is listed|||
||25,247,171.27|983,612.12|
|with “-”)|||
|Including: Investment income on|||
|affiliated company and joint venture|||
|Exchange income (Loss is listed|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|with “-”)|||
|III. Operating profit (Loss is listed with|||
||-6,300,390.89|4,746,535.78|
|“-”)|||
|Add: Non-operating income|3,163,848.99|6,490,823.59|
|Including: Disposal gains of|||
||453,321.89|1,752,028.49|
|non-current asset|||
|Less: Non-operating expense|332,848.12|593,708.10|
|Including: Disposal loss of|||
||4,270.45|164,208.69|
|non-current asset|||
|IV. Total Profit (Loss is listed with “-”)|-3,469,390.02|10,643,651.27|
|Less: Income tax expense|3,262,123.09|2,956,031.00|
|V. Net profit (Net loss is listed with “-”)|-6,731,513.11|7,687,620.27|
|Net profit attributable to owner’s of|||
||-6,731,513.11|7,687,620.27|
|parent company|||
|Minority shareholders’ gains and|||
|losses|||
|VI. Net after-tax of other comprehensive|||
|income|||
|Net after-tax of other comprehensive|||
|income attributable to owners of parent|||
|company|||
|(I) Other comprehensive income|||
|items which will not be reclassified|||
|subsequently to profit of loss|||
|1. Changes as a result of|||
|re-measurement of net defined benefit|||
|plan liability or asset|||
|2. Share of the other|||
|comprehensive income of the investee|||
|accounted for using equity method which|||
|will not be reclassified subsequently to|||
|profit and loss|||
|(II) Other comprehensive income|||
|items which will be reclassified|||
|subsequently to profit or loss|||
|1. Share of the other|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|comprehensive income of the investee|||
|accounted for using equity method which|||
|will be reclassified subsequently to profit|||
|or loss|||
|2. Gains or losses arising|||
|from changes in fair value of|||
|available-for-sale financial assets|||
|3. Gains or losses arising|||
|from reclassification of held-to-maturity|||
|investment as available-for-sale financial|||
|assets|||
|4. The effect hedging portion|||
|of gains or losses arising from cash flow|||
|hedging instruments|||
|5. Translation differences|||
|arising on translation of foreign currency|||
|financial statements|||
|6. Other|||
|Net after-tax of other comprehensive|||
|income attributable to minority|||
|shareholders|||
|VII. Total comprehensive income|-6,731,513.11|7,687,620.27|
|Total comprehensive income|||
||-6,731,513.11|7,687,620.27|
|attributable to owners of parent Company|||
|Total comprehensive income|||
|attributable to minority shareholders|||
|VIII. Earnings per share:|||
|(i) Basic earnings per share|-0.0238|0.0271|
|(ii) Diluted earnings per share|-0.0238|0.0271|

 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
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Item|Current Period|Last Period|
|I. Operating income|54,055,168.03|57,459,329.67|
|Less: Operating cost|8,764,361.27|10,236,937.60|
|Operating tax and extras|6,750,379.97|3,204,860.53|
|Sales expenses|||
|Administration expenses|22,865,179.27|19,086,085.26|
|Financial expenses|47,475,979.01|18,513,856.94|
|Losses of devaluation of asset|1,344,755.83|975,765.97|
|Add: Changing income of fair|||
|value(Loss is listed with “-”)|||
|Investment income (Loss is|||
||25,246,527.78||
|listed with “-”)|||
|Including: Investment income|||
|on affiliated company and joint venture|||
|II. Operating profit (Loss is listed|||
||-7,898,959.54|5,441,823.37|
|with “-”)|||
|Add: Non-operating income|688,140.77|1,756,470.00|
|Including: Disposal gains of|||
||341,452.77|1,600,000.00|
|non-current asset|||
|Less: Non-operating expense|16,682.32|427,026.68|
|Including: Disposal loss of|||
|non-current asset|||
|III. Total Profit (Loss is listed with|||
||-7,227,501.09|6,771,266.69|
|“-”)|||
|Less: Income tax expense|2,314,557.40|1,428,360.32|
|IV. Net profit (Net loss is listed with|||
||-9,542,058.49|5,342,906.37|
|“-”)|||
|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 as a result of|||
|re-measurement of net defined benefit|||
|plan liability or asset|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|2. Share of the other|||
|comprehensive income of the investee|||
|accounted for using equity method|||
|which will not be reclassified|||
|subsequently to profit and loss|||
|(II) Other comprehensive income|||
|items which will be reclassified|||
|subsequently to profit or loss|||
|1. Share of the other|||
|comprehensive income of the investee|||
|accounted for using equity method|||
|which will be reclassified subsequently|||
|to profit or loss|||
|2. Gains or losses arising|||
|from changes in fair value of|||
|available-for-sale financial assets|||
|3. Gains or losses arising|||
|from reclassification of held-to-maturity|||
|investment as available-for-sale|||
|financial assets|||
|4. The effect hedging|||
|portion of gains or losses arising from|||
|cash flow hedging instruments|||
|5. Translation differences|||
|arising on translation of foreign|||
|currency financial statements|||
|6. Other|||
|VI. Total comprehensive income|-9,542,058.49|5,342,906.37|
|VII. Earnings per share:|||
|(i) Basic earnings per share|||
|(ii) Diluted earnings per share|||

5. Consolidated Cash Flow Statement
In RMB
||||
|-|-|-|
|Item|Current Period|Last Period|
|I. Cash flows arising from operating|||
|activities:|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Cash received from selling|||
|commodities and providing labor|513,469,704.97|531,329,345.21|
|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|||
|Net increase of amount from|||
|disposal financial assets that measured|||
|by fair value and with variation|||
|reckoned into current gains/losses|||
|Cash received from interest,|||
|commission charge and commission|||
|Net increase of capital borrowed|||
|Net increase of returned business|||
|capital|||
|Write-back of tax received|||
|Other cash received concerning|||
||296,382,321.93|28,559,456.87|
|operating activities|||
|Subtotal of cash inflow arising from|||
||809,852,026.90|559,888,802.08|
|operating activities|||
|Cash paid for purchasing|||
|commodities and receiving labor|248,964,065.70|317,306,581.05|
|service|||
|Net increase of customer loans and|||
|advances|||
|Net increase of deposits in central|||
|bank and interbank|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Cash paid for original insurance|||
|contract compensation|||
|Cash paid for interest, commission|||
|charge and commission|||
|Cash paid for bonus of guarantee|||
|slip|||
|Cash paid to/for staff and workers|62,963,693.91|60,699,398.41|
|Taxes paid|19,396,559.05|15,885,699.17|
|Other cash paid concerning|||
||305,041,692.25|46,504,964.44|
|operating activities|||
|Subtotal of cash outflow arising from|||
||636,366,010.91|440,396,643.07|
|operating activities|||
|Net cash flows arising from operating|||
||173,486,015.99|119,492,159.01|
|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 long-term||1,925,000.00|
|assets|||
|Net cash received from disposal of|||
|subsidiaries and other units|||
|Other cash received concerning|||
||899,643.49||
|investing activities|||
|Subtotal of cash inflow from investing|||
||899,643.49|1,925,000.00|
|activities|||
|Cash paid for purchasing fixed,|||
||28,607,045.58|6,482,152.86|
|intangible and other long-term assets|||
|Cash paid for investment|||
|Net increase of mortgaged loans|||
|Net cash received from|||
|subsidiaries and other units obtained|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Other cash paid concerning|||
|||44,452.72|
|investing activities|||
|Subtotal of cash outflow from investing|||
||28,607,045.58|6,526,605.58|
|activities|||
|Net cash flows arising from investing|||
||-27,707,402.09|-4,601,605.58|
|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|330,573,804.44|971,853,411.47|
|Cash received from issuing bonds|||
|Other cash received concerning|||
||1,062,033,333.35||
|financing activities|||
|Subtotal of cash inflow from financing|||
||1,392,607,137.79|971,853,411.47|
|activities|||
|Cash paid for settling debts|379,809,073.35|576,115,233.45|
|Cash paid for dividend and profit|||
||53,144,384.74|40,887,323.57|
|distributing or interest paying|||
|Including: Dividend and profit of|||
|minority shareholder paid by|||
|subsidiaries|||
|Other cash paid concerning|||
||500,000,000.00|500,000,000.00|
|financing activities|||
|Subtotal of cash outflow from financing|||
||932,953,458.09|1,117,002,557.02|
|activities|||
|Net cash flows arising from financing|||
||459,653,679.70|-145,149,145.55|
|activities|||
|IV. Influence on cash and cash|||
|equivalents due to fluctuation in|5,022,515.44|1,946,419.38|
|exchange rate|||
|V. Net increase of cash and cash|||
||610,454,809.04|-28,312,172.74|
|equivalents|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Add: Balance of cash and cash|||
||22,392,147.12|50,704,319.86|
|equivalents at the period-begin|||
|VI. Balance of cash and cash|||
||632,846,956.16|22,392,147.12|
|equivalents at the period-end|||

6. Cash Flow Statement of Parent Company
In RMB
||||
|-|-|-|
|Item|Current Period|Last Period|
|I. Cash flows arising from operating|||
|activities:|||
|Cash received from selling|||
|commodities and providing labor|52,034,400.65|54,826,654.35|
|services|||
|Write-back of tax received|||
|Other cash received concerning|||
||68,155,035.46|575,856,964.00|
|operating activities|||
|Subtotal of cash inflow arising from|||
||120,189,436.11|630,683,618.35|
|operating activities|||
|Cash paid for purchasing|||
|commodities and receiving labor|8,322,444.30|7,677,862.85|
|service|||
|Cash paid to/for staff and workers|5,577,101.48|5,118,552.72|
|Taxes paid|6,560,587.94|5,814,559.80|
|Other cash paid concerning|||
||75,777,962.88|489,120,594.10|
|operating activities|||
|Subtotal of cash outflow arising from|||
||96,238,096.60|507,731,569.47|
|operating activities|||
|Net cash flows arising from operating|||
||23,951,339.51|122,952,048.88|
|activities|||
|II. Cash flows arising from investing|||
|activities:|||
|Cash received from recovering|||
|investment|||
|Cash received from investment|||
|income|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Net cash received from disposal of|||
|fixed, intangible and other long-term||1,600,000.00|
|assets|||
|Net cash received from disposal of|||
||1,000,000.00|100,000.00|
|subsidiaries and other units|||
|Other cash received concerning|||
|investing activities|||
|Subtotal of cash inflow from investing|||
||1,000,000.00|1,700,000.00|
|activities|||
|Cash paid for purchasing fixed,|||
||304,712.00|1,042,600.00|
|intangible and other long-term assets|||
|Cash paid for investment||1,000,000.00|
|Net cash received from|||
|subsidiaries and other units|||
|Other cash paid concerning|||
|investing activities|||
|Subtotal of cash outflow from investing|||
||304,712.00|2,042,600.00|
|activities|||
|Net cash flows arising from investing|||
||695,288.00|-342,600.00|
|activities|||
|III. Cash flows arising from financing|||
|activities|||
|Cash received from absorbing|||
|investment|||
|Cash received from loans|19,600,000.00|632,000,000.00|
|Cash received from issuing bonds|||
|Other cash received concerning|||
||1,062,033,333.35||
|financing activities|||
|Subtotal of cash inflow from financing|||
||1,081,633,333.35|632,000,000.00|
|activities|||
|Cash paid for settling debts|50,600,000.00|225,298,800.00|
|Cash paid for dividend and profit|||
||45,555,697.47|33,088,836.69|
|distributing or interest paying|||
|Other cash paid concerning|||
||500,000,000.00|500,000,000.00|
|financing activities|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Subtotal of cash outflow from financingactivities|||
||596,155,697.47|758,387,636.69|
|Net cash flows arising from financingactivities|||
||485,477,635.88|-126,387,636.69|
|IV. Influence on cash and cash|||
|equivalents due to fluctuation in|11,212.34|4,520.46|
|exchange rate|||
|V. Net increase of cash and cashequivalents|||
||510,135,475.73|-3,773,667.35|
|Add: Balance of cash and cashequivalents at the period -begin|||
||14,802,258.59|18,575,925.94|
|VI. Balance of cash and cashequivalents at the period -end|||
||524,937,734.32|14,802,258.59|

7. Statement of Changes inOwners’ Equity (Consolidated)
This Period
In RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||This Period|||||||||||||
||Owners’ equity attributable to parent company|||||||||||||
|||Other||||||||||||
|||equity instrument||||||||||||
|Item||||||||||||Minorit|Total|
|||||||Less:|Other|||Provisio||||
||Share||Perpet|||||Reason||||y|owners’|
||capital|Prefer|ual||Capitalreserve|Inventory|comprehensive|able|Surplusreserve|n ofgeneral|Retained profit|interests|equity|
|||red|capita|Other||shares|income|reserve||risk||||
||||l|||||||||||
|||stock||||||||||||
||||securi|||||||||||
||||ties|||||||||||
||283,16||||||||||-188,69|||
|I. Balance at the|||||109,496||||77,391,||||281,351|
||1,227.||||||||||8,387.8|||
|end of the last year|||||,837.33||||593.25||||,269.74|
||00||||||||||4|||
|Add:||||||||||||||
|Changes of||||||||||||||
|accounting policy||||||||||||||
|Error||||||||||||||
|correction of the||||||||||||||
|last period||||||||||||||
|Enterprise||||||||||||||
|combine under||||||||||||||
|the same control||||||||||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|Other||||||
||283,16|||-188,69||
|II. Balance at the||109,496|77,391,||281,351|
|beginning of this|1,227.|||8,387.8||
|||,837.33|593.25||,269.74|
|year|00|||4||
|III. Increase/||||||
|||36,786,||-6,731,5|30,055,|
|Decrease in this||||||
|year (Decrease is||805.57||13.11|292.46|
|listed with “-”)||||||
|(i) Total||||-6,731,5|-6,731,5|
|comprehensive||||||
|||||13.11|13.11|
|income||||||
|(ii) Owners’||36,786,|||36,786,|
|devoted and||||||
|||805.57|||805.57|
|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||||||
|||36,786,|||36,786,|
|4. Other||||||
|||805.57|||805.57|
|(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)||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|2. Surplus reserves||||||
|conversed to||||||
|capital (share||||||
|capital)||||||
|3. Remedying loss||||||
|with surplus||||||
|reserve||||||
|4. Other||||||
|(V) Reasonable||||||
|reserve||||||
|1. Withdrawal in||||||
|the report period||||||
|2. Usage in the||||||
|report period||||||
|(VI)Others||||||
||283,16|||-195,42|311,406,562.20|
|IV. Balance at the||146,283|77,391,|||
|end of the report|1,227.|||9,900.9||
|||,642.90|593.25|||
|period|00|||5||

Last Period
In RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Last Period|||||||||||||
||Owners’ equity attributable to the parent Company|||||||||||||
|||Other|||Capital||||Surplus||Retaine|||
|||equity instrument||||||||||||
|||||||||||||Minorit||
|Item||||||||||||||
||Share||Perpetual|||Less:Invento|Othercompre|Reasonable||Provision of||yinterest|Totalowners’|
||capital|Preferred|capital|Other|reserve|ryshares|hensiveincome|reserve|reserve|generalrisk|d profit|s|equity|
|||stock||||||||||||
||||securi|||||||||||
||||ties|||||||||||
||283,16||||||||||-196,38|||
||||||109,496||||77,391,||||273,663|
|I. Balance at the||||||||||||||
||1,227.||||||||||6,008.1|||
|end of the last year|||||,837.33||||593.25||||,649.47|
||00||||||||||1|||
|Add:||||||||||||||
|Changes of||||||||||||||
|accounting policy||||||||||||||
|Error||||||||||||||
|correction of the||||||||||||||
|last period||||||||||||||
|Enterprise||||||||||||||
|combine under the||||||||||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|same control||||||
|Other||||||
||283,16|||-196,38||
|II. Balance at the||109,496|77,391,||273,663|
|beginning of this|1,227.|||6,008.1||
|||,837.33|593.25||,649.47|
|year|00|||1||
|III. Increase/||||||
|||||7,687,6|7,687,6|
|Decrease in this||||||
|year (Decrease is||||20.27|20.27|
|listed with “-”)||||||
|(i) Total||||7,687,6|7,687,6|
|comprehensive||||||
|||||20.27|20.27|
|income||||||
|(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||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|conversed to||||||
|capital (share||||||
|capital)||||||
|3. Remedying loss||||||
|with surplus||||||
|reserve||||||
|4. Other||||||
|(V) Reasonable||||||
|reserve||||||
|1. Withdrawal in||||||
|the report period||||||
|2. Usage in the||||||
|report period||||||
|(VI)Others||||||
||283,16|||-188,69||
|IV. Balance at the||109,496|77,391,||281,351|
|end of the report|1,227.|||8,387.8||
|||,837.33|593.25||,269.74|
|period|00|||4||

8. Statement of Changes inOwners’ Equity (Parent Company)
This Period
In RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||This Period|||||||||||
|||Other||||||||||
|||equity instrument|||||Other|||||
|||||||Less:||Reas||||
||||||||comp|||||
|Item|||Perpetu|||Inven|rehen|onab|Surplus||Total owners’|
||Share capital|||||||||Retained profit||
||||||Capital reserve|tory||le||||
||||al||||sive||reserve||equity|
|||Preferre||||share||reser||||
||||capital|Other|||incom|||||
|||d stock||||s||ve||||
||||securiti||||e|||||
||||es|||||||||
|I. Balance at the end||||||||||||
||283,161,227.00||||109,496,837.33||||77,391,593.25|-199,878,673.79|270,170,983.79|
|of the last year||||||||||||
|Add: Changes||||||||||||
|of accounting policy||||||||||||
|Error||||||||||||
|correction of the last||||||||||||
|period||||||||||||
|Other||||||||||||
|II. Balance at the||||||||||||
||283,161,227.00||||109,496,837.33||||77,391,593.25|-199,878,673.79|270,170,983.79|
|beginning of this||||||||||||
|year||||||||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||
|-|-|-|-|
|III. Increase/||||
|Decrease in this||||
||36,786,805.57|-9,542,058.49|27,244,747.08|
|year (Decrease is||||
|listed with “-”)||||
|(i) Total||||
|||-9,542,058.49|-9,542,058.49|
|comprehensive||||
|income||||
|(ii) Owners’||||
||36,786,805.57||36,786,805.57|
|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||||
||36,786,805.57||36,786,805.57|
|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. Other||||
|(V) Reasonable||||
|reserve||||
|1. Withdrawal in the||||
|report period||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|2. Usage in the||||||
|report period||||||
|(VI)Others||||||
|IV. Balance at the|||||297,415,730.87|
||283,161,227.00|146,283,642.90|77,391,593.25|-209,420,732.28||
|end of the report||||||
|period||||||

Last period
In RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Last period|||||||||||
|||Other||||||||||
|||equity instrument|||||Other|||||
|||||||Less:||Reas||||
||||||||comp|||||
|Item|||Perpetu|||Inven|rehen|onab|Surplus||Total owners’|
||Share capital|||||||||Retained profit||
||||||Capital reserve|tory||le||||
||||al||||sive||reserve||equity|
|||Preferre||||share||reser||||
||||capital|Other|||incom|||||
|||d stock||||s||ve||||
||||securiti||||e|||||
||||es|||||||||
|I. Balance at the end||||||||||||
||283,161,227.00||||109,496,837.33||||77,391,593.25|-205,221,580.16|264,828,077.42|
|of the last year||||||||||||
|Add: Changes||||||||||||
|of accounting policy||||||||||||
|Error||||||||||||
|correction of the last||||||||||||
|period||||||||||||
|Other||||||||||||
|II. Balance at the||||||||||||
||283,161,227.00||||109,496,837.33||||77,391,593.25|-205,221,580.16|264,828,077.42|
|beginning of this||||||||||||
|year||||||||||||
|III. Increase/||||||||||||
|Decrease in this||||||||||||
|||||||||||5,342,906.37|5,342,906.37|
|year (Decrease is||||||||||||
|listed with “-”)||||||||||||
|(i) Total||||||||||||
|||||||||||5,342,906.37|5,342,906.37|
|comprehensive||||||||||||
|income||||||||||||
|(ii) Owners’||||||||||||
|devoted and||||||||||||
|decreased capital||||||||||||
|1.Common shares||||||||||||
|invested by||||||||||||
|shareholders||||||||||||
|2. Capital invested||||||||||||
|by holders of other||||||||||||
|equity instruments||||||||||||
|3. Amount reckoned||||||||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|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. Other||||||
|(V) Reasonable||||||
|reserve||||||
|1. Withdrawal in the||||||
|report period||||||
|2. Usage in the||||||
|report period||||||
|(VI)Others||||||
|IV. Balance at the||||||
||283,161,227.00|109,496,837.33|77,391,593.25|-199,878,673.79|270,170,983.79|
|end of the report||||||
|period||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Section XI. Documents available for Reference
I. Text of annual report carrying signature of the Chairman;
II. Text of financial report carrying signature and seal of person in charge of the Company, person in charge of accounting works and person in charge of accounting institution;
III. All files disclosed on China Securities Journal, Securities Times and Hong Kong Commercial Daily appointed by CSRC;
IV. Article of Association;
V. Other relevant files
[Note] This Report is prepared respectively both in Chinese and English. Should be there any difference in interpretation of these two versions, the Chinese version shall prevail.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015Ⅲ. Basic information of the Company
Shenzhen Zhongheng Hwafa Co, Ltd. (hereinafter referred to as “the Company” or referred to as “the Group” when it includes the subsidiary) was founded on Dec. 8, 1981, with the business license number being 440301501120670. The legal representative of the Company is Mr. Li Zhongqiu and theCompany’s registered address is at No. 411 Building, Huafa North Road, Futian District, Shenzhen.
The Company is specialized in manufacturing the computer, communication and other electronic equipment, the business scope: manufacturing& operating each kind of color TV, LCD monitor, LCD screen (subject to branch offices), hi-fi equipment, digital watch, TV game player and computer as well as auxiliary circuit boards, precise injection moulding ware, light packing materials (manufacturing& operating in Wuhan), hardware (including molds), electroplate and solder stick, real estate development and operation (ref. S.F.D.C.No. 7226760), property management. Establishing affiliate companies in Wuhan and Jilin, branch offices in each capital city (excluding Lhasa) and cities directly under jurisdiction of the Central Government.
The Company has established theshareholders’ meeting, board of directors and board of supervisors. Theshareholders’ meeting is the organ of authority of the Company that is responsible for exercising the right to decide the significant matters such as theCompany’s management guideline, financing, investing and profit distribution according to laws. The board of directors is responsible for theshareholders’ meeting and has the right to exercise theCompany’s right of management and decision-making according to laws; the management layer is responsible for organizing theshareholders’ meeting, implementing the resolutions of the board of directors and presiding over theCompany’s production, operation and management.
The approved release date of the financial report: April 22, 2016.
Compared with last year, Yutian Henghua Co., Ltd. was removed this year for being sold. See the Note “VIII. Change in the Consolidation Scope” and the Note “IX. Rights and Interests in Other Entities” for details.
IV. Preparation Basis of Financial Statements
1. Preparation Basis
The Group's financial statements were prepared on the basis of the actual transactions or businesses occurred in its continuous operation according to the Enterprise Accounting Principle promulgated by the Ministry of Finance and according to the "important accounting policies and accounting evaluation".
2. Going Concern
The group has a history of recent earnings management and financial resources to support, think to prepare financial statements on the basis of continuous operations is reasonable.
Ⅴ. Significant Accounting Policy and Accounting Estimate
Specific accounting policy and accounting estimate tips:
The specific accounting policy and accounting estimate prepared by the Group according to actual production and operation
characteristics include operating cycle, recognition and measurement of bad debt provisions over account receivable, measurement of
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 delivered inventories, fixed asset classification and depreciation method, intangible assets amortization, income recognition and measurement.
1. Statement regarding Following Business Accounting Standards
The Financial Statement prepared by the Group complies with the requirements of Business Accounting Standards, and reflect such information regarding enterprise financial situation, operation result and cash flows, etc. on the factual and complete basis. 2. Accounting Period
The accounting period of the Group is from each 01 January to 31 December in the Gregorian calendar.
3. Operating Cycle
The operating cycle of the Group is 12 months and the operating cycle is treated as the classification standard for the liquidity of the assets and liabilities.
4. Standard Currency
RMB is adopted as standard currency by the Group.
5．Accounting processes of business mergers under the same control and those not under the same control The assets and liabilities obtained by the Group, as the combining party, during the business merger under common control shall be measured based on the book value of the combined party in the consolidated statements of the final controlling party on the merger date. Where there is any difference between the book value of obtained net assets and the book value of paid merger consideration, the capital reserve shall be adjusted; where the capital reserve is not sufficient for writing down, the retained earnings shall be adjusted.
Theacquiree’s identifiable assets, liabilities or contingent liabilities obtained during business merger under non-common control shall be measured based on the fair value in the acquisition date. The merger cost is the sum of the fair value of the cashes or non-cash assets paid by the Group on the acquisition date for obtaining the control right of the acquire, liabilities issued or assumed and equity securities issued and direct related expenses occurred in the business merger (for the business merger achieved step by step through several times of transaction, the merger cost shall be the sum of the costs of all single transactions). The difference between the merger cost and the fair value of identifiable net assets of the acquiree obtained in the merger shall be recognized as the goodwill; where the merger cost is lower than the fair value of identifiable net assets of the acquiree obtained in the merger, the fair value of various identifiable assets, liabilities or contingent liabilities obtained in the merger and the fair value of the non-cash assets of the merger consideration or the equity securities issued shall be reviewed. Upon review, where the merger cost is still less than the fair value of the identifiable net assets of the acquiree obtained in the merger, the difference shall be recorded in the non-business income on the same period of the merger.
6. Preparation of Consolidated Financial Statement
The Group incorporates all controlled subsidiaries into the scope of the consolidated financial statements.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 It shall make necessary adjustment onsubsidiaries’ financial statements according to the accounting policy or accounting period adopted by the Company when prepare consolidated financial statement.
All significant internal transactions, balance of current accounts and unrealized profit within the scope of merger shall be offset when preparing the consolidated financial statements. The shares in the ownership interest of the subsidiary thatdon’t belong to the parent company and the shares in the current net profits and losses, other comprehensive incomes and total comprehensive incomes that belong to the minoritystockholder’s interest shall be listed respectively in the item of “minoritystockholder’s interest, minority interest income, other comprehensive incomes belonging to the minority shareholder and total comprehensive incomes belonging to the minority shareholder” in the consolidated financial statement.
The operating result and cash flow of the subsidiary obtained during the business merger under common control shall be incorporated into the consolidated financial statements at the beginning of the merger period. When preparing the consolidated financial statement, relevant items in the financial statement of last year shall be adjusted and the report entity formed after merger shall be deemed to exist always since the final controlling party starts control.
Where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step via several times of transactions, the handling method in the consolidated financial statement shall be supplemented and disclosed during the reporting period when obtaining the control right. For instance: where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step via several times of transactions, when preparing the consolidated financial statement, it shall be deemed as being adjusted according to the current status when the final controlling party starts control; when preparing the comparison statement, relevant assets and liabilities of the acquiree shall be incorporated into the comparison statement of the consolidated financial statement of the Group not earlier than the period when the Group and the acquiree are under the common control of the final controlling party, and the net assets increased due to merger shall be adjusted in the comparison statement as the relevant items under the item of ownership benefit. In order to avoid repeated calculation of the value of net assets of the acquiree, the long-term equity investment held by the Group before merger, relevant profits and losses recognized from the date when obtaining the original equity and the date when the Group and the acquiree are under the common final control (whichever is later) to the merger date, other comprehensive income and change in other net asset shall be written down to compare the retained earnings at the beginning of the period and the profits and losses at the current period during the comparison statement period. Where the subsidiary is obtained via business merger under non-common control, the operating result and cash flow shall be incorporated into the consolidated financial statement since the date when the Group obtains the control right. When preparing the consolidated financial statement, the financial statement of the subsidiary shall be adjusted based on the fair value of various identifiable assets, liabilities and contingent liabilities determined on the acquisition date.
Where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step via several times of transactions, the handling method in the consolidated financial statement shall be supplemented and disclosed during the reporting period when obtaining the control right. For instance: where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step via several times of transactions, when preparing the consolidated financial statement, the equity of the acquiree held before the acquisition date shall be re-measured according to the fair value of the equity on the acquisition date; the difference between the fair value and the book value shall be recorded in the current investment income; where the relevant equity of the acquiree held before the acquisition date involves other comprehensive income under the accounting based on equity method and other ownership benefit change other than the net profit and loss, other comprehensive
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 income and profit distribution, the equity shall be transferred to the profit and loss on investments on the current period of the acquisition date, with an exception of the other comprehensive income generated from the change in the net liabilities or net assets under the benefit plan set based on the re-measurement by the investee.
Where the Group disposes part of the long-term equity investment on the subsidiary without losing the control right, in the consolidated financial statement, the difference between the disposal cost and the shares of the net assets of the subsidiary continuously calculated since the acquisition date or the merger date to which the disposal cost of long-term equity investment corresponds shall be adjusted as the capital premium or stock premium; where the capital reserve is not sufficient for write-downs, the retained earnings shall be adjusted.
Where the Group loses the control over the investee due to reasons such as disposal of partial equity investment, when preparing the consolidated financial statement, the remaining equity shall be re-measured based on its fair value on the date when it loses the control right. The sum of the consideration obtained from disposal of the equity and the fair value of remaining equity, after deducting the difference between the shares of the net assets of the original subsidiary continuously calculated since the acquisition date or merger date and calculated based on the original shareholding ratio, shall be recorded in the profit and loss on the investment on the current period when losing the control right and shall be used to write down the goodwill. The other comprehensive income related to the equity investment of original subsidiary shall be transferred to the profit and loss on investment on current period when losing the control right.
Where the Group disposes the equity investment on subsidiary step by step via several times of transactions until the Group loses the control right, if several transactions about disposal of the equity investment on subsidiary till loss of the control right belong to package deals, various transactions shall be treated as a transaction disposing the subsidiary and losing the control right for accounting handling; however, before loss of the control right, the difference between each disposal price and the share in the net assets of the subsidiary which corresponds to the disposed investment shall be recognized as other comprehensive income in the consolidated financial statement, which shall be transferred into the profit and loss on investment on the current period when the control right is lost.
7. Joint Venture Arrangement and Classification and Joint Operation Accounting Handling Method The joint venture arrangement of the Group includes the joint operation and joint venture. For joint operation project, the Group, as the cooperative enterprise in the joint operation, shall have the right to confirm the separately held assets and assumed liabilities and shall confirm the held assets and assumed liabilities according to shares and confirm relevant income and expense separately according to relevant agreement or based on shares. Where the joint operation related procurement and salesdoesn’t constitute the business asset transaction, only the part of the profit and loss generated from the transaction that belongs to the other participants under joint operation shall be recognized.
8. Determination criteria of cash and cash equivalents
The cash referred to in the Cash Flow Statement of the Group means stocked cash and deposit available for payment at any time. The cash equivalents therein refer to investment due within 3 months since purchasing day, strong fluidity, small risk in value variation and easy to converted into cash of predictable sum.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 9. Conversion in foreign currency transactions and Conversion of foreign currency statements
(1) Foreign currency transaction
Foreign currency amount of thegroup’s foreign currency business is converted into Renminbi amount in accordance with market exchange rate published by thePeople’s Bank of China at the beginning of the current month. At the reporting day of Balance Sheet, the monetary assets in foreign currencies are translated at the instant exchange rate of the reporting day of Balance sheet. As to the exchange loss and profit occurred, except for that of special loan for the purchase or production of assets which meet the conditions of capitalization, which shall be treated according to the principles of capitalization, others shall be accrued into loss and profit in current term.
(2) Conversion of foreign-currency financial statement
Assets and debt items in foreign-currency balance shall be converted with spot rate on the date of balance sheet; ownership items except “undistributed profit” shall be converted according to spot rate; income and fee item in profit statement shall be converted according to market exchange rate issued byPeople’s Bank of China at the beginning of the month when transaction is made. The translation difference in the foreign currency statement generated due to above translation shall be listed in the item of other comprehensive income. Foreign-currency cash flow adopts in conversion market exchange rate issued byPeople’s Bank of China at the beginning of the month when cash flow is incurred. Change amount due to influence from change of exchange rate to cash shall be listed independently in cash flow sheet.
10. Financial Instruments
When the Group becomes a party to the financial instrument contract, one financial asset or financial liability shall be recognized.
(1) Financial asset
1) Financial asset classification, recognition basis and measurement method
The Group divides its owned financial assets, based on the investment purpose and economic nature, into the financial assets which are measured based on fair value and which changes are recorded in current loss and profit, held-to-maturity investment, accounts receivables and available-for-sale financial assets.
The financial assets that are measured based on the fair value and which change is recorded in current profit and loss shall include the trading financial assets and the financial assets which are designated at the initial recognition as assets which are measured based on the fair value and which change is recorded in current profit and loss. The Group divides the financial assets meeting one of the following conditions into the trading financial assets: the purpose for obtaining the financial asset is for sales within a short term period; which belong to a part of the identifiable financial instrument portfolio under centralized management and there is an objective evidence showing that the company adopts short-term profit method in recent period to manage the portfolio; which also belong to the derivative instrument, but the derivative instrument that are designated and that belong to effective arbitrage instrument, the derivative instrument within the scope of financial guarantee contract, the equity instrument that is not quoted in the active market and which fair value cannot be reliably measured and the derivative instrument that is settled via delivery of equity
instrument are not included. The Group requires designating the financial instrument meeting one of the following conditions as the
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 financial asset which is measured based on fair value and which change is recorded in the current profit and loss at the time of initial recognition: such designation can eliminate or obviously reduce the discrepancy in the recognition or measurement of relevant profit or loss caused by different measurement basis of financial instrument; the official written document ofcompany’s risk management or investment strategy has specified that the financial instrument portfolio shall be managed, evaluated and reported to the key management personnel based on the fair value; include the mixed instruments with one or several embedded derivative instruments, unless that the embedded derivative instrumentdoesn’t significantly change the cash flow of the mixed instruments, or the embedded derivative instrument shall not be separated from relevant mixed instruments obviously; include the mixed instruments of embedded derivative instruments to be separated but that cannot be separately measured on the date of acquisition date or on the subsequent balance sheet date. The financial assets designated by the Group mainly include the trading financial assets. Such financial assets shall be measured subsequently based on fair value. The change in the fair value shall be recognized in profit or loss; the interest or cash dividends obtained during the period when the assets are held shall be recognized as income from investment; at the time of disposal, the difference between the fair value and the initial recorded amount shall be recognized as the profit and loss on investment. Meanwhile, the profit and loss on the change in fair value shall be adjusted.
Held-to-maturity investment refers to non-derivative financial asset with fixed maturity, fixed or confirmable returnable amount and that can be held to maturity according to theGroup’s clear intention and ability. The held-to-maturity investment shall be subsequently measured based on the amortized cost according to the effective interest method. And the amortized or reduced amount and the profit or loss generated at the time of final recognition shall be recorded in current profit and loss.
Accounts receivables refer to the non-derivative financial assets that have no quotation in active market and that have fixed or confirmable recoverable amount. Accounts receivables shall be subsequently measured based on the amortized cost according to the effective interest method. And the amortized or reduced amount and the profit or loss generated at the time of final recognition shall be recorded in current profit and loss.
Available-for-sale financial assets refer to the non-derivative financial assets which are designated as the available-for-sale financial assets at the time of initial recognition and the financial assets that are not divided into other categories. In such assets, the equity instrument investment that have no quotation in the active market and that fair value cannot be reliably measured and the derivative financial assets that are linked to the equity instrument and that shall be settled via delivery of the equity instrument shall be measured subsequently according to cost; other assets that have quotation in active market or that have no quotation in active market but have fair value that can be reliably measured shall be measured based on fair value and the change in fair value shall be recorded in the other comprehensive income. Such financial assets shall be subsequently measured based on fair value; except for the impairment loss and the exchange gain or loss generated by the foreign currency financial assets, the change in fair value of the available-for-sale financial assets shall be directly recorded in thestockholders’ equity. When the financial assets are finally recognized, the accumulated changes in fair value that are directly recorded in the equity shall be transferred into the current profit and loss. The interest of the available-for-sale debt instrument investment calculated based on effective interest method during the holding period and the cash dividends to be distributed according to the announcement of the invested unit that are related to the available-for-sale equity instrument shall be recorded in the current profit and loss as the income from investment. The equity instrument investment that has no quotation in the active market and that fair value cannot be reliably measured shall be measured based on the cost.
2) Recognition basis and measurement method of financial asset transfer
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 The financial assets meeting one of the following conditions shall be derecognized: (1) the contractual right for collecting the cash flow of the financial asset shall be terminated; (2) the financial asset has been transferred and the Group transfers almost all risks and remunerations on the ownership of financial asset to the carrying party; (3) the financial asset has been transferred, even though the Group neither transfers nor retains almost all risks and remunerations on the ownership of the financial assets, but waives the control right over the financial asset.
Where the enterprise neither transfers nor retains almost all risks and remunerations on the ownership of the financial asset anddoesn’t waive the control right over the financial asset, relevant financial asset shall be recognized according to its involvement degree in the transferred financial asset and relevant liabilities shall be recognized accordingly.
Where the overall transfer of the financial asset can meet the condition of derecognition, the difference between the book value of transferred financial assets and the sum of the consideration received due to transfer and the accumulated changes in fair value that are originally recorded in other comprehensive income shall be recorded in current profit and loss.
Where partial transfer of the financial asset can meet the condition of derecognition, the overall book value of transferred financial assets shall be shared based on respective relative fair value between the derecognized part and the non-derecognized part; and the difference between the sum of the consideration received due to transfer and the accumulated changes in fair value that are originally recorded in other comprehensive income and the above shared book value shall be recorded in the current profit and loss. 3) Test method and accounting treatment method of financial assets impairment
Except for the financial assets that are measured based on fair value and which changes are recorded in current profit and loss, the Group shall inspect the book value of other financial assets on the balance sheet date. If there is any objective evidence showing that a certain financial asset is impaired, the provision for impairment shall be withdrawn.
Where the financial assets measured based on amortized cost are impaired, the provision for impairment shall be withdrawn based on the difference between the present value of estimated future cash flow (excluding the future credit loss that has not yet occurred) and the book value. If there is any objective evidence showing that the value of the financial asset has been recovered, which is related to the matter occurred after the loss is confirmed objectively, the originally recognized impairment loss shall be transferred back and recorded in current profit and loss.
Where the available-for-sale financial assets are impaired, the accumulated losses caused due to decrease in fair value that are originally and directly recorded in the ownership interest shall be transferred out and recorded in the impairment loss. For the available-for-sale debt instrument investment which impairment loss has been recognized, if the future fair value increases and it is related to the matter occurred after recognition of original impairment loss objectively, the originally recognized impairment loss shall be transferred back and recorded in current profit and loss. For the available-for-sale equity instrument investment which impairment loss has been recognized, the increased in future fair value shall be directly recorded in the ownership interest.
(2) Financial liabilities
1) Classification, recognition basis and measurement method of financial liabilities
The financial liabilities of the Group shall, at the time of initial recognition, be classified as the financial liabilities that are measured based on fair value and which changes are recorded in current profit and loss and other financial liabilities.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 The financial liabilities that are measured based on the fair value and which change is recorded in current profit and loss shall include the trading financial liabilities and the financial assets which are designated at the initial recognition as liabilities which are measured based on the fair value and which change is recorded in current profit and loss. The financial liabilities shall be subsequently measured based on the fair value and the profit or loss generated from change in fair value and the dividend and interest expense related to the financial liabilities shall be recorded in current loss and profit.
Other financial liabilities shall be subsequently measured based on the amortized cost according to the effective interest method.
2) Condition for derecognition of the financial liabilities
When the current obligations of financial liabilities have been removed fully or partially, the part of the financial liabilities or obligations that has been removed shall be derecognized. Where the Company and the creditor enter into an agreement to replace current financial liabilities by assuming new financial liabilities and where the contractual terms with regard to new financial liabilities and the current financial liabilities are different in substance, the current financial liabilities shall be derecognized and the new financial liabilities shall be recognized. Where the Company makes substantial amendment to all or part of the contractual terms for the current financial liabilities, all or part of the current financial liabilities shall be derecognized and the financial liabilities which terms are amended shall be recognized as new financial liabilities. The difference between the book value of the part that is derecognized and the paid consideration shall be recorded in current profit and loss.
(3) Determination method of the fair value of financial assets and financial liabilities
The Group measures the fair value of financial assets and financial liabilities according to the price of the main market. If there is no main market, the Group will measure the fair value of financial assets and financial liabilities according to the price that is most favorable to the market and adopt the suitable valuation technique that is supported by sufficient available data and other information. The input value used for measurement of fair value can be divided into three levels: for the first level, the input value is the unadjusted quotation of the same asset or liability in the active market that can be obtained in the measurement date; for the second level, the input value refers to the input value of relevant asset or liability that can be observed directly or indirectly other than the input value at first level; for the third level, the input value refers to the input value of relevant asset or liability that cannot be observed. The Group preferentially uses the input value at first level and then uses the input value at third level. The level of the measurement result of fair value shall be determined based on the lowest level of the input value that is significant to the overall measurement of the fair value.
11. Accounts Receivables
(1) Accounts receivables with large single amount which bad debt provision is withdrawn separately
|||
|-|-|
|Judgment criteria or amount standard of material specific|The accounts receivables with the single amount being larger than|
|amount or amount criteria|RMB 500000 are treated as the significant accounts receivables|
|Provision method with material specific amount and|Provision bad debt preparation in accordance with the difference of|
|provision of specific bad debt preparation|present value of future cash flow below the book value|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 (2) Accounts receivable which bad debt provision is withdrawn according to the credit risk characteristics
|||
|-|-|
|Combination name|Methods for withdrawing the bad debt provision|
|Aging portfolio|Aging analysis method|

Bad debt reserve accrued by aging analysis method in the combination
√ Applicable□ Inapplicable
||||
|-|-|-|
|||Accrual proportion of Other Accounts|
|Account ageing|Accrual proportion of account receivables||
|||Receivable|
|< 1 year|0.00%|0.00%|
|1-2 year (s)|5.00%|5.00%|
|2-3 year (s)|10.00%|10.00%|
|Over 3 years|30.00%|30.00%|

 Bad debt reserve accrued by balance percentage method in the combination
□ Applicable√ Inapplicable
Bad debt reserve accrued by other method in the combination
□ Applicable√ Inapplicable
(3) Accounts receivable that were not significant but have been provisioned bad debt preparation separately
|||
|-|-|
|Reason of specific bad debt preparation|Accounts receivable with non-material specific amount and being not able to reflect|
|provision|its risk character by provisioning bad debt preparation in accordance with portfoio|
||Bad debt preparation will be provisioned in accordance with the difference of presentvalue of its future cash flow below its book value.|
|Provision method of bad debt preparation||

12. Inventories
The inventories of the Group mainly include the raw materials, goods in process, commodities in stock, low priced and easily worn articles, self-made and semi-finished products and outsourced materials.
The perpetual inventory system is implemented for inventories. The inventories shall be valued based on actual cost at the time of acquisition; for reception or delivery of inventories, the actual cost of the inventories shall be determined based on the first-in and first-out method. The low priced and easily worn articles and packing materials shall be amortized based on the one-ff amortization method.
For such stocked goods directly for sales as products in stocks, products in progress and materials for sales, their net realizable value shall be recognized after deducting the estimated sales expenses and relevant taxes from estimated sales price of such
inventories. For stocked materials for production use, their net realizable value shall be recognized after deducting estimated cost
occurring at completion, sales expenses and relevant tax from estimated sales price of products to be manufactured.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 13. Assets classified as held for sale
14. Long-term Equity Investment
TheGroup’s long-term equity investment mainly refers to the investment in subsidiaries, joint ventures and cooperative enterprises.
The judgment basis of the Group on common control: all participants or the participating groups collectively control the arrangement and the policy of the arrangement-related activity shall be consistently agreed by the participants who collectively control such arrangement.
When the Group directly or indirectly owns the voting rights larger than20% of the total voting rights of the invested unit (inclusive) but lower than50% of the total voting rights via subsidiaries, it is often considered a significant influence on the invested unit. Where the Group holds less than20% of the voting rights of the invested unit, whether it has a significant influence on the invested unit shall be judged after comprehensively considering the facts and situations that the Group assign representatives to the investedunit’s board of directors or similar organs of power, the Group participates in the financial and operation policy preparation process of the invested unit, the Group has important transactions with the invested unit, the Group assigns management personnel to the invested unit or the Group provides the invested unit with key technical information and materials.
The unit controlling the invested unit shall be the subsidiary of the Group. For the long-term equity investment obtained from the business merger under common control, the shares of the book value of the net assets of the acquiree in the consolidated financial statement of the final controlling party obtained in the merger date shall be treated as the initial investment cost of the long-term equity investment. Where the book value of the net assets of the acquiree on the merger date is negative, the long-term equity investment cost shall be determined as zero.
Where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step via several times of transactions, the handling method of long-term equity investment in the parentcompany’s consolidated financial statement shall be supplemented and disclosed during the reporting period when obtaining the control right. For instance: where the business merger is finally realized by obtaining the equity of the invested unit under common control step by step via several times of transactions, which belongs to the package deal, the Group shall conduct accounting treatment by treating various transactions as a transaction obtaining the control right. Where itdoesn’t belong to a package deal, on the merger date, the shares of the book value of the net assets of the acquiree in the consolidated financial statement of final controlling party after merger shall be treated as the initial investment cost of the long-term equity investment. The difference between the initial investment cost and the sum of the book value of long-term equity investment before the merger and the book value of new payment consideration of shares further obtained on the merger date shall be used to adjust the capital reserves. Where the capital reserves are not sufficient for write-downs, the retained earnings shall be written down.
Where the long-term equity investment is obtained through the business merger under non-common control, the merger cost shall be treated as the initial investment cost.
Where the business merger is finally realized by obtaining the equity of the invested unit under non-common control step by step via several times of transactions, the handling method of long-term equity investment in the parentcompany’s consolidated financial statement shall be supplemented and disclosed during the reporting period when obtaining the control right. For instance:
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 where the business merger is finally realized by obtaining the equity of the invested unit under non-common control step by step via several times of transactions, which belongs to the package deal, the Group shall conduct accounting treatment by treating various transactions as a transaction obtaining the control right. Where itdoesn’t belong to a package deal, the sum of the book value of originally held equity investment and the newly-increased investment cost shall be treated as the initial investment cost accounted based on cost method. Where the equity held before the acquisition date is accounted based on equity method, other relevant comprehensive income accounted based on original equity method shall not be adjusted temporarily and during disposal of such investment, accounting treatment shall be carried out based on the same basis on which the invested unit directly disposes relevant assets or liabilities. Where the equity held before the acquisition date in the available-for-sale financial assets is accounted based on fair value, the accumulated changes in fair value that shall be recorded in other comprehensive income originally shall be transferred into the current profit and loss on investment on the merger date.
Except for the long-term equity investment obtained via the business merger, for the long-term equity investment obtained via the cash payment, the purchase price actually paid shall be treated as the investment cost; while for the long-term equity investment obtained via issuance of equity securities, the fair value of the issued equity securities shall be treated as the investment cost; for the long-term equity investment invested by the investors, the value specified in the investment contract or the agreement shall be treated as the investment cost; where the Company has any long-term equity investment obtained via debt restructuring and non-currency asset exchange, the method to determine the investment cost shall be disclosed in accordance with relevant regulations of accounting standards for business enterprises and the actual situation of the Company.
The Group adopts the cost method to account the investment on the subsidiaries and adopts the equity method to account the investment on the joint venture and cooperative enterprises.
For the long-term equity investment measured and accounted subsequently based on the cost method, when increasing the investment, the book value of the long-term equity investment cost shall be added based on the fair value of cost paid for additional investment and relevant transaction cost occurred. Where the invested unit declares the distributed cash dividend or profit, the amounts to be shared shall be recognized as the current investment income.
For the long-term equity investment measured and accounted subsequently based on the equity method, the book value of long-term equity investment shall be added or reduced accordingly based on the change in the ownership interest of the invested unit. When recognizing the shares of the net profit and loss of invested unit, the net profit of invested unit shall be adjusted before recognition based on the fair value of the identifiable assets of the invested unit when obtaining the investment and based on the accounting policies of the Group during accounting period and the internal transaction profit or loss between the joint venture and cooperative enterprises shall be offset and the part that belongs to the investment enterprise shall be calculated based on the shareholding ratio.
When disposing the long-term equity investment, the difference between the book value and the actually obtained price shall be recorded in the current profit and loss on investment. When accounting the long-term equity investment based on equity method, where the other changes in the ownership interest of the invested unit other than the net profit and loss are recorded in the ownership interest, when disposing such investment, the part that shall be recorded in the ownership interest originally shall be transferred into current profit and loss on investment according to corresponding ratio.
In case of loss of common control or significant influence on the invested unit due to reasons such as disposal of partial equity
investment, the remaining equity after disposal can be accounted based on the available-for-sale financial asset and difference
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 between the fair value and book value of the remaining equity on the date of loss of the common control or significant influence shall be recorded in the current profit and loss. Accounting treatment shall be carried out on other comprehensive income of original equity investment recognized due to the accounting based on equity method according to the same basis based on which the invested unit directly disposes relevant assets or liabilities when terminating adoption of equity method for accounting.
In case of loss of control on the invested unit due to disposal of partial long-term equity investment and where the remaining equity after disposal can implements common control or exerts significant influence on the invested unit, the accounting based on equity method shall be carried out and the difference between the book value of disposed equity and disposal consideration shall be recorded in investment income and the remaining equity shall be deemed as being adjusted based on the equity-method accounting at the time of acquisition; where the remaining equity after disposal cannot implement common control or exert significant influence on the invested unit, accounting treatment can be carried out based on relevant regulations of available-for-sale financial assets; and the difference between book value of disposed equity and disposal consideration shall be recorded in investment income. The difference of the fair value and book value of remaining equity on the date of loss of control shall be recorded in the current profit and loss on the investment.
Where various transactions conducted by the Group from step-by-step disposal of equity to loss of controlling interestdon’t belong to a package deal, the accounting treatment on each transaction shall be carried out separately. Where they belong to a package deal, various transactions shall be treated as a transaction disposing the subsidiary and losing the control right for accounting treatment. However, before loss of control right, the difference between each transaction disposal price and the book value of long-term equity investment to which the disposed equity corresponds shall be recognized as other comprehensive income and shall be transferred into the current profit and loss without control right at the time of loss of control right.
15. Property of Investment
Measurement mode for investment real estate
Measurement based on cost method
Depreciation method or amortization method
The depreciation or amortization of theGroup’s investment real estate is withdrawn based on the composite life method. The expected service life, net residual value rate and annual depreciation (amortization) rate of various investment real estates are shown as follows:
|||||
|-|-|-|-|
|Items|Depreciation Term (Year)|Expected Salvage Rate (%)|Annual Depreciation Rate (%)|
|Land-use Right|50|10.00%|1.80%|
|Houses & Buildings|5—50|10.00%|1.80%—18.00%|

16. Fixed Assets
(1) Recognition Condition
Fixed assets of the Group refer to the tangible assets that simultaneously possess the following features. They are held for the
sake of producing commodities, rendering labor service, renting or business management; their useful life is in excess of one fiscal
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 year; and unit value has exceeded 2,000 Yuan. The fixed assets shall be recognized when its relevant economic benefit may be flowed into the Group and its cost can be reliably measured. TheGroup’s fixed assets include Houses& buildings, Machinery equipment, Mould equipment, Transport equipment, Apparatus equipment, Tooling equipment and Office equipment.
(2) Depreciation method
||||||
|-|-|-|-|-|
|Items|Depreciation method|Depreciation Term|Rate of salvage value|Annual Depreciation Rate|
|Houses & buildings|Straight-line method|20—50|10.00%|1.80-4.50|
|Machinery equipment|Straight-line method|10|10.00%|9.00|
|Mould equipment|Straight-line method|3|10.00%|30.00|
|Transport equipment|Straight-line method|5|10.00%|18.00|
|Apparatus equipment|Straight-line method|5|10.00%|18.00|
|Tooling equipment|Straight-line method|5|10.00%|18.00|
|Office equipment|Straight-line method|5|10.00%|18.00|

 17. Project in Process
Since the day when project in process reaching the expected service status, carry over the estimated value of the project to fixed assets in line with project budget, construction cost or actual cost, etc. with depreciation drawn since the preceding month. After the completion procedures have been completed, an adjustment shall be made to the difference of original fixed assets value.
18. Borrowing Costs
When occuring the borrowing costs that can be directly attributed to the fixed assets, investment real estate and inventories which can reach the predetermined usable or marketable state through more than 1 year of construction or production activity, when the asset expenditure has occurred, borrowing cost has occurred, the necessary construction or production activity that can make the asset reach the predetermined usable or marketable status has occurred, the capitalization shall be conducted; when the constructed or produced assets meeting the capitalization condition can reach the predetermined usable or marketable status, the capitalization shall be suspended and the subsequent borrowing costs shall be recorded in current profit and loss. If the assets meeting capitalization condition are abnormally suspended during construction or production and the suspension period lasts for more than three months, the capitalization of borrowing costs shall be suspended until the asset construction or production activity is restarted.
As for specifically borrowed loans, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment. As for the general borrowing; for ordinary borrowings, the capitalized amount is determined by multiplying the capitalization rate of ordinary borrowings by the weighted average of the accumulative asset expenditure in excess of the special borrowings.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 19. Intangible Assets
(1) Valuation Method, Service Life and Impairment Test
The major intangible assets of the Group include land-use right, patented technologies and non-patented technologies, etc., and shall be measured according to the actual cost when acquired. The acquired intangible assets shall be recorded as per actual price and relevant other disbursements. The intangible assets invested by investors shall be priced as per the value agreed in investment contract or agreement, with the exception of those of unfair value as is stipulated in such contract or agreement. At the time of initial recognition of theacquiree’s assets, the intangible assets owned by the acquiree during merger under non-common control which are not recognized in the financial statement shall be recognized as the intangible assets based on the fairvalue.。
The land-use right shall be averagely amortized based on its useful years since the beginning date of use; the patented technologies, non-patented technologies and other intangible assets will be averagely amortized by installments depending the shortest one among predicted service years, benefiting years set out in the contract and legal effective years. The amortized amount shall be accrued into relevant assets cost and current loss and profit as per their beneficiary objects. The estimated life of and amortization method for the intangible assets with limited life is to be reviewed at the end of every financial year. In case of any change, it will be handled as accounting estimate change.
20. Long-term Asset Impairment
The Group carries out inspection on the long-term equity investment, investment real estate measured based on cost mode, fixed asset, project under construction, production biological asset measured based on cost mode, oil and gas asset, intangible assets with limited service life on each balance sheet date. Where there is any sign of impairment, the Group shall carry out the impairment test. The impairment test shall be carried out on the intangible assets which goodwill and service life are uncertain at the end of each year no matter whether there is any sign of impairment. After an impairment test to an asset, if the book value of such asset exceeds its recoverable amount, the positive difference shall be recognized as impairment loss. The impairment loss of above said assets shall not be reversed in later accounting period after being recognized.
21. Long-term Deferred Expenses
Long-term deferred expenses of the Group refer to various expenses that have been paid but shall be assumed on current period or subsequent period with the amortization period of more than one year (exclusive). Such expenses shall be amortized averagely during the beneficial period. Where the long-term deferred expenses will not benefit the later accounting period, the remaining amount to-be-amortized shall be recorded into the loss or profits of current period.
22．Employees’ Remuneration
(1) Accounting Treatment Method of Short-term Remuneration
Short-term remuneration mainly includes the wage, bonus, allowance, subsidy,employee’s welfare expense, medical insurance premium, birth insurance premium, industrial injury insurance premium, legal reserves of housing acquisition, labor union expenditure, personnel education fund and non-currency welfare. During the accounting period when the employees provide the
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 service for the Company, the Company shall recognize the actual short-termemployees’ remuneration as the liability and shall record it in current profit and loss or relevant asset cost. The non-currency welfare shall be measured based on the fair value.
(2) Accounting Treatment Method of Welfare after Departure
The welfare after departure mainly includes the defined contribution plan, which mainly includes basic endowment insurance, unemployment insurance and annuity. Corresponding payable amount shall be recorded in relevant asset cost or current profit and loss at the time of occurrence.
(3) Accounting Treatment Method of Dismissal Welfare
When terminating the labor relationship with employees before expiration of theemployees’ labor contract or proposing a suggestion on provision of compensation for the purpose of encouraging employees to accept workforce reduction willingly, theemployees’ remuneration related liabilities generated from dismissal welfare shall be recognized and recorded in current profit and loss when the Company fails to unilaterally cancel the dismissal welfare offered for labor relationship termination plan or reduction suggestion and when the Company recognizes the cost related to payment of dismissal welfare restructuring (whichever is earlier). However, if the dismissal welfare cannot be fully paid within 12 months after the end of the annual reporting period, it shall be treated as the other long-termemployee’s remuneration.
Theemployees’ internal retirement plan shall be treated based on the same principle of above dismissal welfare. The Company shall record the internal retiredemployees’ wages and paid social insurance premiums to be paid from the date when the employees stop providing service to the normal retirement date in current profit and loss (dismissal welfare) when they meet the expected liability recognition condition.
(4) Accounting Treatment Method of Other Long-termEmployees’ Welfare
Where the other long-termemployees’ welfare provided by the Company to the employees can meet the defined contribution plan, accounting treatment on such welfare shall be conducted based on the defined contribution plan; otherwise, it shall be conducted based on the defined income plan.
23. Predictable Liabilities
In case all the obligations in relation to such contingent items as external guaranty, suspensive lawsuit or arbitration, product quality guarantee, staff cutback plan, loss contract, restructuring obligation and fixed assets discarding obligation, etc. comply with the following conditions simultaneously, the Group will recognize them as liabilities. Such obligations are constant burdened by the Group; the execution of such obligations will possibly result in the outflowing of economic benefit from the Group; the amount of such obligations can be reliably measured.
The predictable liabilities shall be initially measured as per the best estimated amount to be paid for executing relevant instant obligations in combination with such factors as risk, uncertainty and time value of money regarding contingent issues. If the time value of money exerts serious effect, the best estimated amount shall be determined through discounting relevant cash outflows in the future. On the date of Balance Sheet, the Company shall double check the book value of predictable liabilities and make adjustment to it so as to reflect the best estimated amount at present.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 24. Stock Payment
The stock payment settled based on equity which is used to exchange the service provided by the employees shall be measured based on the fair value on the date of grant ofemployees’ equity instrument. The amount of fair value shall be recorded in relevant costs or expenses based on straight-line method under the condition that the service within the waiting period is completed or the specified performance condition is met before exercise of right by taking the best estimate of the quantity of exercisable equity instruments within the waiting period as the basis, in order to increase the capital reserves accordingly.
Share-based payment adopting cash settlement, The measurement accords with the fair value of liabilities borne by the enterprise and determined through the calculation based on share or other equity instruments. Where the right can be exercised immediately upon grant, the fair value of assumed liabilities shall be recorded in relevant costs or expenses on the date of grant to increase the liabilities accordingly; where it needs to complete the service within waiting period or meet the specified performance condition before exercise of right, the best estimate of exercisable right can be taken as the basis on each balance sheet date during the waiting period to record the obtained service on current period in the cost or expense in accordance with the fair value amount of liabilities assumed by the Group to adjust the liabilities accordingly.
The enterprise remeasures the fair value of liabilities and record its change in current profit and loss on every balance sheet date before related liability settlement and the settlement date.
Where the Group cancels the granted equity instruments within the waiting period (with an exception of cancellation due to failure in meeting the exercisable condition), it shall be deemed as accelerated exercise of right, which means that the equity payment plan within the remaining waiting period have fully met the exercisable condition and all expenses within the remaining waiting period shall be recognized on the current period when cancelling the granted equity instrument.
24. Income
The operating income of the Group mainly includes the sales revenue of commodities, income from provision of labor service, income from transfer of asset use right and income from construction contract. The income recognition policy is shown as follows: (1) Sales revenue of commodities: When the Group has transferred the significant risks and rewards of ownership of the goods to the buyer; the Group retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; The relevant amount of revenue can be measured in a reliable way; The relevant economic benefits may flow into the enterprise; The relevant costs incurred or to be incurred can be measured in a reliable way, it may recognize the realization of revenue.
(2) Income from provision of labor service: When total revenue and total cost from labor service can be measured in a reliable way; the relevant economic benefits are likely to flow into the enterprise; the schedule of completion under the transaction can be confirmed in a reliable way; it may recognize the realization of revenue from labor service. On the date of Balance Sheet, where the result of a transaction concerning the providing of labor service can be measured in a reliably way, it shall recognize relevant revenue according to the schedule of completion; Percentage of completion is the percentage of incurred costs in the total costs; where the result of a transaction concerning the providing of labor service cannot be measured in a reliably way and the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost of labor services shall be carried forward at the same amount; where the result of a transaction concerning the providing of labor service cannot be measured in a reliably way and the cost of labor services
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 incurred is not expected to compensate, the cost incurred should be included in the current profits and losses, and no revenue from the providing of labor services may be recognized.
(3) Income from transfer of assets: The revenue from abalienating of right to use assets may be recognized on the condition that the relevant economic benefits are likely to flow into the Company and the amount of revenues can be measured in a reliable way. 26. Government Grants
(1) Judgment Basis and Accounting Treatment Method of Asset-related Governmental Subsidies
The governmental subsidies related to the assets refer to the governmental subsidies obtained by the enterprise, governmental subsidies used for construction and procurement or the governmental subsidies forming long-term assets in other ways. A government grant pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in the current profits and losses.
(2) Judgment Basis and Accounting Treatment Method of Income-related Governmental Subsidies The income related governmental subsidies refer to the governmental subsidies other than the asset-related governmental subsidies. The government grant pertinent to incomes, if used for compensating the related future expenses or losses of the Company, shall be recognized as deferred income and shall included in the current profits and losses during the period when the relevant expenses are recognized; or if used for compensating the related expenses or losses incurred to the Company, shall be directly included in the current profits and losses.
27. Deferred Income Tax Assets/Deferred Income Tax Liabilities
TheGroup’s deferred income tax assets and deferred income tax liabilities shall be recognized based on the difference between the tax base and book value of the assets and liabilities (temporary difference). For the deductible loss that can be used to offset the taxable income of following years according to the tax law regulations, corresponding deferred income tax assets shall be recognized. For the temporary difference generated from initial recognition of the goodwill, the corresponding deferred income tax liabilities shall not be recognized. For the temporary difference generated from initial recognition of the assets or liabilities generated during the transaction of non-business merger which neither affects the accounting profit nor affects the taxable income tax (or deductible loss), no corresponding deferred income tax asset and deferred income tax liability shall be recognized. On the balance sheet date, the deferred income tax asset and deferred income tax liability shall be measured based on the applicable tax rate during the period when it is expected to recover such assets or pay off such liabilities. The Group will recognize the deferred income tax assets based on the future taxable income that may be used to deduct the deductible temporary difference, deductible loss and tax payment offsetting. 28. Lease
(1) Accounting treatment method of operating lease
Operating lease refers to a lease other than a financing lease. Where the Group is lessee, the rents shall be recorded in the relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the lease term. Where the Group is lessor, the rents shall be recorded in the profits and losses of the current period by using the straight-line method
over each period of the lease term.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 (2) Accounting treatment method of finance lease
Financing lease refers to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset. On the lease beginning date, the Group as lessee shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges.
29. Significant accounting policy and accounting estimate change
(1) Change in significant accounting policy
□Applicable√ Inapplicable
(2) Change in significant accounting estimate
□Applicable√ Inapplicable
Ⅵ. Taxes
1．Main tax types and rates
||||
|-|-|-|
|Tax type|Tax basis|Tax rate|
|VAT|Sales revenue of commodities|17%|
|Business Tax|Taxable income|5%|
|Urban Maintenance & Construction Tax|Circulating tax payable|7%|
|Enterprise Income Tax|Taxable income amount|25%|
|Extra charges of education funds|Circulating tax payable|3%|
|Real estate tax|70% of the original value of real estate|1.2%|

Disclosure of subjects of taxation at different rates of corporate income tax
|||
|-|-|
|Subject of taxation|Rate of income tax|

Ⅶ. Notes to the Items of Consolidated Financial Statements
1. Monetary Fund
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|Ready money|382,669.21|516,454.17|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Bank Deposit|632,464,286.95|21,875,692.95|
|Other Monetary Fund|29,268,508.03|6,427,210.56|
|Total|662,115,464.19|28,819,357.68|

 Other explanations
(1) Other monetary capitals of the Group at the end of the year refer to the cash deposit for bank acceptance.
(2) In the monetary capitals of the Group at the end of the year, the limited monetary capital is RMB 29,268,508.03. The monetary capital limited at the beginning of the year is RMB 6,427,210.56.
2. Notes Receivable
(1) Classified Presentation of Notes Receivable
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|Bank acceptance bill|54,346,509.74|100,821,063.85|
|Total|54,346,509.74|100,821,063.85|

 (2) Notes Receivable of the Company that Have Been Pledged at the End of the Period
Unit: RMB
|||
|-|-|
|Items|Pledged amount at the end of the period|
|Bank acceptance bill|24,349,803.96|
|Total|24,349,803.96|

 (3) Notes Receivable of the Company that Have Been Endorsed or Discounted and that Are not Expired on Balance Sheet Date at the End of the Period
Unit: RMB
||||
|-|-|-|
|Items|Amount Ceased to Recognized at Year End|Amount Ceased to Recognized at Year End|
|Bank acceptance bill|44,415,527.63||
|Total|44,415,527.63||

3. Notes Receivable
(1) Classified Disclosure of Accounts Receivable
Unit: RMB
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Amount at the end of period|||||Beginning balance|||||
||||Provision for Bad||||||||
||Book balance|||||Book balance||Provision for Bad Debts|||
||||Debts||||||||
|Items|||||Book||||||
|||||Percen||||||Book Value|
|||Proporti|||Value||Propor||Percent||
||Amount||Amount|t||Amount||Amount|||
|||on|||||tion||Drawn||
|||||Drawn|||||||
|Accounts|||||||||||
|receivable with|||||||||||
|significant specific|||||||||||
|||||100.00||7,649,789.1|||||
|amount that were|7,649,789.11|6.22%|7,649,789.11||||6.17%|6,227,694.47|81.41%|1,422,094.64|
|||||%||1|||||
|provisioned bad|||||||||||
|debt preparation|||||||||||
|separately|||||||||||
|Accounts|||||||||||
|receivable which|||||||||||
|bad debt provision|110,105,447.8||||109,965,|111,125,574.|89.67|||111,003,373.9|
|||89.58%|139,455.74|0.13%||||122,200.33|0.11%||
|shall be withdrawn|8||||992.14|26|%|||3|
|based on credit|||||||||||
|risk characteristics|||||||||||
|Accounts|||||||||||
|receivable that|||||||||||
|were not|||||||||||
|significant but||||100.00||5,160,953.4|||||
||5,160,953.41|4.20%|5,160,953.41||||4.16%|5,160,953.41|100.00%||
|have been||||%||1|||||
|provisioned bad|||||||||||
|debt preparation|||||||||||
|separately|||||||||||
||122,916,190.4||||109,965,992.14|123,936,316|100.00|||112,425,468.57|
|Total||100.00%|12,950,198.26|||||11,510,848.21|||
||0|||||.78|%||||

 Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end ofperiod：
√ Applicable□ Inapplicable
Unit: RMB
||||||
|-|-|-|-|-|
||Ending balance||||
|Accounts receivable (based on unit)|Notes Receivable|Provision for Bad|Percent Drawn||
|||||Reason of provision|
|||Debts|||
|Shenzhen Boteman Bowling Club|||||
|Co., Ltd. (hereinafter referred to as|2,555,374.75|2,555,374.7|5 100.00%|Can not be taken back|
|Boteman)|||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|H. K. Haowei Industry Co., Ltd.|1,870,887.18|1,870,887.18|100.00%|Can not be taken back|
|TCL Wangpai Electric Appliance|||||
||1,325,431.75|1,325,431.75|100.00%|Can not be taken back|
|(Huizhou) Co., Ltd.|||||
|Qingdao Hai’er Spare Parts|||||
||1,225,326.15|1,225,326.15|100.00%|Can not be taken back|
|Procurement Co., Ltd.|||||
|Skyworth Multimedia(Shenzhen)|||||
||672,769.28|672,769.28|100.00%|Can not be taken back|
|Co.,Ltd.|||||
|Total|7,649,789.11|7,649,789.11|--|--|

Accounts receivable with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable□ Inapplicable
Unit: RMB
|||||
|-|-|-|-|
||Ending balance|||
|Account ageing||||
||Notes Receivable|Provision for Bad Debts|Percent Drawn|
|Subitem within one year||||
|Subtotal within 1 year|109,617,721.92|||
|1-2year (s)|27,448.20|1,372.41|5.00%|
|Over 3years|460,277.76|138,083.33|30.00%|
|Total|110,105,447.88|139,455.74||

Instructions for determining the combination basis:
Accounts receivable with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable√ Inapplicable
Accounts receivable with accrual of bad debt reserve by other method in the combination:
Accounts receivable without major individual amount but with separate accrual of bad debt reserve at the end of period
||||||
|-|-|-|-|-|
|Unit name|Balance at the end of the year||||
||NotesReceivable|Provision for BadDebts|Percent Drawn（%）|Reason of provision|
|Shenzhen Huixin Video Science andTechnology Co.,Ltd.|381,168.96|381,168.96|100.00|Can not be taken back|
|Shenzhen Wandial Number Science andTechnology Co.,Ltd.|351,813.70|351,813.70|100.00|Can not be taken back|
|Shenzhen Dalong Electric Co.,Ltd.|344,700.00|344,700.00|100.00|Can not be taken back|
|Shenzhen Qunpin Electric Co.,Ltd.|304,542.95|304,542.95|100.00|Can not be taken back|
|China Galaxy Electric(Hong Kong) Co.,Ltd.|288,261.17|288,261.17|100.00|Can not be taken back|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|Dongguan Weite Electric Co.,Ltd.|274,399.80|274,399.80|100.00|Can not be taken back|
|Hong Kong New Century Electric Co.,Ltd.|207,409.40|207,409.40|100.00|Can not be taken back|
|Shenyang Beitai Electric Co.,Ltd.|203,304.02|203,304.02|100.00|Can not be taken back|
|Bejing Xinfanweiye Science and TechnologyCo.,Ltd.|193,000.00|193,000.00|100.00|Can not be taken back|
|TCL Electric(Hong kong) Co.,Ltd.|145,087.14|145,087.14|100.00|Can not be taken back|
|Huizhou TCL New and Special ElectronicsCo., Ltd.|142,707.14|142,707.14|100.00|Can not be taken back|
|Shenzhen Skyworth-RGB Electric Co.,Ltd.|133,485.83|133,485.83|100.00|Can not be taken back|
|Shenzhen Xinfa Electronics Co., Ltd.|119,094.78|119,094.78|100.00|Can not be taken back|
|Other|2,071,978.52|2,071,978.52|100.00|Can not be taken back|
|Total|5,160,953.41|5,160,953.41|||

(2) Bad Debt Provision Withdrawn, Recovered or Refunded at Current Period
The bad debt provision withdrawn at current period is RMB 1,439,350.05; the bad debt provision recovered or refunded at current period is RMB0.00.
Among which, the important bad debt provision recovered or refunded at current period:
Unit: RMB
||||
|-|-|-|
|Unit name|Recovered or refunded amount|Recovery method|

(3) Accounts Receivable with Top Five Ending Balances Collected Based on the Debtor
The total amount of accounts receivable with top five ending balances collected by the Debtor this year reaches RMB
99,977,340.65, which accounts for81.34% of the total ending balance of the accounts receivable. The total amount of ending balances of withdrawn bad debt provision is RMB 1,225,326.15.
4. Advance payment
(1) List of advance payments according to aging
Unit: RMB
||||||
|-|-|-|-|-|
||Ending balance||Beginning balance||
|Account ageing|||||
||Amount|Proportion|Amount|Proportion|
|Within 1 year|1,201,255.38|38.85%|4,042,321.66|71.30%|
|1-2year (s)|515,157.07|16.66%|1,496,115.65|26.39%|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|2-3 year (s)|1,252,009.66|40.49%|130,682.56|2.31%|
|Over 3 years|123,598.99|4.00%|||
|Total|3,092,021.10|--|5,669,119.87|--|

Instruction for the cause of failure in completion of timely settlement of advance payment with aging larger than 1 year and significant amount:
None
(2) Advance Payment with Top Five Ending Balances Collected Based on the Prepayment Object
The total amount of advance payment with top five ending balances collected based on the prepayment object this year reaches RMB 1,927,181.85, which accounts for62.33% of the total ending balances of the advance payment.
Other explanations:
None
5. Interests receivable
(1) Classification of interests receivable
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|Wuhan Hengsheng Opto-electric IndustryCo., Ltd.|||
||1,838,752.40||
|Total|1,838,752.40||

6. Other Accounts Receivable
(1) Classified Disclosure of Other Accounts Receivable
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||||Provision for Bad|||||Provision for Bad|||
||Book balance|||||Book balance|||||
|Items|||Debts||Book|||Debts|||
|||||||||||Book Value|
|||Proporti||Percent|Value||Proportio||Percent||
||Amount||Amount|||Amount||Amount|||
|||on||Drawn|||n||Drawn||
|Accounts receivable|||||||||||
|with significant|||||||||||
|specific amount that|6,403,097.3||5,662,187.||740,909.9|505,662,1||5,662,187.||500,000,00|
|||30.91%||88.43%|||81.49%||1.12%||
|were provisioned|5||38||7|87.38||38||0.00|
|bad debt preparation|||||||||||
|separately|||||||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Other accounts|||||||||||
|receivable which|||||||||||
|bad debt provision|8,844,219.4||173,338.0||8,670,881.|109,162,2||||109,094,81|
|||42.69%||1.96%|||17.59%|67,431.78|0.06%||
|shall be withdrawn|7||4||43|44.07||||2.29|
|based on credit risk|||||||||||
|characteristics|||||||||||
|Accounts receivable|||||||||||
|that were not|||||||||||
|significant but have|5,469,385.4||5,469,385.|||5,668,513.||5,668,513.51|100.00||
|||26.40%||100.00%|||0.92%||||
|been provisioned|4||44|||51|||%||
|bad debt preparation|||||||||||
|separately|||||||||||
||20,716,702.||11,304,91||9,411,791.40|620,492,9||11,398,132.67||609,094,812.29|
|Total||100.00%|||||100.00%||||
||26||0.86|||44.96|||||

 Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end of period
√ Applicable□ Inapplicable
Unit: RMB
||||||
|-|-|-|-|-|
||Ending balance||||
|Other accounts receivable|||||
||Other Accounts||||
|(based on unit)||Provision for Bad Debts|Percent Drawn|Reason of provision|
||Receivable||||
|Boteman|4,021,734.22|4,021,734.22|100.00%|Can not be taken back|
|Wuwu Branch of Shenzhen||||No risk of bad debts|
||740,909.97||||
|Dachong Industrial Co., Ltd.|||||
|Zhao Baomin|564,646.35|564,646.35|100.00%|Can not be taken back|
|Traffic incident indemnity|555,785.81|555,785.81|100.00%|Can not be taken back|
|Hebei Botou Court|520,021.00|520,021.00|100.00%|Can not be taken back|
|Total|6,403,097.35|5,662,187.38|--|--|

Other Accounts Receivable with accrual of bad debt reserve by aging analysis method in the combination
√ Applicable□ Inapplicable
Unit: RMB
|||||
|-|-|-|-|
||Ending balance|||
|Account ageing||||
||Other Accounts Receivable|Provision for Bad Debts|Percent Drawn|
|Subitem within one year||||
|Subtotal within 1 year|7,773,233.74|||
|1-2 year (s)|572,918.40|28,645.92|5.00%|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||
|-|-|-|-|
|2-3 year (s)|23,640.40|2,364.04|10.00%|
|Over 3years|474,426.93|142,328.08|30.00%|
|Total|8,844,219.47|173,338.04||

Instructions for determining the combination basis:
Other Accounts Receivable with accrual of bad debt reserve by balance percentage method in the combination
□ Applicable√ Inapplicable
Other Accounts Receivable with accrual of bad debt reserve by other method in the combination
√ Applicable□ Inapplicable
Other Accounts Receivable without major individual amount but with separate accrual of bad debt reserve at the end of period:
||||||
|-|-|-|-|-|
|Unit name|Balance at the end of the year||||
||Other AccountsReceivable|Provision for BadDebts|Percent Drawn（%）|Reason of provision|
|Personal borrowings|991,841.17|991,841.17|100.00|Can not be taken back|
|Employee canteen ect.|796,041.46|796,041.46|100.00|Can not be taken back|
|Trade Union|297,402.55|297,402.55|100.00|Can not be taken back|
|Shenzhen Lotus Island Restaurant Co.,Ltd|236,293.80|236,293.80|100.00|Can not be taken back|
|Chuangjing workshop|192,794.00|192,794.00|100.00|Can not be taken back|
|Weili Electric Corporation Co.,Ltd,Zhangzhou City, Fujian Province|112,335.62|112,335.62|100.00|Can not be taken back|
|Others|2,842,676.84|2,842,676.84|100.00|Can not be taken back|
|Total|5,469,385.44|5,469,385.44|||

(2) Bad Debt Provision Withdrawn, Recovered or Refunded at Current Period
The bad debt provision withdrawn at current period is RMB147,653.19; the bad debt provision recovered or refunded at current period is RMB 240,875.00.
Among which, the important bad debt provision recovered or refunded at current period:
Unit: RMB
||||
|-|-|-|
|Company name|Reverse or recovery amount|Recovery mode|

None.
(3) Classification of Other Accounts Receivable Based on Nature of Money
Unit: RMB
||||
|-|-|-|
|Payment nature|Book balance at the end of period|Book balance at the beginning of period|
|Lease Deposit|1,071,309.97|330,400.00|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Borrowing|2,230,773.98|2,472,108.12|
|Current accounts|7,427,894.35|607,947,763.80|
|Wage and utilities paid by agent||1,832,111.50|
|Rent receivable|8,780,596.09|7,181,456.09|
|Others|1,206,127.87|729,105.45|
|Total|20,716,702.26|620,492,944.96|

 (4) Other Accounts Receivable with Top Five Ending Balances Collected Based on Debtor
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||||Proportion in the||
|||||total ending balances|Ending balance of|
|Unit name|Payment nature|Ending balance|Account ageing|||
|||||of other accounts|bad debt provision|
|||||receivable||
|Shenzhen Jifang|Lease fees|||||
|||4,136,643.08|Within 1 year|19.97%||
|Investment Co., Ltd.|receivable|||||
||Lease fees|||||
|Boteman||4,021,734.22|Over 3years|19.41%|4,021,734.22|
||receivable|||||
|Wuwu Branch of||||||
|Shenzhen Dachong|Security deposit|740,909.97|Within 1 year|3.58%||
|Industrial Co., Ltd.||||||
||Lease fees|||||
|Zhao Baomin||564,646.35|Over 3years|2.73%|564,646.35|
||receivable|||||
|Traffic incident||||||
||Current accounts|555,785.81|Over 3years|2.68%|555,785.81|
|indemnity||||||
|Total|--|10,019,719.43|--|48.37%|5,142,166.38|

 7. Inventories
(1) Type of Inventories
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Items||Depreciation|||Depreciation||
||Book balance||Book Value|Book balance||Book Value|
|||Provisions|||Provisions||
|Raw Materials|17,440,555.09|1,260,134.51|16,180,420.58|16,000,026.71|1,260,134.51|14,739,892.20|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||
|-|-|-|-|-|-|-|
|Finishing Product|307,753.41||307,753.41|1,296,995.00||1,296,995.00|
|Stocked Goods|9,231,179.62|549,643.94|8,681,535.68|12,222,310.12|549,643.94|11,672,666.18|
|Turnover|||||||
||297,390.39|51,587.59|245,802.80|440,625.54|51,587.59|389,037.95|
|materials|||||||
|Self-made|||||||
|semi-finished|1,749,684.14|33,070.70|1,716,613.44|2,740,898.61|33,070.70|2,707,827.91|
|product|||||||
|Processed|||||||
|Materials upon||||73,631.31||73,631.31|
|entrustment|||||||
|Total|29,026,562.65|1,894,436.74|27,132,125.91|32,774,487.29|1,894,436.74|30,880,050.55|

 (2) Provision for Depreciation of Inventories
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Beginning|Current increment||Current decrement|||
|Items||||||Ending balance|
||balance|Withdrawing|Others|Carryover or resale|Others||
|Raw Materials|1,260,134.51|||||1,260,134.51|
|Stocked Goods|549,643.94|||||549,643.94|
|Low-value|||||||
|consuming|51,587.59|||||51,587.59|
|products|||||||
|Self-made|||||||
|semi-finished|33,070.70|||||33,070.70|
|product|||||||
|Total|1,894,436.74|||||1,894,436.74|

 8. Assets classified as held for sale
Unit: RMB
||||||
|-|-|-|-|-|
|Items|Ending book value|Fair value|Estimated disposal|Estimated disposal time|
||||expense||
|Gongming Huafa|||||
||92,857,471.69|||December 31, 2016|
|Electric Shopping Mall|||||
|Total|92,857,471.69|||--|

Other explanations:
The company on August 26, 2015, with wuhan zhongheng new technology industry group co., LTD. (hereinafter referred
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 to as "wuhan zhongheng new technology industry group), shenzhen vanke real estate co., LTD and shenzhen vanke real estate development co., LTD. Signed a light on the" shenzhen guangming new district huafa hai street area update unit "urban renewal projects cooperation agreement conditions", "property acquisition and relocation compensation and resettlement agreement" and guangming new district huafa industrial zone of old hai street change project cooperative joint venture contract, according to our company and wuhan zhongheng new technology industry group, the company full authority of wuhan zhongheng new technology industry group co., LTD. On behalf of our company, the project cooperation, the company will receive compensation for price is 50000.00 ten thousand yuan, hundreds of square meters of also moved business area; And target project after the completion of the liquidation and settlement of wuhan zhongheng huafa industrial group designated third party intermediary structure on the target project of mutual benefit for the distribution of liquidation, common benefit if you have a profit, the company may, in accordance with the amount of land rights and interests of the50.50% share, such as common benefit part has losses, the company need to undertake.
9. Property of Investment
(1) Investment Real Estate Measured Based on Cost
√ Applicable□ Inapplicable
Unit: RMB
||||||
|-|-|-|-|-|
|Items|Houses & Buildings|Land-use Right|Project in Progress|Total|
|I. Original value of book value|||||
|1.Beginning balance|107,661,686.94|||107,661,686.94|
|2. Additional amount of current period|||||
|(1) Outsourcing|||||
|(2) Transferred from inventory/fixed|||||
|assets/construction in progress|||||
|(3) Increase in business merger|||||
|3.Decreased amount of current period|||||
|(1) Disposal|||||
|(2) Other transfer-out|||||
|4.Ending balance|107,661,686.94|||107,661,686.94|
|II. Accumulated depreciation and|||||
|accumulated amortization|||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|1.Beginning balance|76,387,023.20|76,387,023.20|
|2. Additional amount of current period|1,254,757.08|1,254,757.08|
|(1) Withdrawal or amortization|1,254,757.08|1,254,757.08|
|3.Decreased amount of current period|||
|(1) Disposal|||
|(2) Other transfer-out|||
|4.Ending balance|77,641,780.28|77,641,780.28|
|III. Impairment Provision|||
|1.Beginning balance|||
|2. Additional amount of current period|||
|(1) Withdrawing|||
|3、Decreased amount of current period|||
|(1) Disposal|||
|(2) Other transfer-out|||
|4.Ending balance|||
|IV. Book Value|||
|1.End-of-period book value|30,019,906.66|30,019,906.66|
|2.Opening book value|31,274,663.74|31,274,663.74|

 (2) Investment Real Estate Measured Based on Fair Value
□ Applicable√ Inapplicable
10．Fixed Assets
(1) Condition of Fixed Assets
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||Houses &|Machinery|Transport|Tool|||||
|Items|||||Office|Molding|Instrument|Total|
||Buildings|Equipment|Equipment|Equipment|E quipment|Equipment|Equipment||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||||
|-|-|-|-|-|-|-|-|-|
|I. Original value of book|||||||||
|value：|||||||||
|1.Beginning|218,393,134.3|||9,391,187.|5,804,317.0|12,334,943.|3,043,325.0|332,264,911|
|||79,156,580.89|4,141,422.87||||||
|balance|3|||88|8|70|6|.81|
|2. Additional|||||||||
|||||247,095.3||2,013,247.7||29,256,503.|
|amount of current|26,326,840.40|531,072.93|||102,349.51||35,897.42||
|||||7||3||36|
|period|||||||||
|||||247,095.3||2,013,247.7||29,116,653.|
|(1) Procurement|26,186,990.40|531,072.93|||102,349.51||35,897.42||
|||||7||3||36|
|(2) Transferred|||||||||
|from construction in|139,850.00|||||||139,850.00|
|progress|||||||||
|(3) Increase in|||||||||
|business merger|||||||||
|3.Decreased|||||||||
||153,165,875.8|||||8,248,022.3||166,214,138|
|amount of current||4,018,201.62|85,000.00|60,293.55|311,747.97||324,996.90||
||8|||||6||.28|
|period|||||||||
|(1) Disposal or||||||8,248,022.3||13,048,262.|
|||4,018,201.62|85,000.00|60,293.55|311,747.97||324,996.90||
|scrap||||||6||40|
|（2）Other transfer|153,165,875.8|||||||153,165,875|
||8|||||||.88|
|||||9,577,989.|5,594,918.6|6,100,169.0|2,754,225.5|195,307,276|
|4.Ending balance|91,554,098.85|75,669,452.20|4,056,422.87||||||
|||||70|2|7|8|.89|
|II. Accumulated|||||||||
|depreciation|||||||||
|1.Beginning||||6,600,313.|5,208,507.7|9,919,995.3|2,571,385.4|145,234,488|
||67,614,462.40|50,560,780.90|2,759,043.05||||||
|balance||||27|2|3|0|.07|
|2. Additional|||||||||
|||||288,602.6||1,360,878.2||14,073,158.|
|amount of current|5,559,828.49|6,182,167.25|408,209.28||117,950.64||155,521.54||
|||||5||5||10|
|period|||||||||
|||||288,602.6||1,360,878.2||14,073,158.|
|(1) Withdrawing|5,559,828.49|6,182,167.25|408,209.28||117,950.64||155,521.54||
|||||5||5||10|
|3.Decreased||||||7,374,449.6||74,607,794.|
||62,199,495.19|4,071,783.78|219,164.43|61,267.54|319,290.96||362,343.23||
|amount of current||||||5||78|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||||
|-|-|-|-|-|-|-|-|-|
|period|||||||||
|(1) Disposal or||||||7,374,449.6||12,408,299.|
|||4,071,783.78|219,164.43|61,267.54|319,290.96||362,343.23||
|scrap||||||5||59|
|（2）Other transfer||||||||62,199,495.|
||62,199,495.19||||||||
|||||||||19|
|||||6,827,648.|5,007,167.4|3,906,423.9|2,364,563.7|84,699,851.|
|4.Ending balance|10,974,795.70|52,671,164.37|2,948,087.90||||||
|||||38|0|3|1|39|
|III. Impairment|||||||||
|Provision|||||||||
|1.Beginning|||||||||
|||558,539.32|5,220.01|5,325.93|5,029.81||17,494.33|591,609.40|
|balance|||||||||
|2. Additional|||||||||
|amount of current|||||||||
|period|||||||||
|(1) Withdrawing|||||||||
|3.Decreased|||||||||
|amount of current||558,539.32|5,220.01|5,325.93|5,029.81||17,494.33|591,609.40|
|period|||||||||
|(1) Disposal or|||||||||
|||558,539.32|5,220.01|5,325.93|5,029.81||17,494.33|591,609.40|
|scrap|||||||||
|4.Ending balance|||||||||
|IV. Book Value|||||||||
|1.End-of-period||||2,750,341.|587,751.22|2,193,745.14|389,661.87|110,607,425.50|
||80,579,303.15|22,998,287.83|1,108,334.97||||||
|book value||||32|||||
|2.Opening book|150,778,671.9|||2,785,548.|590,779.55|2,414,948.37|454,445.33|186,438,814.34|
|||28,037,260.67|1,377,159.81||||||
|value|3|||68|||||

 (2) Condition of temporarily idle fixed asset
Unit: RMB
|||||||
|-|-|-|-|-|-|
||Original value|Accumulated|Impairment|Net book||
|Items|||||Remark|
||of book value|Depreciation|Provision|value||
||||||Hengfa technology company in June 2015 purchase|
|Houses & Buildings|26,000,000.00|130,260.12||25,869,739.88||
||||||of wuhan caidian district county street tal zhongheng|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||
|-|
|village, lake in the world building 1 layer 1-11 rooms,|
|2, 1 layer 1-4 room, bought in December 2015,|
|caidian district, wuhan city county street tal|
|zhongheng village, lake in the world 6 layer 1 1-11|
|room, room 7 layer 1 1-4, building area of 1971.22|
|square meters, planning purposes for commercial|
|service. Wuhan science and technology according to|
|the assessment of the price and the contract payment|
|of the corresponding shop price 25 million yuan, pay|
|the deed tax 1 million yuan.|

(3) Fixed assets leased by operating lease
Unit: RMB
|||
|-|-|
|Items|End-of-period book value|
|Houses & buildings|1,010,364.77|

 11. Project in Progress
(1) Condition of construction in process
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Items||Impairment|||Impairment||
||Book balance||Book Value|Book balance||Book Value|
|||Provision|||Provision||
|Huafa building renovation|||||||
||654,356.00||654,356.00|654,356.00||654,356.00|
|project|||||||
|Gongming Electronics|||||||
|||||2,199,000.00||2,199,000.00|
|Town renovation project|||||||
|Total|654,356.00||654,356.00|2,853,356.00||2,853,356.00|

 (2) Changes in Major Construction-in-Process
Unit: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||Additional|Transfer-in|||Proportion|Jobschedule|Accumu|Including:|Proportion||
||||||Other reduced|||||||Source|
|Project|Budget|Beginning|amount of|fixed asset||Ending|of project||lated|accumulat|of||
||||||amount of|||||||of|
|name|amounts|balance|current|amount of||balance|investment||capitaliz|ed|capitalizati||
||||||current period|||||||capital|
||||period|current|||in the||ation of|capitalizati|on of||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||period|||budget||interest|on of|interest in||
||||||||||interest in|the current||
||||||||||the current|period||
||||||||||period|||
|Huafa building||||||||||||
|renovation|654,356.00||||654,356.00||||||Others|
|project||||||||||||
|Gongming||||||||||||
|Electronics||||||||||||
|Town|2,199,000.00|239,814.00||2,438,814.00|0.00||||||Others|
|renovation||||||||||||
|project||||||||||||
|Infrastructure||||||||||||
|||139,850.00|139,850.00||0.00||||||Others|
|projects||||||||||||
|Total|2,853,356.00|379,664.00|139,850.00|2,438,814.00|654,356.00|--|--||||--|

 12. Intangible Assets
(1) Condition of intangible assets
Unit: RMB
|||||||
|-|-|-|-|-|-|
||||Non-patented|||
|Items|Land-use Right|Patent||Software cost|Total|
||||technology|||
|I. Original value of book value||||||
|1.Beginning balance|55,187,826.36|||661,878.97|55,849,705.33|
|2. Additional amount of||||||
|current period||||||
|(1) Procurement||||||
|(2) Internal research and||||||
|development||||||
|(3) Increase in business||||||
|merger||||||
|3.Decreased amount of||||||
|current period||||||
|(1) Disposal||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||
|-|-|-|-|
|4.Ending balance|55,187,826.36|661,878.97|55,849,705.33|
|II. Accumulated amortization||||
|1.Beginning balance|7,680,617.85|302,402.27|7,983,020.12|
|2. Additional amount of||||
||1,444,408.80|49,885.92|1,494,294.72|
|current period||||
|(1) Withdrawing|1,444,408.80|49,885.92|1,494,294.72|
|3.Decreased amount of||||
|current period||||
|(1) Disposal||||
|4.Ending balance|9,125,026.65|352,288.19|9,477,314.84|
|III. Impairment Provision||||
|1.Beginning balance||||
|2. Additional amount of||||
|current period||||
|(1) Withdrawing||||
|3.Decreased amount of||||
|current period||||
|(1) Disposal||||
|4.Ending balance||||
|IV. Book Value||||
|1.End-of-period book value|46,062,799.71|309,590.78|46,372,390.49|
|2.Opening book value|47,507,208.51|359,476.70|47,866,685.21|

 Proportion of the intangible assets produced from internal research and development of the Company at the end of the period in the balance of the intangible assets:0%.
13. Long-term deferred charges
Unit: RMB
|||||||
|-|-|-|-|-|-|
|Items|Beginning balance|Current increment|The amortization|Other reduction|Ending balance|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|||amount of the|amounts||
|||current period|||
|Golf membership fee|291,666.67|50,000.04||241,666.63|
|Renovation|||||
||53,991.57|20,900.04||33,091.53|
|expenditures|||||
|Total|345,658.24|70,900.08||274,758.16|

 Other instructions:
None
14. Deferred Income Tax Assets& Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that are Not Offset
Unit: RMB
||||||
|-|-|-|-|-|
||Ending balance||Beginning balance||
|Items|To deduct temporary|Deferred Income Tax|To deduct temporary|Deferred Income Tax|
||difference|Assets|difference|Assets|
|Provision drawn for|||||
||22,996,373.35|5,749,168.34|22,241,854.51|5,560,538.64|
|assets impairment|||||
|Estimated liabilities|2,604,411.81|651,102.95|2,765,583.81|691,395.95|
|Total|25,600,785.16|6,400,271.29|25,007,438.32|6,251,934.59|

 (2) Deferred Income Tax Assets or Liabilities Listed as the Net Amount after Offsetting
Unit: RMB
||||||
|-|-|-|-|-|
||||Deductible amount of||
||Deductible amount of|Ending balance of||Opening balance of|
||||deferred income tax||
||deferred income tax|deferred income tax||deferred income tax|
|Items|||assets and liabilities at||
||assets and liabilities at|assets or liabilities after||assets or liabilities after|
||||the beginning of the||
||the end of the period|offsetting||offsetting|
||||period||
|Deferred Income Tax||6,400,271.29||6,251,934.59|
|Assets|||||

(3) Deferred tax assets that have not been confirmed
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Deductible temporary differences|1,006,234.22|27,567,291.70|
|Provision drawn for assets impairment|3,153,172.51|3,153,172.51|
|Total|4,159,406.73|30,720,464.21|

 (4) The deductible loss of the unrecognized deferred income tax assets will become due in the following years.
Unit: RMB
|||||
|-|-|-|-|
|Year|Ending amount|Initial amount|Remark|
|2015||142,552.20||
|2016||253,206.10||
|2017|480,885.89|24,123,775.77||
|2018|525,348.33|3,047,757.63||
|Total|1,006,234.22|27,567,291.70|--|

Other instructions:
None
15. Short-term Borrowings
(1) Classification of Short-term Borrowings
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|Pledged loan|21,000,000.00|15,000,000.00|
|Mortgage Loan|78,879,107.41|103,114,376.32|
|Guaranteed loan|19,600,000.00||
|Credit loan||20,000,000.00|
|Total|119,479,107.41|138,114,376.32|

 Description of short-term loans classification
None
16. Notes Payable
Unit: RMB
||||
|-|-|-|
|Type|Ending balance|Beginning balance|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Bank acceptance bill|53,614,420.20|39,994,397.62|
|Total|53,614,420.20|39,994,397.62|

 Total amount of notes payable that is due but unpaid at the end of the period is RMB 0.00.
17. Accounts Payable
(1) Presentation of Accounts Payable
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|Material cost|54,241,655.86|65,547,836.32|
|Total|54,241,655.86|65,547,836.32|

 (2) Important Accounts Payables with Aging Larger than 1 Year
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Cause of failure in repayment or carry-over|
|Shenzhen YH Global Logistics Co., Ltd.|2,858,885.97|Unsettled|
|Taiwan LG Company|1,906,267.50|Unsettled|
|Total|4,765,153.47|--|

Other instructions:
None
18. Advance Collections
(1) Presentation of Advance Collections
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|Payment for goods|1,147,469.52|727,331.06|
|Total|1,147,469.52|727,331.06|

 19.Employees’ Remuneration Payable
(1) Presentation ofEmployees’ Remuneration Payable
Unit: RMB
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|Items|Beginning balance|Current increment|Current decrement|Ending balance|
|I. Short-term remuneration|6,213,887.72|56,302,492.81|57,779,671.24|4,736,709.29|
|II. Welfare after departure-defined|||||
||-5,093.82|4,810,249.07|4,810,249.07|-5,093.82|
|contribution plan|||||
|III. Dismissal welfare||373,773.60|373,773.60||
|Total|6,208,793.90|61,486,515.48|62,963,693.91|4,731,615.47|

 (2) Presentation of Short-term Remuneration
Unit: RMB
||||||
|-|-|-|-|-|
|Items|Beginning balance|Current increment|Current decrement|Ending balance|
|1. Salary, bonus, allowance &|||||
||5,388,866.30|48,958,556.83|50,525,191.94|3,822,231.19|
|subsidies|||||
|2. Staff Welfare Treatment Fund||4,833,615.41|4,833,615.41||
|3. Social Insurance Premium|23,041.98|1,658,606.67|1,658,606.67|23,041.98|
|Among it: Medical insurance|||||
||23,041.98|1,445,107.98|1,445,107.98|23,041.98|
|premium|||||
|Industrial Injury Insurance|||||
|||89,123.13|89,123.13||
|Premium|||||
|Birth Insurance Premium||124,375.56|124,375.56||
|4. Public Housing Fund|24,310.00|737,957.22|737,957.22|24,310.00|
|5. Labor union expense and|||||
||777,669.44|113,756.68|24,300.00|867,126.12|
|personnel education fund|||||
|Total|6,213,887.72|56,302,492.81|57,779,671.24|4,736,709.29|

 (3) Presentation of Defined Contribution Plan
Unit: RMB
||||||
|-|-|-|-|-|
|Items|Beginning balance|Current increment|Current decrement|Ending balance|
|1. Basic retirement|||||
||-5,093.82|4,543,511.57|4,543,511.57|-5,093.82|
|insurance premium|||||
|2. Unemployment|||||
|||266,737.50|266,737.50||
|Insurance Premium|||||
|Total|-5,093.82|4,810,249.07|4,810,249.07|-5,093.82|

Other instructions:
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 None
20. Taxes Payable
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|VAT|3,113,697.74|7,294,271.06|
|Business Tax|4,353,926.65|1,405,738.37|
|Enterprise Income Tax|11,702,968.21|8,804,564.06|
|Personal Income Tax|35,377.25|35,016.79|
|Urban Maintenance & Construction Tax|256,676.38|124,888.48|
|Property Tax|526,275.00|452,346.57|
|Land use tax|323,677.55|330,904.20|
|Educational Surcharge|178,390.78|33,119.68|
|Others|7,306.32|71,197.64|
|Total|20,498,295.88|18,552,046.85|

 Other instructions:
None
21. Other accounts Payables
(1) Other Accounts Payable Listed Based on Payment Nature
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|Cash deposit and cash pledge|10,061,229.53|11,080,224.58|
|Lease management fee|1,698,564.47|1,393,897.07|
|Equipment cost payable|332,322.49|246,722.49|
|Current accounts|18,190,118.93|9,851,796.05|
|After-sales and repai|837,903.65|333,642.00|
|Others|1,545,559.25|1,273,067.12|
|Total|32,665,698.32|24,179,349.31|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 (2) Ather significant payables aging more than one year
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Reasons for failure to pay or carry down|
|Shenzhen Jifang Investment Co., Ltd.|4,011,200.00|Security deposit|
|Shenzhen Huayongxing Environmental|||
||1,000,000.00|Security deposit|
|Protection Technology Co., Ltd.|||
|Linghang Technology (Shenzhen) Co., Ltd.|656,345.28|Unsettled|
|Shenzhen Sed Property Development Co.|||
||634,723.75|Unsettled|
|Ltd.|||
|Shenzhen Tongxing Electronics Co., Ltd.|578,259.83|Unsettled|
|Shenzhen Yongdasheng Investment|||
||558,970.00|Security deposit|
|Development Co., Ltd.|||
|Total|7,439,498.86|--|

Other instructions:
22. Long-term borrowings
(1) Classification of long-term borrowings
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|Mortgage Loan|554,700,000.00|585,300,000.00|
|Total|554,700,000.00|585,300,000.00|

 Description of classification of long-term borrowings:
None
Other instructions: interest rate interval:
The lending rate involves the upward fluctuation of benchmark interest rate of bank loan at the same period and level, which is subject to8.1875% this year.
23. Estimated liabilities
Unit: RMB
|||||
|-|-|-|-|
|Items|Ending balance|Beginning balance|Cause|
|Pending legal action|2,604,411.81|2,765,583.81|Commercial and labor dispute|
|Total|2,604,411.81|2,765,583.81|--|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Other descriptions, including important assumptions, estimations and explanations related to significant contingent liabilities: None
24. Capital Stock
Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Increase and decrease of change in the current period (+, -)||||||
||Beginning|||Share transfer of||||
||||||||Ending balance|
||balance|Issuing new shares|Donate hare|public accumulation|Others|Subtotal||
|||||fund||||
|Total shares|283,161,227.00||||||283,161,227.00|

 Other instructions:
None
25. Capital Reserves
Unit: RMB
||||||
|-|-|-|-|-|
|Items|Beginning balance|Current increment|Current decrement|Ending balance|
|Capital premium (Shares|||||
||96,501,903.02|||96,501,903.02|
|Premium)|||||
|Other Capital Reserves|12,994,934.31|36,786,805.57||49,781,739.88|
|Total|109,496,837.33|36,786,805.57||146,283,642.90|

 Other descriptions, including the descriptions of current increase and decrease changes as well as the reasons for changes
None
26. Surplus Reserves
Unit: RMB
||||||
|-|-|-|-|-|
|Items|Beginning balance|Current increment|Current decrement|Ending balance|
|Statutory Surplus|||||
||21,322,617.25|||21,322,617.25|
|Reserves|||||
|Any Surplus Reserves|56,068,976.00|||56,068,976.00|
|Total|77,391,593.25|||77,391,593.25|

 Descriptions of the surplus reserves, including the descriptions of current increase and decrease changes as well as the reasons for
changes
None.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 27. Undistributed profits
Unit: RMB
||||
|-|-|-|
|Items|Current period|Previous period|
|Undistributed profits at the end of previous periodbefore adjustment|||
||-188,698,387.84|-196,386,008.11|
|Beginning-of-year undistributed profits afteradjustment|-188,698,387.84||
|||-196,386,008.11|
|Add: net profit belonging to the owner of theparent company of the current period|||
||-6,731,513.11|7,687,620.27|
|End-of-period undistributed profits|-195,429,900.95|-188,698,387.84|

 Details of undistributed profits at the beginning of the adjustment period:
1). Retroactive adjustment is made according to the Accounting Standards for Business Enterprises and relevant new provisions; affected undistributed profit at the beginning of the period is RMB 0.
2). Due to the change in accounting policy, the affected undistributed profit at the beginning of the period is RMB 0.
3). Due to correction of significant accounting mistakes, the affected undistributed profit at the beginning of the period is RMB 0. 4). Due to the change in the merger scope under common control, the affected undistributed profit at the beginning of the period is RMB 0.
5). The undistributed profit at the beginning of the period affected by other adjustment: RMB 0.
28. Business Revenues& Business Cost
Unit: RMB
||||||
|-|-|-|-|-|
||Accruals of the current period||Accruals of the previous period||
|Items|||||
||Income|Cost|Income|Cost|
|Main Businesses|440,956,342.98|407,404,193.78|614,968,207.08|564,457,891.72|
|Other Business|58,499,438.13|10,596,873.30|79,871,553.02|29,540,907.46|
|Total|499,455,781.11|418,001,067.08|694,839,760.10|593,998,799.18|

 29. Business Tax& Surcharges
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Business Tax|5,531,420.79|2,349,770.66|
|Urban Maintenance & Construction Tax|1,697,868.43|1,345,107.38|
|Educational Surcharge|836,317.19|576,474.58|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Property Tax|442,258.57|442,258.65|
|Land use tax|239,994.10|239,994.10|
|Local education development fees|376,455.72|384,374.97|
|Others|118,646.63|317,229.50|
|Total|9,242,961.43|5,655,209.84|

 Other instructions:
30. Sales costs
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Employees’ Remuneration|4,353,576.68|4,916,515.15|
|Transportation expenses|2,972,576.15|3,135,971.86|
|Commodity inspection expenses|547,057.32|239,667.47|
|Customs affairs fee|151,446.37|109,718.52|
|Commodity wastage|548,612.19|321,271.86|
|Others|2,854,436.49|2,789,084.30|
|Total|11,427,705.20|11,512,229.16|

 Other instructions:
31. Management costs
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Payroll|7,392,296.88|9,067,143.41|
|Depreciation costs|5,150,256.15|4,096,098.36|
|Social Insurance Premium|7,179,586.17|6,336,762.05|
|Social contact fees|2,543,367.17|1,562,052.88|
|Tax and surcharges|3,541,509.06|3,255,137.17|
|Staff Welfare Treatment Fund|1,352,074.44|1,878,679.25|
|Business trip costs|1,797,662.40|1,460,818.53|
|Amortization of intangible assets|1,494,294.72|1,494,294.72|
|Transportation fees|1,304,291.01|1,491,600.64|
|Consulting fees|930,988.04|2,317,319.50|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Safety protection fee|973,495.28|1,184,265.52|
|Repair costs|1,157,265.00|1,519,462.47|
|Auditing costs|797,169.81|773,171.95|
|Office costs|3,734,264.23|614,373.83|
|Communication fees|419,908.23|320,228.44|
|Amortization of low-value, perishable|||
||314,716.26|353,442.02|
|goods|||
|Securities information disclosure fees|725,725.60|273,950.56|
|Legal action costs|28,478.00|6,520.89|
|Others|1,754,416.35|1,194,956.83|
|Total|42,591,764.80|39,200,279.02|

 Other instructions:
32. Financial Expenses
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Interest Expenditures|53,144,384.74|40,887,323.57|
|Less: interest return|2,028,034.77|260,396.93|
|Add: exchange loss|-5,022,515.44|-1,946,419.38|
|Add: other expenditures|2,299,881.99|1,104,046.01|
|Total|48,393,716.52|39,784,553.27|

 Other instructions:
33. Assets Impairment Loss
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|I. Provision for Bad Debts|1,346,128.24|925,765.97|
|Total|1,346,128.24|925,765.97|

 Other instructions:
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 34. Investment income
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Investment income generated from disposal of|||
||643.49|983,612.12|
|long-term equity investment|||
|Other|62,033,333.35||
|Total|62,033,976.84|983,612.12|

 Other instructions:
35. Non-business Revenues
Unit: RMB
|||||
|-|-|-|-|
|||Accruals of the previous|Amount recorded in current|
|Items|Accruals of the current period|||
|||period|nonrecurring profit and loss|
|Gains of Disposal of|453,321.89|1,752,028.49||
||||453,321.89|
|non-current assets||||
|Among it: income from fixed||||
||453,321.89|1,752,028.49|453,321.89|
|assets disposition||||
|Government Grants|1,691,800.00|4,159,795.00|1,691,800.00|
|Payment that can not be paid|623,987.65|341,320.10|623,987.65|
|Penalty fine income|377,580.00|155,570.00|377,580.00|
|Others|17,159.45|82,110.00|17,159.45|
|Total|3,163,848.99|6,490,823.59|3,163,848.99|

 Governmental subsidies recorded in current profit and loss:
Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||Whether the|||||
|||||subsidy|Whether a|Amount|Amount||
|||||||||Asset|
|Subsidizing|Subject to be|Granting||affects the|special|incurred in|incurred in||
||||Type|||||related/incom|
|program|granted|reason||profit and|subsidy or|the current|the prior||
|||||||||e related|
|||||loss of the|not|period|period||
|||||current year|||||
|Positionsubsidy|Wuhancaidiandistrict|Reward|Because oflocalgovernment|No|Yes|221,800.00|200,695.00|Incomerelated|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||||
|-|-|-|-|-|-|-|-|-|
||humanresources andsocialsecuritybureau||investmentpromotionand capitalintroductionand otherlocal supportpolicy forassistance||||||
|Exportsubsidy andbonus|Wu Hancaimidianeconomicdevelopmentzonemanagementcommittee|Reward|Because oflocalgovernmentinvestmentpromotionand capitalintroductionand otherlocal supportpolicy forassistance|No|Yes|1,470,000.00|3,393,000.00|Incomerelated|
|Energysavingsubsidy|Wuhaneconomic andinformationcommission|Reward|Because oflocalgovernmentinvestmentpromotionand capitalintroductionand otherlocal supportpolicy forassistance|No|Yes||76,800.00|Incomerelated|
|L2278Wmachine typesubsidy|Wuhancaidiandistrictscience andtechnology|Subsidy|Because oflocalgovernmentinvestmentpromotionand capitalintroductionand otherlocal supportpolicy for|No|Yes||80,000.00|Incomerelated|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||||||
|-|-|-|-|-|-|-|-|-|
||||assistance||||||
|Loan withdiscountedinterest|Wuhaneconomic andinformationcommission|Subsidy|Because oflocalgovernmentinvestmentpromotionand capitalintroductionand otherlocal supportpolicy forassistance|No|Yes||409,300.00|Incomerelated|
|Total|--|--|--|--|--|1,691,800.00|4,159,795.00|--|

 Other instructions:
36. Non-business Expenditures
Unit: RMB
|||||
|-|-|-|-|
|||Accruals of the previous|Amount recorded in current|
|Items|Accruals of the current period|||
|||period|nonrecurring profit and loss|
|Loss of Disposal of Non-current|4,270.45|164,208.69||
||||4,270.45|
|Assets||||
|Among it: Loss from||||
||4,270.45|164,208.69|4,270.45|
|fixed-assets disposition||||
|Foreign donations|50,000.00||50,000.00|
|Litigation indemnity||161,172.00||
|Others|278,577.67|268,327.41|278,577.67|
|Total|332,848.12|593,708.10|332,848.12|

 Other instructions:
37. Expenses of Income Tax
(1) Expense Statement of Income Tax
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Income tax expenses of current period|3,410,459.79|521,227.71|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Expense of deferred income tax|-148,336.70|2,434,803.29|
|Total|3,262,123.09|2,956,031.00|

 (2) Accounting Profit and Income Tax Adjustment
Unit: RMB
|||
|-|-|
|Items|Accruals of the current period|
|Total profit|-3,469,390.02|
|Income tax calculated based on legal/applicable tax rate|9,197,820.56|
|Influence of non-deductible cost, expense and loss|852,903.60|
|Influence of deductible loss of deferred income tax assets unrecognized at||
||-6,640,264.37|
|the early stage of use||
|Influence of deductible temporary difference or deductible loss of deferred||
||-148,336.70|
|income tax assets that are not recognized at current period||
|Income tax expense|3,262,123.09|

 Other instructions:
38. Items in Cash Flow Statement
(1) Other Cash Received Related to Operation Activities
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Business Transaction Payment|281,084,189.31|10,157,369.88|
|Administration fee and water and|||
||9,551,004.25|9,827,961.00|
|electricity charges collection|||
|Employees' repayment for their|||
||3,275,328.00|2,323,827.06|
|borrowings|||
|Lease Deposit|2,282,518.00|5,989,902.00|
|Interest income|189,282.37|260,396.93|
|Total|296,382,321.93|28,559,456.87|

 Description of other received cash related to the business activity
(2) Other Paid Related to Operation Activities
Unit: RMB
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|The unit's current money|254,308,002.31|6,213,713.40|
|Advances to employees|5,589,087.29|4,768,944.01|
|Legal action costs|28,478.00|6,520.89|
|Deposit, security|3,943,642.37|1,142,674.29|
|Social contact fees|2,922,346.11|1,562,052.88|
|water & electricity fees|18,973,213.75|18,771,965.55|
|Business trip costs|1,924,876.24|1,460,818.53|
|Transportation expenses|2,972,576.15|3,135,971.86|
|Transportation fees|1,133,172.27|1,491,600.64|
|Repair costs|982,930.48|1,519,462.47|
|Auditing and consulting fee|2,453,883.45|3,090,491.45|
|Security fee|973,495.28|309,351.00|
|Procedure fee of financial organization|2,299,846.99|1,104,046.01|
|Office costs|3,724,297.73|614,373.83|
|Communication fees|434,204.60|320,228.44|
|Rental fee|1,244,881.70||
|Others|1,132,757.53|992,749.19|
|Total|305,041,692.25|46,504,964.44|

 Description of other paid cash related to the business activity
(3) Other recieved cash related to the investment activities
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Disposal of subsidiary received equity|||
|transfer section above subsidiary execution|899,643.49||
|day hold the balance of monetary funds|||
|Total|899,643.49||

Description of other received cash related to the investment activity
(4) Other paid cash related to the investment activity
Unit: RMB
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Disposal of subsidiaries pay equity transfer section below which|||
|||44,452.72|
|execution day hold the balance of monetary funds|||
|Total||44,452.72|

 Description of other paid cash related to the investment activity
39. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
||||
|-|-|-|
|Supplementary information|Current amount|Previous amount|
|1. Convert net profit to cash flow from operating|||
||--|--|
|activities:|||
|Net Profit|-6,731,513.11|7,687,620.27|
|Add: provision drawn for assets impairment|1,346,128.24|925,765.97|
|Depreciation of fixed assets, depletion of oil and gas,|||
||15,327,915.18|15,897,583.20|
|depreciation of production materials or equipment|||
|Amortization of Intangible Assets|1,494,294.72|1,494,294.72|
|Amortization of Long-term Expenses to be Apportioned|70,900.08|1,268,733.43|
|Loss from Disposal of Fixed Assets, Intangible Assets|||
||-449,051.44|-1,587,819.80|
|& Other Long-term Assets (Proceeds indicated by “-”)|||
|Financial Expenses (Proceeds indicated by “-”)|53,144,384.74|40,887,323.57|
|Investment loss(Proceeds indicated by “-”)|-25,247,171.27|-983,612.12|
|Decrement of Deferred Income Tax Assets (Addition|||
||-148,336.70|2,434,803.29|
|indicated by “-”)|||
|Decrement of Inventories (Addition indicated by “-”)|3,747,924.64|23,074,150.75|
|Decrement of Operative Receivables (Addition|||
||120,830,042.63|5,491,533.44|
|indicated by “-”)|||
|Increment of Operative Payables (Decrease indicated|||
||10,100,498.28|22,901,782.29|
|by “-”)|||
|Net Cash Flow Provided by Operating Activities|173,486,015.99|119,492,159.01|
|2. Important investment and fund raising activities|||
||--|--|
|involving no cash：|||
|3. Net Variation of Cash and Cash Equivalent：|--|--|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||
|-|-|-|
|Year-end balance of cash|632,846,956.16|22,392,147.12|
|Less: year-beginning balance of cash|22,392,147.12|50,704,319.86|
|Net increase of cash and cash equivalent|610,454,809.04|-28,312,172.74|

 (2) Net Cash for Disposal of Subsidiary Received at Current Period
Unit: RMB
|||
|-|-|
||Amount|
|Cash or cash equivalent received at the current period from disposal||
||1,000,000.00|
|of the subsidiary at current period||
|Wherein:|--|
|Yutian Henghua Co., Ltd.|1,000,000.00|
|Less: cash and cash equivalent held by subsidiary on the date of loss||
||100,356.51|
|of control right||
|Wherein:|--|
|Yutian Henghua Co., Ltd.|100,356.51|
|Wherein:|--|
|Net cash received from disposal of subsidiary|899,643.49|

 Other instructions:
(3) Composition of cash and cash equivalents
Unit: RMB
||||
|-|-|-|
|Items|Ending balance|Beginning balance|
|I. Cash|632,846,956.16|22,392,147.12|
|Among it: Ready money|382,669.21|516,454.17|
|Bank deposit available for payment|||
||632,464,286.95|21,875,692.95|
|anytime|||
|III. Balance of Cash & Cash Equivalents at|632,846,956.16|22,392,147.12|
|Term End|||

Other instructions:
At the end of the monetary funds - other monetary funds do not belong to the cash and cash equivalents, bank acceptance deposit$29268508.03.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 40. Assets whose ownership or right to use is restricted
Unit: RMB
||||
|-|-|-|
|Items|End-of-period book value|Cause of limitation|
|Monetary Fund|29,268,508.03|Used for issuing the bank’s acceptance bill|
|Notes Receivable|24,349,803.96|Used for pledge to obtain the bank loan|
|Fixed Assets|44,661,660.96|Used to secure the bank loans|
|Intangible Assets|46,062,799.71|Used to secure the bank loans|
|Accounts receivable||Used for pledge to obtain loans from Haier|
||14,122,057.51||
|||Finance Co., Ltd.|
|Investment property|30,019,906.66|Used to secure the bank loans|
|Total|188,484,736.83|--|

Other instructions:
41. Foreign Currency Monetary Item
(1) Foreign Currency Monetary Item
Unit: RMB
|||||
|-|-|-|-|
||Ending balance of foreign|||
|Items||Exchange rate of conversion|Converted ending RMB balance|
||currency|||
|Money funds|--|--|79,022.67|
|Wherein: USD|12,037.07|6.4936|78,163.93|
|HKD|1,025.02|0.8378|858.74|
|Accounts receivable|--|--|49,546,374.57|
|Wherein: USD|7,630,031.81|6.4936|49,546,374.57|
|Advance payment|||464,330.52|
|Wherein: USD|71,505.87|6.4936|464,330.52|
|Short-term borrowing|||28,879,107.41|
|Wherein: USD|4,447,318.50|6.4936|28,879,107.41|

 Other instructions:
(2) Description of overseas operating entities, including the main operation place, recording currency, and
selection basis, as well as the reasons in case of change in the recording currency.
□ Applicable√ Inapplicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015Ⅷ. Change of Merger Scope
1. Disposal of Subsidiary
Where there is any circumstance under which the control right over thesubsidiary’s investment is lost at single disposal?
√ Yes□ No
Unit: RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||Difference|||||||
||||||||||||Determin||
|||||||of disposal|||||||
|||||||||||Profit or|ation|Amount of|
|||||||price and|||||||
||||||||Ratio|Book||loss|method|other|
|||||||the net asset|||Fair||||
||||||||of|value of||generate|and main|comprehensive|
|||||||share of|||value of||||
||||||||remain|remaini||from|assumpti|income related|
|||||Time|Determinati|subsidiary|||remainin||||
||||||||ing|ng||re-measu|on of fair|to original|
||Equity|Equity|Equity|point of|on basis for|to be shared|||g equity||||
|Subsidiary|||||||equity|equity||rement|value of|subsidiary’s|
||disposal|disposal|disposal|loss of|time point of|at the|||on the||||
|name|||||||on the|on the||of|remainin|equity|
||price|ratio|way|control|loss of|consolidated|||date of||||
||||||||date of|date of||remainin|g equity|investment|
|||||right|control right|financial|||loss of||||
||||||||loss of|loss of||g equity|on the|transferred into|
|||||||statement to|||control||||
||||||||control|control||based on|date of|the profit and|
|||||||which the|||right||||
||||||||right|right||fair|loss of|loss on|
|||||||disposed|||||||
|||||||||||value|control|investment|
|||||||investment|||||||
||||||||||||right||
|||||||corresponds|||||||
||||||Handover of||||||||
||||||actual||||||||
|Yutian|||||control right||||||||
|||||Apr. 30,||643.49|||||||
|Henghua|100,000.00|100.00%|Sales||and||||||||
|||||2015|||||||||
|Co., Ltd.|||||resolution of||||||||
||||||shareholders||||||||
||||||’ meeting||||||||

Other instructions:
Where there is any circumstance under which thesubsidiary’s investment is disposed step by step through several times of
transactions and the control right is lost at current period?
□ Yes√ No
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015Ⅸ. Equity in Other Entities
1. Equity in subsidiaries
(1) Composition of Enterprise Group
||||||||
|-|-|-|-|-|-|-|
|Name of|Main business|Registered||Shareholding ratio|||
||||Business nature|||Obtaining method|
|subsidiary|place|address||Direct|Indirect||
|Huafa Lease|||Property|||Invested and|
||Shenzhen|Shenzhen||60.00%|||
|Company|||management|||established|
|Huafa Property|||Property|||Invested and|
||Shenzhen|Shenzhen||100.00%|||
|Company|||management|||established|
|Hengfa|||||||
||||Production and|||Invested and|
|Technology|Wuhan|Wuhan||100.00%|||
||||sale|||established|
|Company|||||||
|Huafa Hengtian|||Property|||Invested and|
||Shenzhen|Shenzhen||100.00%|||
|Company|||management|||established|
|Huafa Hengtai|||Property|||Invested and|
||Shenzhen|Shenzhen||100.00%|||
|Company|||management|||established|

 Instruction for shareholding ratio of subsidiary different from the proportion of voting right:
None.
Basis for holding half or less than half of the voting rights but still controlling the invested unit and basis for holding more than half of the voting rights but failing to control the invested unit:
Basis for control over the important structured entity incorporated in the merger scope:
Basis for determining whether the Company is an agent or a client: none.
Other instructions:
Ⅹ. Financial Instruments Related Risks
The main financial instruments of the Group include the borrowing, accounts receivable, accounts payable, trading financial assets and trading financial liabilities. The detailed information of various financial instruments is shown in NoteⅦ. The financial instruments related risks and the risk management policy taken by the Group for reducing these risks are shown as follows. TheGroup’s management layer will manage and monitor these risk exposures in order to ensure controlling above risks within the limited scope.
1. Various risk management objectives and policies
TheGroup’s risk management aims to achieve proper balance between risk and benefit; minimize the negative influence of risk
on theGroup’s operation performance and maximize the benefits of shareholders and other equity investors. Based on this risk
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 management objective, the basic strategy of risk management of the Group is determining and analyzing the risks faced by the Group; establishing proper risk tolerance and carrying out risk management and supervising various risks in a timely and reliable manner in order to control the risks within a limited scope.
(1) Market risk
The market risk of financial instruments refers to the risk of fluctuation of fair value or future cash flow of financial instruments caused by market price change, including foreign exchange risk, interest rate risk and other price risk.
1. Exchange rate risk
The exchange rate risk assumed by the Group is mainly related to the USD and HKD. Except for the daily operation activities related to display carried out by the secondary subsidiary of the Group Hengfa Science and Technology Co., Ltd. in USD, the other main business activities of the Group shall be settled in RMB. On Dec. 31, 2015, except for the USD balance of following assets and liabilities and the petty UKD balance, the assets and liabilities of the Group are the RMB balances. The exchange rate risk generated from the assets and liabilities of the USD and HKD balance may exert an influence on the operating performance of the Group.
||||
|-|-|-|
|Item|Dec. 31, 2015 (converted into RMB)|Dec. 31, 2014 (converted into RMB)|
|Monetary capital-USD|78,163.93|1,647,548.30|
|Monetary capital-HKD|858.74|131,467.38|
|Accountsreceivable-USD|49,546,374.57|23,844,905.37|
|Advance payment-USD|464,330.52|599,151.38|
|Accountsreceivable-USD||7,294.32|
|Short-termborrowing-USD|28,879,107.41|53,114,376.32|

The Group attaches close attention to the influence of change in exchange rate on the Group.
2) Interest rate risk
TheGroup’s interest rate risk is generated from the bank loan. The financial liabilities of floating interest rate cause the cash flow interest rate risk faced by the Group and the financial liabilities of fixed interest rate cause the fair value interest rate risk faced by the Group. The Group shall determine the relative ratio of fixed interest rate and floating interest rate contract according to the market environment. On Dec. 31, 2015, the interest-bearing debts of the Group mainly include the floating interest rate loan contract valued at RMB and USD, with the total amount being RMB 674,179,107.41 (on Dec. 31, 2014: RMB723,414,376.32).
The Group's risk from changes in cash flow of financial instruments due to variation of interest rate is mainly related to the bank loans with floating rate of interest. The Group's policy is to maintain a floating interest rate on these loans in order to eliminate the fair value risk from variation of interest rate.
3) Price risk
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 The Group sells the display at market price so that the performance is affected by such price fluctuation.
(2) Credit risk
The credit risk refers to the risk of property loss caused to the other party due to the failure of a party to the financial instrument in performance its obligations. On Dec. 31, 2015, the maximum credit risk exposure that may cause the financial loss of the Group mainly comes from the loss of theGroup’s financial assets caused by the failure of other party of the Contract in performance its obligation and the financial guarantee assumed by the Group, which mainly includes:
In order to reduce the credit risk, the Group establishes a special department to determine the credit line and carry out credit approval and implement other monitoring procedures to ensure that necessary measures are taken to recover the overduecreditor’s right. In addition, the Group reviews the recovery situation of each single account receivable on each balance sheet date to ensure full withdrawal of bad debt provision for the accounts that cannot be recovered. Therefore, theGroup’s management layer believes that the credit risk assumed by the Group has been reduced significantly.
TheGroup’s working capital is stored in the bank with higher credit rating so that the credit risk of working capital is lower. The Group implements necessary policies to ensure that all trade debtors have good credit record. Except for the top five accounts receivable, the Group has no other significant credit concentration risk.
Total amount of top five accounts receivable: RMB 99,977,340.65.
(3) Liquidity risk
Liquidity risk is the risk that the Group fails to perform its financial obligation on the due date. The method for the Group to manage the liquidity risk is to ensure sufficient fund liquidity for performance of due debts so as to avoid unacceptable loss or damage to theenterprise’s reputation. The Group regularly analyzes the liability structure and period in order to ensure sufficient funds. TheGroup’s management layer is responsible for monitoring the use of bank loan and ensuring its compliance with the loan agreement. Meanwhile, theGroup’s management layer shall also have negotiation with the financial institution about the financing to ensure a certain line of credit and reduce the liquidity risk.
The financial assets and financial liabilities held by the Group are analyzed based on the maturity of undiscounted remaining contractual obligation:
Amount as of Dec. 31, 2015
|||||||
|-|-|-|-|-|-|
|Items|Within 1 year|1-2 years|2-3 years|More than 3 years|Total|
|Financial assets||||||
|Monetary capital|662,115,464.19||||662,115,464.19|
|Notes receivable|54,346,509.74||||54,346,509.74|
|Notes Receivable|109,965,992.14||||109,965,992.14|
|Other AccountsReceivable|9,411,791.40||||9,411,791.40|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|Advance payment|3,092,021.10|||3,092,021.10|
|Interests receivable|1,838,752.40|||1,838,752.40|
|Financial liabilities|||||
|Short-term borrowing|119,479,107.41|||119,479,107.41|
|Notes payable|53,614,420.20|||53,614,420.20|
|Accounts payable|54,241,655.86|||54,241,655.86|
|Other payables|28,456,858.32|4,208,840.00||32,665,698.32|
|Deposit received|1,147,469.52|||1,147,469.52|
|Employees’remuneration payable|4,731,615.47|||4,731,615.47|
|Long-term borrowing|||554,700,000.00|554,700,000.00|

 1. Sensitivity analysis
The Group adopts sensitivity analysis technology to analyze the influence of reasonable and potential change in the risk variables on the current profit and loss or ownership interest. As few risk variables will change in isolation and the correlation of the variables will have a large influence on the final affected amount of a certain risk variable change, the following analysis is carried out based on the assumption that each variable changes in isolation.
(1) Sensitivity analysis of foreign exchange risk
Assumption of sensitivity analysis of foreign exchange risk: all foreign operation net investment hedging and cash flow hedging are highly effective.
Based on the above assumptions and under the circumstance that other variables remain unchanged, the after-tax influence of potential reasonable change in the exchange rate on the current profit and loss and equity is shown as follows:
|||||||
|-|-|-|-|-|-|
|Item|Exchange rate change|2015||2014||
|||Influence on netprofit|Influence onownershipinterest|Influence on netprofit|Influence onownershipinterest|
|All foreigncurrencies|Appreciation of 5%against RMB|-795,398.26|-795,398.26|-1,011,402.55|-1,011,402.55|
|All foreigncurrencies|Depreciation of 5%against RMB|795,398.26|795,398.26|1,011,402.55|1,011,402.55|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 XI. Connected parties and connected transactions
1. Condition of parent company of the Enterprise
|||||||
|-|-|-|-|-|-|
|||||Shareholding|Percentage of voting|
|Name of parent||||||
|||||proportion of the|rights held by the|
||Registered place|Business scope|Registered capital|||
|company||||parent company over|parent company over|
|||||the Enterprise|the Enterprise|
|Wuhan Zhongheng||||||
|New Technology||||||
|Industry Group Co.,||||||
|Ltd. (hereinafter|Wuhan|Production and sale|34,500,000|41.14%|41.14%|
|referred to as||||||
|Zhongheng Group)||||||

Description of condition of the other affiliates of the Enterprise
Registered capital and its change
||||||
|-|-|-|-|-|
|Controlling shareholder|Opening balance|Increase of thisyear|Decrease of thisyear|Ending balance|
|Wuhan Zhongheng Group|34,500,000|||34,500,000|

 Held share or equity and its change
||||||
|-|-|-|-|-|
|Controllingshareholder|Shareholding amount||Shareholding ratio (%)||
||Ending balance|Opening balance|Ending ratio|Opening ratio|
|Wuhan Zhongheng Group|116,489,894.00|116,489,894.00|41.14|41.14|

 The final controlling party of the enterprise is Li Zhongqiu.
Other instructions:
2. Condition of subsidiaries of the Enterprise
See Note “Composition of Enterprise Group” for information of theenterprise’s subsidiaries.
3. Information of Other Related Parties
|||
|-|-|
|Name of other affiliates|Relationship between other related party and the enterprise|
|Shenzhen Zhongheng Huafa Science and Technology||
||Under the control of the same parent company and the final controlling party|
|Co., Ltd.||
|Wuhan Hengsheng Yutian Industry Co., Ltd.|Under the control of the same parent company and the final controlling party|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||
|-|-|
|Wuhan Hengsheng Opto-electric Industry Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Hongkong Yutian International Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Wuhan Xindongfang Real Estate Development Co.,||
||Under the control of the same parent company and the final controlling party|
|Ltd.||
|Wuhan Zhongheng Property Management Co.,Ltd.|Under the control of the same parent company and the final controlling party|
|Wuhan Guanggu Display System Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Wuhan Yutian Xingye Property Purchase Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Wuhan Yutian East Land Holding Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Wuhan Xiahua Zhongheng Electronic Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Wuhan ZHongheng Yutian Trade Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Wuhan Yutian Hongguang Real Estate Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Shenzhen Zhongheng Huayu Investment Holding||
||Under the control of the same parent company and the final controlling party|
|Co., Ltd.||
|Famous Sky Capital Limited|Under the control of the same parent company and the final controlling party|
|Yutian International Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Hong Kong Zhongheng Yutian Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Shengzhen Yutian Henghua Co., Ltd.|Under the control of the same parent company and the final controlling party|
|Shenzhen Zhongheng Yongye Co., Ltd.|Under the control of the same parent company and the final controlling party|

 Other instructions:
None.
4. Connected Transaction
(1) Connection Transactions about Procurement and Sales of Commodities, Provision and Acceptance of Labor Service
List of procured commodities/accepted labor
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||||Whether it||
||||Approved|exceeds the||
||Content of connected|Accruals of the|||Accruals of the previous|
|Related parties|||transaction|approved||
||transaction|current period|||period|
||||amount|transaction||
|||||amount||
|Hongkong Yutian|Commodities|||||
|||127,963,832.98|500,007,200.00|No|145,128,560.64|
|International Co., Ltd.|purchased|||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|Wuhan Hengsheng||||||
||Commodities|||||
|Yutian Industry Co.,||2,729,748.60|97,404,000.00|No|27,985,217.75|
||purchased|||||
|Ltd.||||||

Fact statement of sales of goods or provisions of labor
Unit: RMB
|||||
|-|-|-|-|
|Affiliated party|Affiliated transaction|Accruals of the current period|Accruals of the previous period|
|Hongkong Yutian International Co., Ltd.|Sales of commodities|163,903,060.99|234,811,940.55|
|Wuhan Hengsheng Opto-electric||||
||Sales of commodities|191,218.42|185,805.98|
|Industry Co., Ltd.||||
|Shenzhen Zhongheng Huafa Science|Provision of labor|||
|||476,979.50|636,090.00|
|and Technology Co., Ltd.|service|||
|Wuhan Zhongheng New Tech Industry||||
||Sales of commodities||60,056.30|
|Group Co., Ltd.||||

Description for related transactions of goods purchase or sales, and labor services rendering or receiving
(2) Associated lease situation
The Company is the Lessor:
Unit: RMB
|||||
|-|-|-|-|
|||Recognized lease income of|Recognized lease income of|
|Name of Lessee|Category of leased assets|||
|||current period|previous period|
|Shenzhen Zhongheng Huafa||||
||House building|1,731,066.00|2,309,448.00|
|Science and Technology Co., Ltd||||

The Company serves as the lessee:
Unit: RMB
|||||
|-|-|-|-|
|||Rental fee recognized in the|Rental fee recognized in the|
|Name of the lessor|Type of leased asset|||
|||current period|prior period|

Description of related-party leasing
(3) Associated guarantee situation
The Company is the Guarantor:
Unit: RMB
||||||
|-|-|-|-|-|
|||||Whether guarantee has|
||Amount of guarantee|Starting date of guarantee|Expiry date of guarantee||
|Guaranteed person||||been fully performed or|
|||||not|
|Hengfa Technology|65,000,000.00|Sep. 10, 2015|Jun.17, 2016|None|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|Company|||||
|Hengfa Technology|||||
||48,000,000.00|Sep. 29, 2015|Sep.29, 2016|None|
|Company|||||

The Company acts as the secured party
Unit: RMB
||||||
|-|-|-|-|-|
|||||Whether guarantee has|
||Amount of guarantee|Starting date of guarantee|Expiry date of guarantee||
|Guarantor||||been fully performed or|
|||||not|
|Li Zhongqiu|600,000,000.00|May 28, 2014|May 28, 2026|None|
|Li Zhongqiu|20,000,000.00|May 13, 2014|Dec 31, 2015|Yes|

Description of related-party guarantee
Lending
(4) Asset transferring and debt restructuring of the related party
Unit: RMB
|||||
|-|-|-|-|
|||Amount incurred in the current|Amount incurred in the prior|
|Related party|Related transaction|||
|||period|period|
|Wuhan New Oriental Real||||
||Asset acquisition|25,000,000.00|0.00|
|Estate Development Co., Ltd.||||

（5）Remuneration of Key Management Personnel
单位：元
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Total remuneration|1,951,600.00|1,743,400.00|

 5. Receivables and payable of related party
(1) Receivables
Unit: RMB
|||||||
|-|-|-|-|-|-|
|||Ending balance||Beginning balance||
|Project name|Associated party||Provision for Bad||Provision for Bad|
|||Book balance||Book balance||
||||Debts||Debts|
|Notes|Hong Kong Tianyu International|||||
|||47,219,865.22||23,844,905.37||
|Receivable|Investment Co.,Ltd.|||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||
|-|-|-|-|
|Advance|Hong Kong Tianyu International|||
|||520,885.50|1,745,857.69|
|payment|Investment Co.,Ltd.|||
|Interest|Hang seng wuhan optoelectronic|||
|||1,838,752.40||
|receivable|industry co., LTD|||
|Other|Wuhan new Oriental real estate|||
||||500,000,000.00|
|receivables|development co., LTD|||

(2) Payables
Unit: RMB
|||||
|-|-|-|-|
|Project name|Associated party|Ending book balance|Opening book balance|
||Shenzhen Zhongheng Huafa Science|||
|Other payables||8,663,196.37||
||and Technology Co., Ltd.|||
||Shenzhen Zhongheng Huafa Science|||
|Advance collections|||276,329.24|
||and Technology Co., Ltd.|||
||Wuhan Hengsheng Opto-Electronics|||
|Accounts payables||924,354.64|1,231,780.60|
||Industry Co., Ltd.|||

Ⅻ. Commitment and Contingent Matters
1. Contingent Affairs
(1) Important contingent matters on the balance sheet date
XIII. Events after Balance Sheet Date
1. Instruction of other events after balance sheet date
As of the approved release date of financial report, the Group has no significant events after balance sheet date to be disclosed. XIV. Other Significant Events
1. Miscellaneous
As of Dec. 31, 2015, the Group has no other significant events to be disclosed.
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 XV. Notes of main items of parentcompany’s financial statements
1. Accounts Receivable
(1) Classified Disclosure of Accounts Receivable
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||Book balance||Provision for Bad Debts|||Book balance||Provision for Bad Debts|||
|Type|||||||||||
|||Proporti||Percent|Book Value||||Percent|Book Value|
||Amount||Amount|||Amount|Proportion|Amount|||
|||on||Drawn|||||Drawn||
|Accounts receivable with|||||||||||
|significant specific amount|5,094,414.3|49.05|5,094,414.|||5,094,414.3||3,672,319.||1,422,094.6|
|||||100.00%|||48.59%||72.09%||
|that were provisioned bad|6|%|36|||6||72||4|
|debt preparation separately|||||||||||
|Accounts receivable which|||||||||||
|bad debt provision shall be|||138,083.3|||||122,200.3|||
||460,277.76|4.43%||30.00%|322,194.43|557,327.76|5.32%||21.93%|435,127.43|
|withdrawn based on credit|||3|||||3|||
|risk characteristics|||||||||||
|Accounts receivable that|||||||||||
|were not significant but have|4,832,157.5|46.52|4,832,157.|||4,832,157.5||4,832,157.|||
|||||100.00%|||46.09%||100.00%||
|been provisioned bad debt|6|%|56|||6||56|||
|preparation separately|||||||||||
||10,386,849.|100.00|10,064,65||322,194.43|10,483,899.||8,626,677.||1,857,222.07|
|Total|||||||100.00%||||
||68|%|5.25|||68||61|||

 Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end ofperiod：
√ Applicable□ Inapplicable
Unit: RMB
||||||
|-|-|-|-|-|
||Ending balance||||
|Accounts Receivable (based on|||||
||AccountsReceivable|Provision for Bad|||
|unit)|||Percent Drawn|Reason of provision|
|||Debts|||
|TCL Wangpai Electric Appliance|||||
||1,325,431.75|1,325,431.75|100.00%|Can not be taken back|
|( Huizhou)Co., Ltd.|||||
|Skyworth Multimedia(Shenzhen)|||||
||672,769.28|672,769.28|100.00%|Can not be taken back|
|Co.,Ltd.|||||
|H. K. Haowei Industry Co., Ltd.|1,870,887.18|1,870,887.18|100.00%|Can not be taken back|
|Qingdao Hai’er Spare Parts|1,225,326.15|1,225,326.15|100.00%|Can not be taken back|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|Procurement Co., Ltd.|||||
|Total|5,094,414.36|5,094,414.36|--|--|

In the combination, aging analysis method is used to accrue the receivables of bad debt reserves:
√ Applicable□ Inapplicable
Unit: RMB
|||||
|-|-|-|-|
||Ending balance|||
|Account ageing||||
||Accounts Receivable|Provision for Bad Debts|Percent Drawn|
|Subitem within one year||||
|Over 3years|460,277.76|138,083.33|30.00%|

 Instructions for determining the combination basis:
Accounts receivable with accrual of bad debt reserve by balance percentage method in the combination:
□ Applicable√ Inapplicable
Accounts receivable with accrual of bad debt reserve by other method in the combination:
Accounts receivable without major individual amount but with separate accrual of bad debt reserve at the end of period:
||||||
|-|-|-|-|-|
|Unit name|Balance at the end of the year||||
||AccountsReceivable|Provision for BadDebts|Percent Drawn（%）|Reason of provision|
|Shenzhen Huixin Video Science andTechnology Co.,Ltd.|381,168.96|381,168.96|100.00|Can not be taken back|
|Shenzhen Wandial Number Science andTechnology Co.,Ltd.|351,813.70|351,813.70|100.00|Can not be taken back|
|Shenzhen Dalong Electric Co.,Ltd.|344,700.00|344,700.00|100.00|Can not be taken back|
|Shenzhen Qunpin Electric Co.,Ltd.|304,542.95|304,542.95|100.00|Can not be taken back|
|China Galaxy Electric(Hong Kong) Co.,Ltd.|288,261.17|288,261.17|100.00|Can not be taken back|
|Dongguan Weite Electric Co.,Ltd.|274,399.80|274,399.80|100.00|Can not be taken back|
|Hong Kong New Century Electric Co.,Ltd.|207,409.40|207,409.40|100.00|Can not be taken back|
|Shenyang Beitai Electric Co.,Ltd.|203,304.02|203,304.02|100.00|Can not be taken back|
|Bejing Xinfanweiye Science and TechnologyCo.,Ltd.|193,000.00|193,000.00|100.00|Can not be taken back|
|TCL Electric(Hong kong) Co.,Ltd.|145,087.14|145,087.14|100.00|Can not be taken back|
|Huizhou TCL New and Special ElectronicsCo., Ltd.|142,707.14|142,707.14|100.00|Can not be taken back|
|Shenzhen Skyworth-RGB Electric Co.,Ltd.|133,485.83|133,485.83|100.00|Can not be taken back|
|Others|1,862,277.45|1,862,277.45|100.00|Can not be taken back|
|Total|4,832,157.56|4,832,157.56|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 (2) Bad Debt Provision Withdrawn, Recovered or Refunded at Current Period
The bad debt provision withdrawn at current period is RMB 1,437,977.64; the bad debt provision recovered or refunded at current period is RMB 0.00.
Among which, the important bad debt provision recovered or refunded at current period: none.
||||
|-|-|-|
|Company name|Reverse or recovery amount|Recovery mode|

(3) Accounts Receivable with Top Five Ending Balances Collected Based the Debtor
The total amount of accounts receivable with top five ending balances collected by the Debtor this year reaches RMB
5,475,583.32, which accounts for52.72% of the total ending balance of the accounts receivable. The total amount of ending balances of withdrawn bad debt provision is RMB 5,475,583.32.
2. Other Accounts Receivable
(1) Classified Disclosure of Other Accounts Receivable
Unit: RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||Book balance||Provision for Bad Debts|||Book balance||Provision for Bad Debts|||
|Type|||||||||||
|||Proporti||Percent|Book Value||Proporti||Percent|Book Value|
||Amount||Amount|||Amount||Amount|||
|||on||Drawn|||on||Drawn||
|Accounts receivable with|||||||||||
|significant specific amount|79,933,722.||10,221,046.||69,712,675.7|510,221,046.|82.05|10,221,046.||500,000,000.|
|||87.11%||12.79%|||||2.00%||
|that were provisioned bad|28||53||5|53|%|53||00|
|debt preparation separately|||||||||||
|Other accounts|||||||||||
|receivable which bad|||||||||||
|debt provision shall be|6,668,848.1|||||106,277,411.|17.09|||106,214,702.|
|||7.27%|168,615.32|2.53%|6,500,232.81|||62,709.06|0.06%||
|withdrawn based on|3|||||47|%|||41|
|credit risk|||||||||||
|characteristics|||||||||||
|Accounts receivable that|||||||||||
|were not significant but|5,160,853.2||5,160,853.2|100.00||||5,359,981.3|100.00||
|||5.62%||||5,359,981.34|0.86%||||
|have been provisioned bad|7||7|%||||4|%||
|debt preparation separately|||||||||||
||91,763,423.|100.00|15,550,515.||76,212,908.56|621,858,439.|100.00|15,643,736.||606,214,702.41|
|Total|||||||||||
||68|%|12|||34|%|93|||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Other Accounts Receivable with major individual amount and separate accrual of bad debt reserve at the end of period:
√ Applicable□ Inapplicable
Unit: RMB
||||||
|-|-|-|-|-|
||Ending balance||||
|Other Accounts Receivable|||||
||Other Accounts||||
|(based on unit)||Provision for Bad Debts|Percent Drawn|Reason of provision|
||Receivable||||
|Wuhan Hengfa Technology|||||
||68,971,765.78|||No risk of bad debts|
|Co., Ltd.|||||
|Huafa Lease Company|4,558,859.15|4,558,859.15|100.00%|Can not be taken back|
|Boteman|4,021,734.22|4,021,734.22|100.00%|Can not be taken back|
|Wuwu Branch of Shenzhen|||||
||740,909.97|||No risk of bad debts|
|Dachong Industrial Co., Ltd.|||||
|Zhao Baomin|564,646.35|564,646.35|100.00%|Can not be taken back|
|Traffic incident indemnity|555,785.81|555,785.81|100.00%|Can not be taken back|
|Hebei Botou Court|520,021.00|520,021.00|100.00%|Can not be taken back|
|Total|79,933,722.28|10,221,046.53|--|--|

Other Accounts Receivable with accrual of bad debt reserve by aging analysis method in the combination::
√ Applicable□ Inapplicable
Unit: RMB
|||||
|-|-|-|-|
||Ending balance|||
|Account ageing||||
||Other Accounts Receivable|Provision for Bad Debts|Percent Drawn|
|Subitem within one year||||
|Subtotal within 1 year|5,692,316.80|||
|1-2 year (s)|478,464.00|23,923.20|5.00%|
|2-3 years|23,640.40|2,364.04|10.00%|
|Over 3years|474,426.93|142,328.08|30.00%|
|Total|6,668,848.13|168,615.32||

Instructions for determining the combination basis:
Other Accounts Receivable with accrual of bad debt reserve by balance percentage method in the combination:
□ Applicable√ Inapplicable
Other Accounts Receivable with accrual of bad debt reserve by other method in the combination:
√ Applicable□ Inapplicable
Other Accounts Receivable without major individual amount but with separate accrual of bad debt reserve at the end of period:
|||
|-|-|
|Unit name|Balance at the end of the year|

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
||Other AccountsReceivable|Provision for BadDebts|Percent Drawn（%）|Reason of provision|
|Shenzhen Lotus Island Restaurant Co.,Ltd|236,293.80|236,293.80|100.00|Can not be taken back|
|Weili Electric Corporation Co.,Ltd,Zhangzhou City, Fujian Province|112,335.62|112,335.62|100.00|Can not be taken back|
|Employee canteen ect.|796,041.46|796,041.46|100.00|Can not be taken back|
|Personal borrowings|991,841.17|991,841.17|100.00|Can not be taken back|
|Trade Union|297,402.55|297,402.55|100.00|Can not be taken back|
|Chuangjing workshop|192,794.00|192,794.00|100.00|Can not be taken back|
|Others|2,534,144.67|2,534,144.67|100.00|Can not be taken back|
|Total|5,160,853.27|5,160,853.27|||

(2) Bad Debt Provision Withdrawn, Recovered or Refunded at Current Period
The bad debt provision withdrawn at current period is RMB 147,653.19; the bad debt provision recovered or refunded at current period is RMB 240,875.00.
Among which, the important bad debt provision recovered or refunded at current period:
Unit: RMB
||||
|-|-|-|
|Company name|Reverse or recovery amount|Recovery mode|

(3) Classification of Other Accounts Payable Based on Payment Nature
Unit: RMB
||||
|-|-|-|
|Payment nature|Ending book balance|Opening book balance|
|Borrowing|2,041,924.43|2,119,400.72|
|Current accounts|80,199,993.19|112,557,582.53|
|Rent income|8,780,596.09|7,181,456.09|
|Security deposit|740,909.97||
|Total|91,763,423.68|121,858,439.34|

 (4) Other Accounts Receivable with Top Five Ending Balances Collected Based on Debtor
Unit: RMB
|||||||
|-|-|-|-|-|-|
||||tAccount ageing|Proportion in the||
|||||otal ending balances|Ending balance of|
|Unit name|Payment nature|Ending balance||||
|||||of other accounts|bad debt provision|
|||||receivable||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
|||||||
|-|-|-|-|-|-|
|Wuhan Hengfa||||||
||Current accounts|68,971,765.78|Within 1 year|75.16%||
|Technology Co., Ltd.||||||
|Wuwu Branch of|Security deposit for|||||
|Shenzhen Dachong|lease|740,909.97|Within 1 year|0.81%||
|Industrial Co., Ltd.||||||
|Huafa Lease||||||
||Current accounts|4,558,859.15|Over 3years|4.97%|4,558,859.15|
|Company||||||
||Lease fees|||||
|Boteman||4,021,734.22|Over 3years|4.38%|4,021,734.22|
||receivable|||||
||Lease fees|||||
|Zhao Baomin||564,646.35|Over 3years|0.62%|564,646.35|
||receivable|||||
|Total|--|78,857,915.47|--|85.94%|9,145,239.72|

 3. Long-term Equity Investment
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Items|Book balance|Impairment|Book Value||Impairment||
|||||Book balance||Book Value|
|||Provision|||Provision||
|Investment in|||||||
||187,208,900.00|600,000.0|0 186,608,900.00|188,208,900.00|600,000.00|187,608,900.00|
|subsidiary|||||||
|Total|187,208,900.00|600,000.0|0 186,608,900.00|188,208,900.00|600,000.00|187,608,900.00|

 (1) Investment in subsidiary
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||||||Withdrawal of||
|||Additionalamount ofcurrent period|Decreased|||Ending balance of|
||Beginning||||depreciation||
|Invested unit|||amount of|Ending balance||depreciation|
||balance||||reserves of current||
||||current period|||reserves|
||||||period||
|Huafa Lease|||||||
||600,000.00|||600,000.00||600,000.00|
|Company|||||||
|Huafa Property|||||||
||1,000,000.00|||1,000,000.00|||
|Company|||||||
|Hengfa Technology|||||||
||183,608,900.00|||183,608,900.00|||
|Company|||||||

SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015
||||||
|-|-|-|-|-|
|Yutian Henghua|||||
||1,000,000.00|1,000,000.00|||
|Company|||||
|Huafa Hengtian|||||
||1,000,000.00||1,000,000.00||
|Company|||||
|Huafa Hengtai|||||
||1,000,000.00||1,000,000.00||
|Company|||||
|Total|188,208,900.00|1,000,000.00|187,208,900.00|600,000.00|

 4. Business Revenues& Business Cost
Unit: RMB
||||||
|-|-|-|-|-|
||Accruals of the current period||Accruals of the previous period||
|Items|||||
||Income|Cost|Income|Cost|
|Other Business|54,055,168.03|8,764,361.27|57,459,329.67|10,236,937.60|
|Total|54,055,168.03|8,764,361.27|57,459,329.67|10,236,937.60|

 Other explanations:
Other business-classified based on categories
||||||
|-|-|-|-|-|
|Products|Amount of current year||Amount of last year||
||Business revenues|Business cost|Business revenues|Business cost|
|Property lease|46,341,950.50|1,640,794.86|47,942,501.28|2,527,059.80|
|Utilities and other expenses|7,713,217.53|7,123,566.41|9,516,828.39|7,709,877.80|
|Total|54,055,168.03|8,764,361.27|57,459,329.67|10,236,937.60|

5. Investment income
Unit: RMB
||||
|-|-|-|
|Items|Accruals of the current period|Accruals of the previous period|
|Other|25,246,527.78||
|Total|25,246,527.78||

XVI. Supplementary information
1. Detailed Statement of Non-recurring Profit and Loss of Current Period
√ Applicable□ Inapplicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 Unit: RMB
||||
|-|-|-|
|Items|Amount|Description|
|Profit and loss on non-current asset disposal|449,051.44||
|Governmental subsidies recorded in current profit and loss|||
|(be closely related to the enterprise business, with an|||
||1,691,800.00||
|exception of the governmental subsidies enjoyed based on|||
|national unified standard quota or ration)|||
|Other non-business income and expenditure other than|||
||690,149.43||
|above items|||
|Other profit and loss items meeting the definition of|||
||25,247,171.27||
|non-recurring profit and loss|||
|Less: amount affected by income tax|3,067,910.45||
|Total|25,010,261.69|--|

Where the non-recurring profit and loss item identified by the Company according to No. 1Company’s Information Disclosure Explanatory Announcement for Public Issuance of Securities-Non-recurring Profit and Loss and the non-recurring profit and loss items listed in No. 1Company’s Information Disclosure Explanatory Announcement for Public Issuance of Securities-Non-recurring Profit and Loss are defined as the recurring profit and loss items, proper explanation shall be given.
□ Applicable√ Inapplicable
2. Return on Net Assets and Earnings Per Share
|||||
|-|-|-|-|
|||Earning per Share||
|Profit during Reporting Period|Averagely-weighted return on net asset|Basic Earning per Share|Diluted Earning per|
|||(Yuan/Share)|Share(Yuan/Share)|
|Net profit ascribed to shareholder||-0.0238|-0.0238|
||-2.27%|||
|of mother company||||
|Net profit belonging to parent||||
|company shareholders after|-10.71%|-0.0532|-0.0532|
|excluding non-recurring items||||

3. Accounting Data Difference under Domestic and Foreign Accounting Standards
(1) Difference of Net Profit and Net Assets in Financial Report Disclosed Based on International Accounting Standard and Chinese Accounting Standard
□ Applicable√ Inapplicable
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 (2) Difference of Net Profit and Net Assets in Financial Report Disclosed Based on Overseas Accounting Standard and Chinese Accounting Standard
□ Applicable√ Inapplicable
4. Other
Section XI Directory of Document Available for Inspection
I. Annual report text bearing the signature of President;
II. Financial report text bearing the signature and seal of head of unit, people in charge of accountancy and leading member of accounting body;
III. Text of all the documents revealed publicly in the China Securities Journal, Securities Times and Hongkong Commercial Daily specified by China Securities Regulatory Commission within the reporting period;
IV. Articles of Association of the Company;
SHENZHEN ZHONGHENG HUAFA CO., LTD.ANNUAL REPORT 2015 V. Other relevant materials.
[Note] This report is prepared in Chinese and English. In case of understanding ambiguity between the two versions, the Chinese version shall prevail.